Category: Cryptocurrency Law

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Australia Blockchain Crypto News Cryptocurrency Law Regulation

Senator Urges Australian Blockchain Industry to Pick Up the Pace

Liberal Senator Andrew Bragg has urged the Australian blockchain industry to pick up the pace or risk falling behind other developed nations, saying Australia is likely to miss an opportunity to become a world leader in cryptocurrency if the government is not given more power to prioritise digital asset reform.

According to a report titled ‘Cryptocurrency and the Distributed Digital Economy in Australia’, cryptocurrency and related digital assets could generate A$68.4 billion for the Australian economy and create jobs for 205,700 people by 2030. The central issue is that Australia does not currently regulate crypto use and could potentially let this opportunity slip by.

Regulatory Framework a Long Time Coming

Federal Treasurer Josh Frydenberg has announced intentions to establish a regulatory framework to guide crypto’s future growth. However, such a plan will not be ready before the year’s end.

NSW Senator Bragg, a pro-crypto politician ranked #82 in the Cointelegraph Top 100 of People in Blockchain and Crypto 2021, has stated he would prefer this framework be put in place much sooner, despite acknowledging that “governments move slowly”.

NSW Senator Andrew Bragg, #82 on Cointelegraph’s Top 100 People in Blockchain and Crypto 2021. Source: ioandc.com

Bragg intends to call for increased treasury funding so dedicated units can work on these reforms. He is also set to insist on “broad, principle-based, regulation-making power delegated by law to a minister”, and is expected to request these changes prior to the release of the federal budget on March 29.

The Current State of Australian Crypto

Last October, the Australian Senate Committee finalised its 12-point crypto reform plan. The successful implementation of the long-awaited plan should alter the nation’s regulatory approach to the digital asset ecosystem. Bragg is a champion of this reform.

Before finalising the plan, the Australian Senate Committee hosted several hearings with domestic crypto-related businesses who shared their struggles with financial institutions denying or terminating banking services without notice – a practice known as ‘debanking’. The 12-point reform plan has a step dedicated to addressing this issue.

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Crypto Exchange Cryptocurrency Law

Ukraine Vice Prime Minister Calls on Crypto Exchanges to Block Russian Users

Mykhailo Fedorov, Ukraine’s vice prime minister and minister of digital transformation, has requested that major crypto exchanges block the addresses of Russian and Belarusian users. Ukraine is now preparing to make legal demands to ensure its pleas are acted on:

Fedorov has written to eight prominent cryptocurrency exchanges voicing the request in the hope of blocking some of Russia’s potential military funding: “It’s crucial to freeze not only the addresses linked to Russian and Belarusian politicians but also to sabotage ordinary users’ [access],” Federov later tweeted:

Demands Require Legal Backing

Ukraine has promised “generous rewards” for anyone with information about the crypto wallets of Russian and Belarusian politicians. The vice prime minister’s ministry then turned its attention to Coinbase, Binance, Huobi, Gate.io, Whitebit, KuCoin, Bybit, and Kuna to address them directly. However, Jesse Powell, co-founder and CEO of Kraken, explained why blocking these users without the backup of legal demands was not possible:

Powell argued that, while Kraken maintains its anti-war stance, blocking users would infringe on what crypto stands for:

https://finance.yahoo.com/news/insulting-kraken-ceo-refuses-comply-154447927.html

The People’s Money is an exit strategy for humans, a weapon for peace, not for war.

Jesse Powell, Kraken CEO and co-founder

In addition, Coinbase has refused to implement Fedorov’s request, saying:

Our mission is to increase economic freedom in the world. A unilateral and total ban would punish ordinary Russian citizens who are enduring historic currency destabilization as a result of their government’s aggression against a democratic neighbor. We remain vigilant as this invasion evolves and are deeply committed to playing our part.

Coinbase statement

Ukraine Embraces Cryptocurrency

Ukraine as a nation has opened its arms to cryptocurrency. In September 2021, draft legislation was passed with the intention to legalise and regulate bitcoin. The purpose of the bill is to protect those who own and trade in bitcoin.

Since the beginning of Russia’s military invasion, Ukraine has had the support of crypto users from around the globe. As of early March, US$37 million had been donated to both the Ukraine government and non-governmental organisations.

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Crypto News Cryptocurrency Law NFTs

Former Bored Ape Owner Sues OpenSea for $1 Million in Damages

Timothy McKimmy, a Texas-based NFT (non-fungible token) collector, is suing OpenSea for US$1 million in damages after his Bored Ape #3475 was stolen from his crypto wallet.

McKimmy filed a lawsuit last week in the US District Court demanding OpenSea return his Bored Ape or pay US$1 million in damages.

On January 26, a bug found on the OpenSea platform allowed attackers to snap up NFTs at previously listed prices – well below current market prices. This was due to the sellers not delisting the item correctly by paying a gas fee.

McKimmy says he’s the owner of Bored Ape #3475, which was stolen during the attack and later listed for 225 ETH – or approximately US$592,000 at the time of writing.

Flaws in the Legal Glass

The lawsuit, however, has a couple of flaws. For starters, the plaintiff listed the defendant as OpenSea instead of the company’s legal identity, Ozone Networks. Ozone Networks is also based in Delaware – not in New York, as listed on the lawsuit.

These defects were pointed out by Twitter user exlawyernft:

OpenSea was ‘Aware of the Vulnerabilities’, Says McKimmy

As per the filing, McKimmy stated that OpenSea was fully aware of the vulnerabilities on its platform. If the case makes it to court, he’ll have to prove this in order to win.

As per the lawsuit:

Defendant’s security vulnerability allowed an outside party to illegally enter through OpenSea’s code and access Plaintiff’s NFT wallet, in order to list and sell Plaintiff’s Bored Ape at a literal fraction of the value (at .01 ETH). Essentially, OpenSea’s vulnerabilities allowed others to enter through its code and force the listing of an NFT.

McKimmy vs OpenSea, US District Court for the Southern District of Texas

Exlawyernft pointed out that “the negligence cause is a pretty good argument” – adding, however, that it will be interesting to see how “the jury interprets the blockchain”:

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Crypto News Cryptocurrency Law

Californian Lawmaker Files Bill Allowing Residents to Let State Accept Crypto

California is now allowing its citizens to cover the cost of government services with crypto. The bill, which was sponsored by Democratic Senator Sydney Kamlager-Dove, was approved on February 18.

Likely to come under this banner are items such as education, public health and emergency services.

The legislation reads as follows:

  • Existing law establishes state agencies for various purposes, including to provide certain services to the public for which payment is required.
  • This bill would authorise a state agency to accept cryptocurrency as a method of payment for the provision of government services.

California the Fourth US State to Accept Crypto

The bill is not the first of its kind in the US, with similar legislation filed in Wyoming, Colorado and Arizona. The implications, however, are being met with some confusion on social media:

Crypto Acceptance Spreads

A survey conducted by Visa in early 2022 found that 24 percent of businesses across nine countries have plans to accept crypto this year. Many of those surveyed agreed that adopting more digital payment options was key for future growth.

Crypto acceptance is also spreading among e-commerce sites, with Shopify merchants now accepting payments through Binance. Any transactions made through the platform will be instantaneous.

By Lauren Claxton, Crypto News Guest Author

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Crime Cryptocurrencies Cryptocurrency Law Ransomware Scams

FBI Announces Crypto Crime Division to Tackle Ongoing Ransomware Attacks

The US Department of Justice has announced the establishment of the National Cryptocurrency Enforcement Team (NCET). The unit, which will specialise in crypto-related crime, has also appointed its first director – long-time prosecutor Eun Young Choi.

The Federal Bureau of Intelligence (FBI) released a statement on February 17 detailing the announcement. NCET aims to counter the criminal misuse of digital assets, and the team will be composed of prosecutors with backgrounds in crypto, money laundering, forfeiture and cybercrime. The proliferation of ransomware will be a particular concern of the unit.

Director Choi, who has a decade’s experience as a cybersecurity prosecutor, has stated she is excited to lead the team:

https://www.pli.edu/faculty/eun-young---choi-28943

[As the world of] digital assets grows and evolves, the department, in turn, accelerates and expands its efforts to combat their illicit abuse by criminals of all kinds.

NCET director Eun Young Choi

The NCET announcement has stirred a lot of discussion on Twitter, with many questioning whether the US government has ulterior motives:

FBI’s Recent Crypto History

The US government has intervened in several crypto-related matters over recent years. Notably, the Justice Department impounded US$3.6 billion in bitcoin earlier this month. This was accompanied by the arrest of a would-be rapper and her husband on charges of conspiring to launder some of the funds, part of the proceeds of the notorious Bitfinex hack of 2016.

In late 2021, US law enforcement seized an impressive US$154 million in bitcoin that had been stolen from Sony Life Insurance Company Ltd. The money had been embezzled by a rogue employee using a business email compromise.

By Lauren Claxton, Crypto News Guest Author

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Bitcoin Crypto News Cryptocurrency Law

US Congressman Introduces ‘Keep Your Coins Bill’ to Prevent Government Confiscation

In the wake of mounting concerns relating to private companies and the Canadian federal government denying financial services to members of the Freedom Convoy, US Congressman Warren Davidson took to Twitter to advise followers that a “Keep Your Coins Act” (KYC) bill would soon be tabled before legislators:

Implications of the Bill

At its core, the KYC bill purports to protect investors’ ability to have self-custody of their own assets, as well as engage in peer-to-peer transactions.

If the bill were passed in its current form, it would block state and federal agencies from prohibiting or otherwise restricting “the ability of a covered user to use virtual currency or its equivalent for such user’s own purposes, such as to purchase real or virtual goods and services for the user’s own use; or conduct transactions through a self-hosted wallet”.

Protest Should Be ‘Even-Handed’

In a discussion with Bitcoin Magazine, Congressman Davidson commented that self-custody had been on his mind for some time and that whatever your views were of the Freedom Convoy:

If this [protest] happened in America [the US], some would be cheering, some would be upset. My point is that it should be even-handed. We shouldn’t use money as a way of controlling people. Of course, if there’s criminal activity you should go after that. But imagine if the same thing were done to a crowdfunded BLM movement. That wouldn’t be okay. It’s not okay with the Freedom Convoy, either.

Republican Senator Warren Davidson

Davidson’s financial services counsel, Tim Hite, echoed these sentiments:

Seemingly on a roll, he didn’t stop there, daring Twitter to ban him for posting an image of two contradictory tweets by Canadian Prime Minister Justin Trudeau:

The tweet in question. Source: Senator Davidson

There’s a whiff of freedom in the air and it appears to be gaining momentum, at least in the US. It remains to be seen how things will turn out in Canada.

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Australia Crime Crypto News Cryptocurrency Law Facebook Social media

Australian Billionaire Launches Criminal Case Against Meta for Fake Crypto Ads

Australian mining magnate Andrew ‘Twiggy’ Forrest has launched criminal proceedings against Mark Zuckerberg’s Meta conglomerate, alleging its Facebook social media arm breached Australia’s money laundering laws by failing to police false crypto advertisements.

Forrest, billionaire chairman of iron ore giant Fortescue Metals, has filed his criminal lawsuit against Meta in the Magistrates Court of Western Australia, having already launched related civil proceedings in the US state of California last September.

In charges brought under the Australian Commonwealth Criminal Code, Forrest alleges Facebook has repeatedly failed to remove posts by scammers that used his image, among those of other celebrities, to promote crypto investments on the site since March 2019.

Andrew ‘Twiggy’ Forrest, chairman of Fortescue Metals. Source: cnn.com

According to Forrest’s complaint, the company’s failure to prevent or remove the ads constitutes “criminally reckless” behaviour. Forrest further alleges that Facebook “failed to create controls or a corporate culture to prevent its systems being used to commit crime”.

‘World-First’ Criminal Action Against the Social Media Giant

In a statement, Forrest said he was launching the “world-first” action on behalf of “everyday Australians” to protect their savings from being “swindled away by scammers”.

“I’m concerned about innocent Australians being scammed through clickbait advertising on social media,” Forrest said. “I’m committed to ensuring social media operators don’t allow their sites to be used by criminal syndicates.

Social media is part of our lives, but it’s in the public interest for more to be done to ensure fraud on social media platforms is eliminated or significantly reduced.

Andrew ‘Twiggy’ Forrest, Australian mining magnate

An initial hearing of Forrest’s complaint will take place on March 28, with the separate civil case pending in the Superior Court of California. A Meta spokesperson said the company was unable to comment on either court action, but provided a broader statement about scams on Facebook:

We don’t want ads seeking to scam people out of money or mislead people on Facebook – they violate our policies and are not good for our community. We take a multifaceted approach to stop these ads, working not just to detect and reject the ads themselves but also block advertisers from our services and, in some cases, take court action to enforce our policies. We’re committed to keeping these people off our platform.

Statement from Meta spokesperson

Meta Share Price Tanks, $200B Wiped Off Market Cap

It’s been a pretty ordinary start to the year for Meta, whose share price plunged 26 percent this week in what was the biggest single-day slide in market value for a US company. The drop erased over US$200 billion from Meta’s market capitalisation and around US$29 billion from CEO Zuckerberg’s net worth.

Yet Meta is not the only entity under fire for its advertising practices, with Spain, Singapore and the UK the latest jurisdictions to have made changes to their crypto advertising regulations. Last year, Google reviewed its crypto advertising policy after lifting its ban and adding specific requirements to which advertisers have to adhere.

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Banking CBDCs Crypto News Cryptocurrency Law

US Lawmaker Introduces Bill Prohibiting ‘Surveillance Tool’ Retail CBDC

A US lawmaker is seeking to stop the Federal Reserve from issuing a CBDC (Central Bank Digital Currency) directly to its consumers due to concerns over privacy of customers’ data.

CBDCs Are a “Surveillance Tool”

Minnesota Republican Tom Emmer introduced a bill on January 12 that would prohibit the Federal Reserve (Fed) from issuing CBDCs to US citizens. The bill briefly explains why such a product would turn into a “surveillance tool” for the Fed in the future, as customers may be forced to register with the central bank to access their money.

Emmer cited China’s efforts to accelerate the spread of the digital yuan to a broader population within the country, with tech giants such as Alibaba and Tencent joining the government to help reach its goal.

However, Emmer believes this will end up in a massive surveillance system directly aimed at Chinese citizens, tweeting that the “US should prioritise blockchain technology with American characteristics rather than mimic China’s digital authoritarianism out of fear”.

Emmer, echoing the majority Republican view, went on to say that the Fed doesn’t have the power to handle these type of demands on its systems like private financial entities do.

As other countries, like China, develop CBDCs that fundamentally omit the benefits and protections of cash, it is more important than ever to ensure the US’ digital currency policy protects financial privacy, maintains the dollar’s dominance, and cultivates innovation.

Tom Emmer, Minnesota Republican

Are CBDCs a ‘Perversion of Crypto’?

CBDCs are simply a digital form of fiat currency issued and regulated by a central bank and/or government authority. Despite continuous efforts by global governments to improve such a product, privacy remains the number one concern, and former NSA consultant and noted whistleblower Edward Snowden concurs.

As Crypto News Australia reported last October, the former NSA consultant argues that CBDCs aren’t so much a form of digital dollar as “something closer to being a perversion of cryptocurrency“.

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Crypto News Cryptocurrencies Cryptocurrency Law DeFi Regulation

Number of Countries Banning Crypto Has Doubled in 3 Years

Although 2021 was generally seen as a good year for the cryptocurrency industry in terms of market performance, the number of international jurisdictions banning crypto has more than doubled since 2018 with no sign of the trend easing in 2022.

According to an updated report by the American Library of Congress (LOC), nine countries have now applied an absolute ban on crypto and 42 an implicit ban. This is up from eight and 15, respectively, in 2018 when the report was first published.

Bans Have Two Shades of Meaning

In the context of the LOC report, an absolute ban means any “transactions with or holding cryptocurrency is a criminal act”, whereas an implicit ban prohibits cryptocurrency exchanges, banks and other financial institutions from “dealing in cryptocurrencies or offering services to individuals and/or businesses dealing in cryptocurrencies”.

The nine new jurisdictions with an absolute ban are Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh and China. Other than the 51 jurisdictions with a crypto ban already in place, 103 have applied Anti-Money Laundering (AML) and combatting the funding of terrorism (CFT) laws, more than three times the 33 jurisdictions with such laws in place three years ago.

Current international legal status of cryptocurrencies. Source: LOC

Sweden, Estonia, Russia on the List; India Delays Execution

Estonia, Sweden’s EU neighbour across the Baltic Sea, is set to implement AML/CFT rules next month. As for Sweden itself, the Scandinavian nation’s Environmental Protection Agency called for a ban on proof-of-work (PoW) mining in November 2021 due to the power demands of keeping networks running.

The new rules are expected to change the definition of a virtual asset service provider and apply an implicit ban on decentralised finance (DeFi) and Bitcoin.

India’s government sent a shiver through the international crypto community when lawmakers there considered a total cryptocurrency ban last November. Although it did not eventuate, the Securities and Exchange Board of India – which oversees the regulation of local crypto exchanges – pushed to regulate cryptocurrencies as crypto assets. An outright ban, however, is still on the table.

Last month, Russia’s central bank moved to ban crypto investments and also also barred mutual funds from investing in digital currency.

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Bitcoin Bitcoin BSV Crypto News Cryptocurrency Law

Self-Proclaimed ‘Satoshi’ Craig Wright Cleared of Charges, But Liable for $100 Million

A US federal jury has found that Australian businessman Craig Wright – who not only credits himself as the inventor of Bitcoin but also claims to be Satoshi Nakamoto, its pseudonymous creator – owes US$100 million in compensatory damages to a company founded by his former friend and associate, the late Dave Kleiman.

Wright testified that Kleiman had helped him edit a white paper that explained the foundation of Bitcoin, but he insisted the two weren’t business partners. Kleiman died in 2013, and his brother Ira brought the federal civil lawsuit on behalf of Kleiman’s estate and the company he founded, W&K Info Defense Research.

“I feel remarkably happy and vindicated,” Wright said after the verdict was announced. “I am not a fraud, and I never have been.” He added that he had offered Kleiman’s estate “US$12 million many years ago, which if [they] had taken then in bitcoin, when it was $200, and kept it – you can do the math”.

Asked to comment specifically on the verdict against W&K, Wright said it means that “I owe my ex-wife more money” – referring to the fact that Ira Kleiman’s control of W&K is being challenged in a county court. Both Wright’s ex-wife and current wife claim to control a third of W&K and are suing Ira Kleiman, alleging he didn’t have authority to bring the federal suit. Those cases have been on hold pending the outcome of the federal suit.

Case Sets Historical Crypto Precedent

Vel Freedman, representing the plaintiffs, also approved of the verdict: “We just won $100 million!” Though a long way short of what he’d sought – up to $36 billion for the value of bitcoin in dispute, $126 billion for intellectual property and $17 billion in punitive damages – Freedman said the verdict set “a historical precedent in the innovative and transformative industry of cryptocurrency and blockchain”.

What follows is an edited extract of the joint statement released by Freedman and his legal colleagues:

We are immensely gratified [this verdict reflects] that Craig Wright wrongfully took bitcoin-related assets from W&K. Years ago, Wright told the Kleiman family that he and Dave Kleiman developed revolutionary Bitcoin-based intellectual property. Despite those admissions, Wright refused to give the Kleimans their fair share and instead took those assets for himself.

Vel Freedman, Roche Freedman

Earlier this year, the London High Court granted a default judgment in Wright’s favour for copyright infringement against “Cøbra”, the pseudonymous operator and publisher of the bitcoin.org website. Wright had sued Cøbra for unlawfully publishing the Bitcoin whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System”.

Aside from legal costs, the order required that “Cøbra” remove the whitepaper and put a notice on its website informing visitors of the default judgment for a period of six months. That deadline elapses at the end of December.

As for the default judgment itself, to the order of US$48,400, it’s not clear if Wright offered to share the spoils with the Kleiman estate. In any case, the $100 million in compensation won this week makes it look like pocket change.