Category: Cryptocurrency Law

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Crypto News Cryptocurrency Law Regulation

State-Chartered Institutions In Nebraska Can Now Be Crypto Custodians

Last week, a vote was won to pass bill 649 that allows financial institutions in Nebraska to operate depository businesses for digital assets. Nebraska will provide “charter, operation, supervision, and regulation” for these financial institutions.

Sworn just in January, Republican Senator Mike Flood quickly introduced the bill named Adopt the Nebraska Financial Innovation Act and provisions for controllable electronic records under the Uniform Commercial Code to the state’s 107th Legislature.

This bill aims to:

[…] authorize digital asset depository entities and provide for the charter, operation, supervision, and regulation of such entities; to transfer funds; to adopt Uniform Commercial Code provisions on controllable electronic records; to harmonize provisions; to provide operative dates […]

Nebraska Financial Innovation Act

This means that depository businesses will be able to operate with supervision and regulation in the state of Nebraska. Under the terms of the Act, these institutions can be chartered in the United States or by a foreign state agency. While crypto custody was already permitted for federally chartered banks in the United States last July, the Nebraska Act will extend these rights to institutions chartered at a state level.

The broader goal of the bill seems to be towards making Nebraska a hub for financial technology. Through allowing financial institutions to get their feet wet in crypto, it may lead to innovative new financial products and services based on blockchain technology while providing a service to the people of Nebraska.

As part of our Growing Together effort, one of the things that we need to do is create high-paying, high-skilled jobs. We also need to create jobs that bring wealth into the community,

Senator Mike Flood

Telcoin Blockchain Used

According to the press release by Telcoin (TEL), a blockchain-based fintech company aligned with telecom and mobile industries at a global level, they have assisted in the drafting of the bill as they want to bring their digital asset-backed financial services to U.S. customers.

Institutions under this new charter will use blockchain technology to empower users to self-custody digital assets and put their money to work for their own benefit.

Paul Neuner, Telcoin CEO

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Binance Crypto Exchange Crypto News Cryptocurrency Law Cryptocurrency Tax

Binance Crypto Exchange Under DOJ Investigation To Target Money Laundering And Tax Evasion

Operation “Hidden Treasure” was initiated by the Internal Revenue Service (IRS) and Department of Justice (DOJ) on Thursday in an effort to uncover the unreported crypto income of U.S. citizens and other illegal activities taking place on the platforms.

The IRS has recently started investigating various crypto platforms to try to discover illicit activities, ramping up its crypto-related auditing and guidance for individuals that own and trade cryptocurrency.

Chainalysis, a blockchain forensics firm whose clients include U.S. federal agencies, concluded last year that among transactions that it examined, more funds tied to criminal activity flowed through Binance than any other crypto exchange. The firm tracked Bitcoin worth $2.8 billion USD that moved on to trading platforms in 2019. Chainalysis determined that roughly 27%, or $756 million, has been hidden on Binance. The exchange has assured regulators that they have done as much as possible to stay within the current regulatory framework.

As recently reported by Bloomberg, the Commodity Futures Trading Commission (CFTC) is also probing Binance (not registered with CTFC) to find out if it allowed U.S. residents to trade derivatives. The CFTC previously filed a civil lawsuit to halt the U.S. commodity derivatives business of BitMEX, which is one of the world’s largest cryptocurrency derivatives exchanges. Exchanges are now, more than ever, under regulatory scrutiny.

The repercussion on Bitcoin price

Bitcoin (BTC) losses accelerated Thursday after Bloomberg reported the Binance investigation.

Many of the top cryptocurrencies dropped in price, down double digits. Bitcoin fell 10% after the news, continuing the negative run it experienced after Tesla announced it would stop accepting Bitcoin as payment for their vehicles.

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Australia Bitcoin Crypto News Cryptocurrency Law

Australian Programmer Claims To Be Satoshi and Opens A$7.4B Lawsuit

Craig Wright is in the news again, this time with his ongoing court case to get access to 111,000 Bitcoin (over $7 Billion AUD) held in two digital addresses – he claims the private keys were “stolen” earlier this year.

The Australian computer scientist who now lives in the UK, claims he is Satoshi Nakamoto who created Bitcoin, and has launched a London high court lawsuit against 16 Bitcoin Core software developers in an effort to secure his “lost” Bitcoins.

“Our client has always maintained that he created Bitcoin to operate within existing laws and that in the event of loss or theft, where legitimate ownership can be proven, the developers have a duty to ensure recovery,”

Paul Ferguson, lawyer representing Wright

The case is largely centred on who wrote Bitcoin’s whitepaper, which first outlined the vision of Bitcoin and was published under the pseudonym Satoshi Nakamoto in 2008.

It does seems odd, that a person so deliberately private and anonymous would suddenly feel the need to burst into the spotlight and claim the title as the great Creator of Bitcoin.

Reached by email, Cobra from Bitcoin.org said:

“We’ve been threatened to take down the Bitcoin whitepaper by someone who obviously isn’t the inventor of Bitcoin (if he was, that would make him the 25th richest person in the world, which he obviously isn’t).

Cobra

It remains to be seen if the courts will decide in favour of these seemingly absurd and highly controversial claims. It smells a bit like the old classic, “the dog ate my homework”. If you can’t prove it, then you don’t own it. The true power of the blockchain is that it is so beautifully open and transparent.

If Craig Wright really is Satoshi Nakamoto, could he retrace the breadcrumbs and provide real evidence to back up his claims?

Stay tunes to see how this court battle pans out.

Related news:

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Blockchain Cryptocurrencies Cryptocurrency Law

Report Shows the SEC Has Made $1.77 Billion As Crypto Regulation Heats Up

In a report recently published by Cornerstone Research, the US financial watchdog has stated that they’ve gathered $1.7 billion in crypto-related penalties since 2013.

This sum has been gathered from a total of 75 enforcement actions, 70% of which have been settled. Unsurprisingly, a significant number of these enforcement actions took place in 2017, right in the middle of the ICO boom.

Claiming Main Regulator Status

According to Simona Mola – the publisher of the report in question – the SEC’s actions have placed the organization firmly in the lead when it comes to crypto regulation.

“In the last seven years or so, the SEC has established itself as one of the main regulators policing the cryptocurrency space.”

While a number of these actions have resulted in a win for the SEC, other cases have not been quite as cut-and-dry – most notable among them being the ongoing Ripple court battle – who seems to be gaining the upper hand.

The main offences that garnered the interest of the SEC were unregistered securities offerings and fraud.

Unregistered securities offerings made up 69% of allegations made by the SEC, and fraud accusations were present in 52% of cases. 37% of cases laid out by the SEC accused the recipient of both.

However, the crypto space has come a long way since the days of “unfortunate hacks” on crypto exchanges and high-profile rugpulls.

As crypto-related startups are finding new ways to finance themselves aside from IPOs, regulatory authorities will allegedly look for ways to allow these new companies to find their footing in order to promote innovation, according to Cornerstone Research VP Abe Chernin.

“While the SEC will continue to focus on fraud, there is an increasing expectation that the new administration develops a clearer regulatory approach and pursue greater interagency coordination to foster innovation in cryptocurrency markets.”

Although a certain amount of regulation is necessary in order to keep earnest investors safe from unscrupulous blockchain projects, it’s important that fraud allegations be investigated on a case-by-case basis – a little communication can often clear things up.

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Bitcoin Mining Crypto News Cryptocurrency Law Mining Regulation

Texas Senate To Approve Bill #4474, Amid Bitcoin Mining Rush

A live broadcast was scheduled for 12 May for the discussion of H.B. No. 4474 to take place. This bill aims to get cryptocurrency recognised under commercial law, to enable superior blockchain innovation and virtual currency regulation in Texas.

Clearing Up Regulatory Uncertainty

The bill is intended to clarify a few key definitions and concepts of virtual currency:

  • The definition of “virtual currency”
  • Control of a virtual currency
  • Rights of purchaser that obtains control of a virtual currency

Representative Tan Parker first introduced the bill in March, and the bill will now go to the Texan Senate to see if there are any proposed amendments, thereafter a final vote. Should the crypto legislation pass the senate, Texas Governor Greg Abbott can sign the bill into law.

The self-proclaimed crypto supporter seems to also stand behind Bitcoin mining initiatives in Texas.

The importance of clarifying cryptocurrency laws and adding to legislation is paramount if a country wishes to house new and upcomming blockchain initiatives. With this move, Texas would be inviting companies to open up shop by reducing regulatory uncertainty.

Texas is already home to crypto mining firms BlockCap and Riot Blockchain. Both companies are also planning to expand their mining ventures in the state with the purchase of new facilities and equipment in the future. Texas is moving toward becoming a crypto-friendly state like Wyoming.

Texan Power Problems

Texas needs to sort out more than just its regulatory framework to become a crypto friendly state. If they want to increase the amount of Bitcoin mining initiatives they will also need to sort out issues with the power grid. Harsh winters in Texas usually have major repercussions for those on the grid.

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Crypto News Cryptocurrency Law Institutions Regulation

Coinbase, Square, Paradigm and Fidelity Form “CCI” to Encourage Responsible Crypto Policies

Coinbase, Square, Paradigm, Fidelity Forms "CCI" to Encourage Responsible Crypto Policy

Some leading financial companies are collaborating to encourage a clear regulatory path for the burgeoning digital currency industry.

Known as the Crypto Council for Innovation (CCI), this group currently includes four prominent industry players: Coinbase, Square, Fidelity, and Paradigm. It aims at informing and helping global regulators understand cryptocurrencies while also encouraging responsible crypto-related public policies.

CCI to Unlock The Transformational Promise of Crypto

The companies behind CCI believe that digital currencies are at their critical stage. In recent years, more people have got to learn and invest in cryptocurrencies, including institutions and corporations. As a result, the crypto market has grown significantly, with the market capitalization recently touching $2 trillion. However, the regulatory uncertainties across different countries mean the industry doesn’t hold a clear or settled future. 

Crypto is at a mainstream inflection point. It’s in its very early stages and, much like the internet (once was), it’s very fragile while it’s in that stage.

Fred Ehrsam, co-founder of Paradigm [Wall Street Journal]

Thus, the Crypto Council for Innovation wants to educate the institutions, regulators, and policymakers on the benefits of digital currencies. Part of the approach includes providing analysis and insight about cryptocurrency. The CCI will also focus on correcting some “misperceptions that inevitably accompany a transformative new technology.”

By educating leaders about crypto, we can help empower them to participate in the crypto ecosystem for the benefit of their citizens, communities, and families.

Gus Coldebella, Chief Policy Officer at Paradigm

More Mainstream Crypto Adoption?

The development today could greatly change the shape of the crypto industry from a regulatory aspect. Having clearer regulations for cryptocurrencies would possibly result in encouraging more mainstream crypto adoption.

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Blockchain Cryptocurrencies Cryptocurrency Law

Former SEC Chairman Hints At Possible Bitcoin Regulation On The Horizon

Jay Clayton – a former chairman of the US Securities and Exchange Commission – has given CNBC an intriguing soundbite regarding possible future regulation of Bitcoin, which he sees as a real possibility lurking just beyond the horizon.

Similar To Gold In The 30s

Just about a week ago, big-league investor Ray Dalio hinted that in the not-so-distant future, Bitcoin may actually be banned in the US for private purposes, similarly to the ban on private ownership of gold in the 1930s.

Now, the former chairman of the entity currently going toe to toe with Ripple in court has stated that he sees tighter regulations placed on Bitcoin – and maybe cryptocurrencies in general – as a thing that may be coming pretty soon. He also added that during his stint at the SEC, he did not seek to declare BTC a security – but also that it was already classed as a non-security before he took up the position.

Currently, Mr Clayton is a crypto advisor for investment firm One River Asset Management.

Although Clayton has reasserted that he is not privy to any insider information regarding future regulation, his career has certainly provided him with enough insight to make an educated guess – and probably more.

“Where digital assets land at the end of the day […] will be driven in part by regulation—both domestic and international—and I expect, and I’m speaking as a citizen now, that regulation will come in this area both directly and indirectly whether it’s through how these are held at banks, security accounts, taxation and the like. We will see this regulatory environment evolve.”

The debate surrounding the amount of regulation cryptocurrencies should be subjected to is generally between those who want crypto to become increasingly more mainstream and the ones who want their own private realm of finance. Provided the restrictions speculated about become a reality, it remains to see which of the camps will be proven right – if either of them.

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Australia Cryptocurrencies Cryptocurrency Law

BitMEX Hotshot Greg Dwyer Still In Talks With U.S. Authorities Regarding Surrender

Following the surrender of BitMEX founder Ben Delo to US authorities, Greg Dwyer – another senior employee of BitMEX – is still in talks regarding his surrender, and has not been taken into custody.

In Breach Of Sanctions

The Australian national from Sydney is accused – alongside CEO Ben Delo and high-profile individuals affiliated with BitMEX, namely Sam Reed and Arthur Hayes – of violating Anti-Money Laundering (AML) regulations, as well as allegedly allowing sanctioned individuals to access the services BitMEX offered.

More precisely, the US Department of Justice (DOJ) accused the individuals involved of “deliberately and willfully breaching money laundering laws including knowingly accepting fake passports by traders from Iran”. They are also accused of breaching US sanctions and letting bad actors engage in money laundering on the BitMEX platform. If found guilty, the defendants could end up facing up to 5 years behind bars. Mr Reed and Mr Delo have turned themselves in and are currently out of custody, having paid bail. Both founders have pleaded not guilty on all counts.

Arthur Hayes has reached a deal with US authorities and will be turning himself in after the Easter holiday in Hawaii. He will then be immediately released on bail, after handing over the necessary $10 million.

Greg Dwyer, however, is at large in an unknown location – last seen in the Bermudas.

However, Mr. Dwyer’s’ lawyer – Jenna Dabbs – has stated that he intends to defend himself in court.

“We have been in touch with the government on this matter and Mr Dwyer has every intention to defend himself in court against these meritless charges. (He) always worked collaboratively with his colleagues, and in good faith, to comply with all applicable regulations and requirements”.

Mrs Dabbs has also stated that Mr Dwyer was not the one responsible for setting up the AML side of the business.

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Cryptocurrencies Cryptocurrency Law Ripple

New Developments In SEC Case Possibly Lean In Favour Of Ripple

In a video published on YouTube by Attorney Jeremy Hogan – who, according to the video – attended the discovery hearing in the SEC vs Ripple case, the judges dropped some hints that they may be leaning in favour of Ripple.

Although no court documentation has been made available yet – and as a result, the conclusions drawn from the video must be approached with caution – Judge Sarah Netburn, who assists Primary Judge Analisa Torres in the current case, has made two comments in the court case that may show that Ripple already has the upper hand.

The Utility Of XRP Is Key

According to Attorney Hogan, Judge Netburn allegedly interrupted the ongoing debate to say that – as far as she can tell – XRP is not only an asset with monetary value but one with a specific utility that is not a store of value.

“My understanding about XRP is that not only does it have a currency value, but it has a utility and that utility distinguishes it from bitcoin and ether.”

 Later on, Judge Netburn also reportedly inquired whether, according to the SEC, all those who’ve sold XRP have sold illegal securities – to which the SEC attorney responded that according to Section 4 of the U.S. Securities Act, only Ripple and its affiliates could be accused of illegal sales.

Hogan himself weighed in on the proceedings, stating that since a currency and a security are fundamentally different.

“No matter what the SEC may try and argue, a currency and a security are, by definition, in opposite … These are two different things. […] If I’m Ripple, I’m feeling pretty good that my mediator and consulting summary judgement judge just said on the record what I essentially argued in my pleadings.”

In late January, Ripple issued a FOIA request demanding to know how Ethereum (and Ethereum’s treatment by the SEC) differs from XRP. According to these alleged statements, the difference seems to have been found in court. At the time, Ripple argued that XRP is not a security, and as such is outside of the SEC’s jurisdiction.

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Cryptocurrencies Cryptocurrency Law Scams

John McAfee Charged With Crypto Fraud

John McAfee has been charged for cryptocurrency fraud by the Manhattan federal court, along with a business associate who goes by the name of Jimmy Gale Watson Jr. 

Failure To Report Earnings For 4 Years

Mr Watson reportedly served as a top level advisor on what courts are calling a “cryptocurrency team”.

Mr Watson — aged 40 — was arrested in Texas and will face a federal judge in a preliminary hearing on Friday, in Dallas. According to an initial statement from the prosecutors, antivirus mogul John McAfee and his crew allegedly made over AUD 16.9 million (USD 13 million) by convincing various investors to buy into a myriad of cryptocurrency-related projects. 

According to US Attorney Audrey Strauss, Mr McAfee used his status to spread false information in 2017 and 2018 that allowed him to make considerable earnings — which he never reported.

“McAfee and Watson exploited a widely used social media platform and enthusiasm among investors in the emerging cryptocurrency market to make millions through lies and deception.”

Although Jimmy Gale Watson Jr. was recently taken into custody,  M. McAfee has been waiting to appear in front of a US Federal Court, even longer, seeing as he is currently being detained in Spain on a separate set of charges on behalf of the US Justice Department.

John McAfee is no stranger to troubles with Law Enforcement, as he’s been in hot water with authorities in the USA and Belize before — and in July 2019, he was released from detention in the Dominican Republic following an arrest on suspicion of going on a yachting trip with high-calibre weapons and other unspecified military-grade gear.