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Binance hires audit firm that served Donald Trump to verify crypto reserves

Cryptocurrency exchange Binance is working with accounting firm Mazars as part of its proof-of-reserve (PoR) audits triggered by the fall of FTX.Mazars, the accounting firm that worked for former United States President Donald Trump’s company, was appointed as an official auditor to conduct a “third party financial verification” as part of Binance’s PoR updates, the Wall Street Journal reported on Nov. 30.The accounting firm is reportedly already reviewing all of Binance’s publicly shared information on Bitcoin (BTC) PoR and will also be verifying future updates and tokens, a spokesperson for Binance reportedly said. “The first verification update for BTC will be completed this week,” the representative added.Mazars is an international accounting firm headquartered in Paris. Its United States division, Mazars USA, was the longtime accounting firm for Trump and had been involved in a controversy with a House Oversight and Reform Committee’s request for some of Trump’s financial records since 2019. The firm reportedly eventually cut ties with Trump and his family in 2022.The news comes amid Binance moving large amounts of cryptocurrency as part of its PoR audits. On Nov. 28, Binance sent 127,351 BTC, or about $2 billion, to an unknown wallet, with CEO Changpeng “CZ” Zhao subsequently announcing that the transaction was part of the ongoing PoR process.The action has triggered some concerns in the community, as previously, CZ argued that it’s bad news when exchanges have to move large amounts of crypto to prove their wallet address.As previously reported, Binance launched a PoR process and mechanism in response to the crash and bankruptcy of the FTX crypto exchange. On Nov. 25, the firm also published Merkle Tree-backed proof of funds for Bitcoin, which was just one of many Binance’s measures to prove its transparency.Related: OKX releases proof-of-reserves page, along with instructions on how to self-audit its reservesBinance is not alone in putting major efforts to maintain the trust of its customers in the aftermath of the FTX collapse, with many other exchanges like OKX and KuCoin rushing to release their PoR reports as well. In the meantime, some industry observers believe that the existing PoR process by exchanges is largely useless unless they also provide liabilities, which are very hard to fake.Binance did not immediately respond to Cointelegraph’s request for comment.

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EmpiresX 'head trader' to face 4 years of prison over $100M crypto 'Ponzi'

One of the leading figures convicted of being behind the $100 million crypto “Ponzi” scheme, EmpiresX, has just been handed an over four-year jail sentence by a United States court.The sentencing was handed to Joshua David Nicholas, the “head trader” of purported crypto platform EmpiresX, who is nowset to serve a 51-month prison sentence along with three years of supervised release for his role in the fraudulent scheme. It follows a Sept. 8 guilty plea from Nicholas for conspiracy to commit securities fraud.According to the Department of Justice (DOJ), over a two-year period, Nicholas made claims the platform would make daily “guaranteed” returns using a trading bot that utilized “artificial and human intelligence” to maximize returns. In reality, the “bot” was fake, and Nicolas and his associates, Emerson Pires and Flavio Goncalves, operated a “Ponzi” scheme that paid earlier investors with money from later investors. The DOJ alleges blockchain analytics shows Pires and Goncalves, both Brazilian nationals, laundered investors’ funds through a “foreign-based” crypto exchange.Only around $1 million of investor funds were sent to a futures trading account for EmpiresX with the majority of funds either lost or misappropriated according to the Commodity Futures Trading Commission (CFTC) which filed civil actions against the three in June.At the same time, fraud charges were leveled against the trio by the Securities and Exchange Commission (SEC) which said investor money was used to “lease a Lamborghini, shop at Tiffany & Co., make a payment on a second home, and more.”Related: HashFlare founders arrested in ‘astounding’ $575M crypto fraud schemeInvestors were also told EmpiresX was registered with the SEC as a hedge fund and that Nicholas was a licensed trader.The SEC said the platform was never registered with the Commission and Nicholas’ was suspended from trading by the National Futures Association for misappropriating customer funds.The scheme ran for two years, from around September 2020 until early 2022 when it fell apart as the platform refused to honor customer withdrawals who were likely wanting to leave the crypto market due to significant price drawdowns that began at the time.Pires and Goncalves, who were residing in Florida, allegedly began winding down the operations of EmpiresX in early 2022 and left the U.S., they are now believed to be in Brazil.

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Senate Banking Committee chair calls for coordination with Treasury on crypto

Sherrod Brown, chair of the United States Senate Banking Committee, has called on Treasury Secretary Janet Yellen to work with financial regulators and lawmakers on comprehensive crypto legislation “in the wake of FTX’s implosion.”In a Nov. 30 letter to Yellen, Brown requested the Treasury secretary coordinate with regulators to address crypto based on recommendations from the Financial Stability Oversight Committee, or FSOC. The committee chair cited crypto exchange FTX’s “alarming fraud,” liquidity crunch and bankruptcy as examples of financial risks that should not “spillover into traditional financial markets and institutions.”“I ask that you coordinate with the other financial regulators to further work on the recommendations from the FSOC Report, including the development of legislation that would create authorities for regulators to have visibility into, and otherwise supervise, the activities of the affiliates and subsidiaries of crypto asset entities,” said Brown. “As noted in the FSOC Report, single regulatory agencies currently generally do not have a comprehensive view of crypto asset entities’ activities.”He added:“As the FTX failure makes clear, given crypto asset entities’ broad use of proprietary crypto tokens combined with opaque financial arrangements and the reliance on arbitrary valuation and data sources, the financial regulatory agencies should continue to find ways to enhance entity and crypto asset disclosures, market integrity, and transparency.”In October, the FSOC released a report in accordance with U.S. President Joe Biden’s executive order on crypto, aimed at exploring potential regulatory gaps and financial stability risks of digital assets. The council recommended lawmakers pass legislation to determine which “rulemaking authority” will be responsible for regulating parts of the crypto spot market — i.e., the Securities and Exchange Commission or the Commodity Futures Trading Commission. At the time, Yellen said the report provided “a strong foundation for policymakers” but did not offer a timeline for action.Related: Senate Banking Committee Democrats warn SoFi about meeting its compliance deadlineBrown’s response was the latest from U.S. lawmakers jumping in to offer their two cents on FTX’s bankruptcy and possible regulatory and legal action. On Nov. 23, Senators Elizabeth Warren and Sheldon Whitehouse penned a letter to the Justice Department to potentially prosecute individuals involved in wrongdoing at FTX as well as investigate the exchange’s downfall with the “utmost scrutiny.” Committees in both the House of Representatives and the Senate will be conducting separate hearings in December to address the collapse of the crypto exchange.

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Gemini gets regulatory greenlight in Italy, Greece amid lending halt

Winklevoss brothers’ cryptocurrency exchange Gemini continues expanding in Europe, announcing new regulatory approvals in Italy and Greece.Gemini has registered as a virtual currency operator with Italy’s payments services regulator, the Organismo Agenti E Mediatori (OAM), the firm announced on Nov. 30.The crypto exchange has also received registration as a custodial wallet provider and provider of virtual currency exchange with Greece’s Hellenic Capital Markets Commission (HCMC).According to official data, the OAM registration was issued on Nov. 3, while the HCMC granted its approval to Gemini on Nov. 7.The new registrations, combined with Gemini’s electronic money institution authorization from the Central Bank of Ireland, officially allow the exchange to provide crypto services to their customers in Italy and Greece. The approvals also aim to demonstrate Gemini’s compliance with applicable Italian and Greek Anti-Money Laundering and Counter Terrorist Financing regulations.As of November 2022, Gemini operates in more than 65 countries, including new jurisdictions like Croatia, Cyprus, Czech Republic, Denmark, Hungary, Ireland, Latvia, Liechtenstein, Portugal, Romania, Slovenia, Sweden and others, the firm said.The latest registrations came before Gemini encountered major issues on its lending platform known as Gemini Earn, which is designed to allow investors to get 8% in interest by lending their cryptocurrency. The product has reportedly halted withdrawals due to its connection with the troubled crypto trading firm Genesis Global Capital, with Gemini allegedly having $700 million of customer money locked in it.According to Gemini status, Gemini Earn started experiencing issues with deposits on Nov. 16, a few days after initial reports on FTX’s liquidity issues surfaced. At the time of writing, the product remains unavailable, while all other Gemini services, including exchange trading engine, Gemini Credit Card and others operate normally.Gemini Earn was launched in 2021 in the United States, providing services through a partnership with Genesis Global Capital, which halted withdrawals on Nov. 16 as a consequence of the ongoing FTX contagion.“We continue to work with Genesis Global Capital — the lending partner of Earn — and its parent company Digital Currency Group to find a solution for Earn users to redeem their funds,” Gemini said in a tweet from Nov. 21.Related: American regulators to investigate Genesis and other crypto firmsOn Nov. 29, Gemini also took to Twitter to announce Gemini Trust Center, assuring its customers that their accounts’ assets are segregated from Gemini’s assets. “Gemini is a full-reserve exchange and custodian. This means that all customer funds held on Gemini are held 1:1 and available for withdrawal at any time,” the company stressed.As previously reported, Gemini was one of exchanges hit by the ongoing crypto bear market, cutting up to 20% of its staff this year. The exchange is also among platforms targeted by the United States Senate Finance Committee as part of the information request regarding customer protection measures in the aftermath of the FTX collapse.

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US lawmaker questions major crypto exchanges on consumer protection amid FTX collapse

Ron Wyden, chair for the United States Senate Finance Committee, has requested information from six crypto firms on consumer protection following FTX’s liquidity issues and bankruptcy.In separate letters dated on Nov. 28, Wyden targeted Binance, Coinbase, Bitfinex, Gemini, Kraken and KuCoin, requesting information on what protections the exchanges had in place if a failure like the one that happened at FTX occurred. The senator said that crypto users who had funds with FTX had “no such protections” like those at banks or registered brokers under the Federal Deposit Insurance Corporation or Securities Investor Protection Corporation.“As Congress considers much-needed regulations for the crypto industry, I will focus on the clear need for consumer protections along the lines of the assurances that have long existed for customers of banks, credit unions and securities brokers,” said Wyden. “If these protections had been in place before the failure of FTX, far fewer retail investors would be facing precipitous financial harm today.” Consumers who entrusted their assets to firms like @FTX_Official are discovering they have no protections when companies go bust. As Congress considers much-needed regulations for the crypto industry, I am laser-focused on ensuring real protections for consumers. https://t.co/QRdSUKe0A3— Ron Wyden (@RonWyden) November 29, 2022Wyden requested the six firms provide answers to questions including those on their subsidiary companies, safeguards of consumer assets, use of customer data, and guards against market manipulation by Dec. 12. The Senate Agriculture Committee has scheduled a hearing to explore the collapse of FTX on Dec. 1, and Senators Elizabeth Warren and Sheldon Whitehouse have called on the Justice Department to potentially prosecute individuals involved in wrongdoing at the exchange.Related: FTX reportedly used Alameda’s bank accounts to process customer fundsIn the other chamber, the House Financial Services Committee will conduct a similar investigative hearing into FTX on Dec. 13. Both chair Maxine Waters and committee ranking member Patrick McHenry have supported the congressional action, with McHenry calling the events around the failed exchange a “dumpster fire.”FTX’s bankruptcy proceedings, currently underway in the District of Delaware, revealed the exchange could be accountable to more than 1 million creditors. The next hearing in the bankruptcy case has been scheduled for Dec. 16.

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US House committee sets Dec. 13 date for FTX hearing

The United States House Financial Services Committee has announced it will be holding a hearing to investigate the events around the collapse of crypto exchange FTX.In a Nov. 28 announcement, House Financial Services Committee chair Maxine Waters said lawmakers had scheduled a hearing aimed at exploring the collapse of FTX for Dec. 13. The hearing, expected to be “Part I” in perhaps a series of hearings around the impact of a major crypto exchange declaring bankruptcy, was first announced on Nov. 16 but not scheduled. Following the fall of FTX, the urgent need for legislation has never been greater. @FSCDems anticipated this need & have already been working for several months under the leadership of Chairwoman Waters, w/ RM McHenry, to craft bipartisan legislation.: https://t.co/RyttaaSqX7— U.S. House Committee on Financial Services (@FSCDems) November 16, 2022The House committee said in its previous announcement that it expected to hear from individuals and companies involved in the events that led to FTX filing for bankruptcy under Chapter 11 in the District of Delaware, including former CEO Sam Bankman-Fried, Alameda Research, and Binance. Though Bankman-Fried was reportedly still based in the Bahamas at the time of publication, New York Times journalist Andrew Sorkin said on Nov. 24 the former CEO intended to give an interview in New York City on Nov. 30 during a conference.The U.S. Senate Agriculture Committee has also scheduled a hearing on “Lessons Learned from the FTX Collapse” for Dec. 1, in which Commodity Futures Trading Commission chair Rostin Behnam will appear as a witness. It’s unclear if Bankman-Fried will also speak to the committee should he remain in the country following his New York itinerary.Related: BlockFi files for bankruptcy, cites FTX collapse for its troublesFTX has been a target for lawmakers and regulators around the world following the firm filing for bankruptcy on Nov. 11. The Australian government reportedly said its Treasury department planned on implementing regulations aimed at improving investor protection in 2023, while the Monetary Authority of Singapore has faced scrutiny for not warning investors about FTX.

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Kraken settles with US Treasury's OFAC for violating US sanctions

The United States Treasury Department’s Office of Foreign Assets Control, or OFAC, has announced a settlement with crypto exchange Kraken for “apparent violations of sanctions against Iran.”In a Nov. 28 announcement, OFAC said Kraken had agreed to pay more than $362,000 as part of a deal “to settle its potential civil liability” related to violating the United States’ sanctions against Iran. The U.S.-based crypto exchange will also be investing $100,000 into sanctions compliance controls as part of the agreement with Treasury. “Due to Kraken’s failure to timely implement appropriate geolocation tools, including an automated internet protocol (IP) address blocking system, Kraken exported services to users who appeared to be in Iran when they engaged in virtual currency transactions on Kraken’s platform,” said OFAC. In a statement to Cointelegraph, Kraken chief legal officer Marco Santori said the exchange had “voluntarily self-reported and swiftly corrected” its actions to OFAC:”Even before entering into this resolution, Kraken had taken a series of steps to bolster our compliance measures. This includes further strengthening control systems, expanding our compliance team and enhancing training and accountability.”The United States has imposed sanctions on Iran that prohibit the export of goods or services to businesses and individuals in the country since 1979. However, Kraken had allegedly been violating these controls since 2019 by allowing a reported more than 1,500 individuals with residences in Iran to have accounts at Kraken — giving them the means to buy and sell crypto. According to a July report from The New York Times, then CEO Jesse Powell — who in September announced he would step down — suggested he would consider breaking the law, through not specifically mentioning sanctions, if the benefits to Kraken outweighed any potential financial or legal penalties. The crypto exchange also reportedly allowed access to crypto for individuals in Syria and Cuba, countries sanctioned by the United States.Related: Crypto exchange Kraken freezes accounts related to FTX and AlamedaIn September 2021, the U.S. Commodity Futures Trading Commission ordered Kraken to pay more than $1 million in civil monetary penalties for allegedly violating the Commodity Exchange Act by offering “margined retail commodity transactions in digital assets” to ineligible U.S. customers from June 2020 to July 2021. Kraken’s incoming CEO, Dave Ripley, said in September he did not see a reason to register with the Securities and Exchange Commission as “there are not any tokens out there that are securities that we’re interested in listing.”

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Line shuts down crypto exchange to focus on blockchain and LN token

The Japanese messaging giant Line has decided to shut down its cryptocurrency exchange business amid the ongoing crypto winter.Line-owned crypto exchange Bitfront officially announced on Nov. 27 a plan to completely close down the platform by March 2023.According to the statement, the closure was driven by the continued cryptocurrency bear market and other issues in the crypto industry.Despite the exchange’s closure, Line will still continue to run its other blockchain ventures, including the Line blockchain ecosystem and Link (LN) token, the announcement notes, stating:“Despite our efforts to overcome the challenges in this rapidly-evolving industry, we have regretfully determined that we need to shut down Bitfront in order to continue growing the Line blockchain ecosystem and Link token economy.”Bitfront also emphasized that the decision to close the exchange was made for the “best interest” of the Line ecosystem and is unrelated to the ongoing industry scandal involving the FTX exchange.According to the announcement, Bitfront will take a gradual approach to suspend its services, stopping signups and credit card payments on Nov. 28. The platform then plans to suspend additional deposits and interest payments of LN interest products and proceed with the related LN withdrawals by mid-December.By the end of December, Bitfront aims to stop all cryptocurrency and fiat deposits alongside trading suspension and cancellation of open orders. Total suspension of withdrawals is scheduled for March 31, 2023, while customers would be still able to claim their assets in different jurisdictions of the United States.As previously reported by Cointelegraph, Line launched its proprietary crypto exchange in 2018 as a Singapore-based business. Originally known as BitBox, the company was rebranded to Bitfront and moved to the U.S. in February 2020. The exchange has been downscaling some of its operations in recent years, suspending services in South Korea in August 2021.Related: Argo Blockchain is at risk of closing if it fails further financingDespite being a smaller crypto exchange, Bitfront has significant trading volumes at the time of writing. According to data from CoinGecko, Bitfront’s daily trading volume amounts to $55 million, with the exchange trading a total of five cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Link, Litecoin (LTC) and Tether (USDT).

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Canada crypto regulation: Bitcoin ETFs, strict licensing and a digital dollar

In October, Toronto-based Coinsquare became the first crypto trading business to get dealer registration from the Investment Industry Regulatory Organization of Canada (IIROC). That means a lot as now Coinsquare investors’ funds enjoy the security of the Canadian Investment Protection Fund in the event of insolvency, while the exchange is required to report its financial standing regularly. This news reminds us about the peculiarities of Canadian regulation of crypto. While the country still holds a rather tight process of licensing the virtual asset providers, it outpaces the neighboring United States in its experiments with crypto exchange-traded funds (ETFs), pension funds’ investments and central bank digital currency (CBDC) efforts. An era of restricted dealersCoinsquare, which happens to be Canada’s longest-operating crypto asset trading platform, benefits from its new legal status as none of its competitors can currently boast the same legal footing. By publishing time, all other local players must have the status of a “restricted dealer,” signaling that they’ve made their registration bid and now await IIROC’s decision. The Guidance for Crypto-Asset Trading Platforms was introduced by IIROC and the Canadian Securities Administrators (CSA) in 2021. It requires crypto businesses dealing with security tokens or crypto contracts to register as “investment dealers” or “regulated marketplaces.” All local companies have been given a two-year transitory period, during which they should start the registration process and, in some cases, obtain the “restricted dealer” temporary registration. The list of “restricted dealers” that have been granted a two-year relief period to operate amid the ongoing registration process is rather short and includes mainly local companies, such as Coinberry, BitBuy, Netcoins, Virgo CX and others. These companies still enjoy a right to facilitate buying, selling and holding of crypto assets, but what lies ahead of them is the stringent compliance procedure necessary to continue their operations after 2023. For example, Coinsquare had to obtain an insurance policy that includes an endorsement of losses of crypto assets and fund a trust account maintained at a Canadian bank. The prosecutors have been watching closely for any non-compliance. In June 2022, the Ontario Securities Commission (OSC) issued financial penalties against Bybit and KuCoin, claiming violation of securities laws and operating unregistered crypto asset trading platforms. It obtained orders banning KuCoin from participating in the province’s capital markets and fining the exchange for more than $1.6 million.The land of experiments At the same time, there are adoption cases in Canada that sound radical to the United States. For example, there are dozens of crypto ETFs to invest in the country, while Grayscale still has to lead the court battle with the U.S. Securities and Exchange Commission (SEC) for a right to launch its first ETF. The world’s first Bitcoin (BTC) ETF for individual investors was approved by the OSC for Purpose Investments back in 2021. Purpose Bitcoin ETF accumulates around 23,434 BTC, which is actually a prominent symptom of the bear market. In May 2022, it held around 41,620 BTC. The major outflow from the Purpose Bitcoin ETF occurred in June, when about 24,510 BTC, or around 51% of its asset under management, were withdrawn by investors in a single week. Recent: FTX’s collapse could change crypto industry governance standards for goodAnother breakthrough in Canadian crypto adoption erupted when the country’s largest pension funds started to invest in digital assets. In 2021, the Caisse de Depot et Placement du Québec — one of the largest pension funds in the French-speaking province of Quebec — invested $150 million into Celsius Network.The same month, the Ontario Teachers’ Pension Plan announced its $95-million investment in FTX. Unfortunately, this news didn’t age well as both companies have since collapsed and both pension funds had to write off their investments. Perhaps, in that light, the U.S. Department of Labor’s warning to employers against using pension funds that include Bitcoin or other cryptocurrencies now seems like a prudent precaution. Due to its cold climate, cheap electric supply and light regulation, Canada is among the world’s leading destinations for crypto mining. In May 2022, it accounted for 6.5% of the global BTC hash rate. However, this fall, the firm managing electricity across the Canadian province of Quebec, Hydro-Québec, requested the government to release the company from its obligation to power crypto miners in the province. As the reasoning goes, electricity demand in Québec is expected to grow to the point that powering crypto will put pressure on the energy supplier. The development of the CBDC is another direction where Canada has been moving faster than its neighbor to the south. In March 2022, the Bank of Canada launched a 12-month research project focused on the design of the Canadian digital dollar in collaboration with the Massachusetts Institute of Technology. In October, the Bank of Canada published a research report and proposed several particular archetypes of CBDC as useful for organizing “the possible CBDC designs.” While back in March, there was “no decision made on whether to introduce a CBDC in Canada,” the country’s recent budget amendment contains a small section on “Addressing the Digitalization of Money.” In the statement, the government said consultations with stakeholders on digital currencies, stablecoins and CBDCs are being launched on Nov. 3, although exactly which stakeholders will be engaged remains unclear.The partisan divide The discussion of what could have become Canada’s formal legal framework for crypto — bill C-249 — showed a sharp partisan divide around the topic. A bill for the “encouragement of the growth of the cryptoasset sector” was introduced to the House of Commons in February 2022 by a member of the Conservative party and ex-Minister Michelle Garner. The lawmaker proposed having Canada’s Minister of Finance consult with industry experts to develop a regulatory framework aimed at boosting innovation around crypto three years after the bill’s passage. Despite the voiced support from the local crypto community, the bill didn’t meet much approval among fellow lawmakers. During the second reading on Nov. 21–23, members of other political parties, including the ruling Liberal party, blasted both the proposition and the Conservative party with accusations of promoting the “dark money system,” and Ponzi scheme and bankrupting retirees and as a result, C-249 is now officially buried. While Michelle Garner introduced the bill, Conservative party leader Pierre Poilievre took most of the heat. A former Minister of Employment and Social Development, Poilievre has been advocating for more financial freedom through tokens, smart contracts and decentralized finance. Earlier this year, he urged the Canadian public to vote for him as their leader to “make Canada the blockchain capital of the world.”The next general elections in Canada are scheduled for 2025, and given C-249’s failure and the general condition of the market, it’s not likely that Poilievre and the Conservatives will get broad support in the Parliament for their pro-crypto efforts until that time. Currently, the Conservative party holds only 16 out of 105 seats in the Senate and 119 out of 338 in the House of Commons. What’s nextFrom a trading platform perspective, there are specific challenges that the industry strives to address, Julia Baranovskaya, chief compliance officer and co-founding team member at Calgary-based NDAX, told Cointelegraph. The majority of industry stakeholders would like to see “clear guidelines and a risk-based approach.” Currently, a majority of regulatory authorities in Canada have chosen to apply existing financial industry rules and regulations designed and implemented for the traditional financial industry.However, Baranovskaya highlighted that in recent years, regulators have been engaging in a closer dialogue with the crypto industry. The Securities Commission has created a sandbox and encouraged crypto asset trading platforms and innovative types of businesses offering alternative financial instruments to join. The IIROC has also been leading a dialogue with the industry participants to understand business models better and identify how the current framework can be applied to them.Recent: Bitcoin miners look to software to help balance the Texas gridBut, the challenges of the fragmented regulatory framework and the lack of crypto asset-specific regulations are still here. Most of the existing regulations are based on the product, but with the constantly evolving crypto space, the product-based approach “would always stay a few steps behind.” In Baranovskaya’s words: “Understanding the underlying technology behind crypto assets and De-Fi products that work out a flexible but robust regulatory regime that can adjust to the ever-changing crypto asset space is essential.” 

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SEC chair's crypto oversight strategy in question as ecosystems collapse

While regulations are often aimed at protecting citizens from bad actors, the effectiveness of crypto regulations in the United States is in question owing to the colossal fall of major exchanges and ecosystems over the past year — FTX, Celsius, Voyager, and Terra (LUNA).Congressman Tom Emmer showed concerns about the oversight strategy implemented by Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC) for the crypto ecosystem. Emmer has been vocal against Gensler’s “indiscriminate and inconsistent approach” toward crypto oversight. On March 16, the Congressman revealed being approached by numerous crypto and blockchain firms that believed Gensler’s reporting requests to be overburdensome and stifling innovation.We are even more concerned now as we’ve seen his strategy miss Celsius, Voyager, Terra/Luna– and now FTX.— Tom Emmer (@RepTomEmmer) November 25, 2022Congressman Emmer had previously asked the SEC to comply with the standards established in the Paperwork Reduction Act of 1980, which was designed to reduce the total amount of paperwork burden the federal government imposes on private businesses and citizens. On an end note, Emmer said that “Congress shouldn’t have to learn the details about the SEC’s oversight agenda through planted stories in progressive publications,” adding that he was looking forward to Gensler’s public testimony before the Financial Services Committee.Related: My story of telling the SEC ‘I told you so’ on FTXAmerican CryptoFed DAO, the first official DAO in the U.S., began a litigation battle with the SEC over 2021 token registrations and opted not to have attorneys in its fight for registration.American CryptoFed also indicated its plans to file a motion for extending the deadline for its answer to the SEC’s Order Instituting Administrative Proceedings.

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US lawmakers ask DOJ hold FTX execs accountable 'to the fullest extent of the law'

Two Democratic members of the United States Senate have called on the Justice Department to investigate the collapse of FTX and potentially prosecute individuals involved in wrongdoing.In a Nov. 23 letter to U.S. Attorney General Merrick Garland and Assistant Attorney General Kenneth Polite, Senators Elizabeth Warren and Sheldon Whitehouse requested the Justice Department launch an investigation into crypto exchange FTX’s downfall with the “utmost scrutiny.” The lawmakers cited the impact the collapse of a major firm in the crypto space had had on related companies — lending companies including Genesis and BlockFi halting trading — and funds which FTX retail investors may not recover.The senators specifically called out former FTX CEO Sam Bankman-Fried for his role in the controversy, including his deleted tweet that funds were “fine” at the exchange and attempts to downplay concerns about the firm’s liquidity issues. Warren and Whitehouse echoed characterizations of FTX’s management from the firm’s bankruptcy proceedings, which referred to Bankman-Fried and others as “inexperienced and unsophisticated.”“The fall of FTX was not simply a result of sloppy business and management practices, but rather appears to have been caused by intentional and fraudulent tactics employed by Mr. Bankman-Fried and other FTX executives to enrich themselves,” said the letter. “We urge the Department to center these ‘flesh-and-blood victims’ as it investigates, and, if it deems necessary, prosecute the individuals responsible for their harm.”Related: US Sen. Elizabeth Warren says crypto will ruin economy — Community respondsIt’s unclear if the Justice Department intends to launch an investigation into FTX, but global financial regulators and lawmakers have taken action following the exchange’s collapse. In the Bahamas — where Bankman-Fried and many FTX executives were based at the time of publication — financial investigators and the Bahamas securities regulators were reportedly investigating possible criminal misconduct. Turkey’s Financial Crimes Investigation Agency also announced on Nov. 14 it had launched an investigation into individuals and entities associated with FTX.

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US Sen. Elizabeth Warren says crypto will ruin economy —community responds

The downfall of former crypto exchange FTX has had the entire industry in disarray since the situation began to unravel days before it declared bankruptcy on Nov. 11. A new op-ed from United States Senator Elizabeth Warren revealed a negative stance towards the industry with regard to the fallout.Warren wrote that the crypto industry is on a “well-worn path of financial innovation,” which starts with exciting rewards but ends in “crippling losses.” She compared it to subprime mortgages of 2008, penny stocks and credit-default swaps. The Senator said what happened with FTX should be a “wake-up call” to regulators to enforce laws on the industry. On Twitter, some agreed with the Senator, tweeting that the crypto industry is just “smoke and mirrors” and that Warren has been trying to warn the public all along. Though many have pointed the finger back at her, saying regulators don’t understand the industry and incite fear with such comments. One user pointed out a middle ground saying there is room for regulation when it comes to centralized exchanges, which are much different than the technology of crypto and decentralized exchanges.Centralized exchanges for crypto are a far cry from crypto the technology. Know the difference and only regulate the centralized exchanges. The risk is the centralized exchanges, not the crypto and not decentralized exchanges/finance. Crypto did not fail. SBF failed. SEC failed.— Steve Westhoff (@SteveWesthoff) November 22, 2022The following day, not referencing the op-ed specifically, the co-founder and CEO of Binance Changpeng “CZ” Zhao also tweeted on the topic saying where there is progress there is always failure.Some (including me) say this will “set the industry back a few years.” But thinking about it, this is natural. There will be failures with progress. Happened in regulated TradFi in 2008, after 70+ years of development. The industry will recover quickly, and become stronger.— CZ Binance (@cz_binance) November 23, 2022

In response to CZ’s tweet, many in the community said that this is the reset crypto needed. Related: Will SBF face consequences for mismanaging FTX? Don’t count on itRegulators in the U.S. have been actively voicing concerns following the FTX scandal. On Nov. 21, U.S. senators released a letter to Fidelity urging it to reconsider its Bitcoin offerings in light of FTX. On Nov. 16 Warren, along with Senator Richard Durbin, publicized a letter they sent to the former and current CEOs of FTX — Sam Bankman-Fried and John Jay Ray III. The letter had 13 requests for documents, lists and answers regarding the situation. Warren has been a major critic of the crypto industry over the last year. Previously she has called DeFi “dangerous” and has been active to expose unsustainable practices in the crypto mining scene in the U.S.Her latest op-ed also addresses those topics, along with crypto’s role in money laundering and ransomware attacks.

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