Binance CEO Changpeng “CZ” Zhao and the cryptocurrency exchange he leads have jointly filed a motion to dismiss the lawsuit filed against them by the United States Securities and Exchange Commission (SEC).
This legal development unfolded in the United States District Court for the District of Columbia, with both Binance Holdings and Zhao asserting that the SEC had exceeded its jurisdiction in their lawsuit.
In a detailed 60-page petition, the legal representatives for Binance and Zhao contended that the SEC’s actions were problematic due to a lack of clear regulatory guidance within the crypto industry prior to the lawsuit.
They accused the SEC of attempting to retroactively assert its regulatory authority over cryptocurrency transactions, dating back as far as July 2017 when the SEC had yet to provide any public guidance on cryptocurrencies.
The petition stated, “The SEC pursues these novel theories retroactively, seeking to impose liability for sales of crypto assets that occurred as far back as July 2017, before the SEC provided any public guidance concerning cryptocurrency.
“It is clear that the SEC’s lawsuit has no foundation in the currently enacted securities laws.”
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Furthermore, Binance’s legal team argued that the SEC had misinterpreted securities laws and their applicability to crypto assets, contending that the regulator distorted the text of these laws in its pursuit of regulatory control over the crypto industry.
Notably, Binance’s American counterpart, Binance.US (legally known as BAM Trading Services), also took a similar stance by filing a separate 56-page petition on the same day, seeking the dismissal of charges.
The SEC initially filed the lawsuit against Binance and its affiliates on June 5, alleging that Binance offered the sale of unregistered securities and conducted unlawful operations within the United States.
This legal action followed a similar move by the Commodity Futures Trading Commission (CFTC), which sued Binance three months prior for failing to register and violating its regulatory guidelines.
The ongoing regulatory scrutiny has significantly impacted Binance.US, with daily trading volumes plummeting by over 98% since September 2022.
The exchange also announced layoffs amounting to 30% of its workforce on September 13, with its president and CEO, Brian Shroder, departing from the company amidst these challenges.
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A recent publication from the Institute of Risk Management (IRM) has drawn attention to the potential of Bitcoin (BTC) to serve as a catalyst for a worldwide energy transition.
The report, authored by members of the IRM Energy and Renewables Group, Dylan Campbell and Alexander Larsen, bears the title “Bitcoin and the Energy Transition: From Risk to Opportunity.”
This comprehensive analysis challenges the prevailing notion that BTC poses a threat due to its energy-intensive nature and instead sheds light on its capacity to instigate transformative changes in the global energy landscape.
The IRM report underscores the indispensable role of energy in contemporary society and the growing demand for sustainable, cost-effective, and clean energy sources.
Notwithstanding the criticisms regarding Bitcoin’s substantial energy consumption, the study offers a more nuanced perspective by elucidating the potential advantages BTC could bring to the energy sector.
One of the most noteworthy findings within the report is the assertion that Bitcoin mining has the potential to reduce global emissions by as much as 8% by 2030.
This ambitious target can be achieved through the conversion of wasted methane emissions into less harmful byproducts.
The report elucidates a theoretical scenario in which captured methane is harnessed to power Bitcoin mining operations, effectively mitigating the release of methane into the atmosphere.
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Furthermore, the report outlines additional opportunities for Bitcoin to make meaningful contributions to the energy sector.
It suggests that Bitcoin could enhance energy efficiency by facilitating electricity grid management through the deployment of Bitcoin miners and the transfer of excess heat generated by mining operations to greenhouses, thus optimizing resource utilization.
The authors of the IRM report articulate their perspective succinctly: “We have shown that while Bitcoin is a consumer of electricity, this does not translate to it being a high emitter of carbon dioxide and other atmospheric pollutants.
Bitcoin can be the catalyst to a cleaner, more energy-abundant future for all.” In essence, the report underscores the potential of BTC not only to coexist with the imperative for a sustainable energy future but also to actively drive positive change within the energy sector.
In conclusion, the IRM’s report challenges the prevailing narrative surrounding Bitcoin’s environmental impact, positing that BTC has the potential to be a constructive force in shaping a cleaner, more energy-rich global future.
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Tether, the leading issuer of stablecoins in the cryptocurrency market, has experienced a surge in stablecoin lending activity during 2023, despite having previously declared its intention to phase out such loans entirely by December 2022.
In its most recent quarterly report, Tether disclosed that its assets included a total of $5.5 billion in loans as of June 30, marking an increase from the $5.3 billion reported in the previous quarter.
A spokesperson from Tether explained to The Wall Street Journal (WSJ) that this upturn in stablecoin lending was primarily driven by a few short-term loan requests originating from clients with whom the company had established long-standing relationships.
It was emphasized that Tether remains committed to reducing these loans to zero by 2024, as initially announced.
Stablecoin loans had previously gained popularity as a lending product offered by Tether, permitting customers to borrow USDT while providing collateral in return.
Nevertheless, these secured loans had often been surrounded by controversy due to a lack of transparency concerning both the collateral and the borrowers.
The WSJ’s report in December 2022 had raised substantial concerns regarding these lending products, asserting that they were not fully collateralized.
Doubts were also cast on Tether’s ability to meet redemption requirements during times of market instability.
Tether addressed these controversies during 2022, prior to announcing its plan to phase out secured loans in 2023.
At the time, the stablecoin issuer dismissed concerns surrounding these loans as “FUD” (Fear, Uncertainty, Doubt) and insisted that they were overcollateralized.
The recent resurgence in secured loans for Tether coincides with the firm’s expanding market dominance and profitability.
Tether reported a surplus reserve of $3.3 billion in September, a notable increase from the $250 million figure reported in 2022.
Despite reaching out to Tether for comment, Cointelegraph has not yet received a response.
Nonetheless, Tether did issue a response to the WSJ article, asserting that the publication’s concerns regarding stablecoin loans were unwarranted.
Tether emphasized that as a company boasting $3.3 billion in excess equity and projecting an annual profit of $4 billion, it was effectively offsetting the secured loans and retaining such profits within its corporate balance sheet.
Tether remained steadfast in its commitment to eventually eliminate secured loans from its reserves.
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Adult content creators are increasingly turning to decentralized alternatives like Only1 and Friend.tech as they grapple with payment challenges and the constant fear of deplatforming.
Leon Lee, the founder and CEO of Only1, a decentralized counterpart to OnlyFans, sees a significant shift of power from intermediaries to content creators, thanks to Web3 technology.
He notes that intermediaries are diminishing in significance while creators’ roles and earnings are on the rise.
Patreon faced issues in August when creators encountered difficulties withdrawing their earnings due to payment flagging by banks. Moreover, the memory of OnlyFans’ attempt to ban sexually explicit content in 2021 still lingers.
Lee argues that as long as creators remain on centralized platforms with traditional payment systems, they remain susceptible to deplatforming and are unable to realize their full earning potential.
Only1, launched on the Solana blockchain in March 2023 with backing from Animoca Brands, is just one example of startups seeking to reinvent adult subscription platforms with a crypto twist.
In 2022, Allie Rae introduced WetSpace, a crypto-powered adult content platform, to provide an alternative to OnlyFans.
Rae identified banks as a driving force behind platform decisions and saw crypto as a solution to circumvent their influence.
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More recently, creators began migrating to Friend.tech, a new decentralized social media platform on Coinbase’s layer-2 network Base.
Lee predicts a mass migration as creators reject censorship rules imposed by centralized intermediaries. While TV producers, advertisers, and brands will maintain a presence in the creator economy, blockchain-based peer-to-peer payment systems offer a logical progression for creators.
By eliminating the reliance on traditional payment processors, Web3 platforms empower communities to exercise full autonomy over the types of content allowed.
Lee emphasizes that since the OnlyFans adult content censorship debacle, creators have been establishing “backup accounts” on various platforms due to deplatforming risks.
In the Web3 space, Proof of Peach, SEXN, and Keyhole are among the adult entertainment platforms joining the decentralized movement.
Lee envisions a future where creators gravitate toward platforms that provide complete autonomy over their content and ownership rights to their earnings.
He believes this shift away from intermediaries is the natural progression facilitated by blockchain technology, enabling an inevitable future where there are no intermediaries between creators and their fans.
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Bit Trade, the provider of the Kraken cryptocurrency exchange in Australia, is facing legal action from the Australian Securities and Investments Commission (ASIC) for allegedly failing to meet design and distribution obligations for one of its trading products.
ASIC, in a statement released on September 21, asserted that Bit Trade did not establish a target market determination before making its margin trading product available to Australian customers.
Design and distribution obligations are mandatory requirements imposed on financial product providers in Australia.
These obligations entail designing financial products that align with the predefined needs of customers and distributing them through a targeted strategy.
ASIC claimed that since the introduction of these obligations in October 2021, over 1,160 Australian customers utilized Bit Trade’s margin trading product, resulting in a collective loss of approximately $8.35 million (12.95 million Australian dollars).
The regulator communicated Bit Trade’s non-compliance with these obligations to the company in June 2022.
Despite this warning, ASIC alleges that Bit Trade continued to offer the product without fulfilling the necessary determinations.
Jonathon Miller, the managing director of Kraken’s Australian operations, expressed surprise at ASIC’s actions, believing the product to be in compliance with local regulations.
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Miller emphasized that they had been actively trying to engage with ASIC to ensure their product offering remained compliant.
Bit Trade’s margin trading product provides customers with a “margin extension” service, enabling them to access credit up to five times the value of their collateralized assets.
ASIC, however, contends that this product qualifies as a “credit facility,” as it extends credit for purchasing and selling specific cryptocurrencies on the Kraken exchange.
Sarah Court, ASIC’s deputy chair, stressed that these legal proceedings serve as a reminder to the cryptocurrency industry that regulators will continue to scrutinize financial products to ensure compliance with consumer protection laws in Australia.
“ASIC’s action should be a reminder of the importance of adhering to design and distribution obligations to ensure appropriate distribution of financial products to consumers,” Court stated.
In summary, ASIC has initiated civil proceedings against Bit Trade, the operator of Kraken in Australia, accusing the company of failing to meet design and distribution obligations related to one of its trading products.
The regulator alleges that Bit Trade did not establish a target market determination and continued to offer the product despite being notified of non-compliance.
Bit Trade contends that its product complies with Australian law, while ASIC emphasizes the importance of compliance with consumer protection laws in the cryptocurrency industry.
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Cryptocurrencies, primarily Bitcoin, have emerged as a dominant component of South Korea’s overseas assets, according to the latest report released by the country’s National Tax Service (NTS).
In an official announcement made on September 20, the NTS disclosed that a total of 1,432 individuals and corporations had reported overseas accounts denominated in cryptocurrencies during the current year.
The cumulative value of these reported cryptocurrency holdings amounted to a staggering 130.8 trillion South Korean won, which equates to approximately $98 million.
This remarkable figure represents more than 70% of the overall reported value of all overseas assets.
The official data revealed that a total of 5,419 entities had filed reports regarding their offshore financial accounts, encompassing a diverse range of assets, such as cryptocurrencies, stocks, deposits, and savings.
The aggregate worth of these assets was measured at 186.4 trillion won, or around $140 million.
Although cryptocurrencies were the single largest category in terms of the value of assets reported, deposits and savings accounts were predominant in terms of the number of reports filed.
A total of 2,952 individuals and companies reported holdings worth 22.9 trillion won, equivalent to $17 million.
Additionally, another 1,590 entities disclosed the possession of stocks valued at 23.4 trillion won, or approximately $17.6 million.
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To ensure compliance with tax regulations, the NTS has outlined its intention to intensively scrutinize individuals and entities that fail to report their overseas financial accounts.
The agency has been collecting comprehensive cross-border information exchange data, foreign exchange data, and notifications from relevant agencies, and it is prepared to levy fines on those who breach the reporting rules.
The NTS emphasized the global trend of tax authorities collaborating to exchange information, as part of efforts to counter potential tax base erosion resulting from virtual assets.
South Korea, known for its crypto-friendly environment, has become increasingly vigilant regarding cryptocurrency tax regulations, even confiscating significant amounts of cryptocurrency from tax evaders.
In August 2023, the city of Cheongju in South Korea reiterated its commitment to seizing cryptocurrency from local tax delinquents.
Previously, the South Korean government had postponed the implementation of a 20% tax on crypto gains, originally scheduled for early 2023, now rescheduled for 2025.
These actions underscore the evolving landscape of cryptocurrency taxation in South Korea.
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On September 20, Bitcoin stood firm at $27,000 as the cryptocurrency world awaited a critical macroeconomic event.
Cointelegraph Markets Pro and TradingView data indicated a shift in focus towards higher BTC prices compared to the previous week.
The crypto markets demonstrated confidence in the upcoming decision regarding interest rates by the United States Federal Reserve.
The Federal Open Market Committee (FOMC) was scheduled to announce its latest changes at 2 pm Eastern Time on that very day.
As of the report, the consensus was overwhelmingly in favor of the rates remaining unchanged, with a 99% probability according to CME Group’s FedWatch Tool.
Financial commentator Tedtalksmacro noted that core CPI inflation was aligning with the Fed’s target, suggesting a potential acknowledgment by the Fed that inflation was trending as desired.
However, the event was expected to bring about short-term market volatility.
Analyzing the BTC/USD order book on Binance, Material Indicators highlighted thin liquidity around the spot price, indicating potential for increased volatility.
They also anticipated that the speech and press conference by Fed Chair Jerome Powell would further impact Bitcoin’s price.
Looking at the order book, there were bid-side liquidity levels around $26,650, with substantial bids at $25,000.
On the upside, sellers were positioned at $27,450, which marked the local BTC price high for September.
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Traders had their eyes on key levels and expected the FOMC’s decision to trigger various reactions in the market.
Some traders foresaw challenges to range levels as part of the FOMC’s impact.
Popular trader Daan Crypto Trades anticipated that stop-loss orders might be triggered during the volatility.
Others, like trader Jelle, predicted “choppy waters” for Bitcoin. Trader Skew also anticipated an active trading environment following the FOMC announcement.
Crypto Tony emphasized the importance of the $26,800 support zone for Bitcoin bulls. He noted that maintaining this level was crucial for his long position, highlighting the potential risk of creating a deviation below it.
In conclusion, Bitcoin remained stable at $27,000 on September 20, with the crypto community eagerly awaiting the outcome of the FOMC’s interest rate decision, which was expected to have short-term effects on market volatility and key price levels.
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Stanford University, headquartered in California, has announced its intention to refund all funds it had received from the now-defunct cryptocurrency exchange FTX, as reported by Bloomberg.
The university disclosed that it had received a sum of $5.5 million in donations from various FTX-associated entities between November 2021 and May 2022.
In a statement released via email on September 19th, a spokesperson from Stanford revealed their plan, stating, “We have been in discussions with attorneys for the FTX debtors to recover these gifts and we will be returning the funds in their entirety.”
Stanford clarified that the donations it had received were primarily intended for pandemic-related prevention and research purposes and had been given by the FTX Foundation and FTX-related companies.
Interestingly, the parents of Sam “SBF” Bankman-Fried, the former CEO of FTX, both have affiliations with Stanford Law School and are legal scholars. This connection adds an intriguing layer to the story.
Stanford’s decision to sever financial ties with FTX comes in the wake of allegations against SBF’s parents, Alan Bankman and Barbara Fried, who are accused of embezzling millions from the cryptocurrency exchange.
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The FTX debtors initiated a lawsuit on September 18th, alleging that the duo had inappropriately diverted funds from their involvement with the exchange for personal enrichment, totaling millions of dollars.
The court documents reveal that Bankman had concerns about his annual salary, which was set at $200,000, and these concerns went unaddressed by SBF or FTX US. Bankman had reportedly expected an annual salary of $1 million.
On September 19th, SBF’s legal team sought his early release from jail to prepare for his upcoming trial scheduled for October.
During the hearing, one of the judges pointed out that SBF’s arguments about his First Amendment rights were no longer relevant due to his alleged attempts to intimidate a witness, Caroline Ellison, who is the former CEO of Alameda Research.
In sum, Stanford University’s decision to return the funds it received from FTX-related entities is an interesting development amidst the legal troubles facing SBF’s parents and the ongoing investigations into FTX’s financial dealings.
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Hong Kong regulators are intensifying their scrutiny of the cryptocurrency market following the arrest of six individuals in connection with an alleged fraud case centered around an unlicensed crypto exchange known as JPEX.
On September 19th, Hong Kong Chief Executive John Lee Ka-Chiu addressed the media, emphasizing the government’s commitment to bolstering investor awareness.
He urged investors to exclusively utilize platforms authorized by the Securities and Futures Commission (SFC), as reported by the Associated Press.
The JPEX controversy first came to light on September 13th when the SFC alerted the public to more than 1,000 complaints regarding the unregistered crypto exchange.
These complaints alleged losses exceeding 1 billion Hong Kong dollars, equivalent to $128 million.
In its official warning, the SFC pointed out that JPEX had aggressively marketed its services and products to the Hong Kong public, leveraging online celebrities and over-the-counter money changers for promotion.
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As the problems surrounding JPEX gained public attention, numerous platform users found themselves unable to withdraw their funds, while others lamented reductions in their wallet balances.
In response to the regulatory warning, JPEX reportedly raised its withdrawal fee to an exorbitant $1,000 in a bid to dissuade users from liquidating their assets.
Subsequently, the crypto exchange attributed the ongoing liquidity crisis to third-party market makers.
Hong Kong police also apprehended influencer Joseph Lam, also known as Lin Zuo, in connection with JPEX.
Hong Kong had positioned itself as a burgeoning crypto hub in 2023, fostering a pro-crypto regulatory environment and facilitating access to the crypto trading market for retail investors.
However, unlicensed platforms like JPEX exploited the lack of knowledge and awareness among many users in the country.
In response, the regulatory authority has embarked on an educational campaign, aiming to enlighten individuals about the importance of exclusively engaging with licensed platforms for their cryptocurrency trading activities.
This proactive stance underscores Hong Kong’s commitment to fostering a safe and transparent crypto ecosystem, protecting investors, and maintaining its position as a reputable global financial center.
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Hong Kong-based cryptocurrency exchange, CoinEx, recently disclosed that compromised private keys led to a significant theft of tokens totaling more than $70 million.
Despite this substantial loss, the exchange has reassured its users that the stolen amount represents only a small portion of its overall assets under management.
CoinEx has pledged to fully compensate affected users for their lost funds as it actively works to recover and enhance platform functionality.
The exchange is diligently investigating the security breach, with several blockchain security firms attributing the incident to North Korean Lazarus Group hackers.
CoinEx has taken the unusual step of initiating direct communication with the hackers in an effort to reach a mutually agreeable resolution.
Preliminary findings from the investigation point to a compromised private key for the exchange’s hot wallets, which are used to store assets for deposits and withdrawals.
To mitigate further losses, CoinEx suspended its withdrawal service, patched system vulnerabilities, and transferred remaining assets from the compromised hot wallets.
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The exchange anticipates gradually resuming withdrawals within seven business days.
In response to the breach, CoinEx has prioritized the development and deployment of an entirely new and robust wallet system capable of handling activities across its extensive portfolio of 211 chains and 737 assets.
The incident began when CoinEx initially noticed “anomalous withdrawals” from one of its hot wallets on September 12, starting with a transfer of 4,947 ETH.
Subsequently, the hackers executed significant withdrawals of other tokens to the same address. Initially estimated at $27 million, the value of the stolen funds has since doubled in the week following the breach.
North Korean hackers have been a persistent threat to the cryptocurrency space in recent years, orchestrating some of the largest thefts in the industry’s history.
In 2022, they masterminded the Axie Infinity Ronin Bridge hack, resulting in the theft of over $650 million.
Chainalysis, a blockchain analytics firm, estimates that North Korean hackers have already stolen approximately $340 million in cryptocurrency in 2023.
This figure is expected to rise with the addition of the CoinEx hack and a $41 million hack of the cryptocurrency gambling platform Stake on September 4.
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