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| Hey Insider! Happy Monday, and welcome to the Inside Cryptocurrency newsletter! The week kicked off (again) in the shadow of crypto-focused regulatory actions. Today’s issue covers the biggest stories in crypto market, including a compromise deal between Binance and the top U.S. securities regulator, Wyre’s decision to wind down its business, the International Monetary Fund’s (IMF) plans to launch a global digital currency platform, and more. Enjoy your reading! Doğa
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| 1 | | Binance, the largest crypto exchange by trading volume, and the U.S. Securities and Exchange Commission (SEC) have agreed upon a reconciliation deal to prevent a potential total asset freeze at the exchange's U.S. arm, Binance.US. The agreement was signed by U.S. Judge Amy Berman Jackson, dismissing an initial request by the SEC. More: - Earlier in June, the SEC filed an emergency action application for a temporary restraining order, requesting the court to freeze the assets of Binance.US.
- In response, Binance.US asked the court to reject the request, saying that its operations would quickly come to a stopping point when it could not pay its liabilities, and a potential freeze could be misunderstood by its banking partners.
- As part of the deal, only Binance.US employees will be able to access U.S. customers' funds until the legal proceedings are finalized.
- U.S. customers will always have the ability to withdraw their funds during litigation.
- The order will also prevent any Binance global official from accessing funds, private keys of wallets, hardware wallets, or Binance.US' tools.
- Besides, Binance.US will not be able to spend corporate assets for any purpose other than covering expenses to maintain its business.
- The company said it was pleased since the disagreement was resolved on mutually acceptable terms, though the SEC's request was entirely unwarranted.
Zoom Out: - On June 5, the SEC also filed a 136-page complaint against Binance and CEO Changpeng Zhao (CZ) over U.S. law violations with 13 charges.
- The allegations in the complaint include mishandling customer funds, misleading investors and regulators, violating securities laws, creating an extensive web of deception, conflicts of interest, lack of disclosure, wash trading, and calculated evasion of the law.
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| 2 | |  What the numbers say: Crypto exchange Binance's stablecoin Binance USD (BUSD) has retreated to fourth place in the ranks of top stablecoins by market cap after holding the No. 3 spot for months. Over the last month, the popular stablecoin's market cap declined by nearly 30%. Most recently, that figure fell to around $4.3B from the $5.1B at the beginning of June, with a decrease of almost $1B within just two weeks.
What it means: A stablecoin is a type of cryptocurrency whose value is pegged to another reference asset, mostly a fiat currency. Customers generally use these assets to trade with different cryptocurrencies without converting their funds back into fiat currencies. Relevance: The sharp decline in BUSD's market cap followed a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) on June 5 against Binance, the largest crypto exchange by trading volume, over alleged U.S. law violations. In the complaint, the SEC directed many allegations against Binance, including mishandling customer funds, misleading investors and regulators, violating securities laws, conflicts of interest, lack of disclosure, and wash trading. At the time, Binance defined the complaint as disappointing, saying they were intent on defending the platform vigorously. The legal action caused a drop in the market caps of Binance's tokens, including BUSD and Binance Coin (BNB). Brands that should care: BUSD launched through a partnership between Binance and the stablecoin issuer Paxos in September 2019. However, the issuance of the token brought new legal challenges for Paxos, too. The firm faced several legal motions from U.S. regulators, including the SEC and the New York Department of Financial Services (NYDFS), over the years. | | | |
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| 3 | | A Montenegrin court has sentenced Do Kwon, the co-founder of the collapsed Terra ecosystem, to four months in prison for forging personal documents. Han Chang-Joon, the chief financial officer of Terraform Labs, also received the same sentence. More: - The pair were arrested at the Podgorica Airport in Montenegro in March while trying to fly to Dubai carrying falsified traveling documents.
- At the time, the Montenegrin police said the two possessed multiple forged passports, including Belgium and Costa Rican documents.
- The verdict pointed out that time spent in detention is included in the prison terms, and the defendants or the prosecutor's office could appeal the order.
- The court has up to 30 days to officially deliver the verdict in writing to the defense and the prosecutor's office.
- Kwon and Han pleaded not guilty to forgery at their first court hearing.
- However, Kwon recently told the court that he did not know the documents he was traveling with were fake, claiming that he obtained them through an agency in Singapore selling citizenships of various countries.
- Both the U.S. and Kwon's native South Korea seek the Terra founder's extradition, though they do not have a direct extradition treaty with Montenegro.
Zoom Out: - The multibillion-dollar Terra ecosystem collapsed last year after its native token Luna's price plummeted nearly to zero in May 2022 and lost all its value against the U.S. dollar (USD), triggering a prolonged crypto winter.
- The collapse caused over $60B to be wiped off the crypto market.
- The 31-year-old Kwon faces many lawsuits and investigations in several countries, including South Korea and the U.S., with allegations such as tax fraud, deceiving investors, racket collecting, and building a Ponzi scheme.
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| 4 | | Speaking at a recent event in New York, the U.S. Securities and Exchange Commission's (SEC) enforcement chief Gurbir Grewal has denied claims that the agency increased crackdown on the crypto industry. Instead, the agency director said the scrutiny intensified in response to the industry's failure to comply with the securities laws. More: - Grewal added that they had to change strategies since they could not see compliance in this space.
- The SEC official also underlined that they worked thoughtfully and incrementally on the crypto market.
- Grewal's comments came nearly two weeks after the SEC filed two consecutive lawsuits against Binance, the largest crypto exchange by trading volume, and Coinbase, the largest U.S. crypto exchange, over alleged U.S. securities law violations.
- The move saw backlash from the crypto industry, and both exchanges denied allegations in the SEC's complaints, accusing the agency of failing to properly regulate the industry by setting new standards unique to the crypto market.
- Grewal stated that a brand-new rule set would not be functional if the entire industry is built around non-compliance.
Zoom Out: - Over the last several months, many other crypto exchanges, including Kraken, Gemini, and Bittrex, also came under increased scrutiny by the SEC.
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| 5 | | The U.S.-based crypto payments firm Wyre has announced that it would halt its operations, citing the financial challenges of the bear market conditions, nearly ten years after its launch. The firm underlined that the move is not due to any regulatory agency direction. More: - Wyre also stated that the decision aims to protect the best interest of the key stakeholders and customers.
- Users who have assets on Wyre can withdraw their funds via the platform's dashboard until July 14.
- After this deadline, the firm will implement a separate process to recover assets remaining on the platform.
- The company added that its assets are now available for acquisition.
Zoom Out: - The move came nearly eight months after online checkout company Bolt Financial terminated a $1.5B acquisition deal with Wyre.
- In January, the crypto payments firm also laid off 75 employees.
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| 6 | | Speaking at a conference in Morocco, the International Monetary Fund (IMF) Managing Director Kristalina Georgieva announced that the agency started working on the concept of a global central bank digital currency (CBDC) platform. The platform will allow CBDC transactions between countries, preventing CBDCs from being fragmented across nations. More: - Georgieva has stated that transactions would need systems connecting countries to become more efficient and fairer.
- The IMF official also said they want central banks to agree upon a common regulatory framework for CBDCs that would allow global interoperability, and there would be a gap to be filled by cryptocurrencies otherwise.
- The managing director added that 114 central banks are currently exploring CBDCs, and ten have already crossed the finish line.
- Besides, Georgieva counted several benefits of CBDCs, such as financial inclusion and cheaper remittances, adding that the average cost of money transfers currently stands at $44B per year.
- The agency official also underlined that cryptocurrencies are an investment opportunity if they are backed by assets, as in CBDCs, defining non-backed tokens as speculative investments.
Zoom Out: - The IMF, which currently has 190 member countries, is a major financial agency of the United Nations (UN).
- In April, the agency's deputy managing director, Bo Li, announced their plans to release a CBDC handbook to guide countries in developing CBDCs, citing heavy demand.
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- The Bank of England (BoE), the U.K.'s central bank, has concluded a trial study dubbed Project Rosalind, becoming one step closer to launching its central bank digital currency (CBDC), or Britcoin.
- Binance, the largest crypto exchange by trading volume, has withdrawn its registration with the Financial Conduct Authority, the U.K.'s financial regulator.
- Sportswear brand Nike has recently hinted at a collection of NFT sneakers in Epic Games' one of the most popular video games, Fortnite.
- The European Union (EU) has postponed the legislation expected to support a potential digital euro after scheduling the discussion and publication of the bill for June 28.
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 | Staff Writer | | Doga is a tech and science editor who has been writing news for nearly 10 years. She worked for leading tech platforms and mainstrem media channels as an editor and presenter throughout his career. Then, she carried her know-how to more than one platform. She is a part-time cat lover and binge-watcher, and also fond of science, space, and emerging tech. She always has a story to tell. She is a bit addict to the laughter and -unfortunately- the '90s culture. | | This newsletter was edited by Brian Warmoth | |
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