Crypto Guides, Knowledge & Insights

US SEC Claims Supreme Court Ruling Won’t Help Ripple; What’s Next?

The U.S. Securities and Exchange Commission (SEC) has responded to the letters filed by Ripple Defendants in the District Court, regarding the Supplemental Authority from the Bittner and Voyager cases. Ripples latest filings in the XRP lawsuit are anticipated to be significant in securing a Summary Judgment in its favor.　　US SEC Rejects Ripples Attempt To Secure Ruling　　In response to the Ripple Defendants letters filed in the District Court, the US Securities and Exchange Commission (SEC) has filed a reply regarding Supplemental Authority from the Bittner and Voyager cases. The agency stated that these cases do not provide any basis to deny their motion for Summary Judgment and neither includes a fair notice defense.　　The SEC emphasized that the Supreme Courts decision in the Bittner case is not relevant to the fair notice defense being invoked by Ripple and Defendants to avoid liability in the civil action. The commission pointed out that the rule of lenity mentioned in the Bittner case is not applicable to the civil enforcement context.　　The US SEC pointed out that the lenity principle cited in the Bittner case only applies in cases where a criminal statute contains a “grievous ambiguity or uncertainty.” Furthermore, the commission reinforced its argument

2023-03-24Deep Dive

Texas Becomes A Hub For Bitcoin Mining Operations

According to the Texas Blockchain Council, the bitcoin sector in Texas is booming despite worries about electricity usage and recent failures. Bitcoin producers in the state increased their demand for electricity by 75% last year, using about 2,100 megawatts, or almost treble the quantity used the year before. However, according to statistics from the Electric Reliability Council of Texas (ERCOT), this demand only represents 3.7% of the states lowest projected peak capacity this year.　　Texas plentiful wind and solar energy, which is predicted to meet 39% of ERCOTs energy requirements by 2023, is what draws bitcoin producers to the state. Additionally, the states municipalities provide financial benefits. In McCamey, Texas, for instance, U.S. Bitcoin Corp. runs a processing business inside a 280-megawatt wind field. The facility used 173,000-kilowatt hours of energy last month, with the wind farm providing roughly 40% and the infrastructure providing the remaining 60%.　　To put this into perspective, the Energy Information Administration estimates that the typical American household consumes about 10 MWh per year.　　Texas is concerned about the effects of increased crypto demand on the infrastructure after a recent catastrophic winter storm outage there caused the deaths of about 250 people. According to Joshua Rhodes, a study chemist

2023-03-24Deep Dive

After Being Detained In Montenegro, Crypto Founder Do Kwon Indicted In The US

Do Kwon, the South Korean entrepreneur who co-founded Terraform Labs, the company behind the collapse of the cryptocurrencies TerraUSD and Luna, has been arrested in Montenegro for fraud and other charges. The arrest occurred on the same day that the US Department of Justice (DOJ) announced eight charges against Kwon, including securities fraud, wire fraud, commodities fraud, and conspiracy.Arrest Details　　Kwon, 31, was arrested in Montenegro along with another South Korean citizen who remains unnamed. The European countrys interior ministry confirmed the arrest, stating that Kwon was suspected of being a fugitive and was behind losses of over $40 billion. Kwon and the other man were apprehended at the Podgorica airport while trying to board a flight to Dubai, using forged documents from Costa Rica that were identified by Interpol.Criminal and Civil Cases　　South Korean authorities revealed last year that Kwon had traveled to an unknown country via Dubai after leaving Singapore. The criminal charges come after a related civil case against Kwon and his Singapore-based company Terraform Labs was announced by the US Securities and Exchange Commission (SEC) last month. Holders of TerraUSD and Luna lost approximately $40 billion after the so-called “stablecoin” fell below its $1 peg in May. TerraUSD

2023-03-24Deep Dive

Coinbase Faces Potential Lawsuit From U.S. SEC Over Certain Crypto Offerings

The Securities and Exchange Commission (SEC) of the United States has given a Wells notice to Coinbase Global Inc (COIN.O), threatening the cryptocurrency exchange with legal action over some of its goods. Following the news, Coinbase shares dropped nearly 13% to $67.33 in prolonged trading.　　The potential enforcement actions relate to Coinbases spot market, as well as its Earn, Prime, and Wallet products. Coinbase said its services would continue to operate as usual while the matter was being addressed.　　A Wells notice is a formal declaration that SEC staff intend to recommend an enforcement action, but it does not always result in charges or signal that the recipient has violated any law.Staking Services Under Scrutiny　　The SEC has been increasing its efforts to regulate the crypto industry since the collapse of FTX last year. Staking services such as Coinbases Earn are under heightened scrutiny for not being registered.　　Staking is a process whereby cryptocurrency holders volunteer to validate transactions on the blockchain, and these products often offer high yields to customers. Last month, Kraken agreed to pay $30 million in penalties and shut down its U.S. cryptocurrency staking service to settle SEC charges that it failed to register the program.　　The potential enforcement action against

2023-03-23Deep Dive

Justin Sun, Lindsay Lohan, And Other Celebrities Sued By SEC For Crypto Sales

The US Securities and Exchange Commission (SEC) has charged Chinese cryptocurrency entrepreneur Justin Sun with fraud and accused eight celebrities of illegally promoting his crypto assets. Sun and his companies, Tron Foundation, BitTorrent Foundation, and Rainberry, were accused of scheming to distribute billions of crypto assets, known as Tronix and BitTorrent, and artificially inflating trading volume since August 2017. Sun was also accused of concealing payments to celebrities to promote Tronix and BitTorrent on social media accounts, misleading the public into thinking they had an unbiased interest. The SEC said Suns activity generated tens of millions of dollars of illegal profit at other investors expense.The Charges　　The SEC has been ratcheting up efforts to crack down on the crypto industry, which SEC Chair Gary Gensler has called a “Wild West” riddled with misconduct. Its efforts gathered pace after Novembers collapse of Sam Bankman-Frieds cryptocurrency exchange FTX. In its complaint filed in Manhattan federal court, the SEC said Sun sold Tronix and BitTorrent as securities, and thus their sale needed to be registered with the agency. Sun inflated apparent trading volume in Tronix through extensive “wash trading,” involving simultaneous or near-simultaneous purchases and sales with no real change in ownership. From at

2023-03-23Deep Dive

U.S. SEC Sues Tron Founder Justin Sun; Claims TRX & BTT Are Unregistered Securities

The U.S. Securities and Exchange Commission has filed numerous charges against cryptocurrency tycoon Justin Sun and three affiliated companies, including the notable Tron Foundation Limited. These charges pertain to the unregistered offer and sale of two cryptocurrencies, as well as accusations of market manipulation and the distribution of airdrops that involve comparable securities without proper registration.　　　　　　　　SEC Files Lawsuit Against Justin Sun　　In a press release on Wednesday, the SEC announced that it intends to file a lawsuit against Justin Sun, the Tron Foundation, the BitTorrent Foundation, and Rainberry over the sale of Tron (TRX) and BitTorrent (BTT) tokens, which the watchdog considers to be unregistered securities. The regulator also claimed that the defendants participated in “extensive wash trading” in an attempt to fraudulently manipulate TRXs secondary market.　　　　Sun gained notoriety after attending a $4.5 million dinner with Warren Buffet in 2020. According to the allegations, Sun attempted to artificially inflate TRXs trading volume by engaging in over 600,000 wash trades of TRX between two crypto asset trading platform accounts that he controlled, involving his own employees. The SEC claims that this scheme required a significant supply of TRX, which Sun allegedly provided. The sale of TRX in the secondary market also generated

2023-03-23Deep Dive

Signature Bank's Digital Payments Platform No Longer Supported By Coinbase

Coinbase Global Inc (COIN.O), a major cryptocurrency exchange, stated on Monday that it has ceased serving Signature Banks (SBNY.O) digital payments tool, Signet, more than a week after the bank was taken over by US authorities. The exchange stated that it is looking for a new technology supplier or more information about the result of Signet, which enabled real-time crypto-to-fiat money transfers. Coinbase customers who rely on Signet will no longer be able to trade outside of conventional banking hours as a consequence of this shift.　　Signature Bank was one of two big U.S. banks to fail earlier this month, causing market chaos comparable to the global financial catastrophe 15 years ago. Prior to its collapse, the bank had been attempting to reduce its exposure to the cryptocurrency industry in light of FTXs bankruptcy and issues at competitor Silvergate Bank (SI.N), which also announced earlier this month that it would be shutting down operations.　　Signature Banks issues started in early March, when its assets at the Federal Reserve Bank of New York were frozen, stopping it from handling client payments. The Federal Deposit Insurance Corporation (FDIC) and the New York State Department of Financial Services then took over the bank.　　On Sunday, a

2023-03-22Deep Dive

Bank Stress Test Cleared By Bitcoin

Amid the current banking meltdown and market recession, Bitcoin is increasingly becoming a safe haven, with a 21% rise in value this month. While the Ss dream - that Bitcoin can be a refuge for investors in times of suffering.　　Bitcoin is showing to be a great investment, according to Stéphane Ouellette, CEO of the digital asset investment platform FRNT Financial, in a setting where central banks are trying to combat inflation with swift rate rises, which is leading to a series of bank runs.　　Over the past week, the association between Bitcoin and the Ss Role During a Banking Crisis　　However, not all digital assets have been immune to the banking fallout, as the number two stablecoin, Circle USD or USDC, lost its 1:1 peg to the dollar after revealing that its reserves were parked at the shuttered Silicon Valley Bank. This has caused concern over USDCs ability to maintain its peg, with its market cap falling from $43.8 billion to $36.8 billion last Friday, while the leading stablecoin Tether gained around $4 billion.　　According to market participants, some USDC withdrawals were likely reinvested in Bitcoin, fueling its rally. While Ed Hindi, Chief Investment Officer at Tyr Capital in Geneva, is cautious in

2023-03-22Deep Dive

Crypto firms Turn to Swiss Banks After Silvergate and Signature Fall

Earlier this month, two major banks in the US, namely Silvergate Capital and Signature Bank, known for their crypto-friendly policies, were closed down. This move by US regulators to tighten their control over banking institutions has prompted crypto firms to seek banking partnerships outside of the US.　　According to a recent report by CNBC, many of these crypto firms have turned to Swiss banks that are also friendly to the crypto industry, and have been inundating them with requests for banking services. While digital assets have demonstrated resilience in the midst of the banking crisis, it remains a fact that crypto firms still require banking partners for liquidity purposes.　　Following the closure of Silvergate Capital and Signature Bank, the two largest lenders for the crypto industry, crypto firms are turning to Swiss banks for support. In recent years, Switzerland has established itself as a hub for the crypto sector, implementing clear regulatory guidelines.　　According to an anonymous advisor at a private Swiss bank, the bank has been overwhelmed with requests for services from crypto firms. The advisor noted that since the shutdown of Silvergate and Signature, there has been a flood of inquiries at the private bank, describing the situation as “just nuts.”　　Interestingly,

2023-03-22Deep Dive

A Fresh Cryptocurrency Advertising Regulation Is Set To Be Introduced In Belgium

New rules regulating ads for virtual currencies will go into force in less than two months. (also known as cryptocurrencies). These guidelines are intended to make sure that ads clearly and correctly convey any possible dangers associated with virtual currencies. The Financial Services and Markets Authority (FSMA) will monitor adherence to the new rules and devote more funds to financial literacy regarding virtual currencies.Risks of Virtual Currencies　　Virtual currencies are popular nowadays, but they carry significant risks. They have no legal framework governing them, and they lack any underlying assets in the physical world. They can experience drastic price fluctuations and are vulnerable to fraud and IT-related risks.The New Regulations　　The FSMA requested and received the authority to regulate advertisements for virtual currencies to address these risks. The new Regulation, published on March 17, 2023, in the Belgian Official Gazette, will take effect on May 17, 2023. It has three main components: accuracy and honesty in advertising, mandatory risk disclosure, and prior notification of mass media campaigns.　　According to the new Regulation, advertisements must be accurate and not misleading. They must also contain mandatory information that highlights the risks involved in investing in virtual currencies. The FSMA requires all mass media campaigns to

2023-03-21Deep Dive

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