Meta Digest

CFTC shift attention to Binance with lawsuit

Josh Barter Josh Barter on March 29, 2023

CFTC — The cryptocurrency sector in the United States is in disarray, with entrepreneurs clashing with regulators.

Crypto enthusiasts in the United States, for example, are not allowed to trade cryptocurrency derivatives.

To further aggravate the situation, major overseas trading platforms for crypto futures do not allow Americans to trade the products.

Only if they are registered with the Commodities Futures Trading Commission (CFTC), a formidable federal regulator, may they do so.

The CFTC has filed a lawsuit against Binance, the world’s most well-known cryptocurrency exchange, for trading without first registering with the agency.

Binance apparently contemplated bailing out rival exchange FTX in November 2022.

Yet, Binance withdrew after closely monitoring the exchange platform, preventing a big federal fraud investigation on FTX.

What happened?

Binance and its CEO, Changpeng Zhao, were accused by the CFTC with breaking US laws.

Among the alleged violations is privately advising “VIP” clients in the United States on how to dodge compliance rules.

In addition, the commission regulates derivatives trading in the United States.

According to the CFTC, Binance and Zhao urged employees and customers to avoid compliance protections in order to increase corporate profits.

The CFTC does not have the ability to pursue criminal charges.

But, the regulator has the authority to levy substantial fines, which might preclude Binance from registering in the US in the future.

The potential ban might be disastrous for the company, given the United States is home to hundreds, if not millions, of cryptocurrency enthusiasts.

The response

As the news of the lawsuit came, Binance noted that it was unexpected and disappointing.

The company stressed that it has spent a significant amount of money in the previous two years to ensure that US-based investors are not active on the platform.

Zhao tweeted the number 4 after the lawsuit was announced on Monday, referring to a previous statement he made:

“Ignore FUD, fake news, attacks, etc.”

FUD is an acronym that stands for “fear, uncertainty, and doubt” in the crypto world.

Binance has long claimed that it is not subject to American legislation since it does not have a physical presence in the country.

Despite its location in China, the crypto trading platform lacks a physical headquarters.

Changpeng Zhao believes that the headquarters of the corporation are wherever he is.

Binance’s technique, according to the CFTC’s complaint, was a willful attempt to avoid regulation.

Read also: Stablecoins witness change after Circle confirms SVB exposure

The bigger picture

The CFTC action is a setback for Binance, but it has far-reaching repercussions for the cryptocurrency sector.

But, the case is not as important as everything else that happened in 2022.

For example, the FTX bankruptcy triggered a chain reaction throughout the crypto sector, causing firms and projects exposed to the corporation to either freeze or shut down.

Terra/Luna also had a collapse, resulting in a drop in the value of crypto assets and NFTs.

Yet, significant progress has been made on the Terra/Luna issue in 2023.

Prices for the two major cryptocurrencies, Bitcoin and Ethereum, fell by more than 3% on Monday, a regular day for cryptocurrency trading.

Worst-kept secret

The CFTC’s lawsuit is remarkable for naming one of its worst-kept Bitcoin secrets.

Consumers in the United States have incredibly simple access to potentially dangerous offshore crypto derivatives, which should be prohibited.

Because crypto derivatives are leveraged bets on very volatile assets, they are accessible to anybody with a VPN.

While this method is straightforward, it is strongly discouraged.

The endgame

The most likely outcome, according to Blockchain Intelligence Group crypto compliance and regulation specialist Timothy Cradle, is that Binance will pay hundreds of millions of dollars in fines to the CFTC.

Furthermore, the company would be prevented from registering derivatives exchanges.

The move would not only be disastrous for American customers, but it would also have a significant impact on Binance’s revenues.

According to the lawsuit, US consumers account for 16% of the revenue generated by Binance’s derivatives products.

Other regulators

The revelation on Monday only adds to the regulatory pressure on one of cryptocurrency’s most well-known characters.

According to Bloomberg, the US Tax Administration and the Securities and Exchange Commission are also investigating Binance.

This week, the SEC issued a Wells Notice to Coinbase, one of the top US-listed crypto exchanges, for possible securities law violations.

Silvergate and Signature Bank, two major connections to the traditional banking sector, were lost to the crypto industry in early March.

Image source: The Coin Republic

SEC grilled by crypto executives over lack of clarity

Vina Grady Vina Grady on March 27, 2023

SEC – After recent developments in the crypto space, various executives from crypto companies have expressed their displeasure with the US government.

Numerous people have criticized them for not comprehending the industry’s laws.

Now, the Securities and Exchange Commission is a major target of the crypto community’s rage due to its active anti-crypto business actions.

US & crypto

While other countries are warming to Bitcoin, the United States is behind.

The government has failed to pass a comprehensive set of laws that would allow bitcoin and blockchain businesses to operate without fear of being targeted by authorities.

The US Securities and Exchange Commission (SEC) has taken it upon itself to expand legal actions against corporations following the collapse of cryptocurrency exchange FTX in 2022.

The clash

On Wednesday, the SEC sent a Wells notice to Coinbase, one of the biggest bitcoin exchanges.

After detecting possible violations of US securities law, it issued a warning to the business.

Moreover, the SEC accused Justin Sun, a crypto entrepreneur, with fraud and unregistered securities against celebrities who advocated the digital currency he was supporting.

The SEC is now engaged in a legal battle with many other cryptocurrency businesses, including Gemini, Genesis, and Ripple.

Reception

“It feels uncollaborative,” said an anonymous crypto executive over the Paris Blockchain Week event.

“It’s very frustrating for players that have been doing right the whole time.”

However, Joe Lubin, CEO of ConsenSys and co-founder of Ethereum, has expressed concern about the ecosystem.

“I think we’re sort of continuing to watch the SEC play this game of punishing the people that are still surviving,” said Blockchain.com president Nicolas Cary.

“And it’s a little bit, you know, sort of frustrating thing to observe.”

The majority of the SEC’s operations include imposing modern limitations on the crypto industry decades after the Howey Test.

The Howey Test is used to determine whether or not something is secure.

Yet, many in the crypto industry think that this is not the best way to go.

“Where I think you have less successful regulatory regimes is when you try to analyze crypto through the lens of traditional finance,” said Oliver Linch, the CEO of Bittrex Global.

“You say, ‘Well, is it a bit like a security? Is it a commodity?’ No, it’s kind of none of those things. It’s crypto.”

Read also: SEC fired up the crypto community after Coinbase notice

Clarity & sympathy

The Paris Blockchain Week is one of Europe’s most well-known crypto events, and the SEC’s activities were one of the most contentious topics among attendees.

Several executives sought clarity from US regulators.

“We’d love to have a little more clarity in regulation,” said Silvio Micali, the founder of blockchain company Algorand.

Some, on the contrary, were more supportive of the SEC.

They said that the watchdog is adhering to the regulations as they are and that the US government has the ability to change them.

“What are they supposed to do? If all you’re given is a hammer, the whole world looks like a nail,” said Linch.

Cary, on the other hand, claimed that the SEC is merely doing its duty to protect customers.

The SEC

SEC Chair Gary Gensler addressed the problems in a column published on The Hill this month, arguing that the agency was clear on the legislation.

“I find the talking point that there’s a lack of clarity in the securities laws unpersuasive,” he said.

“Some crypto companies might message that the laws are unclearer rather than admitting that their platforms don’t have sufficient investor protection.”

Gensler also cited examples of crypto companies that are subject to regular securities regulations, such as when they provide lending products.

He also noted that crypto intermediaries are not lining up to register with the SEC and comply with Congress’ laws.

Furthermore, the SEC chair emphasized that enforcement procedures are yet another weapon in the regulator’s toolbox for weeding out noncompliance.

Falling behind

CEOs expressed concern that the United States’ lack of effective regulation might force it to fall behind other countries and jurisdictions.

“It’s incumbent, I think, on Congress to actually create a legal regulatory framework that regulates crypto properly, because… crypto is here to stay,” said Linch.

Governments worldwide are debating how to regulate bitcoin.

Both Dubai and Switzerland have identified themselves as crypto-friendly nations with favorable regulatory environments.

Meanwhile, the European Union intends to put the Markets in Crypto-Assets Regulation, or MiCA, into effect in 2023.

Its goal is to implement restrictions on and around digital currency businesses.

Monica Long, the president of Ripple, is concerned that the United States may fall behind other jurisdictions in the crypto economy.

“Europe is really emerging as a leader in terms of setting really clear regulations and rules that allow crypto companies and also traditional finance to embrace crypto,” said Long.

Image source: The Hacker News

Coinbase takes steps to evolve with Web3

Clara Emily Clara Emily on March 27, 2023

Coinbase – The beauty of Web3 is that, like technology, it is always growing, and those working in the sector recognize that they have yet to realize its full potential.

To take advantage of Web3, developers may use a variety of tools and services.

Coinbase is seeking to attract new customers and acquaint existing ones with its new Base roll-out in order to generate more income.

The business believes it can accomplish so by developing a variety of innovative on-chain products and services.

The news

Coinbase was launched in 2012 as a basic market for buying and selling Bitcoin.

Much has changed since then, and the decade-old business is eager to remain relevant and up to date.

Coinbase announced the release of Base, its native layer-2 scaling solution, in February.

Base is designed with the OP Stack, which incorporates a significant amount of Optimism technology.

The platform’s choice to construct Base is especially intriguing for a highly centralized, highly regulated, publicly listed firm headquartered in the United States.

OP Stack

The OP Stack is an open-source collection of tools that enables anybody to build their own rollup chain, from fully-centralized crypto ventures to Nasdaq-listed enterprises.

Rollups are components of scaling solutions that group transactions over many networks before condensing them into a single transaction and executing it on the Ethereum mainnet.

It allows the mainnet to stay low-cost while yet working quickly for other initiatives.

Furthermore, the OP Stack is configurable and modular, recalling users of the phrase “appchain,” where everything – from the data later to the consensus method – can be totally altered according to the project’s demands.

Read also: GQ3 NFTs fizzled upon mint, floor price is dropping

The arrangement

Coinbase will be the sole “sequencer” for layer-2, according to their agreement.

A sequence node is a node or group of nodes on the mainnet that conducts batched transactions.

The Optimism sequencer is a substantial money producer for the Optimism foundation.

Optimism earns a portion of the profit for each transaction executed and executed on the mainnet.

It is strongly advised to include activities on the roll-up due to its nature.

Coinbase is likewise considering the same kind of action.

On-chain native

Jesse Pollak, Coinbase Protocols Lead, stated at ETH Denver last week that the choice to become ‘on-chain native.’ is part of a larger goal.

He discussed the company’s innovation approach as well as ambitions to rapidly iterate on projects such as Coinbase NFT and the layer-2 blockchain Base.

“Coinbase, recently, with things likeUSDC, Coinbase Wallet, cbETh, and our dApp Wallet, has started to build what we call ‘on-chain native’ products,” said Pollak.

“It’s still a very small percentage of our overall portfolio.”

Base is part of a modest but steadily expanding toolset.

However, Coinbase’s cbETH asset is another evidence of the company’s transition to an on-chain strategy.

The asset is also known as a liquid staking derivative (LSD), and it is a staked form of Ethereum.

Those that stake their Ethereum with Coinbase receive cbETH in exchange.

These, like other LSDs, can be reused in the DeFi space.

More than $29.5 million in cbETH is presently generating interest using the open source protocol Aave.

White-label solution

Coinbase launched a white-label wallet service for companies looking to establish a crypto wallet on Wednesday.

The objective, according to the business, is to make wallet creation as simple as creating a username and password in order to avoid the technical nature of conventional digital wallets.

“It’s basically eliminating this huge source of friction for getting Web3 adopted,” said Patrick McGregor of Coinbase.

“Effectively, we’ve created a system to give wallets to literally every human on the planet.”

McGregor intimated that other “well-known people” will shortly enter the fray.

However, the Coinbase-native layer-2 solution and on-chain goods provide clarification on a number of aspects.

By creating additional on-chain products for Coinbase consumers, the business is prepping a large audience to migrate their activities away from the exchange.

But, the fees do not inevitably drain the company’s coffers.

Image source: Yahoo News

SEC fired up the crypto community after Coinbase notice

Stephen Reynolds Stephen Reynolds on March 23, 2023

SEC – US authorities have started cracking down on the crypto area, which has had a significant impact on the community.

The SEC sent a warning to Coinbase on Wednesday, saying that the company’s staking products are unregistered securities.

Parts of the Coinbase exchange and Coinbase Wallet were also discussed.

The SEC’s moves against Coinbase have sparked outrage in the cryptocurrency world.

As a result, concerns have arisen concerning the implications of the situation for bitcoin in the United States.

Coinbase

According to reports, Coinbase executives are dissatisfied with how the SEC enabled US investors to participate in cryptocurrency for years before abruptly pulling the rug out from under them.

For months, Coinbase allegedly engaged in regulatory and policy discussions with the SEC.

They began immediately after petitioning the SEC in July, asking the authorities to initiate a public rulemaking process to define what would be constituted securities.

Coinbase sent a letter to the SEC on Monday to clarify the rules governing staking.

The SEC subsequently informed the corporation that it would take enforcement action against it.

Coinbase CEO Brian Armstrong discussed how the SEC permitted the business to go public on the Nasdaq in a Twitter thread.

Coinbase informed customers earlier on Wednesday that Algorand staking incentives will be suspended on March 29.

In that afternoon, Paul Grewal wrote a blog post claiming that the Wells Notice did not offer information to which they could reply.

 

Reaction

Caitlin Long, the founder and CEO of Custodia Bank, shared her thoughts on Twitter, writing:

“It should be crystal clear by now that the Biden Administration wants all crypto – even the legit parts of it – run out by the US.”

“See also yesterday’s White House economic report, which dunked on all financial innovation while espousing the “stability” of traditional banks.”

Long and others questioned the SEC’s unexpected issuance of a “Wells Notice.”

For years, they permitted Coinbase, a publicly listed firm, to provide staking incentives, but have just recently threatened to sue the company, saying they issued unregistered securities.

“Over the past 9 months, [Coinbase] has met with the SEC more than 30 times, sharing details of our business to build a path to registration,” wrote Coinbase Chief Legal Officer Paul Grewal.

“During this time, the SEC hasn’t given basically 0 feedback on what to change, or how to register. Instead, today we received a Wells Notice.”

Chris Dixon, general partner at Andreessen Horowitz, chipped in, saying:

“Since day one, @coinbase has invested heavily in being fully compliant with US laws even when it forced them to move slower or lose a competitive edge vs other exchanges that chose to take shortcuts.”

“The US has a strong history of fostering innovation, and regulators have played a key role by establishing clear rules and pursuing bad actors,” he continued.

“We hope the US will take a more constructive approach to collaborating with innovators while protecting consumers.”

Read also: Stablecoins witness change after Circle confirms SVB exposure

Support & criticism

Numerous members of the cryptocurrency community have shown their support for Coinbase, saying they stand with the firm and Adam Cochran, the founder of Cinnemhain Ventures (CEHV).

Although others criticized the SEC, some members of the cryptocurrency community used the occasion to bash Coinbase.

The most outspoken complaints came from the XRP community, many of whom were still irritated by Coinbase’s removal of XRP from the Coinbase Wallet last fall.

Nevertheless, Ripple Labs has been fighting the SEC in court since December 2020.

The corporation was accused of deceiving investors and raising $1.3 billion in unregistered securities, according to the agency.

“I doubt I will ever understand how the SEC can sign off on @coinbase being publicly listed then raise all these issues afterwards,” said attorney Bill Morgan.

“Forget just crypto, how is the SEC protecting shareholders of Coinbase with this dreadful conduct?”

Image source: CryptoSlate

Crypto ads not as prominent in 2023 Super Bowl

Hector Andrews Hector Andrews on February 7, 2023

Crypto ad – When numerous cryptocurrency firms ran advertisements before the NFL’s championship game in 2022, it became customary.

The Super Bowl LVII is shaping up to be an exciting opportunity for the digital asset sector.

2022

A number of crypto ads from some of the biggest companies were seen during the Los Angeles Rams vs. Cincinnati Bengals game from the previous season on the popular televised game, including:

  • Coinbase
  • Crypto.com
  • FTX (before its collapse)

With an advertisement portraying a trader taking off into the skies after joining up for the site, Etero joined the frenzy and established itself as a top venue for trading stocks and cryptocurrencies.

Meanwhile, a Budweiser ad that appeared to be promoting cryptocurrency also was.

By depicting the project’s famous glasses over a classical painting portrait, it paid tribute to the Nouns DAO NFT collection.

While this was going on, other businesses burned through millions of dollars on the crypto ads in an effort to build a name for themselves.

Over 112 million people watched the game last year, according to the NFL.

Giveaways

FTX and Coinbase were two of the businesses that ran crypto ads and gave away Bitcoin.

The Curb Your Enthusiasm actor Larry David was the subject of the FTX commercial, which ended with the comic being disdainful of the project’s app.

Layoffs

FTX did not reduce employees prior to their demise, but Coinbase and Crypto.com did so once the Terra ecosystem collapsed in the summer of 2022.

In the end, layoffs became a pattern in the cryptocurrency sector, lasting into this year.

The CEO of cryptocurrency exchange Binance, Changpeng Zhao, stated specifically that he will forgo crypto ads for the Super Bowl.

In June, he said, Binance is still hiring.

Read also: Crypto exchanges accounted for a chunk of 2022 layoffs

“It was not easy saying no to Super bowl [SIC] ads, stadium naming rights, large sponsor deals a few months ago, but we did,” Zhao tweeted.

“Today, we are hiring for 2000 open positions.”

A smaller showing

Since Bitcoin sold for almost $42,000 during the previous Super Bowl, the price of cryptocurrencies has significantly decreased.

Despite the shifting market, a number of businesses will support cryptocurrencies on Sunday when the Philadelphia Eagles play the Kansas City Chiefs.

The first commercial break of the game will include a crypto ad from Limit Break, a Web3 startup.

The business intends to distribute thousands of its Dragon series NFTs as part of a promotion for its free-to-own NFT gaming concept.

One of the most distinctive ads will be the one on cryptocurrency.

It is an interactive commercial that uses a QR code to expose the DigiDaigaku universe to the audience.

Limit Break’s crypto ad will follow in Coibase’s footsteps by using a bouncing QR code, similar to the classic bouncing DVD logos, to guide viewers to its website in a 2022 advertisement.

The website failed as a result of all the traffic, thus last year’s advertisement was a bit of a miss.

Other ads

Bitbuy, a cryptocurrency exchange, is one of the recurring Super Bowl ad ventures.

With a few modifications, Bitbuy will run a crypto ad in Canada for the second time.

The firm is adjusting its strategy this time around because lost chances were its main emphasis the previous year.

Bitbuy will center their 2023 crypto ad around the idea of trust.

The forthcoming commercial will be twice as long, clocking in at a full minute.

In place of Kyle Lowry, the most recent Rookie of the Year in the NBA, Scottie Barnes will appear in the Bitbuy advertisement.

Turbotax first mentioned cryptocurrencies in its ad in 2022, and it will do it once again this year.

For the upcoming ad, Jason Sudeikis will make a brief appearance.

Representation

The 2019 Super Bowl won’t have any representation for cryptocurrency firms, according to Mark Evans, vice president of ad sales at Fox Sports.

Despite being focused on blockchain technology, a Limit Break spokesperson claimed that the company’s marketing fell under the gaming category.

Image source: Blockworks

Coinbase joins slew of companies laying off workers

Josh Barter Josh Barter on January 11, 2023

Image source: Forbes

Coinbase: Considering all the cutbacks in the technology industry, Coinbase will reduce 1/5th of its personnel.

The strategy aims to protect money as the crypto market deteriorates further.

The news

According to a blog post posted on Tuesday morning, the crypto company plans to lay off 950 employees.

After an 18% staff reduction in June, Coinbase had over 4,700 employees by the end of September.

The company attributed the layoffs to cost-cutting efforts and rapid expansion amid the bull market.

“With perfect hindsight, looking back, we should have done more,” said Coinbase CEO Brian Armstrong.

“The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.”

Endgame

According to Coinbase, the decision would incur additional costs in the first quarter ranging from $149 to $163 million.

For the quarter ending in March, Coinbase’s operating expenses will shrink by 25% as a result of the layoffs and other restructuring initiatives.

Additionally, the company anticipates that its 2023 adjusted EBITDA losses won’t surpass the $500 million “guardrail” it established a year ago.

Brian Armstrong remarked that it was evident they would need to lower spending to improve their chances of surviving each scenario following several stress tests for the annual revenue.

He claimed that cutting back on staff was the only way to accomplish the objective.

Coinbase will also cancel a slew of low-probability projects.

The FTX factor

The FTX collapse significantly impacted around the end of 2022 despite the cryptocurrency market being volatile throughout most of the year.

The strain that FTX and its founder Sam Bankman-Fried put on the cryptocurrency sector was underlined by Armstrong.

“The FTX collapse and resulting contagion has created a black eye for the industry,” said the Coinbase CEO.

“We may not have seen the last of it – there will be increased scrutiny on various companies in the space to make sure that they’re following the rules.”

“Long term, that’s a good thing. But short term, there’s still a lot of market fear.”

Due to investors being wary of riskier assets during the downturn, cryptocurrency and technology stocks have underperformed over the past decade.

Shares of Coinbase have fallen by 83% in the last year, while those of Bitcoin has fallen by 58%.

Read also: Niall Dailly set for a unique music experience with NFTs

Other companies and job cuts

Coinbase and several other tech firms went on a hiring binge at the start of the 2020 pandemic.

But many businesses are now rapidly dismissing their workers.

  • Amazon is dismissing 18,000 workers.
  • A 10% employee reduction was recently announced by Salesforce
  • Elon Musk cut back on half of the Twitter staff
  • Over 13% of Meta’s employees were let go
  • Fewer people were left employed by crypto firms Genesis, Gemini, and Kraken.

“Every company in Silicon Valley felt like we were just forced on growth, growth, growth, and people were almost using headcount as a symbol of how much progress they were making,” said Armstrong.

“The focus now is on operational efficiency – it’s a healthy thing for the ecosystem and the industry to focus more on those things.”

Coinbase had 2,000 new hires in the product, engineering, and design sectors planned for the beginning of 2022.

Since then, according to Brian Armstrong, he has been working to change Coinbase’s culture to resemble a startup with smaller, more agile teams.

The company

The stock price of Coinbase has decreased since its IPO more than two years ago.

The stock surged to $429.54 upon launch but now trades for less than $40.

On their personal accounts, Coinbase will send emails to employees who are being let go, and access to the systems will be blocked.

According to Brian Armstrong, even though the access limitation seemed excessive, it was their only option for protecting client information.

Armstrong is confident that the cryptocurrency business won’t vanish anytime soon despite a chain reaction of bankruptcies and a decline in transaction volume.

As a result of losing its greatest rival, Coinbase eventually gained the upper hand following the FTX crash.

According to Armstrong, the eventual change in regulatory clarity validates the business’s intention to grow and go public in the United States.

He compared the current state of affairs to the early days of the internet.

“If you look at the internet era, the best companies got even stronger by having rigorous cost management,” said Armstrong.

“That’s what’s going to happen here.”

Reference:

Coinbase to slash 20% of workforce in second major round of job cuts

Coinbase stock price jumps after settlement

Josh Barter Josh Barter on January 4, 2023

Image source: Fintech Magazine

Coinbase: The cryptocurrency exchange site Coinbase had a sharp increase on Wednesday.

Following a $100 million settlement with the New York Department of Financial Services, the exchange’s stock price rose.

Following the agreement, COIN, which is listed on the Nasdaq Composite, was up more than 12% and was trading at $37.34 per share.

The settlement

Issues with the company’s compliance programs were settled between the company and the New York Department of Financial Services.

The cryptocurrency exchange must therefore pay a $50 million fine as a result.

Coinbase must also invest an additional $50 million to improve its capacity to adhere to financial regulations, such as transaction monitoring and KYC requirements.

The New York Banking Law and state rules surrounding the following were broken by the company, according to the Department of Financial Services, which said it failed to comply with a program.

  • Cybersecurity
  • Money transmitting
  • Transaction monitoring
  • Virtual currencies

Company vulnerability

The NYDFS claimed that Coinbase’s compliance program had issues that left it open to the following risks:

  • Activities related to narcotics trafficking or child sexual abuse material
  • Fraud
  • Money laundering

The Superintendent of Financial Services, Adrienne A. Harris, stated:

“It is critical that all financial institutions safeguard their systems from bad actors.”

“Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth.”

The NYDFS asserted that the business has already begun to enhance its practices.

KYC

Coinbase’s treatment of the KYC rule and customer due diligence requirements was deemed by New York regulators to be a “check-the-box” activity.

The exercise was also deemed to be insufficient.

The department also learned the company has a sizable backlog for keeping an eye on suspicious transactions.

By the end of 2021, there were more than 100,000 unreviewed alerts.

As a result, some of the transactions that Coinbase highlighted weren’t examined for several months.

The NYDFS installed an independent monitor at the beginning of 2022 as a result of the company’s failure.

In order to resolve concerns with the company’s procedures, the monitor assessed the company’s compliance program.

The monitor will continue to work with Coinbase for an additional year as part of the settlement.

Read also: Jon Tester, US Senator, still dismissive of crypto

Price jump

Investors who now have a good understanding of the company’s regulatory issues are likely to have contributed to the surge in Coinbase stock’s (COIN) price.

The NYDFS inquiry was first mentioned by the cryptocurrency exchange platform in a late 2021 SEC report as a potential risk to its business operations.

But the regulator’s most recent statement effectively put an end to the matter.

SEC investigation

Despite the good news, an SEC inquiry against Coinbase is still imminent.

A probe into whether the SEC should permit Americans to trade digital assets that ought to have been registered as securities was launched against the corporation in July 2022.

A past insider trading case involving a former Coinbase employee who was suspected of breaking the company’s insider trading policies provides the basis for the current investigation.

The former worker allegedly told his brother and a friend about impending token listings, according to the accusation.

The agency discovered that the accused traded the following tokens:

  • AMP (AMP)
  • Rally (RLLY)
  • DerivaDEX (DDX)
  • XYO (XYO)
  • Rari Governance Token (RGT)
  • LCX (LCX)
  • Powerledger (POWR)
  • DFX Finance (DFC)
  • Kromatika (KROM)

Coinbase

In April 2021, the exchange platform for cryptocurrencies first went public.

It joined the US stock exchange as the country’s first significant cryptocurrency startup.

At the time, the cryptocurrency market was booming, with trades for Bitcoin reaching $63,000.

People consequently developed an interest in investing in cryptocurrencies.

COIN made its debut for an incredible $381, which was 52% more expensive than its $250 reference price.

But a sudden crypto and stock market collapse occurred in 2022.

Crypto ventures, businesses, and almost every coin’s price on the market were decimated by the severe bear market.

Since that time, COIN’s value has decreased considerably, plummeting 90% from the time it was first launched.

References:

Coinbase stock price jumps 12% following $100M NYDSF settlement

Coinbase reaches $100 million settlement with New York regulator over compliance programs

SEC launches probe into Coinbase over alleged securities listing: report

SEC claims Coinbase currently lists nine crypto assets that are securities

Sherrod Brown wants cryptocurrency banned in the US

Clara Emily Clara Emily on December 19, 2022

Image source: CNN

Sherrod Brown: Sherrod Brown, a US senator, recently suggested that US government organizations take cryptocurrency prohibition into consideration.

He especially named the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

The news

Despite suggesting the ban, Brown acknowledged that it would be “very difficult” to put into effect during an appearance on “Meet the Press” on NBC.

According to the US senator, the cryptocurrency industry may move overseas.

He also referred to a number of American regulators, saying:

“We want them to do what they need to do at the same time – maybe banning it.”

“Although banning it is very difficult because it will go offshore and who knows how that will work.”

Sherrod Brown used several examples to support his claims, including “the threat to national security from Korean cyber criminals to drug trafficking and human trafficking and financing of terrorism and all things that can come out of crypto,” along with other instances.

The collapse of FTX is yet another good illustration.

The FTX collapse

At the beginning of November, the cryptocurrency exchange FTX failed and declared bankruptcy.

The corporation said it would file for Chapter 11 bankruptcy and then start analyzing and liquidating assets.

A trade company and related corporation named Alameda Research also declared bankruptcy.

The filing, however, excludes a few businesses, including:

  • Ledger X LLC
  • FTX Digital Markets Ltd.
  • FTX Australia Pty Ltd.
  • FTX Express Pay Ltd.

In the release, company founder and CEO Sam Bankman-Fried announced his departure.

John J. Ray III took over and said:

“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process.”

Read also: Sam Bankman-Fried said to have donated to lawmakers investigating FTX collapse

What happened

In the world of cryptocurrencies, Sam Bankman-Fried once enjoyed rockstar status but swiftly lost it.

Last year, Binance began selling its holdings of FTT (FTX’s native exchange token) as part of an equity exit from the business.

As the token’s value dropped, investors started withdrawing funds from the FTX, which led the platform to block withdrawals and declare a panic.

Brown’s sentiments

Earlier this month, Sherrod Brown asked that several government organizations collaborate to address the problem of capturing cryptocurrency.

“Single regulatory agencies currently generally do not have a comprehensive view of crypto asset entities’ activities,” he declared in a statement.

In the US government, Brown, a Democrat who has served as the representative for Ohio since 2007, is not the only high official who has advocated for more crypto regulations.

Senator Elizabeth Warren proposed a new bitcoin regulation bill last month.

The proposed legislation is referred to as the Digital Asset Anti-Money Laundering Act.

It attempts to require crypto asset producers to deliver audited financial accounts.

Additionally, the bill wants to put in place capital norms akin to those used by banks and other conventional financial institutions.

Finally, the proposal would grant the SEC greater control over the asset class.

Read also: Jon Tester, US Senator, still dismissive of crypto

Offshore crypto movement

Contrary to what the US Senator indicated, the cryptocurrency industry is already moving operations abroad due to the US government’s uncertain regulatory future.

In a tweet from November, Coinbase CEO Brian Armstrong addressed the problem.

“FTX.com was an offshore exchange not regulated by the SEC.”

“The problem is that the SEC failed to create regulatory clarity here in the US,” he continued.

“So many American investors (and 95% of trading activity) went offshore.”

Armstrong continued by calling the sanctions scenario against US firms ridiculous.

After FTX’s bankruptcy, Brian Armstrong emphasized his desire for US lawmakers to seize the initiative and lead the world’s race toward crypto legislation.

He claimed that Coinbase has been a significant proponent of the regulation of cryptocurrencies and contrasted the tactics of his site with that of a Bahamian-based “offshore exchange.”

References:

Banking committee chair: US regulators should ‘maybe’ ban crypto

FTX files Chapter 11 bankruptcy, SBF steps down as CEO

FTX crisis an ‘opportunity’ for US to clarify crypto regulations: Coinbase CEO

Sam Bankman-Fried ‘not ready’ for US House hearing

Clara Emily Clara Emily on December 5, 2022

Image source: Fox Business

Sam Bankman-Fried responded to the US Representative Maxine Waters’ Twitter invitation to a hearing on Friday.

The former FTX CEO said he wasn’t sure if he was ready to attend the hearing scheduled for December 13 in Washington, DC.

The news

Sam Bankman-Fried has recently been ordered to appear and testify before the US House Financial Services Committee.

Senior Member Maxine Waters tweeted to SBF, saying, “We would welcome your participation in our hearing.”

“We appreciate that you’ve been candid in your discussions about what happened at #FTX,” she wrote.

“Your willingness to talk to the public will help the company’s customers, investors, and others.”

Read also: Sam Bankman-Fried acknowledges screwing up at FTX

Response

On Sunday, Sam Bankman-Fried finally replied to Waters on Twitter, turning it down.

“Once I have finished learning and reviewing what happened, I would feel like it was my duty to appear before the committee and explain,” he wrote.

“I’m not sure that will happen by the 13th. But when it does, I will testify.”

Reception to the response

Meanwhile, Crypto Twitter paid special attention to the former FTX CEO, noting a nonchalant attitude towards the invitation.

Chief legal officer of Coinbase, Paul Grewal, did not take too kindly to the attitude SBF displayed.

“Our elected representatives exercise great restraint in communicating their expectations,” he wrote.

“And still this fraudster insults their authority. What a disgrace.”

However, others criticized Maxine Waters’ tone, especially LBRY.

The blockchain-based video streaming platform recently lost a battle with the US SEC over alleged sales of unregistered securities under its LBC token.

Meanwhile, others chimed in to call out Sam Bankman-Fried for fraud.

Read also: Cryptocurrency lawsuit set to conclude soon

After the collapse

Sam Bankman-Fried issued several apologies across different platforms following FTX’s bankruptcy filing last month.

SBF also appeared in high-profile interviews at Good Morning America with George Stephanopoulos, CNBC, and Andrew Ross Sorkin of The New York Times.

During the Sorkin interview, Bankman-Fried revealed that he went against his lawyer’s advice about speaking out.

“I didn’t knowingly commingle funds,” said SBF, referring to the relationship between FTX and his trading firm Alameda Research.

“It was, in effect, tied together substantially more than I would have ever wanted it to be.”

Reference:

SBF publicly punts on the US House Hearing Invitation

Coinbase safe from FTX exposure, says CEO

Josh Barter Josh Barter on November 9, 2022

Image source: Inc. Magazine

Coinbase CEO Brian Armstrong allayed concerns about the company’s stability after Binance announced its takeover of FTX on Twitter.

Armstrong’s tweet covers FTX’s announcement and says he has a lot of sympathy for those involved in FTX’s current situation.

“Coinbase doesn’t have any material exposure to FTX or FTT (and no exposure to Alameda),” said the Coinbase CEO.

Recently, before the news broke, Binance CEO Changpeng Zhao refused an offer to sell his FTT holdings to Alameda Research.

Alameda Research

Alameda Research, a quantitative trading firm that provides liquidity in digital asset markets, was founded in 2017 by FTX CEO Sam Bankman-Fried.

Recently, in July, Voyager Digital, a bankrupt crypto broker, revealed in a court filing that the trading company owed them $377 million.

Additionally, two months ago, Alameda initially agreed to pay Voyager $200.

“I think it’s important to reinforce what differentiates Coinbase in a moment like this,” said Armstrong.

“This event appears to be the result of risky business practices, including conflicts of interest between deeply intertwined entities and misuse of customer funds.”

According to Brian Armstrong, these are behaviors that Coinbase does not adopt.

He also said the company does not transfer customer funds unless they request it and that customers can withdraw their funds at any time.

Read also: Coinbase to Shift Attention to Staking Ahead of the Ethereum Merge

FTT

Coinbase became a publicly traded company in 2021.

However, as a public company in the United States, Armstrong believes that transparency and trust are essential.

“Every investor and customer can see our public audited financials,” said the Coinbase CEO. “Which shows we hold customer funds.”

“We’ve never issued an exchange token,” Armstrong said.

The CEO referred to the FTT token, which serves as collateral for futures positions, trade commission discounts and OTC discounts.

At the time of this writing, the FTT token is selling for $4.77, down 67.3% in the past 24 hours.

Read also: A Guide on How to Transfer Cryptoassets from Binance to Coinbase

Cryptocurrency exchanges

Brian Armstrong says the problem with cryptocurrency exchanges is that regulators focus “onshore” while customers move offshore to companies with questionable business practices.

“To take the US as an example,” the Coinbase CEO started.

“95%+ of crypto trading has developed overseas because crypto regulation in the US has been hard to navigate.”

“That’s bad for the US and Americans who are still losing money in these overseas blowups,” he added.

While Binance is in the process of acquiring FTX, the deal does not include its US subsidiaries, Binance US and FTX US.

Reference:

Coinbase CEO says company doesn’t have ‘any material exposure’ to FTX or Alameda