SEC - Page 258

Silvergate Bank is undergoing significant changes as CEO Alan Lane and two other key executives prepare to step down from their roles, marking a departure from the institution’s previously crypto-friendly stance.

Lane, along with the chief legal officer John Bonino, is set to leave on August 15th, while Antonio Martino, the chief financial officer, will follow suit on September 30th.

In a recent filing to the Securities and Exchange Commission (SEC), Silvergate Capital, the bank’s parent company, confirmed that these departures align with their previously communicated strategy to wind down operations and initiate the voluntary liquidation of Silvergate Bank.

This transition also highlights the bank’s shift away from its previous position as a crypto-friendly establishment.

It’s important to note that the departing executives will not be entitled to additional compensation based on their employment agreements, but they will receive severance benefits in recognition of their service.

The departure of these executives is taking place amid a series of legal challenges that Silvergate Bank is currently facing.

The institution, as well as CEO Alan Lane, are implicated in various proposed lawsuits that center largely around their alleged involvement in the wrongdoings of the crypto exchange FTX.

One lawsuit, brought forth by the Texas-based Word of God Church, alleges that Silvergate Bank utilized $25 million from church deposits to participate in what they describe as FTX’s “fraudulent” activities.

The lawsuit further contends that both Silvergate and Alan Lane were well aware of the ongoing fraudulent activities and misconduct.

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Another class-action lawsuit claims that Silvergate Bank did not adequately conduct due diligence on the crypto firms it onboarded as clients, including prominent names like FTX, Alameda, and North Dimension.

The suit also mentions other notable customers such as Binance.US, Huobi Global, Nexo Capital, and Bittrex.

The bank’s decision to wind down its operations stems from the substantial losses it incurred, amounting to $1 billion, due to the collapse of FTX, one of its major clients.

This collapse had far-reaching implications, not only affecting the bank but also sending shockwaves through the cryptocurrency ecosystem and the broader US banking sector.

Kathleen Fraher, the chief transition officer of Silvergate Capital, is slated to take over the role of CEO Alan Lane, while Andrew Surry, the current chief accounting officer of the bank, is set to assume the responsibilities of departing CFO Antonio Martino.

These changes mark a pivotal moment in the evolution of Silvergate Bank and its role within the cryptocurrency landscape.

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The Stellar Development Foundation (SDF) has taken on a minority investment role in MoneyGram International, a leading payments provider, as revealed in an announcement on August 15th.

Denelle Dixon, the CEO and Executive Director of the Stellar Development Foundation, expressed the decision to invest in MoneyGram as a straightforward one.

Dixon clarified in a corresponding blog post that the investment stemmed from SDF’s internal cash reserves, earmarked for supporting the foundation’s operations.

This funding source diverged from Stellar’s Enterprise Fund, typically utilized for backing startups and early-stage ventures.

Financial particulars of the investment were not disclosed by Dixon, but she did highlight that the SDF’s investment would secure them a position on MoneyGram’s board of directors.

The purpose of the investment, Dixon explained, is to bolster MoneyGram’s digital operations and explore the potential of blockchain technology.

This strategic move signifies MoneyGram’s dedication to embracing digital transformation and emerging as a frontrunner in fintech on a global scale.

The affiliation between Stellar Development Foundation and MoneyGram traces back to 2019, evolving into a more formalized partnership in 2021.

This investment marks the latest step in their collaboration.

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In a noteworthy development, MoneyGram facilitated the purchase, sale, and custody of cryptocurrencies through its mobile app for users based in the United States in November 2022.

In another recent initiative in July 2023, MoneyGram, in partnership with local bank Banesco, introduced a novel account deposit service targeted at consumers in Venezuela.

Despite this significant announcement, Stellar’s native token, Stellar XLM, exhibited a muted response, experiencing a 4.4% drop to $0.129 on the day of the announcement.

This information is according to Cointelegraph price data.

Stellar XLM had previously experienced an upswing following a legal victory for Ripple.

However, it has faced a subsequent 28% decline and remains notably lower, down by 85%, from its all-time high of $0.875, reached in January 2018.

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The United States House of Representatives Democrats have taken a proactive step towards the regulation of artificial intelligence (AI) by establishing an AI working group.

Comprising 97 members, the New Democrat Coalition unveiled this group on August 15th.

Their primary goal is to collaborate with President Joe Biden’s administration, stakeholders, and representatives from both sides of the political spectrum to construct sensible and bipartisan regulations for the rapidly growing AI sector.

With an emphasis on nurturing AI’s potential for economic growth, the working group acknowledges the importance of safeguarding the workforce.

They are dedicated to devising strategies that will protect individuals whose jobs might be threatened by the rise of AI-driven technologies, ensuring that they can remain employed.

Heading this initiative is Representative Derek Kilmer, who will serve as the chair of the AI working group.

Kilmer highlighted the pressing concern regarding the dissemination of misinformation and the proliferation of sophisticated AI-generated deepfakes across the internet.

He expressed the urgency of addressing these issues, emphasizing the need for Congress to swiftly grasp the intricacies of such matters to effectively counteract them.

The AI working group’s intentions align with the broader sentiment expressed by various stakeholders, including legislators, academics, and prominent tech CEOs.

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Recognizing the potential risks associated with unchecked AI advancements, Vice President Kamala Harris and senior advisors under President Biden convened with industry CEOs in May.

This meeting aimed to discuss the inherent dangers AI poses and explore ways to mitigate them.

Furthermore, President Biden, acknowledging the significance of AI, convened a meeting in June with leading AI experts in Silicon Valley.

This meeting served as a platform for thorough deliberation on the potential hazards brought about by AI’s rapid evolution and strategies to manage and regulate its growth.

In conclusion, the United States House of Representatives’ Democrats have formed an AI working group composed of 97 members, aimed at responsibly shaping AI legislation.

Their collaborative approach, involving various stakeholders, seeks to harness AI’s benefits while addressing concerns about misinformation and deepfakes.

These efforts align with recent discussions led by Vice President Kamala Harris and President Joe Biden, underlining the growing recognition of the need to regulate and manage the risks associated with AI advancements.

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Uzbekistan’s financial landscape is undergoing a digital transformation as two prominent private banks, Kapital Bank and Ravnaq Bank, secure the green light from the National Agency for Perspective Projects (NAPP) to participate in the realm of cryptocurrency regulation through the digital sandbox initiative.

A significant development unveiled on August 14th, NAPP’s approval was extended to Ravnaq Bank, thus welcoming them to partake in the pilot program.

This followed the Agency’s announcement in May 2023 confirming Kapital Bank’s involvement in issuing its own crypto card.

Branded as “UzNEX,” the forthcoming Uzbeki crypto card is set to revolutionize the financial sector by synergizing traditional banking services with access to a crypto exchange and an automated exchange mechanism.

Bolstering this innovative venture is a partnership with Mastercard, a global frontrunner in payment systems.

Both Kapital Bank and Ravnaq Bank are diligently working towards a shared goal, aiming to roll out their crypto card offerings to the general public by the close of December 2023.

Notably, they stand as two of the esteemed trio of registered participants within the nation’s digital sandbox experiment.

In a pivotal move commencing from 2023, Uzbekistan’s administration has mandated that only licensed cryptocurrency entities are permitted to offer crypto-related services.

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This regulatory pivot comes on the heels of the issuance of the inaugural licenses to local crypto enterprises in November 2022.

Preceding this, the country had barred access to several international crypto exchanges of repute, including Binance, FTX, and Huobi, citing allegations of unauthorized activities.

The nation’s meticulous approach to cryptocurrency oversight was instigated by a presidential decree in 2022 that heralded the inception of NAPP, entrusted with the responsibility of supervising the burgeoning digital assets sector.

Furthermore, the decree not only set the wheels in motion for regulatory clarity but also intricately delineated the legal framework encompassing cryptocurrency mining endeavors within the confines of Uzbekistan.

As these private banks join hands with cutting-edge technology and renowned financial giants, they are poised to shape a pioneering era in Uzbekistan’s financial landscape.

With their sights set on the imminent launch of the UzNEX crypto card and the overarching vision of advancing secure and regulated cryptocurrency services, these institutions are indelibly etching their mark in the digital evolution of finance.

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The launch of the Digital Energy Council on August 15 marks a significant development in the United States’ crypto mining sector, aiming to debunk misunderstandings about its environmental impact among policymakers.

The council’s primary objective is to champion policies that foster the expansion of digital asset mining and energy innovation.

Thomas Mapes, the founder and president of the council, emphasized the pressing need for a united voice for digital asset miners in the corridors of power in Washington.

Drawing from his past role as the director of energy at the Chamber of Digital Commerce and his experience as the chief of staff at the U.S. Department of Energy’s Office of International Affairs, Mapes underlined the crucial role of crypto mining companies in the energy ecosystem.

He highlighted how these entities contribute by either supplying energy to the grid during peak demand periods or purchasing excess energy that would otherwise go to waste.

Mapes envisions a future where crypto mining firms evolve into energy companies, alongside established players like utility companies and major power providers.

However, he acknowledged that many lawmakers have yet to share this perspective. Over the past year, legislative measures have been introduced that cast a shadow on the industry’s reputation.

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For instance, in March, the chair of the Senate Environment and Public Works Subcommittee reintroduced legislation alleging that crypto miners strain public grids and release substantial greenhouse gas emissions solely for personal profit.

Mapes further referenced President Biden’s proposal for a 30% excise tax on digital asset mining and the White House’s report on the environmental impact of crypto mining as additional instances that have generated concerns.

Mapes disclosed that the association already boasts a roster of founding members, encompassing both crypto mining and energy companies, some of which are publicly traded entities.

While the association’s initial focus will be on the U.S., Mapes emphasized that both membership and lobbying efforts are concentrated within the country.

In summary, the inauguration of the Digital Energy Council on August 15 signifies a pivotal step in the U.S. crypto mining realm, as it endeavors to correct misconceptions surrounding the sector’s sustainability while advocating for policies conducive to its growth and technological innovation.

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Former FTX CEO Sam Bankman-Fried Detained in Notorious Brooklyn Jail

Former FTX CEO Sam Bankman-Fried finds himself in an unexpected predicament, spending his third night alongside over 1,500 inmates within the confines of New York’s infamous jail.

This stark contrast emerges from his earlier life in a luxurious California home owned by his parents, valued in the millions and boasting five bedrooms.

The abrupt change in his circumstances transpired following a bail revocation during an August 11th court hearing, presided over by Judge Lewis Kaplan.

The Brooklyn Metropolitan Detention Center, the facility where he now resides, was labeled by the judge as far from a luxury establishment.

Built to accommodate a maximum of 1,000 inmates, the MDC currently holds more than 1,500 individuals under federal custody.

Bankman-Fried anticipates an extended stay, at least two months, while awaiting his impending criminal trial. Nonetheless, his legal team has swiftly lodged an appeal in a bid to overturn this bail revocation.

Regrettably for Bankman-Fried, the detention center has a history marred by scandal, encompassing instances of inmate mistreatment and corruption.

In 2019, former warden Cameron Lindsay referred to the MDC as one of the most problematic facilities under the Bureau of Prisons’ jurisdiction.

Recent incidents have fueled this perception.

A guard faced charges in April for accepting bribes to facilitate the smuggling of contraband such as phones, cigarettes, and drugs.

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In a chilling winter of 2019, the facility suffered a week-long power outage, subjecting inmates to freezing conditions.

Reports from The Intercept painted a grim picture, illustrating inmates resorting to banging on cell windows to gain attention from onlookers.

Those protesting non-violently against dire conditions faced repercussions like pepper spray, solitary confinement, and even closure of their toilets.

The Brooklyn MDC has housed several high-profile individuals in the past, including artists like 6ix9ine, R. Kelly, and Fetty Wap.

Martin Shkreli, known as “pharma bro,” and Ghislaine Maxwell, an accomplice in Jeffery Epstein’s sex trafficking, also spent time within its walls.

Until recently, Bankman-Fried enjoyed bail, residing in a luxurious $4 million Palo Alto, California home with numerous amenities, including a pool.

The bail’s revocation stemmed from a leak of a diary belonging to former Alameda Research CEO Caroline Ellison.

The diary contained her sentiments towards Bankman-Fried and her role in the company. Prosecutors alleged that Bankman-Fried leaked the diary to undermine Ellison’s credibility as a witness and to intimidate her.

In response, his legal team countered the claims, asserting his right to engage with reporters and comment on an ongoing article. An appeal to reverse the bail revocation has been initiated.

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