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Prosecutors Reveal Sam Bankman-Fried’s Plan to Rehabilitate Image Post-FTX Collapse

In recent legal filings, U.S. prosecutors disclosed attempts by Sam “SBF” Bankman-Fried to rehabilitate his image following the 2022 downfall of FTX.

A Google document, attached to the sentencing memorandum filed on March 15, outlined Bankman-Fried’s 19 strategies aimed at shifting the narrative around the cryptocurrency exchange’s collapse.

These strategies ranged from making media appearances, such as on Tucker Carlson’s show while announcing a political affiliation shift, to disseminating documents to the media, critiquing legal representation, and promoting a staunchly pro-crypto stance alongside an anti-Binance campaign.

The inclusion of this document is part of the prosecution’s case advocating for a severe penalty for Bankman-Fried, who was convicted of fraud and money laundering charges last November.

This document, prosecutors argue, illustrates Bankman-Fried’s potential to perpetrate further fraudulent activities if given the opportunity to reintegrate into society prematurely.

They highlight an instance where, even after FTX declared bankruptcy and subsequent to his indictment, Bankman-Fried pondered over initiating “Archangel LTD,” a venture akin to FTX’s operations aimed at re-establishing an exchange platform.

While the government seeks a prison term of 40 to 50 years, considerably less than the possible maximum of 110 years as per U.S. sentencing guidelines, Bankman-Fried’s defense is advocating for a sentence under seven years.

This plea was made in a memo on Feb. 27, ahead of District Judge Lewis Kaplan’s sentencing decision set for March 28.

Prosecutors further critiqued Bankman-Fried’s sentencing submission for attempting to downplay his crimes as simple misjudgments or misunderstandings, referencing letters from his defense requesting a lenient sentence.

They assert that Bankman-Fried is keen on crafting a narrative of redemption, aiming to manipulate others into investing based on deceitful premises and unfounded optimism.

This case follows a jury finding Bankman-Fried guilty on all seven counts leveled against him by the U.S. government, charges he has denied.

In a related development, FTX’s new leadership announced plans to settle debts with creditors, calculating repayments based on the cryptocurrency values at the time of its bankruptcy filing.

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Federal Judge Allows SEC Lawsuit Against Gemini and Genesis Over Unregistered Securities to Proceed

Bitcoin/Crypto News Today/DeFi

A federal judge has deemed the allegations by the United States Securities and Exchange Commission (SEC) that Gemini and Genesis engaged in the sale of unregistered securities through their Gemini Earn program substantial enough to proceed in court.

The ruling came from Judge Edgardo Ramos of the New York District Court on March 13, denying motions by Gemini and Genesis to dismiss the SEC’s lawsuit in a detailed 32-page order.

The lawsuit, initiated by the SEC in January 2023, claims that the Gemini Earn program, a cryptocurrency yield-bearing product offered by Gemini and managed by Genesis, involved offering and selling unregistered securities.

Judge Ramos highlighted that the program appeared to meet the criteria of an investment contract according to the Howey test, which determines what constitutes a security.

Genesis was specifically noted for not segregating pooled assets on its balance sheet and lending these funds to institutional borrowers based on its discretion, making customers’ profit expectations reliant on Genesis’ efforts.

Furthermore, the court found reasonable the SEC’s position that the agreements underpinning Gemini Earn could be classified as notes, a type of debt security that mandates the repayment of loans with interest.

Judge Ramos stated, “At this stage, under both tests, the court finds that the complaint plausibly alleges that defendants offered and sold unregistered securities through the Gemini Earn program.”

This ruling does not imply a judgment in favor of the SEC but allows the regulatory body to proceed with its case, requiring the collection of further evidence.

The developments follow amidst a backdrop of challenges for Genesis and Gemini, including Genesis’ bankruptcy filing after the SEC’s lawsuit and subsequent agreement to a $21 million settlement with the SEC noted in a bankruptcy court filing last month.

The controversy surrounding the Gemini Earn program, which boasted around 340,000 customers and $900 million in assets under management as of November 2022, intensified following the market turmoil caused by FTX’s bankruptcy.

This turmoil led Genesis to halt withdrawals from Gemini Earn, citing liquidity issues.

In a move to resolve customer grievances, Gemini agreed in February to return $1.1 billion to Gemini Earn customers via a settlement in the Genesis bankruptcy proceedings, coordinated with New York’s financial regulator.

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Core Scientific Sees Revenue Dip but Narrows Losses Amid Crypto Sector Challenges

Bitcoin/Blockchain News/Crypto News Today/DeFi

Core Scientific (CORZ), a prominent player in the crypto mining industry, experienced a downturn in its annual revenue for 2023, reporting a total of $502.4 million, which marks a significant decrease of $137.9 million from the $640 million recorded in 2022, as revealed in their March 12 earnings release.

This decline in revenue was attributed to the company’s exit from the mining rig sales business and an increase in the global Bitcoin hash rate over the year.

Despite this drop in revenue, Core Scientific saw a notable improvement in its financial health, with yearly net losses reducing to $246.5 million in 2023, down from a substantial loss of $2.14 billion in 2022.

The Q4 2023 results further highlighted this positive trend, showing net losses narrowing to $195.7 million from the previous year’s $434.9 million in the same quarter.

The company also made headlines by being relisted on the NASDAQ on January 23, following a successful emergence from a bankruptcy crisis and a 13-month restructuring effort aimed at addressing $400 million in debt.

This financial turmoil was largely due to declining Bitcoin prices, escalating energy costs, and entanglements with the bankrupt crypto lender Celsius.

Core Scientific’s mining operations yielded a remarkable 13,762 BTC in the last year, positioning it as the top publicly traded mining firm in the U.S. based on Bitcoin mined.

Despite these achievements, Core Scientific’s stock experienced a decline, closing at $3.54 a share on March 12, which further slipped to around $3.40 in after-hours trading.

This market reaction did not overly concern the company, as a spokesperson pointed out the general downturn in the market sentiment towards publicly traded Bitcoin miners, citing similar trends in peers like Marathon Digital and Riot Blockchain.

Analysts attribute the falling share prices of mining companies to investor caution ahead of the Bitcoin halving, an event that will reduce mining rewards by half, potentially affecting profitability.

However, with Bitcoin’s price reaching $72,000, predictions suggest these firms will remain profitable post-halving, assuming stable hash rates and Bitcoin prices.

Core Scientific remains optimistic about its future, especially with the upcoming Bitcoin halving. The company is updating its fleet with the latest Bitmain S21 models and aims to enhance its hash rate utilization.

This confidence is echoed by analysts and investment firms, with HC Wainright and Compass Point upgrading their ratings of Core Scientific to “buy,” reflecting a growing interest in the crypto mining sector amid a resurgence in BTC and cryptocurrency values.

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Coinbase Wallet Bolsters Security with Blockaid Integration, Safeguarding Over $75 Million in User Funds

Bitcoin/Blockchain News/Crypto News Today/DeFi

In late 2023, Coinbase Wallet, the self-custody crypto wallet service from Coinbase, significantly enhanced its security by incorporating the Blockaid security tool.

This strategic move, unveiled in a joint announcement to Cointelegraph on March 13, aims to fortify the digital assets of Coinbase users by introducing an additional layer of protection.

The collaboration between Coinbase Wallet and Blockaid has led to the safeguarding of over $75 million in user funds from potential theft.

This achievement was made possible by the integration of Blockaid’s technology, which effectively intercepted nearly 800,000 dubious wallet connections to harmful decentralized applications (DApps), after scrutinizing 114 million transactions and DApp interactions.

Ido Ben Natan, Blockaid’s CEO, shared with Cointelegraph the methodology behind quantifying the protected funds.

By analyzing the malevolent transactions at the wallet level and evaluating the transaction values at the time, Ben Natan affirmed, “We are able to confidently say that the minimum number of funds saved for users is over $75 million.”

Raz Niv, Blockaid’s CTO, referred to this figure as the “lower band” of detected scams for Coinbase Wallet users, emphasizing the calculation process based on transaction warning screens provided to users, which prevented these transactions.

An essential feature introduced through this integration is the enhanced transaction simulation capability, which predicts the outcomes of transactions before their execution on the blockchain.

This technology is crucial for averting cryptocurrency scams and thefts, as it enables users to foresee the implications of their transactions.

This predictive feature is bolstered by the use of three Blockaid application programming interfaces (APIs), enhancing security during the navigation of DApps, executing Web3 protocol transactions, and on-chain messaging.

The partnership has notably improved transaction simulation capabilities across seven blockchain networks, including Ethereum and six Ethereum Virtual Machine (EVM) compatible chains like Base, Optimism, and Polygon, as highlighted by Chintan Turakhia, Coinbase’s senior director of engineering.

Despite the advancements in transaction simulation technology, the report underscores the necessity of validation to ensure comprehensive protection against malicious activities, adding an extra layer of security by alerting users about potentially harmful transactions.

The adoption of Blockaid’s security measures is not exclusive to Coinbase Wallet.

MetaMask, another major EVM wallet, incorporated Blockaid’s security alerts in November 2023 and expanded its default security features to several blockchains by February 2024, marking a significant step forward in the collective effort to enhance the security of cryptocurrency transactions across the industry.

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Grayscale and Coinbase Meet with SEC to Push for Spot Ether ETFs

Blockchain News/Crypto News Today

Crypto firms Grayscale and Coinbase recently engaged in discussions with the U.S. Securities and Exchange Commission (SEC) to advocate for the approval of spot Ether exchange-traded funds (ETFs).

This dialogue, part of an ongoing effort to broaden the accessibility of cryptocurrency investments, took place on March 6, immediately after the comment period for Grayscale’s proposal to convert its Ethereum Trust into an ETF ended.

Grayscale aims to replicate its successful conversion of its Bitcoin Trust into an ETF with Ethereum, addressing SEC concerns regarding market manipulation risks.

During the meeting, Coinbase presented arguments supporting the approval of Ether ETFs, drawing parallels with the earlier approval of Bitcoin ETFs.

They highlighted the inherent mechanisms within Ether that mitigate the risks of fraud and manipulation, suggesting that Ether’s market dynamics are substantially similar to those of Bitcoin.

Furthermore, Coinbase underscored its surveillance-sharing arrangement with the Chicago Mercantile Exchange (CME), a regulatory measure designed to enhance trading oversight, which was a stipulation by the SEC for the Bitcoin ETFs.

Coinbase’s Nate Geraci pointed out the strong correlation between Ether’s futures and spot markets, akin to Bitcoin’s, questioning any rationale for the SEC to reject spot Ether ETFs especially after approving Ether futures ETFs traded on the CME.

Grayscale, on its part, is not only pursuing the spot ETF but has also proposed an Ether futures ETF, highlighting the strategic difference between immediate asset trades in the spot market versus the futures market’s contractual agreement for future trades.

The push for the approval of a spot Ether ETF is not limited to Grayscale and Coinbase; several prominent asset managers, including Invesco, Galaxy Digital, Fidelity, Franklin Templeton, and BlackRock, are also in the race.

They eagerly await the SEC’s final decision, anticipated in May, amid a backdrop of regulatory uncertainty that has left many wondering about the SEC’s stance on this innovative investment vehicle.

Bloomberg’s Eric Balchunas shared his insights on the situation, noting the unusual silence from the SEC regarding their views on the proposed crypto ETFs, contrasting this with the more communicative approach taken during the Bitcoin ETF discussions.

This silence has stirred concerns among asset managers, who remain hopeful yet uncertain about the prospects of introducing spot Ether ETFs to the market.

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Appeals Court Revives Investor Lawsuit Against Binance, Challenges Previous Dismissal Over Securities Sale

Blockchain News/Crypto News Today

A recent decision by a United States appeals court has revived a class-action lawsuit by investors against the cryptocurrency exchange Binance, challenging a previous dismissal by a lower court.

The United States Court of Appeals for the Second Circuit, on March 8, ruled in favor of the investors, overturning the district court’s dismissal of claims related to transparency issues in Binance’s sale of what are alleged to be securities.

The appeals court found the district court’s reasons for dismissal flawed, stating, “We hold that each of the district court’s bases for dismissing Plaintiffs’ claims that are before us on appeal was erroneous.”

The lawsuit, initiated in April 2020 by Chase Williams on behalf of similarly situated investors, accused Binance of engaging in the sale of securities without proper registration as a securities exchange or broker-dealer.

The plaintiffs are seeking to nullify contracts with Binance and demand damages for what they claim is a violation of Section 12(a)(1) of the Securities Act of 1933.

This violation pertains to Binance’s promotion, offer, and sale of crypto-assets or “tokens” that were allegedly not registered as securities, with the district court previously ruling the lawsuit as untimely based on statutes of limitations.

However, the appeals court has sided with the plaintiffs, asserting that Binance falls under U.S. securities laws and that the lawsuit was filed within an appropriate timeframe.

This legal reversal arrives amidst Binance’s ongoing legal battles with U.S. authorities.

Notably, the U.S. Securities and Exchange Commission (SEC) has faced criticism for its handling of inquiries regarding the custody of customer assets.

In June 2023, the SEC initiated a lawsuit against Binance, Binance.US, and its founder, Changpeng “CZ” Zhao, for the alleged sale of unregistered securities and commingling of customer assets in a separate entity controlled by Zhao.

Binance settled with the U.S. Department of Justice in November 2023 for $4.3 billion over charges of money laundering and violating terrorism financing laws.

Zhao, having pleaded guilty to money laundering charges, is scheduled for sentencing in April.

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Binance.US Faces SEC Probe Over Customer Asset Custody, Amid Legal and Regulatory Challenges

Crypto News Today

The U.S. Securities and Exchange Commission (SEC) has voiced concerns regarding Binance.US’s compliance with inquiries into customer asset custody and other fundamental aspects of an ongoing investigation.

According to a joint status report filed to a Washington, D.C. District Court on March 5, Binance.US, operated by BAM Trading Services, has not satisfactorily responded to SEC requests, particularly about the handling of customer assets.

The SEC requested the court’s assistance to expedite the discovery process, indicating a deadlock with Binance.US over crucial inquiries the company has either avoided or failed to address.

The SEC highlighted Binance.US’s reluctance to fulfill basic discovery obligations, including the provision of document attachments, metadata, and written responses.

A significant area of investigation for the SEC is whether Binance’s non-U.S. branches had access to the U.S. customers’ assets, specifically questioning Binance.US’s control over private keys and other access methods.

In defense, Binance.US refuted the SEC’s allegations in the joint status report, claiming full compliance with the SEC’s extensive demands for information.

The company argued that the SEC’s accusations regarding customer assets were baseless and asserted that it had exceeded its legal responsibilities by submitting extensive documentation on its asset custody practices, including sworn statements, monthly reports, and facilitating inspections of shared custody devices.

This legal conflict follows the SEC’s lawsuit against Binance, its U.S. division, and founder Changpeng “CZ” Zhao in June of the previous year, accusing them of selling unregistered securities and improperly mixing customer funds with a different company owned by Zhao.

Additionally, on November 21, Binance settled with the U.S. Department of Justice for $4.3 billion over charges of breaching anti-money laundering and anti-terrorism financing laws.

As part of this settlement, Zhao admitted to money laundering offenses and awaits a sentencing hearing on April 3, which could result in up to 18 months of imprisonment.

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Judge Grants SEC Extension in Ripple Case, Prolongs Legal Battle Over XRP Classification

Crypto News Today/DeFi

In a recent decision by United States District Court Judge Analisa Torres, a motion by the U.S. Securities and Exchange Commission (SEC) to delay the deadline for a critical submission in its ongoing litigation against Ripple Labs has been approved.

The legal documents, filed on March 1, have allowed the SEC additional time to submit discovery materials related to remedies against Ripple.

This extension sets new deadlines, giving the SEC until March 22 to file its opening brief, Ripple until April 22 to submit its opposition brief, and the SEC a final deadline of May 6, 2024, for a reply.

The case between the SEC and Ripple Labs has been a focal point of regulatory discussion since December 2020.

It was then that the SEC charged Ripple and its leading executives, CEO Brad Garlinghouse and co-founder Chris Larsen, with orchestrating a $1.3 billion unregistered securities offering via the sale of the XRP token.

The SEC argues that XRP qualifies as a security, necessitating adherence to stringent regulatory guidelines, a classification Ripple disputes by maintaining that XRP is not a security and criticizing the SEC for not providing adequate notice of its status.

This lawsuit has traversed various legal avenues and arguments, particularly focusing on the Howey test, a criterion to assess if a transaction constitutes an “investment contract” and thus, a security under U.S. law.

The SEC posits that XRP satisfies the Howey test conditions, a stance contested by Ripple.

A pivotal moment in the litigation came in July 2023 when Judge Torres delivered a mixed verdict.

She ruled that XRP did not qualify as a security in its sales on digital asset exchanges through programmatic sales, marking a partial victory for Ripple Labs.

However, she also determined that sales of XRP to institutional investors did classify the token as a security, highlighting the nuanced and complex nature of the legal and regulatory challenges facing cryptocurrency and digital assets.

This ongoing case continues to be a significant point of interest for the cryptocurrency industry, regulatory bodies, and legal observers, as it may set important precedents for the classification and regulation of digital assets.

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Eight State Attorneys General Challenge SEC’s Authority in Kraken Lawsuit

Crypto News Today

Eight state attorneys general in the United States, including officials from Arkansas, Iowa, Mississippi, Montana, Nebraska, Ohio, South Dakota, and Texas, alongside industry lobbyists, jointly filed an amicus brief on Feb. 29, challenging the Securities and Exchange Commission’s (SEC) authority in the lawsuit against Kraken, a cryptocurrency exchange.

The filing, not aligning with either party, contests the SEC‘s jurisdiction over crypto assets, stating that Congress hasn’t granted such authority.

The attorneys general argued against the SEC’s broadening definition of “investment contract,” emphasizing the need for state regulation to protect consumers from potential overreach by the SEC. They emphasized:

“The court should reject categorizing crypto assets as securities absent an investment contract.

The SEC’s exercise of this undelegated authority puts state consumers at risk by preempting state statutes better tailored to the specific risks of non-securities products.”

“The SEC’s enforcement action exceeds its delegated powers,” they reiterated.

“Some state laws are more protective of consumers than the federal securities laws.”

Kraken had previously filed a motion on Feb. 22 seeking dismissal of the lawsuit, echoing concerns of regulatory overreach.

The exchange criticized the SEC for lacking a clear boundary and expressed apprehension that a ruling in the SEC’s favor would grant excessive authority to the agency.

In response, Kraken released a blog post contesting the SEC’s allegations of operating as an unregistered entity and conducting unauthorized securities activities.

Kraken refuted the characterization of crypto tokens as “investment contracts” and highlighted the absence of any contractual agreements between customers and the exchange.

The SEC’s lawsuit against Kraken, initiated in November, alleged regulatory violations, including operating without registration, mingling client funds, and neglecting to address conflicts of interest.

Similar complaints have been levied against other crypto firms, such as Coinbase and Binance, with ongoing cases.

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TBC and Riot Secure Legal Victory Against U.S. Energy Officials in Crypto Data Collection Lawsuit

Crypto News Today/DeFi

The Texas Blockchain Council (TBC) and Bitcoin mining firm Riot Platforms have secured a favourable ruling from a United States District judge in a lawsuit against several U.S. energy officials.

As per a report by Cointelegraph on 22nd February, TBC and Riot accused the U.S. Department of Energy, Energy Information Administration (EIA), the Office of Management and Budget (OMB), and their respective leaderships of seeking intrusive data collection from cryptocurrency miners.

In a filing dated 23rd February in the U.S. District Court for the Western District of Texas, the TBC and Riot persuaded the judge that irreversible harm would occur without a temporary restraining order (TRO) against further data collection.

Consequently, the court implemented a TRO preventing the EIA from mandating crypto miners to respond to the survey and from sharing any data already received.

“The Court finds that Plaintiffs have shown through a verified complaint and supporting evidence that immediate and irreparable injury, loss, or damage will result if a TRO is not issued.”

The TBC and Riot contended that potential damages include unrecoverable costs of survey compliance, a credible threat of prosecution for non-compliance, and the disclosure of requested proprietary information.

Furthermore, there was disagreement over the survey completion timeframe for miners, with no compensation.

Despite the EIA estimating a 30-minute completion time, the court deemed this estimate “extremely inaccurate.”

Meanwhile, the TBC and Riot disputed the estimate, stating that compliance costs thus far have exceeded 40 hours.

Based on the evidence provided, the court judged that TBC and Riot were likely to prevail in the lawsuit.

It also alleged that the EIA misused its authority to have the emergency survey approved, a move the court deemed “falls far short of justifying such an action.”

“[The] Plaintiffs also demonstrate that they are likely to succeed on the merits.

The survey was proposed and approved under an emergency provision of the PRA,” the filing noted.

The TRO is set to expire before March 25, aiming to “preserve the status quo” for four weeks.

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