Post-FTX crypto industry needs education before regulation: Former Biden advisor
Lawyers representing Alex Mashinsky, the former CEO of the crypto platform Celsius facing a criminal indictment in the United States, have lost a motion to drop two charges related to commodities fraud and manipulating the price of the Celsius (CEL) token.
In a Nov. 8 filing in the US District Court for the Southern District of New York, Judge John Koeltl ruled that Mashinsky’s legal team’s arguments to have the charges dismissed were “either moot or without merit.” The judge denied the motion to dismiss the two charges, leaving seven counts on the indictment for the former Celsius CEO’s trial, scheduled to begin in January 2025.
Source: SDNY
The former Celsius CEO’s lawyers claimed that the securities and commodities fraud charges were inconsistent, as prosecutors alleged the platform’s Earn Program was treated as a security while the Bitcoin (BTC) deposited by investors were commodities. Mashinsky also claimed that he lacked “fair warning” that allegedly manipulating the price of CEL (CEL) was a criminal charge.
The motion to dismiss the two charges filed in January included a request for Judge Koeltl not to allow information on Celsius’ bankruptcy to be included in the criminal case. The judge declined to decide on the motion on Nov. 8, suggesting he would respond to motions in limine or at trial.
Questions about FTX for jurors
Following the Nov. 8 order, Mashinsky’s lawyers also requested they be allowed to ask prospective jurors questions about their knowledge of the defunct cryptocurrency exchange FTX. According to the legal team, there will “undoubtedly” be testimony about FTX at trial, and the exchange was “toxic in the cryptocurrency world.”
Related: Celsius token surges 300% a month after $2.5B payment to creditors
Authorities arrested and charged Mashinsky with seven felony counts in July 2023. He pleaded not guilty and has been free to travel with restrictions on a $40 million bond.
Former Celsius chief revenue officer Roni Cohen-Pavon, indicted alongside Mashinsky, also faces charges for “illicitly” manipulating the CEL price. Cohen-Pavon initially pleaded not guilty but later changed his plea to guilty. He is scheduled to be sentenced on Dec. 11.
Magazine: ‘Less flashy’ Mashinsky set for less jail time than SBF: Inner City Press, X Hall of Flame
Alameda Research filed a lawsuit against Aleksandr Ivanov, founder of Waves, as part of its ongoing legal strategy to recover crypto assets.
The trading arm of the bankrupt FTX exchange is aiming to recoup at least $90 million of digital assets from Waves, according to a Nov. 11 court filing.
In March 2022, Alameda Research deposited $80 million worth of USDt (USDT) and USD Coin (USDC) to the Waves-based decentralized liquidity protocol, Vires.Finance.
The court filing alleges that Ivanov artificially inflated the value of Waves (WAVES) tokens. According to the complaint:
“Ivanov secretly orchestrated a series of transactions that inflated artificially the value of WAVES, while at the same time siphoning funds from Vires. As the fraudulent scheme began to be uncovered, WAVES lost substantial market capitalization—losing over 95% of its value—and Vires users were saddled with $530 million in losses.”
Alameda Research, court filing. Source: US Bankruptcy Court for the District of Delaware
FTX filed for bankruptcy on Nov. 11, 2022, causing over $8.9 billion in losses for its users and investors. The period after the collapse of the FTX exchange and its 130 subsidiaries was one of the darkest times in crypto history.
Bankman-Fried was arrested in the Bahamas on Dec. 12, 2022, after United States prosecutors filed criminal charges against him. He was extradited to the US in January 2023. Bankman-Fried was sentenced to 25 years in federal prison on March 28.
Related: History of Crypto: The future of crypto exchanges, regulatory battles, and governance
FTX and Alameda’s “aggressive legal strategy” highlights financial issues
Alameda’s recent lawsuit is part of a wider effort to recoup funds from multiple entities.
Alameda and the FTX estate have sued over 20 entities this year as part of an “aggressive legal strategy” that underscores their financial challenges, according to blockchain expert and author Anndy Lian.
He told Cointelegraph:
“In my view, the allegations against Ivanov point to possible misconduct, such as inflating the WAVES token’s value and misdirecting funds. If these claims are validated, they underscore the ongoing challenges of transparency and accountability within the crypto industry.”
For stakeholders, these legal actions are vital for potentially reclaiming lost assets,” Lian added, noting that the FTX case may set a precedent for future crypto regulations.
Related: Republican Senate majority signals more ‘pro-crypto Congress’
Post-FTX crypto industry needs education before regulation — Former Biden adviser
The crypto industry needs to prioritize education, not just regulation, to avoid the next FTX-like meltdown, according to Moe Vela, former senior adviser to US President Joe Biden and senior adviser to Unicoin.
Financial education, especially regarding risk management, should be the fundamental concern of the crypto industry, Vela told Cointelegraph in an exclusive interview:
“Education is the fundamental key to empowerment. […] We will not have equality in any form until we have economic parity. We’re not going to have economic parity until we teach people to be, instead of unsophisticated at anything, sophisticated, and that comes through education.”
Moe Vela Interview for Cointelegraph
The senior adviser’s comments came a week after FTX’s new amended proposal was released on May 7. The proposal promised “billions in compensation” for the users and creditors of the bankrupt exchange who had been unable to access their funds since November 2022.
Magazine: Microsoft set to vote on Bitcoin, Peter Todd hiding, and more: Hodler’s Digest, Oct. 20–26
The Coinbase-backed crypto advocacy group Stand With Crypto has expanded to Australia as part of a broader move to push for regulatory clarity and crypto-friendly policy in the country.
Tom Duff Gordon, vice president of international policy at Coinbase, said the overarching goal of the new offshoot of Stand With Crypto is to bring political attention to the myriad use cases of blockchain and encourage “sensible” legislation for crypto firms operating in Australia.
Stand With Crypto expands to Australia
“We want to change the narrative from crypto just being related to fraud and scams. We want to show people the good use cases, and I think if we have that from a bottom-up grassroots movement as well as top-down advocacy, I think we can raise the profile crypto in Australia,” Duff Gordon said.
Tom Duff Gordon speaking at the Stand With Crypto launch event. Source: Cointelegraph
Speaking at the event, Simon Kennedy, a member of the Australian House of Representatives, said the crypto industry could expect to see support from the Liberal Party in the lead-up to the country’s federal election in late 2025.
“I think you will see the Liberal Party be a big supporter of this sector. I hope it will be bipartisan, but you will see it from us,” Kennedy said.
Australian crypto advocates push for clarity
Coinbase Australia managing director John O’Loghlen told Cointelegraph that Stand With Crypto would help take up the mantle of assisting regulators in crafting reasonable policy and helping to make crypto a priority in the Australian regulatory landscape.
“It’s really concerning without the clarity of regulation and necessary signposting, a lot of top talent and young human capital are going to look to start their careers elsewhere,” said O’Loghlen.
A lack of clarity and slow progress around crypto policy development is a common pain point cited by many national crypto industry leaders.
In September, Swyftx CEO Jason Titman told Cointelegraph that many investors and would-be entrepreneurs are “sitting on the sidelines” until regulations around the market are clearer.“We’ve also been asking for guidance on … basic lexicon and glossary of terminology that would fit into existing regulation, particularly under ASIC’s purview of digital native terminologies,” Titman said.
“When you look back to the Howey Act and other tests that are enforced overseas, some of this regulation is 80 to 90 years old and relates to market an orange grove and refers to asset classes and technologies that are quite removed from modern-day Australia,” added O’Loghlen.
Related: After US election wins, the crypto industry looks to the 2026 midterms
Crypto advocates push for clarity
Stand With Crypto launched in Canada on July 12, following a similar rollout in the United Kingdom in May.
In the United States, Stand With Crypto lists the pro and anti-crypto statements many prospective candidates for federal, state and local offices have made.
Most recently, it focused much of its efforts on encouraging users to support crypto-friendly candidates in the US elections. The advocacy group reported that more than 280 pro-crypto candidates running for the US House of Representatives and Senate won seats in the 2024 elections.
Over 270 Crypto-friendly candidates won a seat in the House and Senate in the 2024 US elections. Source: Stand With Crypto
Industry advocates say that the new Congress and a crypto-friendly US president could help push through pro-crypto legislation like the Financial Innovation and Technology for the 21st Century Act, which is slated for a vote in the Senate after passing in the House.
Magazine: ETHSafari brings crypto world to Africa, and Africa to the crypto world
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports7 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway