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‘Huge Shift’ in crypto firms’ compliance mindset, says Elliptic co-founder

The crypto industry has seen a significant shift toward regulatory compliance since its early days, according to James Smith, co-founder of Elliptic, a crypto compliance firm established in 2013.

“In the early days, only a few companies approached compliance in a serious way,” Smith told Cointelegraph at the Token2049 event. “Coinbase was our first customer — they knew from the start that they wanted to build their business that way. But for most others, it just wasn’t a major priority.”

‘Huge Shift’ in crypto firms’ compliance mindset, says Elliptic co-founder
Elliptic co-founder James Smith at Token2049. Source: Cointelegraph

That began to shift as regulators, including those in New York State, took a more active interest in the crypto industry. The involvement of traditional financial institutions like Fidelity and DBS Bank also contributed, as they entered the space with established compliance expectations from traditional finance services.

Fidelity, for instance, offered its first crypto service for customers in 2019, while the Asian giant DBS created a digital exchange for accredited and institutional investors in 2020.

“We’ve seen a big change in the last couple of years. Exchanges on the global map all care about compliance now, because they want to be part of a global ecosystem,” Smith said.

Related: DeFi security and compliance must be improved to attract institutions

Compliance questions after Bybit hack

Crypto exchanges and peer-to-peer protocols remain the industry’s key compliance targets. For authorities, these firms are seen as critical choke points where Anti-Money Laundering and broader financial surveillance controls take effect. At the same time, they’re frequent candidates for sophisticated hacks and laundering operations, as seen in the Lazarus Group’s tactics.

The latest example comes from the Bybit hack, where the Lazarus Group engaged in a sophisticated money laundering scheme to funnel funds. The hackers quickly swapped low-liquidity tokens for Ether (ETH), then swapped them for Bitcoin (BTC) using no-KYC (Know Your Customer) decentralized exchanges.

“They went through some no KYC exchanges, which probably shouldn’t exist, but also through a decentralized protocol where there was lots of liquidity provision that enabled them to get it into Bitcoin,” Smith said, adding that “we’re making it too easy for them as an industry.”

Smith also noted that even after firms flagged the funds as stolen, users continued to trade them through decentralized platforms. “Why was there so much liquidity available to help launder this money?” he said, arguing that those providing liquidity to such protocols should be subject to basic checks on the source and destination of funds. “Go and look at who’s making money. And that’s the first place to start putting some controls.”

Magazine: Lazarus Group’s favorite exploit revealed — Crypto hacks analysis

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Corbyn and Sultana have ‘patched things up’ – but what really happened?

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Corbyn and Sultana have 'patched things up' - but what really happened?

For decades he was the dissident backbencher, then unlikely Labour leader. She was a firebrand left-wing Labour MP with a huge online presence. To the left – on paper – it looked like the perfect combination.

Coupled with the support of four other independent MPs, it held the blueprints of a credible party. But ever since the launch of Your Party (working title) the left-wing movement has faced mockery and exasperation over its inability to look organised.

First, we learned Jeremy Corbyn’s team had been unaware of the exact timing of Zarah Sultana’s announcement that she would quit the Labour Party. Then a much bigger row emerged when she launched a membership drive linking people to sign up to the party without the full consent of the team.

It laid bare the holes in the structure of the party and pulled focus away from its core values of trying to be a party to counter Labour and Reform UK, while also drawing out some pretty robust language from their only woman MP calling the grouping a “sexist boys club”. It gave the impression that she was being sidelined by the four other male MPs behind the scenes.

This week, they tried to come together for the first time at a rally I attended in Liverpool and then, in quick succession, another event at The World Transformed conference the day after. But not everyone I spoke to who turned up to see the two heroes of the left found them all that convincing.

Jeremy Corbyn admitted to me that “there were some errors made about announcements and that caused a problem”. He said he was disappointed but that “we’re past that”.

Jeremy Corbyn and Zarah Sultana take part in a discussion on Your Party at The World Transformed conference in Manchester. Pic: PA
Image:
Jeremy Corbyn and Zarah Sultana take part in a discussion on Your Party at The World Transformed conference in Manchester. Pic: PA

Zarah Sultana said they were like Liam and Noel, who managed to “patch things up and have a very successful tour – we are doing the same”.

The problem is, it didn’t really explain what happened, or how they resolved things behind the scenes, and for some, it might have done too much damage already.

Layla signed up as a member when she first saw the link. It was the moment she had been waiting for after becoming frustrated with Labour. But she told me she found the ordeal “very unprofessional, very dishonest and messy”, and said she doesn’t want to be in a disorganised party and has lost trust in where her money will end up. She’s now thinking about the Greens. She said their leader, Zack Polanski “seemed like such a strong politician” with “a lot of charisma”.

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Jeremy Corbyn’s back – with Zarah Sultana and a new party. But is it a real threat to Labour, or just political theatre?

Since Polanski’s rise to power as leader, the Green Party has surged in popularity. According to a recent poll, they went up four points in just one week (following their conference). Voters, particularly on the left, seem to like his brand of “eco populism”.

While he has politely declined formally working in conjunction with Your Party publicly, he has said the “door is always open” to collaboration especially as he sees common goals between the two parties. Zarah Sultana said this weekend though that the Greens don’t describe themselves as socialists and that they support NATO which she has dubbed an “imperialist war machine”.

While newer coalitions may not be the problem for now, internal fissures might come sooner than they expect. Voters at the rally this weekend came with pretty clear concerns about some of the other independent MPs involved in Your Party.

The two heroes of the left fell out over a row over their party's paid membership system
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The two heroes of the left fell out over a row over their party’s paid membership system

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I asked Ayoub Khan if he considered himself left-wing. A question that would solicit a simple answer in a crowd like this. But he said his view was very simple, that he is interested in fighting for equality, fairness and justice: ‘We all know that different wards, different constituencies have different priorities and MPs should be allowed to represent the views of the communities they serve.” To him, that can sometimes mean voting against the private school tax and against decriminalising abortion.

The Your Party rally on Thursday night was packed, but the tone was subdued. People came full of optimism but they also wanted to make up their mind about the credibility of the new offering and to see the renewed reconciliation up close.

The organisers closed the evening off with John Lennon’s song, Imagine. That was apt, because until the party can get their act together, that’s all they’ll be doing.

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Politics

DeFi booming as $11B Bitcoin whale stirs ‘Uptober’ hopes: Finance Redefined

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DeFi booming as B Bitcoin whale stirs ‘Uptober’ hopes: Finance Redefined

DeFi booming as B Bitcoin whale stirs ‘Uptober’ hopes: Finance Redefined

An $11 billion Bitcoin whale returned to crypto markets this week, likely seeking trading opportunities tied to October’s historic crypto rallies and uncertainty in the US.

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SEC’s ‘future-proofing’ push to shape how much freedom crypto enjoys after Trump

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SEC’s ‘future-proofing’ push to shape how much freedom crypto enjoys after Trump

SEC’s ‘future-proofing’ push to shape how much freedom crypto enjoys after Trump

Could a future US presidential administration undo all of Paul Atkins’ work in a matter of days? Cointelegraph spoke to legal and regulatory experts to find out.

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