Crypto news & regulatory update: April 19 – May 5, 2024

Editor’s note: Our Regulatory Updates series highlights the latest regulatory, legal, 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, guidance, legislation, and frameworks released by regulators, industry consortia, professional associations, banks, governments, and other entities as they impact the crypto industry (or applications) around the world. We also occasionally include select resources such as talks, posts, or other commentary — from us or from others — with the updates.

🧠 tl;dr

1. A federal judge sentenced Binance founder Changpeng Zhao (CZ) to four months in prison after he pleaded guilty for failing to implement an effective anti-money laundering program at the crypto exchange.
2. The Department of Justice (DOJ) charged Roger Ver, also known as “Bitcoin Jesus,” with mail fraud, tax evasion, and filing false tax returns in connection with allegations of evading nearly $50 million in taxes.
3. The Internal Revenue Services (IRS) proposed a format for the first-ever crypto tax reporting form, which taxpayers would use to figure out taxable gains or losses for brokered digital assets transactions.

🦅 Congress

• House Representatives Drew Ferguson (R-Ga.) and Wiley Nickel (D-N.C.) introduced the “Providing Tax Clarity for Digital Assets Act” that would clarify within the tax code that digital asset rewards are collected at the point of sale and codify staking rewards as created property.
• Senator Elizabeth Warren (D-Mass.) sent several crypto-related letters to top Biden administration officials. The first, penned with Roger Marshall (R-Kan.), expressed concern over Russia’s use of crypto to evade sanctions and fund its war effort; another, penned with Angus S. King Jr. (I-Maine), inquired about “efforts to combat Iran’s rampant evasion of U.S. and international sanctions through cryptocurrency (crypto) mining”; and a third, penned with Bill Cassidy (R-La.), regarded the use of crypto in the illegal trade of child sexual abuse material.
• In a post on X, House Financial Services Committee (HFSC) Chairman Patrick McHenry (R-N.C.) accused Securities and Exchange Commission (SEC) Chair Gary Gensler of intentionally misrepresenting the SEC’s position on the classification of Ether as a security when he testified before the HFSC.

⚖️ Department of Justice

• As mentioned in “tl;dr,” a federal judge sentenced Binance founder Changpeng Zhao (CZ) to four months in prison after he pleaded guilty for failing to implement an effective anti-money laundering program at the crypto exchange.
• As also mentioned above, the DOJ charged Roger Ver, also known as “Bitcoin Jesus,” with mail fraud, tax evasion, and filing false tax returns in connection with allegations of evading nearly $50 million in taxes.
• The DOJ charged the co-founders of privacy-focused bitcoin wallet application Samourai Wallet with one count of conspiracy to commit money laundering and one count of conspiracy to operate an unlicensed money transmitting business.
• A Russian national pleaded guilty to conspiracy to commit money laundering in connection with his role in operating the cryptocurrency exchange BTC-e from 2011 to 2017.
• The DOJ charged three former executives of bankrupt crypto lender Cred for conspiracy to commit wire fraud, wire fraud, and engaging in financial transactions for illicit purposes in connection with a scheme that allegedly caused losses of customer crypto assets worth approximately $780 million.
• An Indian national pleaded guilty to charges that he created a fake version of Coinbase’s website to steal users’ login credentials for the real website, which he then used to steal more than $9.5 million of cryptocurrency from hundreds of victims.
• The DOJ charged an eighth defendant in connection with the multibillion-dollar cryptocurrency fraud scheme “OneCoin” for laundering about $35 million in illicit proceeds through bank accounts he controlled in China and Hong Kong.
• A federal judge sentenced a former Instagram influencer known as “Jay Mazini” to seven years in prison for wire fraud, wire fraud conspiracy, and money laundering in connection with multiple schemes that defrauded the New York Muslim community of more than $8 million.
• The Federal Bureau of Investigation issued an alert warning Americans against using cryptocurrency money-transmitting services that are not registered as “Money Services Businesses” according to U.S. federal law and do not adhere to anti-money laundering requirements.

💵 Department of the Treasury

• As mentioned in “tl;dr,” the IRS proposed a format for the first-ever crypto tax reporting form, which taxpayers would use to figure out taxable gains or losses for brokered digital assets transactions.

📈 Securities and Exchange Commission

• The SEC charged Geosyn Mining, a Texas-based crypto asset mining and hosting company, and its cofounders for allegedly engaging in an unregistered and fraudulent securities offering that raised approximately $5.6 million from more than 60 investors.
• The SEC delayed its decisions on whether to approve two proposed spot Ethereum exchange-traded funds from Grayscale and Franklin Templeton.
• The SEC delayed its decision on listing and trading spot bitcoin ETF options from multiple exchanges.

🌍 International

🇪🇺 European Union

• The European Parliament adopted a package of laws relating to money laundering and terrorist financing, which include enhanced due diligence measures and checks on customers’ identities for so-called “obliged entities,” such as crypto asset managers.

🇳🇱 Netherlands

• The Fiscal Information and Investigation Service of the Netherlands announced the arrest of a man suspected of fraud, embezzlement, and money laundering in connection with crypto gambling network ZKasino.

🇹🇭 Thailand

• Thailand’s Securities and Exchange Commission announced that it was coordinating with government agencies to block unauthorized access to digital asset service providers’ platforms.

🇬🇧 United Kingdom

• HM Treasury released a report on anti-money laundering and counter-terrorist financing, which included an assessment from the Financial Conduct Authority that retail banking (including payments), wholesale banking, wealth management, and crypto asset firms are particularly vulnerable to financial crime and pose the greatest risk of being exploited for money laundering.

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