SEC - Page 37

The United States Department of Justice’s recent decision to forgo a second trial against Sam Bankman-Fried has ignited controversy within the crypto community.

In a letter filed on December 29th, prosecutors argued that the case’s significant public interest necessitated a “swift resolution.”

This choice implies that Bankman-Fried will not be subjected to further charges related to his alleged involvement in unlawful campaign contributions.

The document states, “Much of the evidence that would have been presented in a second trial was already presented in the first trial and can be considered by the Court at the defendant’s March 2024 sentencing.”

This decision has been met with widespread criticism among crypto enthusiasts. Paul Grewal, Coinbase’s chief legal officer, branded it a “miscarriage of justice,” emphasizing the importance of a public airing of charges, especially those involving campaign finance.

He stressed that questions about what politicians knew and when they knew it are crucial and must be answered.

Simon Dixon, co-founder of BnkToTheFuture.com, an online investment platform, pointed out that the decision also shields U.S. politicians from further scrutiny concerning campaign contributions and clawbacks during the upcoming 2024 election season.

READ MORE: US Prosecutors Hint at No Second Trial for Ex-FTX CEO Sam Bankman-Fried

Bankman-Fried himself admitted to being a “significant donor” to both sides of the political spectrum leading up to the 2022 midterm elections. Court documents revealed that he contributed over $100 million to politicians.

During his trial in October, he explained that these donations made in his name were funded by loans from Alameda Research, FTX’s sister company.

The aim was to influence U.S. government policies on cryptocurrency regulation. Before FTX’s collapse in November 2022, Bankman-Fried had plans to donate $1 billion for political causes by 2024.

In addition to the campaign contribution allegations, Bankman-Fried has also been cleared of charges related to a conspiracy to bribe Chinese officials.

Prosecutors argue that a second trial would not impact the U.S. Sentencing Guidelines range for him.

It’s worth noting that Bankman-Fried had previously been found guilty of all seven fraud charges by a jury during his criminal trial.

These charges included wire fraud, wire fraud conspiracy, securities fraud, commodities fraud conspiracy, and money laundering conspiracy.

His sentencing is scheduled for March 28, 2024, and he could potentially face a maximum sentence of 115 years in prison.

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The Nigerian Securities Exchange Commission (SEC) has introduced crypto license requirements that are poised to reshape the landscape of the local cryptocurrency exchange market.

Despite the Central Bank of Nigeria (CBN) recently lifting restrictions on Nigerian banks facilitating cryptocurrency transactions, Rume Ophi, a Nigerian crypto analyst, believes that the SEC’s new regulations will have a significant impact.

In an interview with Cointelegraph, Rume pointed out a crucial issue: the minimum paid-up capital requirement of $556,620 (N500 million naira).

This substantial financial burden is a barrier that many local cryptocurrency exchanges may find insurmountable.

Consequently, Rume predicts that these stringent requirements will likely result in a reduced number of operational local exchanges, tilting the balance towards foreign exchanges dominating the Nigerian market.

The Nigerian SEC’s move to reshape the crypto landscape began in May 2022 when it published a comprehensive 54-page document titled “New Rules on Issuance, Offering Platforms, and Custody of Digital Assets.”

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This document aimed to provide guidelines for cryptocurrency service providers in Nigeria and outline how banking and financial institutions in the country could engage with digital assets.

To comply with the SEC’s regulations, cryptocurrency exchanges must obtain a virtual asset service provider (VASP) license, which involves meeting various requirements, including application processing, registration fees, and other associated costs.

Remarkably, a global survey spanning 15 countries revealed that Nigeria, Africa’s largest economy, boasts the highest level of cryptocurrency awareness in the world.

Despite this, Nigeria’s cryptocurrency adoption and usage rate ranked only eighth among 154 countries surveyed in Chainalysis’ 2020 Cryptocurrency Geography Report.

Rume suggests that the ban on financial institutions servicing crypto exchanges played a pivotal role in constraining investment in the country.

However, with the recent lifting of the CBN ban, Rume believes that Nigeria is poised for a positive shift in crypto investment.

This policy change is expected to encourage more foreign crypto investment, potentially revitalizing the Nigerian cryptocurrency industry.

Additionally, it could pave the way for the employment of locals in Web3 and the broader crypto sector, contributing to the growth and development of Nigeria’s digital economy.

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It appears that former CEO of the now-defunct cryptocurrency exchange FTX, Sam Bankman-Fried, may not face a second trial, according to United States prosecutors.

A recent Reuters report, dated December 29, suggests that many stakeholders are keen to see a swift resolution to the ongoing legal proceedings.

In a court filing, prosecutors emphasized the significant public interest surrounding the case, given the eager anticipation of victims seeking details about compensation for their FTX accounts, which collapsed in November 2022.

This pressing public interest, they argued, should weigh heavily in the decision-making process.

Moreover, the prosecutors noted that there is a dearth of new evidence that would warrant a second trial, as the bulk of the evidence had already been presented during the initial trial.

On November 3, a jury in the criminal trial found Bankman-Fried guilty on all seven fraud charges after just four hours of deliberation.

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The charges against him included two counts of wire fraud, two counts of wire fraud conspiracy, one count of securities fraud, one count of commodities fraud conspiracy, and one count of money laundering conspiracy.

In a parallel development, Bankman-Fried’s request for a postponement of his sentencing hearing by four to six weeks was denied.

Judge Lewis Kaplan declined to make any changes to the established schedule, pointing out that the defense had not initially objected to the sentencing date when it was initially set.

Additionally, it was highlighted that Bankman-Fried had already received one extension for filing sentencing submissions.

As it stands, Bankman-Fried’s sentencing date remains set for March 28, 2024.

The anticipation surrounding the resolution of this high-profile case continues to captivate the cryptocurrency community and stakeholders eager for clarity and closure following the FTX exchange’s collapse.

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In a recent development, a United States federal judge has handed down a ruling in favor of the Securities and Exchange Commission (SEC) in a case involving Terraform Labs and its former CEO, Do Kwon.

The court granted summary judgment in favor of the SEC, which had accused Terraform Labs and Kwon of offering and selling two unregistered securities, namely, LUNA, UST, and MIR.

District Court Judge Jed Rakoff issued his decision on December 28, stating that Terraform Labs and Kwon indeed offered and sold unregistered securities in the form of LUNA, UST, and MIR.

However, Judge Rakoff did grant summary judgment in favor of the defendants regarding the alleged unregistered offer and sale of security-based swaps.

The SEC had argued that Kwon and Terraform Labs offered and executed transactions in security-based swaps by creating and maintaining the Mirror Protocol, which allowed users to mint “mAssets.”

Nevertheless, the court rejected this claim, asserting that mAssets did not meet the statutory definition of a security-based swap.

M-Assets are blockchain assets that mirror real-world assets by reflecting on-chain exchange prices.

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The court referenced a prior statement made by Kwon, in which he encouraged LUNA holders to invest and expect profits solely from Terraform and himself.

This led the court to conclude that LUNA satisfied the Howey test, thus constituting a security.

Regarding the MIR token, the court similarly ruled in favor of the SEC, stating that the defendants could not dispute that MIR holders expected profits from a common enterprise based on Terraform’s efforts to develop and maintain the Mirror Protocol.

Despite these rulings, the court did not grant either side’s motion for summary judgment on the SEC’s fraud claims against Kwon, which alleged that he orchestrated a fraudulent cryptocurrency scheme resulting in a substantial market value loss of at least $40 billion in 2022.

The fraud claims will be the subject of a jury trial scheduled to commence in January, with jury selection set for January 24, 2024.

In response to the court’s decision, a spokesperson for Terraform Labs expressed disagreement and a commitment to vigorously defend against the SEC’s fraud claims in the upcoming trial.

They asserted that they do not believe the UST stablecoin or the other tokens in question should be classified as securities and that the SEC’s fraud allegations lack supporting evidence.

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The cryptocurrency community swiftly pushed back against Gary Gensler, the Chair of the United States Securities and Exchange Commission (SEC), following his recent criticism of the industry’s compliance efforts.

On December 22, Gensler took to Twitter to assert that there is a pervasive lack of compliance within the crypto space, emphasizing that this situation erodes confidence in the sector and leaves victims without recourse.

He even suggested that those affected by recent crypto-related bankruptcies can only hope to “stand in line” within the legal system.

In response, the crypto community wasted no time pointing out that the SEC has repeatedly been called upon to provide clarity on what constitutes compliance within the industry.

Leveraging Twitter’s Community Notes feature, which enables users to fact-check posts, they highlighted the absence of a clear regulatory stance from the SEC.

They also highlighted efforts by companies like Coinbase to seek regulatory guidance from the SEC over the past few years.

Even Dogecoin’s creator, Billy Markus, chimed in, asserting that Gensler has yet to establish concrete rules for the cryptocurrency space.

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Markus went further, labeling Gensler as “useless in every single way.”

Ripple CEO Brad Garlinghouse did not mince words either, characterizing Gensler’s statements as “stunning hypocrisy” and branding him a “political liability” whose actions have undermined the integrity of the SEC.

Interestingly, on the very same day, the SEC released a new filing expressing “deep regret” for certain errors made during an enforcement proceeding.

Paul Grewal, Chief Legal Officer of Coinbase, seized upon this admission, questioning why the SEC, while claiming remorse for its mistakes, continues to criticize and admonish an entire American industry.

Grewal’s pointed inquiry raised doubts about whether taxpayers and judges should place any faith in the SEC’s professed regrets.

In summary, Gensler’s recent criticisms of crypto compliance ignited a swift and spirited response from the cryptocurrency community, including prominent figures like Billy Markus and Brad Garlinghouse.

These industry stakeholders highlighted the lack of regulatory clarity from the SEC and raised doubts about the sincerity of the SEC’s expressed regrets for past errors.

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Blockchain security company CertiK has issued a critical security alert to all iPhone users of OKX, urging them to promptly update their iOS application.

The warning comes following the discovery of a significant security vulnerability earlier this month.

In a December 19 announcement shared on X (formerly known as Twitter), CertiK alerted OKX wallet users to the urgency of updating their iOS apps to the latest version.

The security firm emphasized the necessity of this action to safeguard users from potential exposure to a security flaw.

CertiK disclosed that earlier in the month, they had identified and reported a critical Remote Code Execution (RCE) vulnerability within the OKX iOS App.

This vulnerability had the potential to compromise sensitive data and crypto assets, posing a severe threat to users.

Taking swift action, OKX responded to the security issue by implementing a “relevant upgrade” on December 19.

They encouraged all users to transition to the latest iOS version, specifically version 6.45.0.

CertiK subsequently confirmed that the security concern had been successfully addressed and resolved by the exchange.

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A Remote Code Execution (RCE) vulnerability is a serious threat, as it allows malicious actors to execute code on an organization’s computers or network.

This type of breach can lead to the theft of funds or data breaches, posing significant risks to users and their assets.

It’s important to note that OKX has faced security challenges in the recent past.

On December 13, the OKX decentralized exchange, known as OKX DEX, experienced a $2.7 million hack.

This breach occurred due to the alleged leakage of the private key of the proxy admin owner.

Such incidents emphasize the need for robust security measures within the cryptocurrency industry.

Despite these security concerns, OKX has maintained a strong reputation in the cryptocurrency exchange sector.

It currently holds the 10th position on CoinGecko’s “trust score” leaderboard for trading platforms, boasting a score of 9/10.

Notably, OKX expanded its services to Brazil in late November, further extending its global reach in the world of crypto trading and wallet services.

In conclusion, the swift response of CertiK and OKX in addressing the RCE vulnerability highlights the importance of proactive security measures within the cryptocurrency industry, ultimately enhancing the safety of users and their assets.

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