Here are all the major crypto firms facing charges from regulators this year
Top line
Cryptocurrency trading platform Beaxy announced Wednesday it will shut down after it was charged by the Securities and Exchange Commission, which alleged the company violated securities laws and its founder misappropriated customer funds, becoming the latest firm to be caught in a crackdown on allegedly illegal crypto. activity this year.
Time line
The crypto exchange Beaxy ceased operations after it was accused by the SEC of failing to register as a securities exchange, in a complaint that also alleged that the company’s founder, Artak Hamazaspyan, misused $900,000 of customer money for gambling and other personal use.
The Commodity Futures Trading Commission sued the world’s largest crypto exchange Binance and its CEO Changpeng Zhao, who alleged that the firm had worked to “keep the money flowing and avoid compliance,” including by allowing U.S. customers to trade on the platform even though it is not registered under U.S. law (Zhao called the case “unexpected and disappointing”).
Do Hyeong Kwon, founder of stablecoin TerraUSD and its companion token Lunawas charged with fraud by US prosecutors after he was arrested in Montenegro, which contributed to a civil lawsuit against him by the SEC in February, nine months after the sudden collapse of both tokens last year.
The SEC announced charges against Justin Sun and three of his companies for selling tokens Tronix and BitTorrentwhich the agency said are unregistered securities – the agency also accused eight celebrities of illegally promoting the tokens, including Akon, Lindsay Lohan and Lil Yachty.
Cryptocurrency exchange Coin base said it received a notice indicating that the SEC had identified possible violations of securities laws — the SEC focused in part on Coinbase’s “staking” service, which pays a return if customers set aside their crypto to help process blockchain transactions (Coinbase called the move “disappointing” and claimed the industry has faced “conflicting statements from regulators”).
Nishad Singh became the third leader from the once dominant cryptocurrency exchange FTX to plead guilty to criminal fraud charges amid a federal investigation into the crypto giant after it collapsed late last year and its former chief executive Sam Bankman-Fried was charged with criminal wrongdoing.
The Federal Trade Commission announced that it was investigating the crypto lender Voyager Digital— which filed for bankruptcy in 2022 — for the company’s “misleading and unfair marketing of cryptocurrency to the public,” according to a filing.
Crypto exchange Kraken agreed to pay the SEC $30 million in fines and stop offering betting services to U.S. customers, after the agency said Kraken failed to register the service under securities laws (the firm that operates Kraken admitted or denied the SEC’s allegations as part of the settlement).
Crypto lender Nexo Capital agreed to pay the SEC $45 million in fees and fines after the agency charged it with allowing customers to earn interest on their cryptocurrency savings — even though Nexo never admitted any wrongdoing.
The Department of Justice announced charges against the cryptocurrency exchange Bitzlato and its founder, Anatoly Legkodymov, alleged that the Hong Kong-based company had processed more than $700 million in illicit funds and failed to meet US regulatory standards.
SEC charged cryptocurrency lender Genesis Global Capital and the crypto exchange Gemini Trust— owned by Cameron and Tyler Winklevoss, twins famous for claiming they created the idea for Facebook — offering unregistered securities to investors with the promise of high interest rates on deposits through a program called Gemini Earn, prompting Genesis to file for bankruptcy. week later.
Big number
$19,873. That’s the price Bitcoin — the largest cryptocurrency by market capitalization — fell to on March 10, the first time the token crossed below $20,000 since January. This is a 71% percent decline from the record high of $68,990 in November 2021. Bitcoin later recovered and reached more than $28,000 by March 29.
Key background
SEC Chairman Gary Gensler has signaled for years that the once freewheeling cryptocurrency sector will face tougher federal regulation, claiming in 2021 that the crypto market — which he called “the Wild West” — was full of “fraud, fraud and abuse” because it was not enough protection for investors as tokens rose in price. Gensler suggested that investor protection rules covering stocks and derivatives should also apply to crypto exchanges, and has argued that some cryptocurrencies are securities, an argument challenged by crypto firms. Despite a surge in the prices of tokens like Bitcoin in 2021, crypto markets saw a loss of nearly $2 trillion in market capitalization the following year, amid rising inflation and fears of a recession. Popular cryptocurrencies Bitcoin, ether and BNB fell a whopping 70%, 75% and 65% respectively from record highs, as some cryptocurrency companies collapsed or laid off thousands of employees between June and August. The year ended with the fall of crypto exchange FTX and its associated trading company Alameda Research, drawing scrutiny of the two firms’ operations that later led to a series of fraud charges against founder Bankman-Fried.
Tangent
A crackdown on crypto firms is complemented by the closure of two major banks that served the cryptocurrency industry. Crypto-banking giant Silvergate Bank announced in March that it was shutting down operations and liquidating its assets – resulting in Bitcoin falling below $20,000 for the first time in nearly two months. The bank is also being investigated by the Department of Justice for its ties to FTX and Alameda Research, although the bank has not been accused of fraud or any wrongdoing, according to Bloomberg. Signature Bank – also known for its crypto operations – was also shut down by New York regulators and taken over by the FDIC after facing a wave of withdrawals that coincided with the collapse of Silicon Valley Bank.
Further reading
Crypto Exchange Beaxy Shuts Down Amid SEC Charges (Forbes)
Terra-Luna Coins founder Do Kwon charged with fraud by US prosecutors (Forbes)
Kraken exits US crypto venture to pay SEC fees (Forbes)
Coinbase Crypto Exchange Facing Possible SEC Charges, Company Says (Forbes)
