Law

UK plan on digital securities sandbox laid before Parliament

The regulations will take effect on Jan. 8, with the Bank of England and the U.K. Financial Conduct Authority operating the sandbox.

The United Kingdom Financial Services and Markets Act’s provisions on a digital securities sandbox are scheduled to come into force in January 2024 after being presented to Parliament.

In a Dec. 18 publication, the U.K. government announced the Digital Securities Sandbox (DSS) regulations of the 2023 Financial Services and Markets Act, which were laid before Parliament, paving the way for crypto firms to test products and services in the country. According to the government, the regulations will take effect on Jan. 8, with the Bank of England and the U.K. Financial Conduct Authority operating the sandbox.

“The DSS will allow firms and the regulators to test the use of new technology across our financial markets,” says a memo explaining the bill. “In particular, this will involve trialling the use of developing technology (such as distributed ledger technology, or in general technology that facilitates what are commonly referred to as ‘digital assets’) to perform the activities of a central securities depository (specifically notary, settlement and maintenance), and operating a trading venue.”

SEC accused of ‘gaslighting’ in Coinbase rulemaking dispute

Pro-XRP lawyer John Deaton said that the SEC’s stance in the Coinbase rulemaking dispute directly opposes the SEC chair’s statements during his congressional testimony earlier in 2023.

In the ongoing legal dispute between Coinbase and the United States Securities and Exchange Commission (SEC), pro-XRP lawyer John Deaton accused SEC Chair Gary Gensler of gaslighting the public and disagreed with his stance on cryptocurrencies.

The accusation comes amid the SEC rejecting Coinbase’s crypto rulemaking petition for three reasons: applying current securities laws to cryptocurrencies, the SEC’s engagement with the crypto securities markets through rulemaking, and the significance of preserving the commission’s discretion in establishing its rulemaking priorities.

In a post on X (formerly Twitter), Deaton emphasized Gensler’s statement outlining the reasons for the SEC’s decision, where the SEC chair states, “there is NOTHING unique or new about cryptocurrencies.” Gensler added that Coinbase’s rulemaking request relies on the belief in the distinctiveness of the crypto ecosystem concerning asset volatility and the categorization of all assets as securities under current laws.

Ripple exec predicts crypto landscape shifts in 2024

Stuart Alderoty predicts the possible resolution of Ripple’s SEC lawsuit and U.S. lawmakers agreeing on the need for crypto regulations.

Ripple chief legal officer Stuart Alderoty has shared insights on the future of the cryptocurrency landscape in 2024. He discussed predictions about Ripple’s legal dispute with the United States Securities and Exchange Commission (SEC), the judiciary’s influence on crypto regulations and potential legislative challenges in the U.S. Congress.

Alderoty predicts the possible resolution of Ripple’s lawsuit with the SEC in 2024, and he cautions against the SEC’s persistent “regulation by enforcement” strategy, highlighting its potential consequences for the crypto industry.

Alderoty predicts a significant role for the judiciary in curbing SEC overreach, suggesting that ongoing legal conflicts could escalate to a confrontation in the U.S. Supreme Court.

Majority of UK MPs ‘lack crypto knowledge,’ says industry association

According to CryptoUK, MPs Andrew Griffith and Lisa Cameron were among the top crypto proponents in the U.K. government.

The self-regulatory trade association CryptoUK has reported roughly 5% of all members of Parliament (MPs) in the United Kingdom have publicly spoken on crypto and blockchain, suggesting a lack of knowledge.

In a report released on Dec. 14, CryptoUK analyzed the sentiment of MPs between 2022 and 2023, finding that only 37 lawmakers specifically mentioned crypto and blockchain — 5.7% of the 650 members. Some of the top voices in the U.K. government in 2023, according to CryptoUK, included MP and former Economic Secretary Andrew Griffith and crypto proponent Lisa Cameron.

“It’s important that MPs from all parties and from all corners of the UK get to know the cryptoasset industry better,” said a CryptoUK spokesperson. “Almost five million people […] in the UK have some sort of cryptoasset exposure, while tens of thousands of people work in the industry in the UK, supporting their local economies and helping the British economy grow.”

Is El Salvador’s Bitcoin gambit finally paying off?

The rise in El Salvador’s bond prices “almost defies gravity,” and it may soon have access to Eurobond markets, said Santander Bank.

El Salvador’s controversial $117.5 million Bitcoin investment briefly swung into profitability this past week for the first time in two years.

This was a milestone of sorts because, until then, not much had gone right crypto-wise for the impoverished Central American nation.

El Salvador still hasn’t come close to making Bitcoin (BTC) a medium of exchange as was anticipated when it made Bitcoin legal tender in September 2021, the world’s first nation to take such a step.

3AC co-founder Su Zhu to be released by year-end after court grilling: Report

Three Arrows Capital co-founder Su Zhu has faced his first interrogation in a Singapore court and is reportedly set to be released soon.

Su Zhu, co-founder of bankrupt cryptocurrency lender Three Arrows Capital (3AC), is reportedly set to be released this month after facing an extensive interrogation in a Singapore court.

Zhu was arrested in Singapore in September 2023 when he attempted to flee the country after a local court sentenced him to four months of imprisonment. At the time, 3AC’s joint liquidator, Teneo, said that Zhu was planning to assist on matters related to 3AC and to help recover assets from the defunct firm.

According to Bloomberg’s Dec. 13 report, Zhu faced his first interrogation in Singapore this week, responding to Teneo lawyers in a two-day court hearing. Citing people familiar with the matter, Bloomberg said lawyers sought details about how the fund failed and the whereabouts of assets. According to Bloomberg’s sources, Zhu is to be released this month based on standard provisions for good behavior.

IRS lists 4 crypto crimes among its top cases in 2023

The cases included investigations into the Silk Road marketplace, OneCoin, Oyster Protocol founder “Bruno Block,” and a money laundering scheme using Bitcoin kiosks.

The criminal investigation unit of the United States Internal Revenue Service (IRS) has listed four crypto-related cases among the top ten of its “most prominent and high-profile investigations” in 2023.

In a Dec. 11 notice, the IRS unit said there were four significant cases in 2023 involving the seizure of cryptocurrency, fraudulent practices, money laundering and other schemes. Coming in at its third most high-profile investigation in the past year was OneCoin co-founder Karl Sebastian Greenwood, who was sentenced to 20 years in prison in September for his role in marketing and selling a fraudulent crypto asset.

Other cases included Ian Freeman, a New Hampshire resident sentenced to 8 years in prison for operating a money laundering scheme using Bitcoin (BTC) kiosks and failing to pay taxes from 2016 to 2019. The government body was also behind an investigation of Oyster Protocol founder Amir Elmaani, also known as “Bruno Block,” for tax evasion related to minting and selling Pearl tokens.

Terra co-founder Do Kwon will stay in Montenegro until February: Report

The Terraform Labs co-founder had been awaiting extradition to either the U.S. or South Korea after serving a prison sentence in Montenegro for using falsified travel documents.

Terraform Labs co-founder Do Kwon, expected to be extradited to the United States to face criminal charges, will reportedly stay in Montenegrin custody until February.

According to a Dec. 12 Bloomberg report, authorities with the U.S. and South Korea requested Montenegrin officials hold Kwon for an additional two months following the conclusion of his prison sentence. The Terraform Labs co-founder was arrested in Montenegro in March for using falsified travel documents and sentenced to four months behind bars.

Kwon, a South Korean national formerly based in Singapore, has been charged in the U.S. and South Korea for his alleged role in the collapse of Terra. The Wall Street Journal reported on Dec. 7 that the U.S. would be taking custody of Kwon before South Korea. Both countries have extradition requests pending at the time of publication.

EU officials reach ‘historic’ AI regulation deal

The agreement mandates models like ChatGPT and general AI to follow transparency rules before market entry.

The European Parliament and Council negotiators reached a provisional agreement on the rules governing the use of artificial intelligence (AI) on Friday, Dec 8.

The agreement covers the governmental use of AI in biometric surveillance, how to regulate AI systems such as ChatGPT, and the transparency rules to follow before market entry. This covers technical documents, adherence to European Union copyright and sharing training content summaries.

The EU wants to be the first supranational authority with laws on AI, specifying how it is to be used beneficially while protecting against risks. The deal was struck following a nearly 24-hour debate on Dec. 8 and 15 hours of negotiations after that.

Crypto lawyer wants to depose Changpeng Zhao for civil case

The Moskowitz Law Firm, which represented many crypto investors in class-action lawsuits, cited the former Binance CEO’s “unique knowledge” of issues in calling for his deposition.

Adam Moskowitz, who has been the lead attorney in a number of civil cases involving crypto firms, filed a motion to take a deposition from former Binance CEO Changpeng “CZ” Zhao.

In a Dec. 8 filing in the United States District Court for the Southern District of Flordia Miami Division, Moskowitz said Zhao’s testimony would be “crucial to the claims and defenses of all parties” involved. The law firm filed the motion as part of a $1 billion lawsuit against Zhao, Binance and crypto influencers, which a court ordered stayed in August.

Moskowitz and his firm have represented several clients in cases against high-profile crypto firms and related entities. He was counsel for many victims of the collapse of FTX in a lawsuit targeting celebrities who promoted the crypto exchange, as well as a suit claiming investors suffered losses from soccer star Cristiano Ronaldo touting Binance’s nonfungible tokens.