SEC - Page 63

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Gemini’s Tyler Winklevoss Slams SEC Charges over Genesis-Linked Earn Programme

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Gemini Co-Founder Tyler Winklevoss slammed regulators on 12 January after facing charges of issuing unregistered securities. The US Securities and Exchange Commission (SEC) slapped the firm with charges linked to its “Earn” programme, stating it was “optimizing for political points”

In a Twitter thread, he lambasted the charges as “super lame” and stated they were a “manufactured parking ticket.”

He continued that the SEC’s charges were “totally counterproductive” and that it had ongoing talks with the watchdog for over 17 months.

Winklevoss said: “They never raised the prospect of any enforcement action until AFTER Genesis paused withdrawals on November 16th.”

His comments come after the SEC released its statement, which said,

“The complaint further alleges that, in November 2022, Genesis announced that it would not allow its Gemini Earn investors to withdraw their crypto assets because Genesis lacked sufficient liquid assets to meet withdrawal requests following volatility in the crypto asset market. At the time, Genesis held approximately $900 million in investor assets from 340,000 Gemini Earn investors. Gemini terminated the Gemini Earn program earlier this month. As of today, the Gemini Earn retail investors have still not been able to withdraw their crypto assets.”

Gemini-Genesis Crypto Crisis

The news comes after Gemini’s Earn programme kicked off in February 2021 and ended on 8 January. This led to a major partnership with Genesis, a Digital Currency Group (DCG) subsidy, allowing customers to earn additional yield.

Genesis later halted access to the programme, blocking over $175 million in assets. The incident came amid the ongoing FTX collapse, leading to further issues.

According to reports, Genesis must pay roughly $900 million USD to around 340,000 Gemini Earn users. Gemini co-founder Cameron Winklevoss revealed the details in an open letter.

Thai SEC to Investigate Zipmex amid V Ventures Acquisition

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Crypto exchange Zipmex has become the centre of a new Securities and Exchange Commission of Thailand (Thai SEC) investigation, reports have found.

According to Bloomberg, Thailand has been monitoring Zipmex for suspicious activities that could breach local regulations. Such restrictions apply to digital asset service providers operating in the country.

The ongoing developments between the two entities began later in 2022. On 7 September the same time, the government agency filed police reports stating Zipmax provided “incomplete” details on its compliance materials.

The organisation has set a 12 January deadline to determine whether it operates as a “digital asset fund manager without permission.” The cryptocurrency exchange could be forced to obtain permits to continue functioning in the Southeast Asian nation.

Lock Out, Crack Down on Crypto?

The news comes as Thoresen Thai Agencies PCL subsidy V Ventures aims to buy out Zipmex for roughly $100 million USD. This could potentially unlock client accounts in April this year with acquisition funds.

Financial woes hit the embattled cryptocurrency exchange on 21 July last year, forcing the firm to block access to accounts and funds. Subsequently, the firm reopened withdrawals the following day.

The incident exposed nearly $53 million USD to risk, hitting crypto lending firms Celsius and Babel Finance. This has prompted Thailand, Australia, Israel, South Korea, the United States, and others to crack down on crypto providers with tougher regulations.

Governments have voiced concerns amid the ongoing bear crypto market and collapse of now-bankrupt crypto firm FTX, sparking calls for tightened restrictions.

SEC Files ‘Limited Objection’ to Binance.US Takeover of Voyager Digital

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United States authorities have submitted a “limited objection” to Binance.US as it plans to buy out bankrupt crypto lending firm Voyager Digital, documents revealed on Wednesday.

The US Securities and Exchange Commission (SEC) filed a limited objection to the $1 billion USD buyout over an alleged lack of “necessary information.”

It also accuses Binance.US of failing to demonstrate its capability to finance the takeover, post-acquisition operations, or the security of acquired customer assets.

The SEC added it had communicated with Voyager over the matter. Additionally, it urged Voyager to provide further information on the potential results of the deal, should it fail to take place on 18 April.

A limited objection is similar to a normal objection but only applies to a specific part of the proceedings.

Speculators have said the SEC objection indicates the regulatory body may force Binance’s global operations to pay fees for the acquisition.

In its filing, the SEC said it already communicated its concerns with Voyager and the lender intends to file a revised disclosure statement prior to a hearing on the matter.

Tit-for-Tat on a Takeover

The news comes after Reuters reported in October that Binance.US conducted its business as a “de facto subsidiary” to “insulate finance from [US] regulators.” Binance chief executive Changpeng Zhao (CZ) has reaffirmed Binance.US continues to operate independently of its parent firm.

The crypto giant has since hit back at detractors in a recent blog post. The company emphatically denied accusations directed towards its operations and provided a seven-point rebuttal to critics.

According to a 19 December statement, Binance and the crypto lending company agreed to a deal totalling $1.022 billion in assets.

The statement read,

“The Binance.US bid, which sets a clear path forward for Voyager customer funds to be unlocked as soon as possible, […] is comprised of (i) the fair market value of Voyager’s cryptocurrency portfolio at a to-be-determined date in the future, which at current market prices is estimated to be $1.002 billion, plus (ii) additional consideration equal to $20 million of incremental value.”

The press release added that Binance.US aimed to “return crypto to customers in kind” while following “court-approved disbursements and platform capabilities.”

Its US operations also vowed to “immediately move to return value to customers” should the deal fail to close by 18 April this year, pending a one-month extension.

2023 Set to See Renewed Cybersecurity Threats and Thefts, CertiK Report Finds

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2023 is set to see fresh waves of malicious attacks, phishing, scams, and other hacking attempts on cryptocurrency and decentralised finance (DeFi) platforms, a recent CertiK report has revealed. 

It was considered the worst year for the industry, with losses increasing from $3.2 billion from the previous year, the company added in a statement to the media. 

November was the worst month for cryptocurrency platforms after thieves stole over $595 million in tokens, the company said in its report. 

According to a recent CertiK report teaser, cryptocurrency markets saw nearly $3.7 billion USD wiped out due to hackers, scammers, and platform exploits. 

It said in a tweet, 

“2022 was a painful year for the many in crypto. Alongside a broad market downturn, the year was punctuated by a number of exploits, hackers, and bankruptcies, with one major exception. The largest losses of user funds this year resulted from centralized platforms going insolvent as falling asset prices exposed their unsustainable business practices” 

The company cited the fall of Terra/LUNA, a stablecoin that had lost its currency peg in May last year, triggering a rapid collapse of the cryptocurrency. 

Speaking to Business Insider, Ronghui Gu, CertiK chief executive and co-founder, added: “With almost three times as much value lost from Web3 protocols in 2022 compared to 2021, it’s clear that there’s still a lot of work to be done to secure the Web3 world.” 

Hacktober to Poor-vember? 

The news comes amid the ongoing collapse of FTX, one of the world’s largest trading platforms, which filed for Chapter 11 bankruptcy in mid-November. 

Investors saw roughly $8 billion USD in assets wiped from the platform, namely after a massive liquidity crunch ahead of its bankruptcy at the time. Numerous executives, including ex-chief executive Sam Bankman-Fried and former Alameda Research CEO Caroline Ellison, among others, face significant charges for fraud, misappropriation of funds, and defrauding several systems. 

Hackers also stole $28 million from Derebit, a massive cryptocurrency exchange for derivatives and other securities, forcing the company to temporarily halt withdrawals. 

The incident took place in early November, with the exchange stating it was still in a “financially sound position.” CoinGecko data verified its daily trading volumes were $280 million.  

Additional hacks have taken place on Binance, forcing the world’s largest exchange by trading volume to suspend transactions due to the attacks temporarily. 

Company chief executive Changpeng Zhao later apologised for the breach, with a further spokesperson stating that roughly $100 million remained “unrecovered.” 

Additionally, in March, hackers hit blockchain platform Ronin Bridge in one of the world’s largest crypto thefts on record. North Korean hackers allegedly stole the funds, according to US authorities. 

Brazil Securities Regulators Approve Crypto Assets for Investment Funds

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Brazil’s Securities and Exchange Commission (CVM) approved cryptocurrency assets for inclusion in sanctioned investment funds, it was revealed ahead of the Christmas holiday. 

The government body allowed investment funds to keep crypto assets on Friday. It explained that it will allow cryptocurrency funds to operate under regulations based on the ownership and integrity of held assets.  

The news comes ahead of a debate among members of the Financial Innovation Laboratory (LAB) on crypto assets and decentralised finance (DeFi). 

According to its website, the CVM-linked organisation aims to “promote the study, analysis and development of models and conceptual structures in the Brazilian financial and capital market that use crypto-assets and functionalities and models adopted by Decentralized Finance, preserving investor protection, market efficiency and other objectives of national regulation.” 

It also aims to create and develop crypto prototypes for Brazil’s capital markets. 

What’s in the New Bill? 

The new government regulatory framework, signed into law by former Brazilian president Jair Bolsonaro last Thursday, will determine sets of regulations for crypto assets. 

The new bill will provide rules for establishing fraud charges for digital assets, totalling four to six years of jail and monetary penalties.

The bill also requires digital asset companies to apply for licences for designated “virtual service providers.” This also covers exchange and trading intermediaries and determines which digital currencies qualify as legal payment methods in Brazil. 

The new law also determines rules for inclusion in investment funds. For example, crypto assets must receive authorisation from the CVM, local supervisory firms, or Brazil’s Central Bank, the Banco Central do Brasil. 

All supervisory entities involved must remain legally capable of conducting operations and follow regulatory guidelines, including anti-money laundering and counter-financial terrorism rules.  

Market agents must also scrutinise cryptocurrency assets on whether they are securities, as market guidelines have outlined. 

SEC Official Warns Investors to Remain ‘Very Wary’ of Crypto Firms’ Proof of Reserve Claims

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A key United States Securities and Exchange Commission (SEC) official has cautioned investors to avoid fully trusting claims of proof-of-reserves (PoR) from global centralised crypto firms.

Paul Munter, SEC acting chief accountant, said in a Wall Street Journal interview that investors should remain “very wary of some of the claims that are being made by crypto companies.”  

Munter added ongoing audits did not indicate companies were in a sound financial position, stating, “Investors should not place too much confidence in the mere fact a company says it’s got a proof-of-reserves from an audit firm.” 

He continued that PoR lacked sufficient information to allow stakeholders to determine if companies held enough assets to cover liabilities. 

The news comes as numerous crypto companies, including Binance, Crypto.com, and Kraken, among others, have offered to show customers their PoR data amid the ongoing FTX collapse. 

The measures aim to ease fears of further bankruptcies and ensure customers of financial liquidity. 

The news comes after Munster voiced concerns over cryptocurrency platforms at a recent conference in the US Capitol in mid-December.  

In the subsequent WSJ article, he stated that, should the SEC find additional patterns in the industry, it could escalate matters with law enforcement agencies. 

Earlier claims from former SEC Internet Enforcement chief John Reed Stark accused Binance of failing to address internal financial controls over its proof-of-reserves. 

The news comes after three key crypto exchanges—Celsius, Three Capital Arrows, and FTX—have filed for administration in their respective markets over severe liquidity crunches triggering bank runs, among other problems. 

Belgium’s Financial Regulators Clarify Cryptocurrencies Are Not Securities

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Belgium’s Financial Services and Markets Authority (FSMA) issued a statement this week that cryptocurrencies such as Bitcoin, Ether, and others do not constitute securities.

The FSMA’s statement comes amid a report published in July, with the most recent statement clarifying questions on how the nation’s finance regulations affect digital assets.

The FSMA’s “stepwise plan” aims to classify cryptocurrencies issued by individuals and entities as a security in a non-legally binding agreement.

It explained in the statement: “If there is no issuer, as in cases where instruments are created by a computer code and this is not done in execution of an agreement between issuer and investor (for example, Bitcoin or Ether), then in principle the Prospectus Regulation, the Prospectus Law and the MiFID rules of conduct do not apply.”

It added that cryptocurrency not categorised under the new stepwise plan regulations could potentially face further restrictions if companies use the assets as a medium of exchange.

It added: “Nevertheless, if the instruments have a payment or exchange function, other regulations may apply to the instruments or the persons who provide certain services relating to those instruments.”

The Belgian regulators also explained its plan was neutral to the blockchain and other cryptocurrency technologies, but rather their use in markets.

The news comes after the first draft of the report, issued in July this year, to address Belgian digital asset entities. The European Parliament is set to adopt its Market in Crypto Assets regulation (MiCA), with Belgium adopting its stepwise plan before EU legislation takes effect in 2024.

MintMe.com Coin Secures 25 Million Dollars Investment Commitment From GEM Digital Limited

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Belize City, Belize, 27th October, 2022, Chainwire

GEM Digital Limited commits 25 Million Dollars to MintMe.com Coin. MINTME rose by over 50,000% in the last two years, and such news will only speed up its march to the top.

MintMe, with over 70 000 users growing against the bear market, was built to serve as an alternative to fiat crowdfunding services. It allows users to create a unique token representing their brand or idea and have their fans and followers buy them as a means of donation. MintMe works as an electronic marketplace for these tokens, and it also has a traditional crypto exchange market within its services.   

Thirty developers have been working tirelessly for over a year on a new, not yet released MintMe 2.0 version. It will include many ground-breaking features, such as adding a token shop, giving creators more options to monetize their ideas, and for investors to support projects with potential. This version will completely change the visual interface for MintMe, and it is planned to be released near the end of 2022.

This investment commitment from GEM Digital will allow MintMe to propel its growth, allowing them to allocate funds toward talent acquisition, further development of its marketing efforts, the acquisition of scalability-related infrastructure, and the build of a fully functional mobile application to accompany its site. 

Their commitment to providing MintMe with up to a 25 Million USD investment shows the untapped potential of the startup within their market sector and the institutional appetite for more blockchain-based alternatives to popular social and community services such as crowdfunding platforms.

MintMe.com is not only an instrument for prospective entrepreneurs as well as social figures and organizations to crowdfund what they do, but also, it can serve as a medium for creators to directly interact with supporters and for supporters to potentially influence the development path of their favorite project, as well as getting to know more about its creator.

MintMe continues to innovate and push its service forward, incorporating more and more features requested by its users and onboarding its native coin (MINTME) into multiple renowned decentralized exchange platforms. This, together with the notice of the upcoming release of their version 2.0 update, which will bring a complete redesign of the site, has been one of the factors of their exponential growth in the last couple of months.

This commitment by GEM is a big step towards the mainstream integration of MintMe as a secure, straightforward, and community-driven crowdfunding alternative, allowing the service to boost its rate of development and look into the potential of implementing even bigger and more ambitious features to the platform, such as the addition of an NFT marketplace, DeFi token swaps, and more. 

About GEM Digital Limited

GEM Digital Limited is a digital asset investment firm. Based in the Bahamas, GEM Digital has committed capital to 50+ projects that trade on over 23 Centralized Exchanges globally. Their mission is to fuel growth and provide working capital to innovative, industry-leading projects in the Web 3.0 ecosystem.

Global Emerging Markets (“GEM”) is a $3.4 billion alternative investment group with offices in Paris, New York, and the Bahamas. GEM manages a diverse set of investment vehicles focused on emerging markets and has completed over 570 transactions in seventy-two countries. Each investment vehicle has a different degree of operational control, risk-adjusted return, and liquidity profile. The family of funds and investment vehicles provides GEM and its partners with exposure to Small-Mid Cap Management Buyouts, Private Investments in Public Equities, and select venture investments.

Contact

CEO
Artur Makowka
MintMe.com
artur.makowka@mintme.com

Blockchain Association Slams SEC, Backs Ripple Labs in Court Battle

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The Blockchain Association has backed Ripple Labs as the latter continues its legal row with the Securities and Exchange Commission (SEC), it revealed in a recent post.

The Washington, DC-based organisation stated the ongoing case would become significant for the future of cryptocurrency.

The advocacy group stated in its post it would back the US crypto market with an amicus brief (friend of the court) after the SEC hit Ripple with a lawsuit, citing alleged unregistered securities sales via XRP in December 2020.

The former and current chief executives of the firm, Christian Larsen and Brad Garlinghouse, respectively, faced litigation in the court case.

Blockchain Association Statement

In the Association’s Twitter thread, it stated: “This case, which is just one in a long line of SEC efforts to regulate by enforcement, highlights the SEC’s efforts to cement and legitimize its overly broad interpretation of the Howey test.”

The US government determines investment contracts and the jurisdiction of its security laws with the Howey test, which the Blockchain Association has stated may have “devastating effects” on crypto.

It added that securities laws could “significantly restrict” cryptocurrency networks from functioning, namely in use cases such as inventory tracking, purchases, intellectual property (IP), and others.

The Association continued that the SEC disregarded precedents from the Supreme Court and Second Circuit, adding: “Though the blockchain industry is global in nature, the federal securities laws are not. The Second Circuit has repeatedly re-emphasized the Supreme Court’s lesson on this subject.”

The organisation also warned that the Court should be “mindful of the limits of these securities laws.”

Executive Director Hits Out at SEC

In a statement, Executive Director Kristian Smith said that the SEC’s “broad, haphazard interpretations” of securities laws were the “single greatest threat to the future of this rapidly growing industry.”

She slammed the SEC for targeting crypto via a “regulation by enforcement” pattern, claiming the regulatory body continued its “regulation by enforcement” pattern to punish crypto companies with “little justification or warning.

She added: “The SEC must follow the law, they cannot impose their draconian view on the entire crypto ecosystem through an enforcement action.”

Concluding, Smith said that Ripple’s decision to fight the lawsuit provided an opportunity for the cryptocurrency industry to “push back” against the pattern and “open the door to modernized standards for the industry.”

Prosecutors Request 8-Year Prison Sentence for Bithumb Exec’s $70m Fraud Case

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A South Korean businessman may face up to eight years imprisonment for his alleged role in a cryptocurrency fraud scandal totalling $70 million USD, reports found on Wednesday.

Lee Jung-Hoon, former Bithumb chairman, has been charged with scamming cryptocurrency investors of roughly 70 million USD (100 billion won) from the chairman of the BK Group, Kim Byung Gun.

According to Yonhap News Agency, prosecutors involved in the case have asked the Seoul District Court to sentence Lee on 25 October, with a further hearing on 20 December.

Kim was chairman of the cosmetic surgery conglomerate in October 2018 and planned at the time to buy out the cryptocurrency exchange platform.

Kim alleges he transferred the $70 million to Lee for a “down payment” for the exchange, providing Lee listed the BXA token from the Blockchain Exchange Alliance formed.

Local prosecutors asked the 34th Criminal Settlement Section of the Seoul District Court for the sentence on Oct. 25, with a hearing to take place on Dec. 20, according to a report from Yonhap News Agency.

Bithumb never listed the token, causing the deal to fall through.

Responding, Lee Jung-Hoon’s lawyer stated the deal’s structure was a “typical stock sale contract” and had been carried out as needed according to the normal procedures for the contract.

Lee added in a final statement he was “very sorry for making it difficult for employees and causing social pressure,” just weeks after failing to join a parliamentary hearing on 6 October.

He stated he failed to show up for the meeting involving the $40 billion collapse of Terra Luna due to having a panic disorder.

Bybit Buyouts

The news comes just a day after Bybit, a Dubai-based cryptocurrency exchange, invested $3.8 million in the third-largest shareholder of the South Korean platform, T-Scientific, media reports found.

T-Scientific issued the 16 billion won of convertible debt at the end of September, allowing the firm to leverage its debt on interest, convertible to equity with stipulations.

The recent acquisition of debt will allow Bybit potentially a massive stake in the South Korean crypto platform with trading volumes of $239 million USD.

In late July, cryptocurrency trading platform FTX also entered talks with Bithumb to discuss acquiring the latter, Bloomberg reported, citing anonymous sources.

Both Bithumb and FTX spokespeople could not confirm the talks, the report added. Bloomberg based the report, which stated that the discussions have been underway for months, on an unnamed source.

The buyout comes as Sam Bankman-Fried, FTX co-founder, aims to buy out Bithumb to gain access to capital used for further acquisitions, it concluded.

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