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| 1 | | A U.S. district court has issued a summons for the crypto exchange Binance's CEO, Changpeng Zhao (CZ). The move came nearly two days after the U.S. Securities and Exchange Commission (SEC) filed a 136-page complaint against Binance and CZ over U.S. law violations with 13 charges. More: - It is currently not clear whether the summons is officially served or not.
- After the document is served, Zhao will have 21 days to respond to the summons, though he does not have to appear in court in person.
- If CZ fails to respond, he will be subject to judgment by default for the remedy sought in the SEC's lawsuit.
- The allegations in the U.S. regulator's 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.
- At the time, Binance defined the complaint as disappointing, adding that they intend to defend the platform vigorously.
- The SEC also recently filed an emergency action application for a temporary restraining order, requesting the court to freeze the assets of crypto exchange Binance's U.S. arm, Binance.US.
Zoom Out: - The exchange is similarly under scrutiny by the Commodity Futures Trading Commission (CFTC), the Internal Revenue Service (IRS), and federal prosecutors in the U.S., mainly due to compliance issues.
- Meanwhile, rival crypto exchange Coinbase was also recently sued by the SEC over alleged U.S. securities law violations.
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What the numbers say: The data compiled by Cointelegraph has shown that the U.S. Securities and Exchange Commission (SEC) undertook 17 crypto-related enforcement actions in the first six-month period of the year. The figure accounts for a 183% increase from the same period in 2022. The number of crypto-related enforcement actions has already almost reached the verge of surpassing the total for all of 2022 within the first half of 2023, with a significantly higher amount than in the last five years. Relevance: On the other hand, Cointelegraph underlined that the compiled data does not involve the SEC's latest complaints against two major crypto exchanges. The U.S. regulator recently hit the headlines with two separate lawsuits it consecutively filed against Binance, the largest crypto exchange by trading volume, and Coinbase, the largest U.S. crypto exchange. Both complaints alleged the famous platforms of violating U.S. securities laws. Details: The SEC's move immediately shook the markets. Binance's BNB Coin (BNB) hit its five-month low, while Coinbase shares (COIN) saw an over 15% decrease in its five-day performance. Bitcoin (BTC), the largest cryptocurrency by market cap, also retreated to the $25,000 level for the first time since March, on the same day the SEC filed a complaint against Binance. Brands that should care: The lawsuits are expected to have further implications for other crypto exchanges operating in the U.S., such as Kraken and Gemini. Also, the increase in the SEC's crypto-related enforcement actions is predicted to be a reaction to 2022 seeing the collapses of high-profile crypto firms and ecosystems, including the previously third-largest crypto exchange FTX and multi-billion-dollar Terra ecosystem. | | | |
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| 3 | | The U.K.'s Financial Conduct Authority (FCA), the country's financial regulator, has decided to tighten rules for crypto promotions as the global regulatory efforts around the crypto industry have intensified. Sheldon Mills, executive director of consumers and competition at the FCA, has reminded consumers that the crypto market is still unregulated and high-risk. More: - As part of the new rules, crypto will be classified as restricted mass market investments, a category for high-risk investment products, as of Oct. 1.
- Crypto ads will also have to contain clear risk warnings, including a notification that the investors should not expect protection if something goes wrong and should be prepared to lose all the money they invest.
- In addition, the amended rules prohibit incentives such as referrals and new joiner bonuses.
- The agency will also start implementing a 24-hour cooling-off period for investors who engage in crypto for the first time as of Oct. 8.
- The cooling-off period, already used for other investments classified as high-risk, will start when a potential investor responds to the marketing material by requesting additional information, and the entity marketing the investment will have to wait 24 hours before responding.
Zoom Out: - The FCA has seen crypto as a high-risk asset class for several years despite Prime Minister Rishi Sunak's push to make the country a global crypto hub since his finance ministry.
- The U.K. lawmakers also recently argued that retail investing in unbacked cryptocurrencies, including Bitcoin (BTC) and Ether (ETH), should be legally regulated like gambling.
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| 4 | | The U.S. government has objected to the bankrupt crypto exchange Bittrex's repayment plan for refunding customers in cash and crypto. In a recent court filing, the government stated that the Bittrex companies have not explained why it is important to settle ownership disputes over crypto assets before the bankruptcy plan is confirmed. More: - The objection came nearly one month after Bittrex filed for Chapter 11 bankruptcy protection in the U.S.
- In the bankruptcy filing, the company reported more than 100,000 creditors.
- The bankruptcy filing concerns the firm's Seattle-based entity, two entities in Malta, and an affiliated entity dubbed Desolation Holdings LLC.
- The exchange's Liechtenstein-based global entity, Bittrex Global GmbH, was excluded from the bankruptcy process, and the company said it does not plan to halt its global operations.
- The firm asked for court permission to allow customers to withdraw their holdings four days after it filed for bankruptcy.
- Bittrex's U.S. arm currently has customer assets of $50M in cash and $250M in crypto.
- The Maltese entity also holds $120M of customer funds in cash and crypto.
- The court will hold a hearing on Bitrex's plan to let withdrawals on June 14.
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| 5 | | The European consumer group BEUC has presented a joint complaint against several social media giants that allegedly host misleading crypto ads, together with nine of its members. The complaint was filed to the European Commission, the governing body of the European Union (EU), and consumer authorities. More: - The platforms in the complaint include Instagram, YouTube, TikTok, and Twitter.
- In the complaint, BEUC said the misleading crypto ads on social media platforms are an unfair commercial practice since they put customers at risk of serious harm, such as substantial financial loss.
- The filing pointed out that these promotions are spreading through advertisements and influencers.
- The group urged the Consumer Protection Cooperation Network to mandate the social media platforms to establish tougher ad policies on crypto, take actions to prevent influencers from deceiving users, and inform the European Commission about the effectiveness of these measures.
- Also, the region's consumer authorities were urged to ensure that social media platforms adjust their ad policies to stop the misleading marketing of cryptocurrencies, working with other related European authorities.
- The complaint was signed by consumer groups in Denmark, France, Greece, Italy, Lithuania, Portugal, Slovakia, and Spain.
Zoom Out: - Earlier in June, the EU officially signed its most comprehensive, region-wide crypto regulations, the Markets in Crypto Assets (MiCA), into law, after three years of development.
- BEUC Director General Monique Goyens stated that the MiCA does not include a provision to prevent social platforms from benefiting from the crypto ads at the expense of consumers.
- BEUC is based in Belgium and gathers 45 European consumer organizations from 32 countries as an umbrella group.
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| 6 | | Australia's largest bank, Commonwealth Bank of Australia (CBA), has announced that it would ban some payments to certain crypto exchanges as part of its new anti-scam policies. The bank has yet to specify the crypto exchanges the new measures will apply to. More: - The Aussie bank has also started holding certain payments to crypto exchanges for 24 hours.
- Also, the country's largest lender will implement a 10,000 Australian dollar (~$6,666) transfer limit for crypto trading platforms on a monthly basis.
- James Roberts, general manager of CBA's group fraud management services, said customers making payments to crypto exchanges currently face a significantly higher risk of being scammed.
Zoom Out: - Last month, another Australian bank, Westpac, similarly blocked its clients from making payments to some crypto exchanges, including the largest crypto exchange Binance, to reduce losses from scams.
- Several U.K.-based banks also recently restricted payments to crypto exchanges for their customers this year, including HSBC, Nationwide, NatWest, Barclays, Banco Santander, and Lloyds Banking Group.
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- U.S.-based crypto exchange Coinbase CEO Brian Armstrong said they would not shut down the staking service, although they are facing lawsuits from U.S. regulators over the product.
- South Korean prosecutors have stated that Do Kwon, the 31-year-old co-founder of the collapsed Terra ecosystem, could spend most of his life in prison in his native South Korea and the U.S.
- The largest crypto exchange Binance's U.S. arm, Binance.US, has halted trading for around 100 trading pairs following the U.S. Securities and Exchange Commission's (SEC) complaint against it over U.S. securities law violations.
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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 Aaron Crutchfield | |
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