Regulators around the globe assert more control over crypto: Law Decoded

Published

1 year ago

October 23, 2023

admin

In the last week, several major financial regulators, both national and international, simultaneously produced new guidelines for decentralized assets. The European Banking Authority and the European Securities and Markets Authority proposed guidelines for assessing the suitability of management members in crypto firms, offering standardized criteria for evaluating their knowledge, expertise, integrity and ability to dedicate adequate time to fulfill their responsibilities.

The Basel Committee on Banking Supervision of the Bank for International Settlements (BIS) proposed to oblige banks to provide both quantitative and qualitative data on exposures to crypto assets and the corresponding capital and liquidity requirements. According to the BIS, using a uniform disclosure format will encourage the application of market discipline and lessen information asymmetry between banks and market participants.

The United States Treasury Department’s Financial Crimes Enforcement Network proposed designating cryptocurrency mixing as an area of “primary money laundering concern” following Hamas’ attack on Israel. It suggests requiring domestic financial institutions and agencies to “implement certain recordkeeping and reporting requirements” for crypto mixers transactions.

The Hong Kong Securities and Futures Commission (SFC) will make certain digital currency products available only to professional investors. The updated requirements consider digital assets “complex products” under the SFC and subject to the same guidelines as similar financial products. The commission mentions crypto exchange-traded funds and products issued outside Hong Kong as complex products.

FTX court updates

FTX’s former general counsel Can Sun was unaware of the exchange’s comingling of funds with Alameda Research, he told jurors during his testimony in Sam Bankman-Fried’s criminal trial. Sun said he learned from other employees about Alameda’s exemption from the liquidation engine system in August 2022. Typically, the system would liquidate loss-making trades, but Alameda reportedly bypassed the mechanism due to its exception.

Accounting professor Peter Easton provided a breakdown of the alleged commingling of funds between FTX and Alameda Research since 2021. According to Easton’s analysis, Alameda invested in Genesis Capital, K5 Global Holdings, Anthropic PBC, Dave Inc, Modulo Capital and other ventures, partially using funds from FTX customers. In June 2022, Alameda had a negative balance of $11.3 billion with FTX, while the companies’ liquid assets stood at $2.3 billion, meaning a gap of $9 billion between the sister firms. Another critical point from the analysis: Alameda has 57 accounts with FTX that could have negative balances, whereas no other customer could do so. The analysis challenges Bankman-Fried’s defense argument that Alameda had similar privileges as other market makers on FTX.

Continue reading

Pennsylvania aborts two-year mining moratorium bill

A Pennsylvania House Representative has cut a two-year crypto mining ban from a bill to regulate the sector’s energy consumption, claiming trade labor unions pressured the change. The committee’s chair and the bill’s sponsor, Democratic Representative Greg Vitali, revealed that Democratic Party leaders pressured him not to run the bill inclusive of the moratorium. Vitali said building trade labor unions had “chronic opposition” to environmental policy and claimed the unions had his Democratic colleagues in their pocket. According to the politician, voting against the unions would risk the Democratic majority in Pennsylvania’s House, and he would rather see the bill pass sans moratorium than not at all.

Continue reading

Gemini, Genesis, DCG accused of $1 billion fraud

New York’s attorney general has filed a lawsuit against cryptocurrency firms Gemini, Genesis and Digital Currency Group (DCG) for allegedly defrauding investors through the Gemini Earn investment program. An official statement from the office of Attorney General Letitia James outlines the basis of the charges, claiming that the companies defrauded more than 23,000 investors, including 29,000 New York citizens, of more than $1 billion. An investigation carried out by James’ office claims that Gemini lied to investors about its Gemini Earn investment program, which it ran in partnership with Genesis. It argues that while Gemini had assured investors that the program was a low-risk investment, investigations reveal that Genesis’ financials “were risky.”

Continue reading

Politics

Wolf Capital co-founder pleads guilty to $9.4M Ponzi, promised 547% returns

Published

9 hours ago

January 11, 2025

admin

Wolf Capital co-founder pleads guilty to .4M Ponzi, promised 547% returns

According to the US Department of Justice, Wolf Capital’s co-founder has pleaded guilty to wire fraud conspiracy for luring 2,800 crypto investors into a Ponzi scheme.

Politics

Rachel Reeves lands in China amid pressure to cancel trip over market turmoil

Published

11 hours ago

January 11, 2025

admin

Rachel Reeves lands in China amid pressure to cancel trip over market turmoil

Making Britain better off will be “at the forefront of the chancellor’s mind” during her visit to China, the Treasury has said amid controversy over the trip.

Rachel Reeves flew out on Friday after ignoring calls from opposition parties to cancel the long-planned venture because of market turmoil at home.

The past week has seen a drop in the pound and an increase in government borrowing costs, which has fuelled speculation of more spending cuts or tax rises.

The Tories have accused the chancellor of having “fled to China” rather than explain how she will fix the UK’s flatlining economy, while the Liberal Democrats say she should stay in Britain and announce a “plan B” to address market volatility.

However, Ms Reeves has rejected calls to cancel the visit, writing in The Times on Friday night that choosing not to engage with China is “no choice at all”.

👉 Click here to follow Electoral Dysfunction wherever you get your podcasts 👈

The chancellor will be accompanied by Bank of England governor Andrew Bailey and other senior executives.

She will meet with her counterpart, Vice Premier He Lifeng, in Beijing on Saturday to discuss financial services, trade and investment.

She will also “raise difficult issues”, including Chinese firms supporting Russia’s invasion of Ukraine and concerns over constraints on rights and freedoms in Hong Kong, the Treasury said.

But it did not mention whether Ms Reeves would raise the treatment of the Uyghur community, which Downing Street said Foreign Secretary David Lammy would do during his visit last year.

On Friday, Culture Secretary Lisa Nandy defended the trip, telling Sky News that the climbing cost of government borrowing was a “global trend” that had affected many countries, “most notably the United States”.

“We are still on track to be the fastest growing economy, according to the OECD [Organisation for Economic Co-operation and Development] in Europe,” she told Anna Jones on Sky News Breakfast.

“China is the second-largest economy, and what China does has the biggest impact on people from Stockton to Sunderland, right across the UK, and it’s absolutely essential that we have a relationship with them.”

Read more – Ed Conway analysis: The chancellor’s gamble with China

However, former prime minister Boris Johnson said Ms Reeves had “been rumbled” and said she should “make her way to HR and collect her P45 – or stay in China”.

While in the country’s capital, Ms Reeves will also visit British bike brand Brompton’s flagship store, which relies heavily on exports to China, before heading to Shanghai for talks with representatives across British and Chinese businesses.

It is the first UK-China Economic and Financial Dialogue (EFD) since 2019, building on the Labour government’s plan for a “pragmatic” policy with the world’s second-largest economy.

Sir Keir Starmer was the first British prime minister to meet with China’s President Xi Jinping in six years at the G20 summit in Brazil last autumn.

Relations between the UK and China have become strained over the last decade as the Conservative government spoke out against human rights abuses and concerns grew over national security risks.

Navigating this has proved tricky given China is the UK’s fourth largest single trading partner, with a trade relationship worth almost £113bn and exports to China supporting over 455,000 jobs in the UK in 2020, according to the government.

During the Tories’ 14 years in office, the approach varied dramatically from the “golden era” under David Cameron to hawkish aggression under Liz Truss, while Rishi Sunak vowed to be “robust” but resisted pressure from his own party to brand China a threat.

The Treasury said a stable relationship with China would support economic growth and that “making working people across Britain secure and better off is at the forefront of the chancellor’s mind”.

Ahead of her visit, Ms Reeves said: “By finding common ground on trade and investment, while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”