by Samuel Mbaki | Mar 23, 2023 | Regulation
Do Kwon, Terra Labs co-founder and CEO, has been arrested in Montenegro, according to Interpol and US prosecutors who are now planning extradition and pressing charges.
Another crypto ‘Kingpin’ in the ropes?
A report from the Minister of Interior in Montenegro, Filip Adzic, indicates that the Ex-CEO of the fallen crypto ecosystem, Terra, DO Kwon, has been arrested and detained there.
Adzic Tweeted saying that their police have detained a person that is suspected of being one of the most wanted fugitives, Do Kwon. He added that the suspect was detained at the Podgorica airport using falsified documents, but they are still awaiting solid confirmation of his identity.
Interpol confirms Do Kwon’s arrest
Official information has been offered now to back the claims from the unverified Twitter account used by Adzic that Kwon has been arrested, and the US is already pressing charges. A report from CNN today claims that Kwon will be extradited to the US to answer eight charges of wire fraud, securities fraud, commodities fraud, conspiracy, etc.
Interpol has confirmed that the suspect was Kwon via a fingerprint match against the available data in Interopl’s national central bureau in Seoul. He will now be answerable to the collapse of his $40B crypto empire, which saw two major coins, LUNA and UST stablecoin devalue. Do Kwon might also face similar charges to Sam Bankman-Fried, who is being prosecuted in the U.S.
Keep watching Fintech Express for updates on Kwon and Bankman-Fried’s cases and other Fintech-related news.
by Fintech Express | Mar 23, 2023 | Regulation
The US SEC has issued a Wells notice to crypto exchange Coinbase over its crypto staking services. A Wells notice always comes before this regulator legally presses charges.
SEC issues a Wells notice to Coinbase
The US SEC has continued its crypto crackdowns, with Coinbase as its latest victim. It has issued a Wells notice saying that the exchange is offering some services in the US that can be classified as securities without its clearance.
This Wells notice is the second that the SEC issued this year after it sent one to Paxos in February. At the time, the SEC claimed that Binance USD pegged stablecoin, BUSD was a security, and Paxos should cease issuing it. The SEC has also charged Kraken, another crypto exchange, $30M for offering unregistered crypto staking services in the US. This news rocked the internet and caused a series of debates as Coinbase CEO had claimed that they had received rumors that the SEC was preparing to fight crypto staking.
Due to regulatory uncertainty, the news of a Well notice being issued to Coinbase has greatly shaken its stocks. The shares fell almost 12% in extended trading and another 8.16% during the trading hours.
Coinbase stands its ground against SEC charges
Coinbase has issued a statement regarding the notice saying that it supposes the SEC may aim to use enforcements on its Spot market, staking services, Coinbase Prime, Earn program, and the Coinbase Wallet.
It noted, “The potential civil action may seek injunctive relief, disgorgement, and civil penalties.”
The company’s CEO has called out the SEC, saying the SEC scrutinized their products pre-launch and gave them the go-ahead. He assured Coinbase clients that the company is ready to prove its products are law-compliant in court and will continue supporting them.
It is not the first time he has said that his company is ready to use legislation and defend its operation from a hawkish SEC. In February, he condemned the SEC for charging Kraken and said Coinbase would face the regulator in court.
Keep watching Fintech Express for regulation and fintech-related news.
by Samuel Mbaki | Feb 21, 2023 | Cryptocurrencies, Regulation
Christopher Emms has been allegedly arrested and detained in Moscow for aiding North Korea with its crypto pursuits. It’s not Emm’s first time to be arrested on the matter as he had been in Saudi custody too but was released for lack of enough evidence.
Moscow detains a suspect for aiding North Korea
The Moscow bureau of Interpol has allegedly detained Christopher Emms in connection with past allegations of consulting for North Korea in crypto-related services. The British Citizen was arrested upon his landing in Moscow as his name had been on Interpol’s “red notice”
The 31-year-old British Citizen is alleged to have contacted North Korea and consulted for them in April 2022 alongside Spanish national Alejandro Cao De Benos. Interpol alleges that the two offered knowledge to North Korea on how to use blockchain technology and cryptocurrency in money laundering and evasion of sanctions.
More information indicates that the two planned and moderated the 2019 Pyongyang Blockchain and Cryptocurrency Conference. It also indicated that there was a third person in the conspiracy, Virgil Griffith, a former Ethereum developer. Griffith was arrested by the Federal Bureau of Investigation in November 2019 and pleaded guilty to the charges, which ended up getting him 63 months in prison.
Now, Emms could face up to 20 years in jail for one count of conspiring with North Korea to violate the International Emergency Economic Powers Act.
Crypto crackdowns continue
Crypto crackdowns are increasingly becoming a hot trend in the crypto market. The US has been at the forefront of these crackdowns. Earlier this month, the US settled charges with Kraken crypto exchange and continued taking legal action against crypto exchange founder Sam Bankman Fried. Binance plans to settle charges with the US SEC by taking a penalty.
The UK has been adamant about a crypto advertisement, a stance South Africa is also taking. The two countries seek to free their citizens from the dangers of wrong and deceitful crypto advertisements.
These efforts foreshadow a coming regulatory clean-up in the crypto space. Keep watching fintechexpress for this and other news as soon as they happen.
by Fintech Express | Feb 9, 2023 | Cryptocurrencies, Regulation
On Thursday, Coinbase CEO Brian Armstrong shared a Twitter post saying the US SEC had plots to do away with crypto staking. His Twitter thread sparked mixed reactions as the crypto community took it as a potential attack on the innovation.
Armstrong condemns SEC attack on crypto staking
In his Twitter thread, Armstrong said that they are hearing rumors the SEC would like to do away with crypto staking in the US. He said that the main target of such enforcement would be the retail investors and added that he hopes it’s not the case as it would be a terrible path for the US.
Armstrong expressed how staking is an important innovation in the crypto space, meaning it would be catastrophic if it were to be overlooked. He explained that it allows users to participate directly in open crypto networks. He stated that it brings different positive improvements to the industry, like scalability, security, and a lower carbon footprint. As such, he believes staking is not a security.
He said that the crypto community needs to ensure that technologies and innovations are encouraged and welcomed in the US and not smothered by a lack of clear rules. He added that if such financial and Web 3 tools were to be built outside the country, it could be a matter of national security.
Is regulation going to kill crypto?
In his thread, Armstrong said there are better ways out than regulation by enforcement. He said it encourages companies to operate offshore, like in the case of FTX, which could be a danger to the finance sector as they cannot be adequately monitored.
He added that he hoped all stakeholders could work together to develop clear rules governing the industry. He said such rules should be sensible solutions to protect consumers and preserve innovation and national security interests in the US.
His comments attracted mixed reactions. Cardano Co-Founder Charles Hoskinson responded and claimed that ETH staking is problematic. He explained that temporarily giving someone else your unregulated assets to help them get a return does not look good. He said a lack of good innovation that allows for staked money to be accessed and decentralized could end up lumping all betting together.
by Fintech Express | Jan 31, 2023 | Banking, Cryptocurrencies, Regulation
FTX meltdown has been monumental. Now, a series of events haunt Bankman-Fried and keep him away from what was once his crypto estate.
FTX keeps haunting Bankman-Fried
Things are getting hard for Sam Bankman-Fried as regulators prepare for the October trials, and FTX is getting liquidated. He is under house arrest after being granted a $250M bail.
Since his release, Bankman-Fried has been trying to access FTX and Alameda Funds and ‘prove’ his innocence to no avail. All that seems to be working against him. Yesterday, a series of events happened. Here is a breakdown of what transpired.
Judge rules that SBF’s $250M guarantors be made public
In a Jan 30 ruling, two sureties of the $250M bail granted to Bankman-Fried were asked to be revealed. The New York judge ruled that the two unnamed individuals who have been hidden since the bail terms were made and signed can now be exposed.
This news shocked Bankman-Fried’s legal counsel, who had highly contested that the individuals’ identities remain hidden, citing security reasons. The Judge has given them until Feb 8 to contest the ruling.
Alameda Research sues bankrupt Voyager Digital for $446M
FTX’s sister company, Alameda Research, is suing bankrupt crypto lender Voyager Digital for $446M. The ill-fated company is seeking to claw back loan repayments that FTX had made to the crypto lender before filing for bankruptcy in November.
The lawyers managing FTX and Alameda filed the motion against Voyager in a Delaware court on Jan 30. The development twist is that both companies filed for bankruptcy in 2022, but voyagers came four months earlier. Following its bankruptcy filing, it demanded that FTX and Alameda repay all loans.
According to FTX lawyers, these loans need to be clawed back as they were made near November when the exchange filed for bankruptcy. FTX claims to have paid $248.8M in September and another 4193.9M in October. It also made a $3.2M repayment of the loan’s interest in August.
The lawyers claim that the exchange used customer deposits to make the payments, meaning the process was irregular. Voyager ought to refund it so the exchange’s users can be repaid.
Justice Dept wants SBF not to access FTX and Alameda assets
The US Department of Justice is siding with a filing that seeks to bar Bankman-Fried from accessing FTX and Alameda Assets. Prosecutors are not happy that Bankman-Fried tried to contact both FTX bankruptcy CEO John Ray and FTX US general counsel Ryne Miller. The prosecutors have even produced the text and email messages between Bankman-Fried and John Ray.
In Jan 30 filings, the Department of Justice responds to a recent move by Bankman-Fried’s lawyers to amend his bail conditions, including not contacting former or current FTX employees. Bankman allegedly wanted to meet John Ray in New York to explain how Ray could access the funds.
On Jan 12, Bankman-Fried had also claimed that law firm Sullivan & Crowell had pressured him into naming Ray as his successor. In response, Ray claimed that after filing for bankruptcy, Sam Bankman-Fried was no longer the FTX CEO, and he has no role in the company, therefore, no authority to talk on the company’s behalf.
by Fintech Express | Jan 30, 2023 | Regulation
FTX did not convince the ASIC of its operations. New details show that the exchange had been served 3 notices in eight months. The surfaced report claims that the ASIC had warned about the exchange in March, the first month it began operations there.
FTX was a huge red flag
The ASIC has been shown to express concerns about the Australian FTX subsidiary eight months before the November collapse. Via documents accessed by Guardian Australia, the regulators were concerned about how the exchange conducted its business there after obtaining an operation license via a company acquisition.
After taking over IFS Markets in December, the exchange acquired the operational license in 2021. However, it only opened for business months later, in March 2022. The ASIC noted red flags in how the exchange operated its newest entity as soon as it began operations there.
The documents obtained by Guardian Australia show that the ASIC issued a section 912C notice to FTX in March, requiring it to provide information about its operations to assess if it was meeting the AFSL license requirements. Such a notice allows the ASIC to monitor the kind of financial services the licensee engages in and determine if the person is fit to hold it.
The report by Guardian Australia confirmed that the ASIC and FTX engaged for several months, with three notices being issued to the exchange in the process. However, the operations of the business remained the same. Reports have it that the ASIC was still concerned by the exchange’s operations till late October.
Is ignorance what’s fanning crypto meltdown fires?
The ASIC had seen the red flags in the operations of the FTX subsidiary in the country but did not take any legal action like bans or fines. The ASIC is not the only regulatory body that has had clashes with FTX.
Recently, the CFTC expressed that it was concerned with venture capitalists (VCs) not taking charge of how their money was working in FTX. It said that it would make arrangements to question those VCs and figure out whether they ignored FTX red flags or needed to make an effort to know how their investments were fairing.
FTX is not the only meltdown that shows a great level of ignorance in the crypto space. Other organizations like Terra and crypto lenders like BlockFi and Celsius were never reported before they collapsed. That shows the lender never quite struck deals that allowed them to monitor how their investments were fairing or didn’t even care.
As such, it calls for all stakeholders in the financial sector to be vigilant and more active in streamlining financial vehicles like crypto and stocks. Keep watching FintechExpress for crypto and other finance-related news.
