The United States Securities and Exchange Commission (SEC) has initiated legal proceedings against accounting firm Prager Metis, which had previously provided services to the cryptocurrency exchange FTX before the exchange’s declaration of bankruptcy.
According to an official statement released on September 29th, the SEC alleges that Prager Metis failed to maintain the necessary independence while offering auditing services to its clients, which is in violation of the auditor independence framework.
To prevent conflicts of interest, accounting and audit functions are required to be kept separate.
The SEC claims that these intertwined activities took place over a span of nearly three years, constituting a significant breach of fundamental auditing principles.
The statement underscores the critical importance of auditor independence in safeguarding investor interests.
While the SEC’s statement does not explicitly mention FTX or any other specific clients, it highlights that there were allegedly “hundreds” of violations of auditor independence throughout the three-year period in question.
This suggests a widespread problem within Prager Metis’ practices.
A previous court filing disclosed that FTX Group had engaged Prager Metis to audit its subsidiaries, FTX US and FTX, at some point in 2021. Subsequently, FTX declared bankruptcy in November 2022.
The filing argued that Prager Metis should have recognized that FTX would use their audit results to build public trust, especially after former FTX CEO Sam Bankman-Fried had publicly disclosed previous audit outcomes.
Concerns had been previously raised about the content presented in FTX’s audit reports.
On January 25th, FTX’s current CEO, John J. Ray III, expressed substantial concerns regarding the information presented in the audited financial statements during a bankruptcy court proceeding.
Senators Elizabeth Warren and Ron Wyden had also voiced concerns about Prager Metis’ impartiality, suggesting that the firm had operated more as an advocate for the cryptocurrency industry.
Meanwhile, another entity involved with FTX, U.S.-based law firm Fenwick & West, has recently faced legal challenges.
In a court filing dated September 21st, plaintiffs alleged that Fenwick & West should bear partial responsibility for FTX’s collapse due to its alleged excessive service offerings to the exchange.
However, Fenwick & West contends that it cannot be held accountable for a client’s misconduct as long as its actions remain within the bounds of its representation of the client.
This legal dispute further complicates the aftermath of FTX’s bankruptcy declaration and raises questions about the responsibilities of service providers in such cases.
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On September 29th, Polygon Labs made a significant announcement, revealing that Google Cloud had joined the Polygon proof-of-stake network as a validator.
This development marked a significant milestone for Polygon, as Google Cloud brought its extensive expertise and resources to the table.
As part of this collaboration, Google Cloud joined a diverse group of over 100 validators responsible for verifying transactions on Polygon’s layer-2 Ethereum network.
This move showcased Google Cloud’s commitment to supporting the growth and security of blockchain technology.
In a statement shared on the X platform (formerly known as Twitter), Polygon Labs expressed their enthusiasm for this partnership, highlighting that the same infrastructure powering platforms like YouTube and Gmail would now contribute to the security and efficiency of the Ethereum-based Polygon protocol.
Validators play a crucial role in maintaining the integrity of the Polygon network by operating nodes, staking MATIC tokens, and participating in the proof-of-stake consensus mechanism.
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The Google Cloud Singapore account officially confirmed its role as a validator on the Polygon proof-of-stake network, emphasizing its dedication to enhancing the network’s security, governance, and decentralization.
Notably, Google Cloud joined the ranks of other prominent validators, including Deutsche Telekom, one of Europe’s largest telecommunications firms.
Google Cloud described its collaboration with Polygon Labs as an ongoing strategic partnership, indicating a long-term commitment to blockchain technology. In tandem with this announcement, Google Cloud Asia Pacific released a YouTube video titled “Polygon Labs is solving for a Web3 future for all,” further underscoring their dedication to the Web3 ecosystem.
Polygon Labs had recently initiated “Polygon 2.0,” aimed at updating and enhancing the Polygon network.
This multi-phase project, with “Phase 0” being the current focus, involves several Polygon Improvement Proposals (PIPs). PIP 17 stands out as it involves transitioning from the MATIC token to the new POL token.
PIPs 18 and 19 address essential aspects like the technical description of POL and the update of gas tokens.
These changes are scheduled to be implemented in the fourth quarter of 2023, reflecting Polygon’s commitment to continuous improvement and innovation within the blockchain space.
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Paradigm, a prominent venture capital firm, has voiced strong criticism against the United States Securities and Exchange Commission (SEC) for what it perceives as a deviation from standard rulemaking procedures in its current legal action against the cryptocurrency exchange giant, Binance.
In a statement released on September 29th, Paradigm accused the SEC of attempting to reshape the legal landscape by leveraging the allegations in its complaint against Binance to effect changes in the law without adhering to established rulemaking processes.
Paradigm firmly contends that the SEC is overstepping its regulatory boundaries and vehemently opposes this unconventional approach.
The SEC initiated legal proceedings against Binance in June, alleging multiple violations of securities laws, including operating without the required registration as an exchange, broker-dealer, or clearing agency.
Paradigm emphasized that the SEC has been pursuing similar cases against various cryptocurrency exchanges lately, raising concerns that the SEC’s stance “could fundamentally reshape our comprehension of securities law in several critical aspects.”
Furthermore, Paradigm expressed reservations about the SEC’s application of the Howey test, a legal standard used to determine whether transactions qualify as investment contracts subject to securities regulations.
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Paradigm’s amicus brief argued that many assets are actively marketed, purchased, and traded based on their profit potential. Despite this, the SEC has consistently exempted them from being classified as securities.
Paradigm cited examples such as gold, silver, and fine art, underscoring that the mere potential for value appreciation does not inherently classify their sale as a security transaction.
In a related development, Circle, the issuer of USD Coin (USDC), has entered the fray of the ongoing legal dispute between Binance and the SEC.
Circle firmly contends that stablecoins should not be categorized as securities by the SEC.
They argue that individuals who acquire stablecoins are not doing so with the intention of deriving profits, thereby challenging the SEC’s attempt to regulate these assets as securities.
In summary, Paradigm’s criticism of the SEC centers on the agency’s unconventional approach to legal action against Binance, which they believe goes beyond established rulemaking procedures and could have far-reaching implications for the cryptocurrency and securities landscape.
Meanwhile, Circle has joined the legal dispute, asserting that stablecoins should not be treated as securities by the SEC due to their distinct nature and use cases.
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Nearly a year has passed since the infamous FTX hack, which saw cybercriminals abscond with a staggering $600 million in tokens.
However, on Saturday, September 30, 2023, on-chain data unveiled intriguing activity within the perpetrator’s wallet, identified as 0x3e957.
This revelation unfolds in close proximity to the imminent launch of an Ethereum-based ETF in the United States.
Spot On Chain, a reliable source for on-chain data, has recently detected a resurgence in activity emanating from the exploiter’s address.
Currently, this enigmatic wallet contains a substantial treasure trove of $16.75 million worth of Ether.
Further examination of the data exposes two significant transactions involving the movement of 2,500 ETH each, a combined value of $4 million.
Such transfers often correlate with selling activities, which could potentially exert downward pressure on the price of Ether, thereby impacting smaller investors.
Conversely, there is a tantalizing prospect that the price of ETH could embark on a bullish trajectory in the near future, coinciding with the launch of several Ethereum exchange-traded funds (ETFs) within the United States.
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Multiple companies are eagerly awaiting the approval of the U.S. Securities and Exchange Commission (SEC), which is poised to make a momentous decision on October 2.
If granted, this decision could greenlight up to nine ETF products, facilitating unprecedented access to Ethereum for mainstream investors.
The convergence of these developments is poised to inject significant volatility into the Ethereum market.
Investors and enthusiasts alike are keenly observing the situation, gauging the potential impact on ETH prices and the broader cryptocurrency landscape.
The lingering specter of the FTX hack, with its audacious $600 million heist, continues to cast a shadow over the crypto world, serving as a stark reminder of the importance of security and vigilance in this rapidly evolving digital frontier.
As we approach the fateful SEC decision date, the crypto community braces itself for the possible repercussions, hoping that the launch of Ethereum-based ETFs can bring not only increased accessibility but also stability and legitimacy to the world of cryptocurrencies in the United States.
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Nvidia, a global powerhouse in artificial intelligence (AI) chip manufacturing with its headquarters in California, found itself at the center of attention this week as French law enforcement conducted an unexpected raid on its offices.
This move is part of a broader investigation by French antitrust authorities into the cloud computing sector, as reported by The Wall Street Journal on September 28. So far, neither Nvidia nor French enforcement agencies have officially disclosed details about the incident.
A press release on the website of the French antitrust agency, Autorité de la Concurrence, mentions an unannounced inspection focused on the graphics cards sector.
The agency obtained a judicial authorization for this action based on suspicions of Nvidia’s involvement in “anticompetitive practices in the graphics cards sector.”
Notably, the agency emphasizes that the raid does not automatically imply the existence of a legal violation attributable to the company.
This development comes in the wake of Autorité de la Concurrence’s extensive analysis of the cloud computing sector, which culminated in a report published in June 2023.
Notably, this report did not explicitly mention Nvidia but instead concentrated on major tech giants like Amazon Web Services, Google Cloud, and Microsoft Azure.
According to the agency’s findings, these three hyper-scalers accounted for a staggering 80% of the spending growth in public cloud infrastructures and applications in France during 2021.
The agency expressed concern about the market power wielded by these companies and their potential to stifle competition.
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To address this issue, Autorité de la Concurrence is exploring various avenues under national competition laws and the European Data Act to counteract this monopolistic trend.
Nvidia has attracted the regulators’ scrutiny due to its unique role as a hardware provider to some of the most cutting-edge segments of the digital industry.
Notably, Nvidia’s recent quarterly report revealed that United States regulators had requested the company to limit the export of AI chips to “certain Middle East countries.”
However, the U.S. Department of Commerce later denied this information, adding a layer of complexity to Nvidia’s ongoing interactions with regulatory bodies.
In summary, Nvidia’s encounter with French authorities underscores the growing regulatory scrutiny faced by tech giants operating in the AI and cloud computing sectors, particularly those with a significant influence on the digital landscape.
The outcome of this investigation will likely have ramifications not only for Nvidia but also for the broader tech industry as it navigates complex antitrust and competition concerns.
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A new legislative proposal has surfaced in the United States that seeks to enhance oversight and transparency within the cryptocurrency industry. U.S.
Representative Don Beyer unveiled the “Off-Chain Digital Commodity Transaction Reporting Act” on September 28.
This groundbreaking legislation mandates that cryptocurrency service providers report all blockchain transactions to a government-designated repository registered with the Commodity Futures Trading Commission (CFTC).
The primary objective of this legislation is to safeguard cryptocurrency investors from potential disputes, manipulation, or fraudulent activities arising from transactions conducted off-chain or beyond the purview of the blockchain network.
Unlike on-chain transactions that are instantaneously recorded on the blockchain, off-chain cryptocurrency transactions traverse secondary layers, making tracking and monitoring more challenging.
This issue has gained prominence due to the proliferation of trading platforms that aim to expedite transaction processing times while reducing costs.
Thousands of transactions now occur “off-chain,” eluding public visibility on the blockchain.
Representative Beyer emphasized the discrepancies in internal record-keeping among these private entities, underscoring the vulnerability of investors and consumers to fraudulent practices.
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In his statement, Representative Beyer articulated the legislation’s purpose: “This bill is a common-sense measure to restore some transparency and confidence to the digital asset market.”
According to the bill’s provisions, cryptocurrency service providers will be obliged to report all off-chain transactions within a 24-hour window to a CFTC-registered trade repository.
Notably, these requirements parallel the rules governing “virtually all securities and swaps transactions.”
This legislative move reflects a broader trend of U.S. lawmakers actively addressing cryptocurrency regulations.
In mid-September, nine U.S. senators threw their support behind Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act, which was reintroduced in July 2023.
The bill seeks to clamp down on noncustodial digital wallets and extend the responsibilities outlined in the Bank Secrecy Act to tackle the illicit use of digital currencies.
These collective efforts underscore the growing recognition of the need for robust regulatory frameworks to govern the cryptocurrency space and protect the interests of investors and consumers alike.
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Gemini, the New York-based cryptocurrency exchange, has announced its departure from the Dutch market, following the footsteps of crypto behemoth Binance.
The move is attributed to Gemini’s inability to meet the regulatory requirements imposed by the De Nederlandsche Bank (DNB).
However, the company has assured its Dutch users of its intention to re-enter the market once it achieves full compliance with the new regulations.
In a letter addressed to its Dutch clientele on September 26, Gemini urged users to take action before November 17, 2023, when the platform will suspend its operations in the Netherlands due to the stringent DNB requirements.
The letter emphasized the need to empty Gemini accounts completely by that date.
The company’s decision underscores the evolving regulatory landscape within the cryptocurrency space, with authorities worldwide increasing their scrutiny of exchanges and digital assets.
Gemini has recommended that its users transfer their cryptocurrency holdings to Bitvavo, a local cryptocurrency exchange fully registered with the DNB.
Bitvavo, founded in 2018 and headquartered in Amsterdam, is a member of the Dutch Association of Bitcoin Companies.
This recommendation aims to facilitate a seamless transition for Gemini’s Dutch user base and ensure continued access to cryptocurrency services.
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The cryptocurrency exchange has expressed its commitment to re-entering the Dutch market as soon as it achieves full compliance with the Markets in Crypto-Assets regulations (MiCA).
These regulations, set to unify crypto-related requirements across the European Union, will play a pivotal role in determining the re-entry of crypto exchanges into the Dutch market.
Gemini’s decision aligns with its dedication to operating within a framework that ensures both user protection and regulatory adherence.
Gemini’s move mirrors a similar decision made by Binance during the summer of 2023 when it ceased operations in the Netherlands due to its failure to obtain approval from the DNB.
The DNB’s press officer, Tobias Oudejans, suggested that compliance with MiCA could pave the way for Binance’s return, emphasizing the potential for a different legal landscape for cryptocurrency companies in the Netherlands.
Presently, the DNB has registered 37 virtual asset providers, including well-known platforms like eToro, Coinbase, Crypto.com, and BitPay.
These providers operate within the evolving regulatory framework, adapting to the changing landscape of cryptocurrency regulation in the Netherlands and the broader European Union.
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Epic Games, renowned as the force behind the massively popular Fortnite, has taken a significant step by reducing its workforce by 16%, which translates to roughly 830 employees.
This substantial reduction comes as a response to the company’s overly optimistic projections regarding revenue derived from the metaverse concept, leading to excessive spending that outweighed earnings.
In a memo sent to Epic Games’ staff on September 29, CEO Tim Sweeney acknowledged the necessity of these layoffs to restore financial stability.
Sweeney, while reflecting on his initial optimism about weathering the transition without job cuts, admitted, “I had long been optimistic that we could power through this transition without layoffs, but in retrospect, I see that this was unrealistic.”
Epic Games attributed its recent growth to the Fortnite Creator program, allowing players to create and sell in-game content while retaining a 40% share of the profits.
However, this shift has come at the cost of reduced profit margins.
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Sweeney commented, “Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”
In addition to the layoffs, Epic Games also announced that 250 more employees would be parting ways with the company.
This decision accompanies the sale of the recently acquired music website Bandcamp and the spin-off of SuperAwesome, a child-safety tech firm that joined Epic in 2020.
Notably, Epic Games intends to provide some support for departing employees. Those leaving the company will receive six months of pay, with employees residing in the United States, Canada, and Brazil also receiving six months of paid healthcare.
Besides its flagship title, Fortnite, which boasts an impressive 400 million registered users, Epic Games is also renowned for the Unreal Engine, a video game development suite powering titles like God of War and PlayerUnknown’s Battlegrounds.
While this decision is undoubtedly challenging for affected employees, Epic Games aims to provide some support during this transition.
In conclusion, Epic Games’ decision to reduce its workforce by 16% reflects the company’s need to rectify its financial situation, which suffered due to unrealistic revenue expectations related to the metaverse concept.
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An individual in China, whose identity remains undisclosed, has been slapped with a fine of 1.06 million yuan ($144,907) for utilizing a Virtual Private Network (VPN) to gain access to sites barred in the nation while remotely working for an overseas employer.
Local media insights reveal that the individual, serving as a consultant from 2019 to 2022, accessed restricted platforms like GitHub to scrutinize source code, responded to customer service inquiries, convened teleconferences through Zoom, and created multiple threads on Twitter, all facilitated by a VPN.
The adjudication, declaring the consultant engaged in utilizing electronic devices “without authorization for non-legal international networking,” was reported by China Digital Times.
Chengde Police documents indicate that the earnings accumulated through the utilization of a VPN were categorized as “proceeds of crime,” leading to a hefty penalty equivalent to the individual’s three years’ salary, amounting to $144,097.
The legal framework in China strictly forbids the employment of VPNs to navigate through the country’s “Great Firewall,” which obstructs access to renowned websites such as Google, Wikipedia, and Facebook.
This recent enactment has instigated a wave of anxiety among professionals in China’s IT and Web3 sectors, who frequently depend on VPNs to perform analogous tasks related to remote work.
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This unprecedented penalty underscores China’s relentless enforcement of its stringent internet norms, triggering a ripple of concern among tech professionals, consultants, and those engaging in international collaborations.
The decision reflects the broader context of government control and supervision, aiming to monitor online content meticulously and maintain hegemony over the nation’s digital interactions.
The ramifications of this ruling extend beyond legal repercussions, shining a light on the extensive and pervasive nature of digital governance in China.
It creates a milieu of uncertainty and apprehension around digital communications and remote collaborations, particularly those with international counterparts, emphasizing the tightening constraints on digital freedoms and interactivity.
This stern regulatory stance and subsequent legal actions serve as a glaring reminder for professionals to be acutely aware and compliant with the existing cyber laws, emphasizing the increasing limitations and the potential risks associated with unauthorized internet usage and access to international web platforms in China’s progressively restrictive digital environment.
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Marathon Digital, a prominent Bitcoin mining company, has acknowledged its involvement in mining an invalid Bitcoin block as part of an operational optimization experiment.
In a statement posted on September 27th, Marathon clarified that only a small portion of its hash rate was dedicated to such experiments, explicitly emphasizing that their intentions did not involve any alteration of the Bitcoin network.
Marathon was quick to assure the public that their experiment was never intended to tamper with Bitcoin Core, the primary software for connecting to the Bitcoin network and running nodes. Instead, the issue stemmed from an internal development environment within the company.
The incident took place on September 26th at 9:42 pm UTC, specifically on block 809,478, as reported by Mempool.space.
Various Bitcoin developers and BitMEX Research identified the root cause as a “transaction ordering issue.”
A Bitcoin developer known as “mononaut” suggested that Marathon’s mistake arose from reordering transactions based on ascending absolute fees.
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Notably, Bitcoin analyst Dylan LeClair pointed out that Marathon should have conducted such experiments on a testnet before venturing onto Bitcoin’s mainnet to prevent such mishaps.
Marathon expressed gratitude that Bitcoin, despite the unintended incident, continued to function as designed.
The Bitcoin network promptly rejected the invalid block and rectified the anomaly, demonstrating the robust security inherent to the Bitcoin ecosystem.
Cointelegraph sought comment from Marathon regarding the incident but had not received an immediate response at the time of reporting.
Following the incident, Marathon’s (MARA) share price experienced a 2.91% decline, opening at $8.01 on September 27th, according to Google Finance.
In summary, Marathon Digital’s experiment resulted in the mining of an invalid Bitcoin block, a situation they promptly rectified.
The incident highlighted the Bitcoin network’s resilience and security, emphasizing the importance of caution and testing in the ever-evolving world of cryptocurrency.
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