Autor Cointelegraph By Felix Ng

Regulatory uncertainty creates rash of ‘novel’ lawsuits: Legal experts

Regulatory uncertainty creates rash of ‘novel’ lawsuits: Legal experts

Uverejnil používateľ | jún 29, 2022 |

Regulatory uncertainty surrounding crypto has created a “fertile environment” for crypto-related litigation and enforcement to grow, according to lawyers from Choate Hall & Stewart LLP.In an analysis piece published on Law360 on June 28, lawyers from Choate Hall & Stewart LLP, including Mike Gass, Diana Lloyd and Alex Bevans, noted increasing evidence that “novel applications of existing laws” are being used to litigate against users and investors of cryptocurrency, predicting this trend to only accelerate over time:“High market capitalization, alongside widely discussed regulatory uncertainty, has created fertile ground for litigation and enforcement to grow.”The lawyers cited several cases as examples, including the prosecution of a U.S. citizen for violating sanctions using crypto, several lawsuits brought on by the SEC in recent years, as well a rising number of class action lawsuits and private litigation. “Cryptocurrency trading platforms and those trading in and using cryptocurrency must recognize that litigation and enforcement activity is likely to accelerate in the current regulatory climate, perhaps in unpredictable ways,” the authors said.In May, the United States Department of Justice (DOJ) issued its first criminal complaint against an unnamed U.S. citizen through the U.S. District Court for the District of Columbia for using crypto to violate sanctions under the International Emergency Economic Powers Act (IEEPA).Lawyers from the firm, including Mike Gass, co-chair of the complex trial and appellate practice at the firm, said that this illustrates an “increased willingness of government agencies to pursue criminal charges against those violating old laws with new forms of currency.”“If this case is any indication, this trend is likely to accelerate.”Other litigation efforts noted by the lawyers include the Securities and Exchange Commission (SEC) lawsuits against XRP creator Ripple Labs Inc in 2020 and decentralized content sharing platform LBRY in 2021, both for allegedly offering unregistered securities in the form of digital tokens. More recently, crypto lending platform BlockFi was issued a $100 million fine in February for failing to register its retail crypto lending product, they noted. The lawyers said the LBRY case in particular “demonstrates the SEC’s willingness to target smaller projects like LBRY as much as large projects like Ripple.”The lawyers also noted research that found that the number of crypto enforcement actions between 2019-2021 was greater than every year to that point combined. Source: Cornerstone ResearchLooking ahead, the lawyers believe that the SEC and DOJ are poised to increase their enforcement efforts, and will “likely be willing to pursue novel theories.”“Crypto-related private litigation also shows no sign of letting up. Increased regulatory certainty may help stem the litigation tide, but it is unclear whether this will happen anytime soon.”

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Tether CTO refutes stablecoin FUD as short-sellers circle

Tether CTO refutes stablecoin FUD as short-sellers circle

Uverejnil používateľ | jún 28, 2022 |

Tether chief technology officer Paolo Ardoino has confirmed that the stablecoin has been the subject of a “coordinated attack” by hedge funds looking to short sell the dollar-pegged crypto asset. Speaking to his 151,600 Twitter followers on Monday, June 27, the Tether executive was responding to reports that hedge funds have been borrowing millions in loans to short USDT since the collapse of Terra (LUNA) in May.He alleged that hedge funds have been trying to create pressure “in the billions” to “harm Tether liquidity” with the aim of eventually buying back tokens at a much lower price.The CTO levied accusations that some hedge funds have believed and help spread “FUD” (fear, uncertainty, and doubt) about the stablecoin. Notions that it is not 100% backed, is issuing tokens from “thin air,” has significant exposure to distressed companies and Chinese commercial paper, and other narratives have been spread by its competitors over “troll networks,” he said.1/I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse.It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc. https://t.co/hhcsgHV1Ow— Paolo Ardoino (@paoloardoino) June 27, 2022As part of a 12-part Twitter thread refuting these rumors and slamming FUD spreaders, Ardoino argued that the company has been collaborating with regulators and has increased transparency efforts, as well as noting its recent commitment to phase out its commercial paper exposure.“Despite all the public 3rd party attestations, our collaboration with regulators, our increased transparency efforts, our commitment to phase out CP exposure and move into US Treasuries, our settlements, … they kept thinking and suggesting that we, Tether, are the bad guys.”He argued that Tether has “never failed a redemption,” adding that in just the last 48 hours, Tether has redeemed around 10% of its total assets, which he said is “something almost impossible even for banking institutions.”He also confirmed that Tether has already reduced its commercial paper exposure from $45 billion to $8.4 billion this month, intending to clear out its commercial paper backing “in the coming months.” However, it appears Ardoino’s comments may not do much to hold back the tidal wave of short-sellers hoping to profit from a potential decline in the crypto’s price, which is currently sitting just below peg at $0.9989 at the time of writing. On Monday, a report from the Wall Street Journal quoted Leon Marshall, head of institutional sales at Genesis, stating that there has been an increase in trades to short Tether through its brokerage platform, particularly over the past month. Related: USDC’s ‘real volume’ flips Tether on Ethereum as total supply hits 55.9B“There has been a real spike in the interest from traditional hedge funds who are taking a look at Tether and looking to short it,” said Marshall.Short-selling is an investment strategy by which an investor borrows assets and immediately sells them in the open market, intending to repurchase them later at a lower price to pocket the difference. It allows an investor to profit from the decline of a share or asset. Marshall added that the majority of short trades have come from traditional hedge funds in the United States and Europe, with many becoming interested following the fall of algorithmic stablecoin TerraUSD (UST) in May.

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Community reacts after SEC’s Gensler affirms BTC’s commodity status

Community reacts after SEC’s Gensler affirms BTC’s commodity status

Uverejnil používateľ | jún 28, 2022 |

Securities and Exchange Commission Chairman Gary Gensler riled up Crypto Twitter on Monday after affirming that Bitcoin (BTC) is a commodity. Questions were raised about its impact on Grayscales’ proposed Bitcoin ETF and why Ethereum wasn’t mentioned.Speaking to Jim Cramer on CNBC’s Squawk Box on Monday, June 27, the SEC chair said while many crypto-financial assets have the key attribute of a security, Bitcoin is the “only one” that he was comfortable publicly labeling as a commodity. “Some, like Bitcoin — and that’s the only one I’m going to say because I’m not going to talk about any one of these tokens, but my predecessors and others have said they’re a commodity.”Grayscale Bitcoin ETFThe remarks kicked up chatter about Grayscale’s application to convert its Bitcoin Trust into a spot-based exchange-traded fund (ETF) — which is expected to see a yes-or-no decision from the SEC on July 6. James Seyffart, an ETF analyst at Bloomberg Intelligence, told his 19,300 Twitter followers that while Gensler’s remarks are positive for Bitcoin, it may not be enough to see Grayscale’s Bitcoin-spot ETF approved next week.This isn’t new from Gensler, but definitely positive IMO. Unfortunately this isn’t enough for approval of $GBTC’s conversion into a spot #Bitcoin ETF. Odds of SEC approval next week (or this week) are near zero in our opinion. https://t.co/mvRnkajGdd— James Seyffart (@JSeyff) June 27, 2022Eric Balchunas, a senior ETF analyst at Bloomberg, made similar comments, noting he saw only a 0.5% chance of Grayscale’s GBTC being allowed to convert to an ETF. No mention of ETHCrypto Twitter also picked up on the fact that Gensler refrained from mentioning whether he placed Ethereum (ETH) in the same commodities boat, despite the regulator and the Commodity Futures Trading Commission (CTFC) previously agreeing that the asset was a commodity just like Bitcoin. Any thoughts on why Gensler didn’t mention Ethereum as a commodity today? https://t.co/GjN5so63O3 #ethereum— swankyfinance.eth (@swankyfinance) June 28, 2022

Positive for BitcoinNevertheless, Gensler’s views on Bitcoin have been seen as a positive for the king of crypto. Bitcoin bull Michael Saylor shared the video to his 2.5 million Twitter followers, adding that Bitcoin is essential as a treasury reserve asset, which will allow governments and institutions to support it as a digital asset to grow the economy.#Bitcoin is a commodity, which is essential for any treasury reserve asset. This allows politicians, agencies, governments, & institutions to support bitcoin as a technology & digital asset to grow the economy and extend property rights & freedom to all. pic.twitter.com/b4WmdSRilb— Michael Saylor⚡️ (@saylor) June 27, 2022

Meanwhile, Eric Weiss, founder of Blockchain Investment Group noted on Twitter that Gensler is the second SEC chair to declare Bitcoin a commodity, making it near impossible for this classification to be altered in the future.Related: Google users think BTC is dead — 5 things to know in Bitcoin this weekInterestingly, the positive news for Bitcoin resulted in another price decline, falling from a 24-hour high of $21,478 to $20,635 at the time of writing.Ethereum has fallen from a 24-hour high of $1,234 to $1,171 at the time of writing as the bears retain their grip on the markets.

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Anonymous vows to bring Do Kwon’s ‘crimes’ to light

Anonymous vows to bring Do Kwon’s ‘crimes’ to light

Uverejnil používateľ | jún 27, 2022 |

Hacktivist group Anonymous has pledged to “make sure” Terra co-founder Do Kwon is “brought to justice as soon as possible” in regards to the collapse of the Terra (LUNA) and TerraUSD (UST) ecosystems in May. On Sunday, a video purportedly coming from the Anonymous hacker group rehashed a laundry list of Kwon’s alleged wrongdoings, including cashing out $80 million each month from Luna and TerraUSD prior to its collapse as well as his role in the fall of stable coin Basis Cash, for which Do Kwon allegedly co-created under the pseudonym “Rick Sanchez” in late 2020. “Do Kwon, if you are listening, sadly, there is nothing that can be done to reverse the damage that you have done. At this point, the only thing that we can do is hold you accountable and make sure that you are brought to justice as soon as possible.”The hacker group said it would be looking into Do Kwon’s actions since he entered the crypto space to expose his alleged crimes. “Anonymous is looking into Do Kwon’s entire history since he entered the crypto space to see what we can learn and bring to light,” the group stated. [embedded content]“There is no doubt that there are many more crimes to be discovered in your trail of destruction.”The hacker group also criticized Kwon for his “arrogant tactics” in trolling competitors and critics and “acting like he would never fail.” Originating in 2003 on 4chan, Anonymous is a decentralized international activist collective known for orchestrating cyber attacks against government institutions, agencies, private corporations, and even the Church of Scientology. In June 2021, the same YouTube channel took aim at Tesla CEO Elon Musk for allegedly “destroying lives” using his clout and influence on Twitter to play with the crypto markets. The video has around 3.4 million views as of today. It is worth noting that there are multiple YouTube channels that either claim to be affiliated with the hacker group Anonymous. However, there is a general consensus that there is no official YouTube channel for the group, given its inherent decentralized and anonymous nature. Mixed reactions from the communityCommenters of the YouTube video and the community on Twitter appeared to be broadly supportive of the hacker group’s pledge to go after Kwon, with one commenter calling Anonymous the “Robinhood of today.” However, the video message garnered more skepticism on the r/CryptoCurrency subreddit, with users criticizing the hacker group for issuing an empty threat against Kwon and providing no new information to the public, with one commenter saying: “Anonymous is so teen bop now […] This anon video is so non-threatening it’s almost bizarre.”While another said, “would expect them to have uncovered something but its nothing more than, well nothing.”It appears that, for now, Kwon will likely have bigger, more tangible threats to worry about.Terraform Labs, for which Do Kwon is the co-founder, is currently under multiple investigations from the South Korean authorities, including the alleged embezzlement of Bitcoin (BTC) from the company’s treasury. Related: South Korean prosecutors ban Terraform Labs employees from exiting the country: ReportIn May, a famous financial crimes investigation unit dubbed the “Grim Reapers of Yeouido” was revived by South Korea to investigate the collapse of Terra. The team consists of various regulators and will focus on prosecuting fraud and illegal trading schemes.Later that month, Korean authorities subpoenaed all Terraform Labs employees to investigate any internal role in market manipulation.The company has also been fined $78 million by South Korea’s national tax agency for tax evasion charges.

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Former Chancellor says UK is falling behind on crypto opportunity

Former Chancellor says UK is falling behind on crypto opportunity

Uverejnil používateľ | jún 24, 2022 |

A former Chancellor of the United Kingdom has raised concerns the country is slipping behind its rivals in the European Union when it comes to the regulation of crypto.Philip Hammond, who served as the U.K’s Chancellor of the Exchequer from 2016 to 2019 told Bloomberg that there has been a distinct lack of direction and cohesion when it comes to crypto policy. “Particularly in the area of digital asset trading, I feel that the UK has missed a trick […] We are getting very close to the point where it will be too late. Other jurisdictions are racing ahead of us.”“The problem is that there are no regulations, and nobody quite knows where they stand, right? It’s a bit of a wild-west, and has gained, frankly, a mixed reputation, particularly among policymakers and politicians and the public.”He also stressed that the development of digital trading infrastructure will be key to turning the U.K. into a hub for trading tokenized traditional assets, such as tokenized equities and tokenized bonds. “Getting this right, getting the rules around digital trading right, will be an essential prerequisite for being a player in the digitization of traditional financial assets.”“The jurisdictions that have embraced this technology that have regulated it properly and effectively will be the ones that develop these markets and they will become the new hubs.”The former minister’s criticisms came despite promises from the U.K. government in May to introduce legislation to regulate the crypto industry. Hammond said that while the country has been “very agile in embracing new technologies” in the past, this hasn’t been as apparent when it comes to crypto regulation, adding that it was likely due to a mix between a “bandwidth issue” and a “capacity issue.”“This is a very new area of technology. It’s very difficult for public sector bodies with public sector pay structures to recruit the best and the brightest into these areas.”Related: UK government proposes additional safeguards against stablecoin failure risks“Personally, I think the [Financial Conduct Authority] FCA should have gone to the industry and said we need secondees. We can’t, you know, we can’t hire the people we need. We need the industry, to provide us with the talent to work up the regimes we need to introduce.”In their defense, Hammond said that regulators have been dealing with a period of immense stress dealing with the consequences of Brexit, Covid-19, and its impact on their own working arrangements. Hammond is no stranger to the crypto industry, currently serving as a senior advisor to copper.co since October 2011, a London-based start-up firm that provides custodial and infrastructure services in the digital asset sector.

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