The Scenius State of Regulation (Issue #19)
Crypto Policy & Regulation: February 2024
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United States 🇺🇸, Canada 🇨🇦, & Caribbean 🌎
Matt Stankiewicz, Partner at The Volkov Law Group, writes that the recent settlement does reveal the SEC’s general stance and the arguments it will likely rely on in future enforcement actions.
Justice Department Charges Three People in $400 Million FTX Mystery Hack (February 2)
The hack coincided with the crypto exchange’s meltdown more than a year ago.
US Lawmakers Challenge SEC On Crypto Asset Regulation (February 2)
U.S. Representatives Mike Flood, Wiley Nickel, as well as Senator Cynthia Lummis submitted similar resolutions to strip the SEC’s Accounting Bulletin of its force and effect.
US Turns Up The Heat On Crypto Miners (February 2)
The US Energy Information Administration said it would start tracking the electricity consumption of crypto mining companies.
DOJ Charges Duo For Crypto Mining In School District Amid US Energy Scrutiny (February 3)
The charges against the school district staff members coincide with the U.S. energy regulator’s recent clampdown on crypto mining activities.
What Happens to FTX Clawback Cases if the Company Repays Its Creditors? (February 3)
Lawyers for the failed crypto exchange told a bankruptcy judge they expected to pay creditors in full.
Crypto Teacher Loses Student’s $1.2M Investment In Fake Hedge Fund (February 3)
According to the U.S. SEC, Brian Sewell allegedly never launched the crypto hedge fund that promised to use AI and other strategies for maximizing returns.
Grayscale CEO Calls For Regulatory Approval On Spot Bitcoin ETF Options (February 3)
According to the U.S. SEC, Brian Sewell allegedly never launched the crypto hedge fund that promised to use AI and other strategies for maximizing returns.
First US Bank To Let Customers Keep Cryptocurrency In Checking Account Exits Crypto (February 5)
Vast Bank made the strategic decision to shutter its mobile crypto app and exit the scene after receiving an OCC consent order in October 2023.
Yellen Says Congress Should Provide Authority To Regulate Stablecoins (February 6)
U.S. Treasury Secretary Janet Yellen told Congress to provide a federal authority to regulate stablecoin issuers and wallet providers to close gaps in consumer protection and financial stability protections.
SEC May Be Forced To Declare Ethereum A Security After Controversial New Launch (February 7)
Prometheum is launching custody services for Ether, the first step in an attempt to create a regulated path for crypto.
TradeStation To Pay $3 Mln To Settle Charges From SEC, States Over Unregistered Crypto Product (February 7)
TradeStation failed to register its crypto lending product that allowed U.S. investors to deposit or purchase assets on TradeStation's platform in exchange for yield.
US Senators Call SEC Actions In Debt Box Case ‘Unconscionable’ (February 8)
The U.S. Securities and Exchange Commission admitted to not being “accurate and candid” in its filings related to Debt Box, later petitioning the court to drop the case.
US Lawmakers Get ‘Very, Very Close’ To Agreement On Stablecoin Bill (February 8)
Rep. Maxine Waters said U.S. lawmakers are inching closer to reaching an agreement on stablecoin legislation.
New York Attorney General Expands Crypto Lawsuit, Sees $3 Billion Fraud (February 9)
New York AG Letitia James expanded her lawsuit against Digital Currency Group and other cryptocurrency defendants, tripling the size of their alleged fraud scheme to more than $3 billion.
Ripple Suffers a Hard Blow in its Standoff with the SEC (February 9)
Federal Judge Sarah Netburn has given the Securities and Exchange Commission permission to demand certain financial documents from Ripple, tightening the noose around the company.
SEC, DFPI Charge Unregistered Crypto Platform (February 12)
Charges were announced against a Florida-based crypto platform, for failing to register the offer and sale of a crypto lending product that allowed U.S. investors to deposit or purchase crypto assets into an account in exchange for promised interest payments.
SEC Expands Dealer Definition to Capture Large Traders Regularly Providing Liquidity to the Markets (February 12)
High-frequency traders, private funds, decentralized exchange automated market makers, and even state pension plans should consider whether the expanded dealer definition triggers the need to register as a securities dealer with the SEC and with an SRO like FINRA.
How the CEO of This Crypto Exchange Violated US Law (February 14)
Adam Colin Todd, the CEO of the Digitex Futures Exchange (Digitex Futures), is charged with willfully neglecting to establish an anti-money-laundering (AML) program in compliance with the Bank Secrecy Act (BSA).
US Treasury Highlights Growing Concerns of Crypto in Illicit Finance Activities (February 14)
In a recent statement to the House Financial Services Committee, a US Treasury official highlighted the growing concerns around using crypto in illicit finance activities.
This Crypto Company is Now Under The SEC’s Criminal Investigation (February 15)
The SEC enforces subpoenas against NovaTech promoters due to alleged securities law violations.
The Crypto Lobby’s Newest Target (February 16)
The super political action committee Fairshake—which is backed by crypto firms such as Coinbase—launched a multimillion-dollar media campaign against Representative Katie Porter (D-Calif), who is running for the US Senate.
U.S. Regulators Do Have Some Control Over Stablecoin Tether: JPMorgan (February 16)
JPMorgan (JPM) said in a research report that USDT's appeal relative to other stablecoins will likely diminish as regulations will require more transparency and compliance with new anti-money laundering standards.
CFTC Advisory Subcommittee Releases Report on DeFi: Issues, Findings and Recommendations (February 16)
The global law firm WilmerHale released a client alert that analyzes the recent CFTC Advisory Subcommittee Report on DeFi.
SEC Heavily Penalizes VanEck For Its ETF (February 16)
The Securities and Exchange Commission (SEC) has fined asset manager VanEck $2 million for failing to disclose the role of an influencer in marketing its Bitcoin ETF, nor inform its board of directors of variable fees.
FTX Investors Sue Law Firm Sullivan & Cromwell, Claiming Role In Fraud (February 20)
A group of FTX investors has filed a proposed class action lawsuit against U.S. law firm Sullivan & Cromwell, claiming it participated in the defunct cryptocurrency exchange's multibillion-dollar fraud before further enriching itself as FTX's bankruptcy counsel.
Texas Crypto Company Sues SEC For 'Overreach' On Digital Assets (February 21)
A recent suit against the U.S. Securities and Exchange Commission states the regulator has overstepped its authority and asking a judge to rule that digital assets traded on exchanges are not securities.
Looking at Kraken's Motion to Dismiss an SEC Lawsuit (February 23)
Crypto exchange Kraken filed a motion to dismiss the lawsuit it faces by the U.S. Securities and Exchange Commission.
Binance’s $4.3 Billion Payment in US Plea Deal Approved by Judge (February 23)
US District Judge Richard Jones approved a plea deal that levies one of the largest criminal penalties in US history against the world’s biggest cryptocurrency exchange.
Crypto Exchange Gemini to Return $1.1 Billion to Customers in Regulator Settlement (February 28)
New York’s financial regulator also fined the company about $37 million over compliance failures.
Chamber Of Digital Commerce Files Amicus Brief Supporting Kraken In SEC Lawsuit (February 28)
The Chamber of Digital Commerce said the purpose of the amicus brief is to end the SEC's attempted regulation of the digital asset industry.
Webull Ended Crypto Offerings Due To SEC Opposition During Past IPO Attempts (February 28)
The online brokerage company is about to close a $7.3 billion SPAC deal which will allow it to list on Nasdaq.
SEC Objects to Terraform’s $166M Retainer of Law Firm Dentons: Reuters (February 29)
Additionally, the SEC has said that Terraform should not be allowed to hire law firm Dentons or pay litigation costs for employees, the report said.
U.S. House Panel Votes to Disapprove of Controversial SEC Custody Guidance (February 29)
The House Financial Services Committee also adopted a bill giving the U.S. Secret Service more resources to investigate crypto crimes.
Middle East & Africa 🌍
Kenya Faces Backlash Over New AI And Robotics Bill (February 9)
Kenyan information technology (IT) professionals have urged the country’s parliament to reject the 2023 Robotics and Artificial Intelligence Society Bill, citing numerous shortcomings.
Ethiopia To Set Up Large Data Centre Amid Reported Bitcoin Mining Surge (February 16)
Ethiopia has signed a preliminary agreement to develop infrastructure for data mining and artificial intelligence training operations, the government's strategic investment arm said.
Binance Accused Of Manipulating Nigerian Naira As ‘Glitch’ Impacts P2P Traders (February 21)
Binance Nigerian users speculated that the exchange implemented a price cap at the behest of the government.
Turkey’s Upcoming Crypto Rules Will Protect Users While Fostering Innovation, Lawmaker Says (February 21)
Ömer İleri, who oversees Information and Communication Technologies for Turkey’s ruling party, met with representatives of the crypto sector to discuss upcoming regulations.
South Africa Advances Financial Inclusion With Crypto And Digital Payment Reforms (February 22)
South Africa intends to legitimize crypto payments and make them an intrinsic part of the local economy over the coming years.
Nigeria’s Anti-Crypto Crusade: The Stakes Of Currency Control Against Naira Manipulation (February 24)
While Nigeria relaxed its stance on cryptocurrencies in 2023, the government has now cracked down by banning several major exchange platforms, including Binance.
Binance Nigeria Moved $26B Worth of Untraceable Funds in 2023, Central Bank Chief Says: Reports (February 28)
The country's facing a crippling foreign exchange crisis and looking for ways to limit capital outflows, including via crypto.
Nigeria Detains Binance Executives as It Investigates the Crypto Exchange: Reports (February 29)
The detentions are not necessarily arrests, a National Security spokesman told Bloomberg.
Europe 🌍
EU Data Act risks pushing crypto innovation overseas (February 1)
21Shares’ “State of Crypto” report says global regulatory shifts and their implications for the industry have created “jurisdictional competition” among emerging crypto hubs.
Binance Push to Re-Enter UK Foiled by Regulatory Challenges (February 1)
At least three UK firms with regulatory permission to approve communications between crypto platforms and their clients have rebuffed requests from Binance in recent months.
Euro-Backed Stablecoin Trials Begin In Spain (February 2)
Spanish fintech firm Monei has started trials of a euro-backed stablecoin EURM under the supervision of the Bank of Spain.
EU Member States ‘Endorse Political Agreement’ To Advance AI Act (February 3)
The European Union has advanced its regulatory framework for artificial intelligence (AI), with member states voting to approve the final text of the EU’s AI Act.
Spanish Treasury To Seize Crypto To Pay Tax Debts (February 5)
Spain’s Ministry of Finance has announced tax reforms that will give financial organizations the power to collect taxes on behalf of the government.
Jupiter Asset Management's Compliance Team Blocked Crypto ETP Investment (February 16)
Jupiter’s compliance department blocked its investment team from holding a cryptocurrency exchange traded product in one of its Irish Ucits funds, highlighting divergent regulatory approaches in the EU.
Defendant Had ‘No Idea’ Bitcoin Funds Were Proceeds Of Alleged £5bn Fraud, UK Court Told (February 19)
Jian Wen has pleaded not guilty to charges of laundering money for her fugitive former boss who is wanted in China.
OFAC Sanctions 10 Wallets Linked To LockBit Takedown (February 20)
Europol said authorities have frozen over 200 crypto accounts linked to LockBit.
Crypto Hedge Fund Accused Of ‘Criminal’ Mismanagement In Dispute Over FTX (February 20)
Swiss prosecutor raided Geneva-based Tyr last August following complaint by investor TGT.
Crypto Tycoon Do Kwon Should Be Extradited to U.S., Montenegro Court Rules (February 21)
Cryptocurrency entrepreneur Do Kwon should be extradited to the U.S. to face trial on fraud charges, rather than to his native South Korea, a court in the tiny Balkan country of Montenegro has ruled.
FTX Drops Demand for $323 Million Over Europe Deal, Agrees to Sell EU Assets (February 22)
Under a proposed settlement, FTX Europe co-founders Patrick Gruhn and Robin Matzke would buy back the unit’s assets for $32.7 Million.
The SEC Approved Bitcoin ETFs. The European Central Bank Is Not Happy (February 22)
In a blog post, the ECB weighs in on the unsuitability of Bitcoin “as means of payment or as an investment.”
Tyr Capital Faces Swiss Justice Over FTX (February 22)
Swiss hedge fund Tyr Capital Partners is suffering the repercussions of its close links with FTX, following a complaint from an investor, the Geneva public prosecutor’s office ordered a search of Tyr’s premises on suspicion of “criminal management”.
Italy Launches Two Public Consultations On Draft Decrees On MICAR And TFR (February 26)
The draft decree on TFR introduces amendments to the Italian AML decree and set outs provisions on enhanced measures to be applied in case of transfers to/from self-hosted wallets,
Law Commission of England and Wales Consults on Draft Legislation Relating to Digital Assets (February 27)
The global law firm Cooley states that the intended effect of the new legislation would be to provide confirmation that digital assets, including crypto-tokens, are capable of being recognized by the law as property.
The global law firm Shearman & Shearling gives an overview of ESMA’s recently published consultation papers on proposed guidelines under the EU Markets in Crypto Assets Regulation.
Australia 🇦🇺 & Oceania
Block Earner Case Brings ‘Nuanced Implications’ For Defi In Australia (February 09)
Block Earner says a recent federal court decision over its Earner and Access products carries “nuanced implications” for the broader crypto industry in Australia.
NZ Central Bank Governor Labels Stablecoins ‘The Biggest Misnomers’ (February 12)
Reserve Bank of New Zealand governor Adrian Orr said Bitcoin and stablecoins are neither a means of exchange nor a store of value.
Indonesia Picks Crypto-Friendly Team in Presidential Election (February 14)
During the presidential campaign, vice-presidential candidate Gibran discussed crypto and blockchain as a means to expand job opportunities for the country’s younger generation.
Latin America 🌍
Salvadoran president’s Bitcoin strategy ‘unwavering’ amid elections (February 1)
El Salvador is likely to keep its Bitcoin ambitions if President Nayib Bukele is reelected on Feb. 4.
OKX Rolls Out Crypto Exchange Services In Argentina (February 11)
Hong Fang, president of crypto exchange OKX, emphasized that Argentina represents “a crucial launchpad” for the crypto exchange’s regional growth strategy.
Honduras Watchdog Bans Institutions From Trading Crypto (February 16)
Honduras' CNBS regulator has banned the Central American country's financial system from trading in cryptocurrency and similar virtual assets, it said in a resolution, citing risks of fraud and money laundering.
Crypto Adoption Rises In Honduras Despite Ban On Financial Institutions (February 18)
Honduras’ National Banking and Securities Commission has just banned all cryptocurrency-related activity by financial institutions, arguing high risks to consumers and the financial system.
Asia 🌏
Singapore Police Recommend Hardware Wallets Against Crypto Drainers (February 1)
The authorities raised concerns about commercial crypto draining kits, which allow novice cybercriminals to arm up with sophisticated malware at no upfront costs.
Another Crypto Bankruptcy Filing: Terraform Labs (February 1)
The blockchain software development company has filed for bankruptcy after the US SEC accused the company and its founder, Kwon Do Heyong, of orchestrating a multi-billion dollar crypto asset securities fraud.
Zipmex Served 15-Day Ultimatum To Comply With Thai Regulations (February 2)
Zipmex received instructions to immediately halt its crypto exchange and digital asset brokerage services in Thailand pending changes to the platform’s financial positions and operational deficiencies.
Hong Kong Regulator Says Unlicensed VASPs Must Cease Operations By May (February 2)
The Secretary for Financial Services and the Treasury, Christopher Hui, wrote in a blog that unlicensed service providers must submit an application for licensing by Feb. 29.
Worldcoin Scrutinized By Hong Kong For Biometric Data (February 3)
Hong Kong has opened an investigation into the cryptocurrency, suspected of illegally collecting sensitive biometric data from users, following growing concerns about possible breaches of privacy regulations.
The Future of Crypto ETFs: South Korea Seeks Guidance From SEC (February 5)
Lee Bok-hyun, the head of South Korea’s Financial Supervisory Service (FSS), is poised to embark on a pivotal visit to the US to discuss crypto regulations and spot Bitcoin ETFs with the SEC Chairman.
This Web3 Game Developer is Under Legal Lenses in South Korea (February 5)
South Korea's crypto-regulatory body is investigating Web3 game developer Wemade for potential evasion of legal obligations.
Haru Invest Execs Arrested In South Korea On Embezzlement Charges (February 6)
South Korean prosecutors announced the arrests of Haru Invest CEO and two other execs two days after Haru posted another “no information” update.
Hong Kong SFC Issues Warning Over Imposter Crypto Exchange Posing As MEXC (February 10)
The Hong Kong SFC identified eight websites linked to the fraudulent entity posing as the crypto exchange MEXC, all containing the exchange’s name within the domain name.
Bitsonic CEO Sentenced To 7 Years In Prison (February 11)
A Seoul court has sentenced Jinwook Shin, CEO of crypto exchange Bitsonic, to 7 years in prison. The company’s CTO was sentenced to one year in prison.
Why Japan Wants to Stop Crypto P2P Transactions (February 14)
The National Police Agency (NPA), in conjunction with the Financial Services Agency (FSA), believes a significant portion of these fraudulent activities leverages crypto-assets for illicit fund transfers.
Japan Authorizes Companies to Hold Bitcoin (February 20)
The Japanese government has just approved a bill authorizing investment limited partnerships to hold bitcoin and other cryptos.
Hong Kong Targets Over-the-Counter (OTC) Crypto Services in Regulatory Clampdown (February 27)
New rules mandate rigorous record-keeping by OTC providers; exchanges face a Feb 29 permit deadline.
HTX Withdraws Hong Kong Crypto License Application Three Days After Submitting It (February 27)
Crypto exchange HTX (formerly Huobi) has made a U-turn by withdrawing its application for a crypto license in Hong Kong just a few days after submitting it.
Crypto-Related Crime In Hong Kong Triples In Three Years (February 28)
With the number of reported cases almost tripling to 3,415 by 2023, involving HK$4.4 billion ($564 million), the Hong Kong authorities have decided to take action.
Singapore Grants Hashkey OTC In-Principle Approval For Major Payment Institution License (February 28)
Singapore's MAS has granted licenses to major crypto firms, including Coinbase, BitGo, and others during the past year.