Crypto news & regulatory update: November 22 – December 20, 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

• The Court of Appeals for the Fifth Circuit issued a decision holding that the Treasury Department’s Office of Foreign Assets Control (OFAC) exceeded its statutory authority when it sanctioned Tornado Cash’s immutable smart contracts because the immutable smart contracts do not constitute “property” of a foreign national or entity.
• A court filing in a lawsuit against the Federal Deposit Insurance Corporation (FDIC) revealed communications from the FDIC to financial institutions directing them to pause cryptocurrency-related activity while the agency evaluated regulatory concerns with the services.

🌽 Commodity Futures Trading Commission

• The Commodity Futures Trading Commission (CFTC) released its enforcement results for Fiscal Year 2024, which reflected an all-time high for monetary relief of more than $17.1 billion, mainly from the agency’s resolution of the FTX case.
• The CFTC published an information sheet that includes 10 signs for how to spot a scam crypto or forex trading website.
• The CFTC charged a pastor in Washington state for engaging in a fraudulent digital assets multilevel marketing scheme worth at least $5.9 million that mainly targeted Spanish-speaking customers who had little to no experience or understanding in digital asset transactions or commodity interest trading.

🦅 Congress

• The House Judiciary Committee and its Select Subcommittee on the Weaponization of the Federal Government released an interim report titled, “Financial Surveillance in the United States: How the Federal Government Weaponized the Bank Secrecy Act to Spy on Americans.”

⚖️ Department of Justice

• A federal judge sentenced two men to 10 years and eight years in prison, respectively, for their roles in the large-scale cryptocurrency Ponzi scheme known as IcomTech.
• A federal judge sentenced a Texas man to two years in prison for filing a tax return that falsely underreported the capital gains he earned from selling $3.7 million in bitcoins.
• A federal judge sentenced a former cryptocurrency research firm executive to four years in prison after he previously pleaded guilty to stealing $4.46 million from his former employer.
• A federal judge sentenced a Washington man to 41 months in prison for running a crypto investment scheme in which he allegedly induced victims he met online and defrauded them of more than $350,000.
• The founder and former CEO of Celsius pleaded guilty to one count of committing commodities fraud and one count of committing securities fraud. As part of his plea, he agreed to forfeit more than $48 million in proceeds from his illegal schemes.
• A Nebraska man pleaded guilty to wire fraud for operating a large-scale illegal “cryptojacking” operation that defrauded two well-known providers of cloud computing services out of more than $3.5 million worth of computing resources in order to mine cryptocurrency worth nearly $1 million.
• The Department of Justice charged three Nigerian nationals for their roles in a transnational internet-enabled investment fraud scheme in which the Nigerians impersonated licensed FINRA representatives, spoofed websites, misappropriated the seal of the SEC, and promised to invest in cryptocurrencies, among other things. The SEC issued parallel civil charges.
• A jury convicted a Virginia man of charges relating to his efforts to provide material support to the Islamic State of Iraq and al-Sham (ISIS) using a crypto financing scheme.

💵 Department of the Treasury

• As mentioned in “tl;dr,” the Court of Appeals for the Fifth Circuit issued a decision holding that OFAC exceeded its statutory authority when it sanctioned Tornado Cash’s immutable smart contracts because the immutable smart contracts do not constitute “property” of a foreign national or entity.
• OFAC sanctioned five individuals and four entities that are associated with or leverage the TGR Group, an international network of businesses and employees that have facilitated significant sanctions circumvention on behalf of Russian elites. OFAC states that the network provides a range of services, including an unregistered service to exchange cash and cryptocurrency.
• The Internal Revenue Service Criminal Investigation released its Fiscal Year 2024 Annual Report that details significant criminal cases, including the first indictment and guilty plea of a U.S. taxpayer solely for not paying taxes on gains from cryptocurrency sales, and the U.S. government’s settlement with crypto exchange Binance. 
• OFAC sanctioned two individuals and one entity involved in a network that facilitated money laundering and cryptocurrency conversion services for illicit funds that North Korean IT workers generated for the North Korean government.

💰 Federal Deposit Insurance Corporation

• As mentioned in “tl;dr,” a court filing in a lawsuit against the FDIC revealed communications from the FDIC to financial institutions directing them to pause cryptocurrency-related activity while the agency evaluated regulatory concerns with the services.

✔️Financial Stability Oversight Council

• The Financial Stability Oversight Council’s annual report included a short section on digital assets, which, in part, recommended that Congress pass legislation creating a comprehensive federal prudential framework for stablecoin issuers, and legislation that provides federal financial regulators with explicit rulemaking authority over the spot market for crypto assets that are not securities.

📈 Securities and Exchange Commission

• The Securities and Exchange Commission announced that it filed 583 total enforcement actions in fiscal year 2024 while obtaining orders for $8.2 billion in financial remedies, approximately 56% of which was attributable to a monetary judgment obtained following the SEC’s jury trial win against Terraform Labs and Do Kwon.
• Crypto wallet provider Exodus Movement announced that its common stock has been approved for listing on the NYSE American stock exchange.

🌍 State

🗽 New York

• Ripple’s CEO announced that Ripple has received approval from the New York State Department of Financial Services for its RLUSD stablecoin.
• Anchorage Digital announced that the New York State Department of Financial Services approved its subsidiary, Anchorage Digital NY, LLC, for a BitLicense.

🌍 International

🇪🇺 European Union

• The European Central Bank published its second progress report on the digital euro preparation phase.
• Payment platform ZBD announced that the Dutch Authority for the Financial Markets approved its application for a European Union Markets in Crypto-Assets Regulation license.

🇬🇧 United Kingdom

• The UK’s Financial Conduct Authority (FCA) published a crypto roadmap that outlines planned FCA policy publications for crypto assets that will seek feedback from the public. It also addresses the content that the publications will cover.
• The FCA announced that Pump.fun is not authorized in the UK and warned the public to avoid dealing with the firm and to “beware of scams.”

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