Editor’s note: The a16z crypto Global Regulatory Roundup is a series that highlights the latest regulatory and policy happenings relevant to builders in web3 and crypto, as tracked and curated by the a16z crypto regulatory team. The roundups are based on recent news, the latest updates, new guidance, ongoing legislation, and frameworks released by regulatory agencies/bodies, industry consortia and professional associations, banks, governments, and other entities as they impact the crypto industry (or applications) around the world. We also occasionally include select other resources such as talks, posts, or other commentary – from us or from others – with the updates. [Past editions of this roundup: September 27 – October 17; October 18 – November 9; November 9 – 18; November 19 – December 16.]
- SBF pleaded not guilty to all eight counts of criminal charges against him, while Caroline Ellison and Zixiao (Gary) Wang pleaded guilty and are cooperating with the government.
- Senator Pat Toomey (R-Pa.) introduced the Stablecoin TRUST Act, which would recognize privacy for stablecoin transactions, grant the Office of the Comptroller of the Currency power to license companies issuing stablecoins, and allow nonbank entities to issue stablecoins, among other things.
- House Republicans announced plans to establish a subcommittee in the new Congressional term dedicated to digital assets and financial technology. House Representative French Hill (R-Ark.) will chair the subcommittee, and Warren Davidson (R-Ohio) will serve as vice chair.
Department of Justice
- In the government’s first cryptocurrency insider trading case, the brother of a former Coinbase product manager received a 10-month prison sentence for illegally trading on secret Coinbase offering information in the government’s first cryptocurrency insider trading case.
- In its first market manipulation case relating to a DeFi platform, the DOJ charged a U.S. resident with commodities manipulation and commodities fraud in connection with his trading activity on the Mango Markets DeFi exchange and lending platform. The Commodity Futures Trading Commission (CFTC) filed parallel civil charges.
- The DOJ charged a French national with defrauding purchasers of “Mutant Ape Planet” NFTs of more than $2.9 million dollars in a “rug pull” scheme, a cryptocurrency scam in which a developer attracts investors, but then pulls out before the project is complete and leaves the investors with a worthless asset.
- The DOJ charged two additional individuals involved in the Forcount crypto Ponzi scheme that defrauded Spanish-speaking investors around the world of approximately $8.4 million.
- A federal district court ordered that more than $17 million in restitution be distributed to approximately 800 victims from over 40 different countries due to their investment losses in the BitConnect cryptocurrency investment scheme.
Department of the Treasury
- The Department of the Treasury declined to comment on OFAC’s sanctioning of Tornado Cash while private litigation is pending, in response to a five month-old letter from U.S. House Representative Tom Emmer (R-Minn.) that expressed concern about OFAC’s designation.
Federal Banking Regulators
- The Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued a joint statement on crypto-asset risks to banking organizations, which include: fraud and scams, legal uncertainties, inaccurate or misleading representations and disclosures, asset volatility, run and contagion risks, immature risk management and governance practices, and others.
Office of the Comptroller of the Currency
- The OCC reiterated its “careful and cautious” approach to crypto in its 2022 annual report and that it considers immature risk management practices, volatile stablecoins, and potential contagion to be key risk areas in the industry.
- The New York Department of Financial Services announced a settlement with Coinbase relating to allegations that the company did not conduct sufficient background checks on new users, among other things. Coinbase agreed to pay a $50 million fine and to invest an additional $50 million in its compliance program over the next two years.
- New York’s Attorney General sued Alex Mashinsky, the co-founder and former CEO of Celsius, for allegedly defrauding investors out of billions of dollars worth of cryptocurrency by lying to them and misrepresenting or concealing the company’s deteriorating financial condition.
Securities and Exchange Commission
- SEC Commissioner Hester Peirce discussed the limitations of the Supreme Court’s Howey test for determining whether an asset is an “investment contract” security, particularly that the test does not clarify how changes in an asset could result in a classification shift from security to commodity.
- The SEC charged Thor Technologies, its CEO, and its CTO with conducting an unregistered offering of securities through an ICO of “Thor Tokens” to raise approximately $2.6 million from investors.
- The SEC charged the creator of CoinDeal and others in connection with a fraudulent scheme that raised more than $45 million from sales of unregistered securities to tens of thousands of investors worldwide.
- The SEC filed a limited objection to Binance.US’s proposed $1.02 billion purchase of bankrupt crypto lender Voyager’s assets on the basis that the company did not provide sufficient details about its ability to consummate a transaction of such magnitude, among other things. The bankruptcy court judge has allowed Binance.US’s bid to advance.
- The SEC charged Genesis Global Capital, LLC and Gemini Trust Company, LLC for allegedly offering and selling unregistered securities to retail investors through the Gemini Earn crypto asset lending program.
- Brazil’s former President Jair Bolsonaro approved a crypto regulation law that establishes a crime of fraud involving virtual assets and creates a “virtual service provider” license.
- The Brazilian Securities and Exchange Commission (CVM) will allow investment funds to hold crypto assets, as long as the crypto assets are traded in entities authorized by either the Central Bank of Brazil or the CVM.
Central African Republic
- The Central African Republic announced a delay in the listing of Sango, its national cryptocurrency, until the first quarter of 2023.
- China announced the launch of its first state-backed NFT marketplace, the “China Digital Asset Trading Platform,” which will be used for trading digital copyrights and property rights, as well as collectibles.
- Eurojust and Europol dismantled a cryptocurrency fraud network operating out of Bulgaria, Cyprus, and Serbia. The network operated professionally to set up call centers, which defrauded numerous victims in Germany, Switzerland, Austria, Australia, and Canada of at least tens of millions of euros. (Located in the Hague, Netherlands, Eurojust is the European Union Agency for Criminal Justice Cooperation. As the E.U.’s hub for judicial cooperation, Eurojust delivers hands-on support to prosecutors and judges working together in the fight against cross-border crime.)
- Governor Shaktikanta Das of the Reserve Bank of India called for a prohibition on cryptocurrencies.
- The Central Bank of Ireland approved Coinbase to operate as a Virtual Asset Service Provider.
- The Italian Parliament approved a 26% crypto-gains tax starting in 2023.
- Lee Jung-Hoon, the former Chairman of Bithumb Holdings, the parent company of crypto exchange Bithumb Korea, was acquitted of charges that he committed $100 million in fraud.
- Binance registered with Sweden’s Financial Supervisory Authority. Sweden is now the seventh E.U. member state that has granted authorization to Binance.
- The Central Bank of Turkey announced that it successfully carried out its first payment transactions on its CBDC network as part of an initial test phase, and that it would publish a comprehensive evaluation report with the test results.
- The U.K.’s Advertising Standards Authority ruled against NFT promotions by crypto.com for failing to lay out the risks of investing in NFTs and not properly illustrating transaction fees.
- The U.K. will enforce a tax exemption for foreign investors purchasing crypto through local investment managers or brokers, as part of the country’s efforts to become a crypto hub.
- The U.K.’s National Crime Agency announced the launch of a crypto and virtual-assets team, which will start with five officers.
- Andrew Griffith, a British Member of Parliament and Economic Secretary to the Treasury, said that the U.K. government is “fully behind” a stablecoin for wholesale settlements between banks and that the stablecoin would be issued by a third-party provider, not the government.
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