Law

US senators target crypto in bill enforcing sanctions on terrorist groups

Senator Elizabeth Warren isn’t leading the charge on this bill linking crypto transactions to terrorism; it comes from Senators Mitt Romney, Mark Warner, Mike Rounds and Jack Reed.

A bipartisan group of lawmakers in the United States Senate introduced legislation aimed at countering cryptocurrency’s role in financing terrorism, explicitly citing the Oct. 7 attack by Hamas on Israel.

In a Dec. 7 announcement, Senators Mitt Romney, Mark Warner, Mike Rounds and Jack Reed said they had introduced the Terrorism Financing Prevention Act. The bill would expand U.S. sanctions to include parties funding terrorist organizations with cryptocurrency or fiat. According to Senator Romney, the legislation would allow the U.S. Treasury Department to go after “emerging threats involving digital assets” in the wake of the Oct. 7 attacks as well as actions by the terrorist group Hezbollah.

“It is critical that the Department of the Treasury has the necessary counter-terrorism tools to combat modern threats,” said Senator Rounds. “The Terrorism Financing Prevention Act takes commonsense steps toward rooting out terrorism by sanctioning foreign financial institutions and foreign digital asset companies that assist them in committing these heinous acts.”

Bitcoin’s many deaths: Is crypto market past ‘point of no return?’

Bitcoin has been declared dead more times than you’d think amid downswings in the market, but it’s always managed to bounce back.

Bitcoin and the broader crypto market have been gleefully declared dead more than a few times during bear markets, but some experts say it would take a genuinely extreme set of events for it to truly die.

According to 99Bitcoins — a website that, among other things, tracks how many times Bitcoin (BTC) has been declared dead by mainstream media outlets — the largest crypto by market cap has died 474 times since 2010.

Often, the proclamation is met with cheering by crypto skeptics as evidence that BTC is not a viable asset, but it might not be so simple to kill off crypto — at least according to some experts in the space.

Montenegrin official plans to extradite Do Kwon to the United States: Report

The Terraform Labs co-founder had been awaiting extradition to either the U.S. or South Korea after being arrested and charged in Montenegro.

Terraform Labs co-founder Do Kwon will reportedly be extradited to the United States rather than South Korea to face criminal charges.

According to a Dec. 7 Wall Street Journal report citing people familiar with the matter, Justice Minister Andrej Milović in Montenegro plans to grant U.S. officials’ request for extradition. Kwon was arrested in Montenegro in March and sentenced to four months in prison for using falsified travel documents. He has also been charged in the U.S. and South Korea for his alleged role in the collapse of Terraform Labs.

Milović reportedly said the announcement would be made public “in a timely manner.” If extradited to the U.S., Kwon faces eight charges, including commodities fraud, securities fraud, wire fraud and conspiracy to defraud and engage in market manipulation related to his time at Terra. The U.S. Securities and Exchange Commission also charged Kwon with “defrauding investors in crypto schemes” in February.

AI regulations in global focus as EU approaches regulation deal

Concerns over the potential misuse of AI have prompted the U.S., U.K., China and the G7 to speed up regulation of the technology, but Europe is already ahead.

The surge in generative artificial intelligence (AI) development has prompted governments globally to rush toward regulating the emerging technology. The trend matches the European Union’s efforts to implement the world’s first set of comprehensive rules for AI.

The EU AI Act is recognized as an innovative set of regulations. After several delays, reports indicate that on Dec. 7, negotiators agreed to a set of controls for generative AI tools such as OpenAI’s ChatGPT and Google’s Bard.

Concerns about the potential misuse of the technology have also propelled the United States, the United Kingdom, China and other G7 countries to speed up their work toward regulating AI.

Jury in Terraform Labs case shouldn’t decide whether crypto is a security — SEC

According to the SEC, the tokens at issue in its civil case against Terraform Labs should be a “legal question” for a court, “not a factual question for the jury.”

Lawyers representing the United States Securities and Exchange Commission requested the judge in its civil case against Terraform Labs and co-founder Do Kwon determine whether certain crypto assets are securities rather than a jury.

In a Dec. District Court for the Southern District of New York, the SEC argued that the matter of cryptocurrencies as securities under the commission’s guidelines was a “legal question to be determined [by] the Court, not a factual question for the jury.” According to the SEC, sending the question of whether certain cryptocurrencies in the Terraform Labs case qualified as securities under the Howey test — the commission’s standard for determining what is a security — opened the matter up for discussion.

“There is no genuine dispute of material fact that Defendants’ crypto asset offerings involved an investment of money, in a common enterprise, with an expectation of profit to be derived from Defendants’ efforts,” said the SEC.

The SEC has taken it upon itself to label different cryptocurrencies as securities in various lawsuits, including enforcement actions against Binance and Coinbase. In the commission’s case against Ripple, a federal judge ruled in July that the XRP (XRP) token did not necessarily qualify as a security, potentially leading to the SEC dropping charges against CEO Brad Garlinghouse and executive chair Chris Larsen.

The question of what cryptocurrencies qualify as securities or commodities in the United States has been an ongoing debate among lawmakers and regulators, as has the role the SEC should play in regulating digital assets. Many experts are also speculating that the SEC may soon decide on whether to approve a spot crypto exchange-traded product for the first time.

UK Legislators urge caution in retail digital pound rollout

The committee’s report recommends imposing lower initial limits on the value of retail digital pounds to alleviate the risk of potential bank runs amid market instability.

British legislators are urging a careful stance regarding implementing a retail digital pound.

Members of the Treasury Select Committee have expressed reservations regarding the possible launch of a retail digital pound, underscoring the need for thoughtful examination before execution.

In the interim, the committee’s report recommends imposing lower initial limits on the value of retail digital pounds to alleviate the risk of potential bank runs amid market instability.

*Screenshot of the Treasury Committee report Source: UK Parliament*

The report addressed privacy concerns, recommending that any legislation introducing a digital pound should strictly limit the use of data by the government or the BoE.

The report proposes that in the event of legislation for the introduction of a digital pound, it should expressly limit the Government and Bank of England from utilizing data acquired through the digital pound for purposes beyond those already sanctioned for law enforcement.

Committee chair Harriett Baldwin stressed the need for compelling evidence before contemplating the introduction of a retail digital pound.

SEC faces sanctions threat as Judge questions DEBT Box case accuracy

Initially, the SEC, led by attorney Michael Welsh, had convinced the court to freeze DEBT Box’s assets, arguing the company was moving to Dubai, beyond U.S. regulatory reach.

United States District Judge Robert Shelby has cautioned the Securities and Exchange Commission (SEC) lawyers, hinting at possible sanctions due to purportedly deceptive statements in a legal action against Digital Licensing Inc., also recognized as DEBT Box, a crypto company.

Lodged in the federal court of Utah, the SEC’s legal action alleged that DEBT Box deceived investors by around $50 million via the vending of unregistered securities known as “node licenses.”

Judge Shelby’s decision revealed notable discrepancies in the SEC’s case. Initially, the SEC, led by attorney Michael Welsh, had convinced the court to freeze DEBT Box’s assets, arguing the company was moving to Dubai, beyond U.S.

The judge raised apprehensions regarding the behavior of the SEC lawyers.

The intricacy of the case is underscored by a TRM Labs report corroborating the SEC’s primary claim that DEBT Box deceived investors regarding mining tokens.

This milestone signifies a pivotal moment in the legal process, highlighting the complexities of cryptocurrency regulation and underscoring the significance of legal responsibility in high-stakes financial litigation.

Terraform Labs and SEC lawyers spar over whistleblower in court: Report

Though many filings in the SEC case were made under seal, Judge Jed Rakoff reportedly suggested that nothing would remain confidential should the matter go to trial.

Lawyers representing the United States Securities and Exchange Commission and Terraform Labs and co-founder Do Kwon sparred in court over information provided by a whistleblower in the securities lawsuit.

According to a transcript of court events provided by Inner City Press on Nov. 30, the SEC reiterated its claims that Terra and Kwon “committed fraud” using the LUNA token, citing sealed evidence provided by an unnamed whistleblower.

“The SEC has misrepresented Do Kwon’s statements,” said Kwon’s and Terra’s lawyer, according to the report.

OK – now at SEC v Terraform Labs & Do Kwon, Inner City Press will live tweet, thread below https://t.co/zRKCGlc0T4

— Inner City Press (@innercitypress) November 30, 2023

The arguments came in a hearing of the U.S. 28, the judge approved the confidential treatment of certain materials filed by Jump Crypto, the firm under scrutiny for its alleged involvement in the events leading to the depegging of UST.

Kwon, who was arrested by authorities in Montenegro in March for using falsified travel documents, could face extradition to either the U.S. Attorney’s Office charged Kwon with eight criminal counts related to fraud at Terraform Labs.

Binance VIP traders got sneak peak of US settlement: Report

At an exclusive dinner in Singapore, certain Binance executives reportedly told traders about the pending settlement with U.S. officials, allowing the exchange to stay in business.

Executives of cryptocurrency exchange Binance reportedly gave a heads-up to its top market makers regarding a potential $4.3-billion settlement with authorities in the United States.

According to a Dec. 1 Bloomberg report, Binance traders at an exclusive September dinner in Singapore were informed about a tentative deal the crypto exchange had with U.S. Some Binance executives reportedly told certain traders at the event that the exchange could easily afford the $4.3-billion penalty to stay in business.

Then Binance CEO Changpeng “CZ” Zhao was reportedly not in attendance at the event, but Richard Teng, who succeeded Zhao following the settlement, was mingling with guests.

According to Teng’s posts on X (formerly Twitter) from September, the then head of regional markets was in Singapore for the Token2049 conference, the Milken Institute Asia Summit, the Singapore Grand Prix for Formula 1 and “plenty of side events.” Cointelegraph will release an exclusive interview with the Binance CEO at 6:00 pm UTC on Dec.

Glad to be speaking at Ethereum_sg. Busy week in Singapore with Token 2049, Milken, plenty of side events and rounded up by Singapore F1 night race https://t.co/FBirPWgRLg

— Richard Teng (@_RichardTeng) September 12, 2023

As part of its settlement, Binance must pay $4.3 billion to various U.S. at the time of publication, as a court considered his request to return to the United Arab Emirates before sentencing in February.

Binance VIP traders got sneak peek of US settlement: Report

At an exclusive dinner in Singapore, certain Binance executives reportedly told traders about the pending settlement with U.S. officials, allowing the exchange to stay in business.

Executives of cryptocurrency exchange Binance reportedly gave a heads-up to its top market makers regarding a potential $4.3-billion settlement with authorities in the United States.

Then Binance CEO Changpeng “CZ” Zhao was reportedly not in attendance at the event, but Richard Teng, who succeeded Zhao following the settlement, was mingling with guests.

Glad to be speaking at Ethereum_sg. Busy week in Singapore with Token 2049, Milken, plenty of side events and rounded up by Singapore F1 night race https://t.co/FBirPWgRLg

— Richard Teng (@_RichardTeng) September 12, 2023