Day: March 9, 2023

Biden’s Budget Proposal Includes Crackdown on Crypto Wash Sales and Doubling of Capital Gains Tax for Certain Investors

by Blockchain News

President Joe Biden’s upcoming budget proposal includes a few surprises for crypto traders and investors, as it seeks to raise around $24 billion through changes to crypto tax treatment. The proposal includes a crackdown on crypto wash sales, which are not currently subject to the same rules as stocks and bonds under current wash sale rules, and a doubling of the capital gains tax for certain investors.

One of the proposals aims to eliminate the tax-loss harvesting strategy used by crypto traders. This strategy allows traders to sell assets at a loss for tax purposes before immediately repurchasing them. The proposal seeks to put an end to this strategy, which is not permitted when stocks and bonds are involved, by applying the same wash sale rules to digital assets. If implemented, this change could have significant implications for many crypto holders who entered the market during the 2021 market peaks and are currently suffering from heavy losses.

The Biden budget proposal also seeks to raise the capital gains tax rate for investors making at least $1 million to 39.6%, nearly double the current rate of 20%. This change would only apply to a certain subset of investors, according to a Bloomberg report.

These proposed changes to crypto tax treatment are part of Biden’s plan to reduce the deficit by nearly $3 trillion over the next decade. The budget proposal also includes plans to raise income levies on corporations and wealthy Americans.

The crackdown on crypto wash sales and the proposed doubling of the capital gains tax rate have sparked concerns among crypto traders and investors. However, some experts believe that these changes are an inevitable consideration for the U.S., as it would put it on par with other jurisdictions such as Canada and Australia, where crypto wash sales apply.

Overall, the Biden budget proposal represents a significant shift in the government’s approach to regulating the crypto industry. If these proposals are implemented, they could have far-reaching implications for the industry and its participants.

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FTX Founder’s Lawyers Consider Delaying Criminal Trial

by Blockchain News

Lawyers representing Sam Bankman-Fried, the founder of FTX, have suggested that they may need to delay his criminal trial due to a lack of evidence from the DOJ. In a letter to United States District Judge Lewis Kaplan, Bankman-Fried’s lawyers stated that they are still waiting for a “substantial portion” of evidence to be turned over to them and that more charges had been laid against the FTX founder in late February.

The criminal trial, which is scheduled to begin on October 2, will focus on fraud charges brought by the DOJ. Bankman-Fried’s lawyers have not formally requested a date change, but they have stated that it may be necessary. According to the letter, prosecutors from the DOJ are holding evidence from devices belonging to Caroline Ellison, the former CEO of FTX’s sister trading firm Alameda Research, and Zixiao “Gary” Wang, an FTX co-founder. Both Ellison and Wang have pleaded guilty to fraud charges and are cooperating with the DOJ.

Bankman-Fried’s lawyers have stated that they are also waiting for contents from “computers belonging to two other former FTX/Alameda employees.” They anticipate that the evidence from these devices “will be voluminous and critically important to the defense.”

The letter also noted that Bankman-Fried was hit with new charges relating to conspiracy and fraud when a superseded indictment was unsealed on February 22. The number of charges against him was bumped up from eight to twelve. Bankman-Fried had previously pleaded not guilty to the original eight charges that were brought against him in December.

The delay in evidence being handed over to Bankman-Fried’s lawyers could have significant implications for the trial. If the defense does not receive the evidence it needs to prepare its case, it may be forced to request a delay. This would mean that the trial would not begin as scheduled on October 2.

The criminal trial against Bankman-Fried has attracted significant attention in the crypto industry. FTX is one of the fastest-growing crypto exchanges in the world, and Bankman-Fried is seen as a leading figure in the industry. The outcome of the trial could have implications for the regulation of the crypto industry, as well as for the future of FTX.

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Silvergate Bank Voluntary Liquidation Sparks Controversy in Crypto Industry

by Blockchain News

The voluntary liquidation of Silvergate Bank, a crypto-friendly bank, has caused a stir in the crypto industry, with many sharing their thoughts about the bank’s troubles and the broader impact of its collapse on crypto. Some United States lawmakers have taken the opportunity to criticize the crypto industry, labeling it as a “risky, volatile sector” that “spreads risk across the financial system.” Senator Elizabeth Warren called for regulators to “step up against crypto risk,” while Senator Sherrod Brown expressed concern that banks that get involved with crypto are putting the financial system at risk.

However, these remarks have faced criticism from the community, with some arguing that it was not a crypto problem, but rather a fractional-reserve banking issue. Silvergate held far more in-demand deposits compared to cash on hand, which led to its collapse.

Several companies have used the recent announcement from Silvergate to reiterate their lack of or now-severed ties with the firm. Binance CEO Changpeng Zhao assured customers on Twitter that the crypto exchange does not have assets stored with Silvergate, while peer exchange Coinbase also assured its followers that no customer funds were held by the bank.

Nic Carter, co-founder of venture firm Castle Island and crypto intelligence firm Coin Metrics, suggested that the government was responsible for “hastening the collapse” of Silvergate by launching investigations and legal attacks on it. He referred to “Operation Choke Point 2.0,” which he claims is a sophisticated, widespread crackdown against the crypto industry. CEO of financial services firm Lumida, Ram Ahluwalia, had a similar take, arguing that Silvergate faced a bank run after a senator’s letter had undermined public trust in the firm. He claimed that “Silvergate was denied due process.”

Some believe that the collapse of Silvergate won’t necessarily hurt the crypto industry, but proposed changes to tax laws could exacerbate the exodus of crypto firms from the U.S. With Silvergate winding down, some have also asked where crypto firms will turn to now. Coinbase, which previously accepted payments via Silvergate, announced that it would facilitate institutional client cash transactions for its prime customers with its other banking partner, Signature Bank. However, Signature Bank announced in December that it intended to reduce its exposure to the crypto sector by reducing deposits from clients holding digital assets. To further reduce its crypto exposure, Signature Bank imposed a minimum transaction limit of $100,000 on transactions it would process through the SWIFT payment system on behalf of crypto exchange Binance.

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Jimmy Fallon Fights Subpoena in NFT Legal Battle

by Blockchain News

The current litigation between Yuga Laboratories Inc. and Ripps et al. has brought attention to the intellectual property and trademark rights that are associated with the NFT industry. In a separate case involving Yuga Laboratories and securities fraud, Fallon is a co-defendant with Paris Hilton. During his program, Fallon disclosed that he had purchased a non-fungible token (NFT) issued by the Bored Ape Yacht Club. Notwithstanding this, Fallon’s legal team asserts that their client is not a party to the lawsuit involving Yuga Laboratories and Ripps and has nothing to do with the aforementioned case.

Collectors now have a new option to acquire rare pictures in NFT format as a result of a cooperation between Getty Images and Candy Digital. Beginning on March 21, customers will be able to make purchases of the NFTs on Candy Digital’s website. Prices for the NFTs will range anywhere from $25 to $200. The United States of America, the United Kingdom of Great Britain, and Japan are just some of the locations where consumers will be able to purchase the new release.

With the purpose of providing real-time insights into the digital asset ecosystem, Forkast Labs has introduced a number of NFT indexes, one of which is the Forkast 500 NFT index, which evaluates the performance of digital assets on 21 different blockchains. These indexes attempt to give a more complete measure of the health of the NFT economy, which is difficult to determine using standard market rankings based on prices, sales, and transaction volumes. These indices aim to provide a more comprehensive assessment of the health of the NFT economy.

The trade volume on the NFT market surpassed $2.04 billion in February, representing a 117% increase from January’s figure of $941 million, indicating that the sector is expanding. Its expansion is attributable to Blur, a developing market that just overtook OpenSea in trade volume. This month alone, Blur eclipsed OpenSea. Even while there are indications that a positive trend is developing in the market, the NFT area is still in the process of evolving, with new possibilities and legal conflicts forming.

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BitMEX Co-Founder Proposes Bitcoin-Backed Stablecoin

by Blockchain News

Even if authorities are increasing their scrutiny of stablecoins, the community’s persistent interest in stablecoins that are not related to the U.S. dollar is illustrated by Hayes’ idea for the NakaDollar. NakaDollar would be a stablecoin that would not be tied to the dollar. The proposed stablecoin differentiates itself from major reserve-backed stablecoins such as Tether (USDT) and USD Coin by relying on derivatives markets that offer liquid inverse perpetual swaps rather than US dollar reserves as its backing mechanism. This is in contrast to major reserve-backed stablecoins such as Tether (USDT) and USD Coin. This stands in stark contrast to the two big stablecoins that came after it. These sorts of deals are referred to as “liquid inverse perpetual swaps” which is a fancy term for them (USDC).

The combination of short BTC holdings and USD inverse perpetual swaps would serve as the stablecoin that Hayes has suggested using as its underlying structure. In order to maintain the stablecoin’s 1:1 peg to the United States dollar, transactions based on mathematics would be conducted between the new NakaDAO and allowed parties and derivatives exchanges. These transactions would be necessary. The viability of the proposed stablecoin would be contingent on their being both the availability and the liquidity on derivatives markets to engage in the trading of inverse perpetual swaps. This is an essential prerequisite that must be met before the introduction of the stablecoin.

As the cryptocurrency industry continues its unyielding quest of perfection, it is virtually guaranteed that new concepts for stablecoins will emerge at some time in the near future. This might take the form of a new product or an improvement on an existing one. Yet, the regulatory framework that stablecoins operate under is also going through a period of transition. In light of this, it is of the utmost importance that stablecoin issuers make compliance and transparency their top priority in order to both attract investors and stay in line with the regulations that are now in place.

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Federal Judge Refuses to Consolidate Class-Action Lawsuits Against FTX Exchange

by Blockchain News

As a result of the decision taken by United States District Judge Jacqueline Scott Corley to refuse the motion to consolidate the cases, FTX and its defendants will have the right to react to the accusations that have been made by the plaintiffs. This right will come as a direct result of the fact that the motion to consolidate the cases was denied. A number of individuals have been named as defendants in the case because it is believed that they stole money or property. In addition to Bankman-Fried and other FTX executives, these defendants also include independent auditors and exchange promoters. Before taking any action, the judge’s decision underscores the importance of following the correct method and ensuring that all parties have the chance to be heard.

Criminal charges are being brought against Bankman-Fried in addition to the class-action lawsuits that have already been filed against the company. The criminal accusations are tied to alleged violations of anti-money laundering and banking regulations. The lawsuits that have been brought against the firm are connected to these claims in some way. The attorneys representing Bankman-Fried have recently stated that it is possible that the criminal trial that was scheduled to take place in October will need to be postponed in order to accommodate the fact that they are awaiting significant evidence as well as additional accusations that were brought against their client in February.

The ongoing legal conflicts that FTX and Bankman-Fried are involved in serve as a reminder of how vital it is for the bitcoin industry to preserve an atmosphere that is open and responsible to its participants. It is essential for companies, in order to ensure that they conduct business in a manner that is both ethical and responsible, to make the protection of investors and compliance with laws a top priority as the sector continues to develop and advance. This will ensure that businesses conduct themselves in a manner that is both ethical and responsible.

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Mt. Gox Creditors Given Extra Month to Register Claims, Distribution Deadline Delayed

by Blockchain News

Mt. Gox was a cryptocurrency exchange that was situated in Tokyo. At one point in time, it was responsible for more than 70% of all Bitcoin transactions. In 2014, the exchange suffered a hacking attack, which led to the theft of thousands of Bitcoin and the subsequent filing of a bankruptcy claim by the exchange. Since then, creditors have been holding out hope that they would eventually be compensated for the damages they sustained.

The official document cites a number of reasons for the postponement in the registration and distribution deadlines, one of which is the progress that rehabilitation creditors have achieved in regard to the selection and registration. Creditors have the choice of obtaining payment in the form of a lump amount, having their funds sent by a bank or another provider of money transfer services, or transacting with a cryptocurrency exchange or custodian.

Since the exchange went bankrupt, the delay in the payment has been a source of concern, especially in light of the large rise in value of Bitcoin that has occurred since the collapse of the exchange. There has been conjecture over the effect that creditors of Mt. Gox selling their assets may have on the market if they made that decision. Yet, according to a story that was published by Bloomberg not too long ago, the major creditors of Mt. Gox have no intentions to liquidate any of their Bitcoin holdings.

Creditors of Mt. Gox have been given some breathing room thanks to the extension of the registration and distribution deadlines. This gives the creditors more time to submit claims and decide how they would want to be compensated for their losses. As the cryptocurrency industry continues to mature, it is absolutely essential that exchanges place a high priority on security measures in order to forestall the occurrence of incidents similar to those that have already occurred in the past. This will ensure the safety of creditors as well as investors.

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BaFin Declines to Classify NFTs as Securities, Recommends Case-by-Case Approach

by Blockchain News

The fact that there is now a discussion going on over the appropriate approach to classify these digital assets is reflected in BaFin’s decision to not recognize NFTs as securities. This argument has been going on for quite some time. Even if there are many who think of non-fungible tokens (NFTs) as investments or crypto assets, there are also others who believe that NFTs are nothing more than one-of-a-kind digital collectibles that have no value apart from the rarity or desirability of their presence. Despite the fact that some individuals regard non-traded stocks and bonds to be investments, this is the case. It is possible that, at some time in the future, the case-by-case method that BaFin utilizes will make it possible to get greater clarification about the classification of NFTs.

Yet, it is difficult to apply current legal frameworks to non-fiat currencies such as NFTs since these assets are not standardized and cannot be exchanged. This makes it difficult to apply existing legal frameworks. Those in charge of regulation are presented with a challenge as a result of this. The phrase “crypto assets” refers to non-fungible tokens that cannot be traded for other currencies and is an exception to this norm. BaFin is under the impression that non-financial transactions will not be in conformity with the licensing requirements outlined in the Payment Services Supervision Act, nor will they be subject to BaFin’s supervision regarding the prevention of money laundering. This is due to the fact that non-bank financial transactions are not regulated in the same manner that payment services are.

Notwithstanding the difficulties that are associated with recognizing them, non-fungible tokens are becoming an increasingly popular category of digital collectibles. This is despite the fact that identifying them may be difficult. The majority of non-fungible token (NFT) collectors acquire NFTs for reasons related to status, distinctiveness, and aesthetics rather than with the purpose of utilizing them as an investment, according to research that was undertaken by the metaverse site Metajuice. As the market for non-traditional assets (NFTs) continues to increase, the legal frameworks that control it will need to change in order to provide investors and collectors a higher degree of transparency and protection. This will be necessary in order to accommodate the market’s growing size.

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FTX to Sell Remaining Interest in Sequoia Capital to Abu Dhabi Sovereign Wealth Fund

by Blockchain News

According to the papers filed with the court, Alameda Research, the investment division of FTX, has reached an agreement to sell the company’s remaining stake in Sequoia Capital to Al Nawwar Investments Company Ltd, which is controlled by the government of Abu Dhabi. The transaction is valued at $45 million, and its completion is anticipated by the 31st of March, provided that the Delaware bankruptcy judge John Dorsey gives his consent. FTX made the decision to enter into the agreement with Purchaser because Purchaser had a more attractive offer and was capable of carrying out the selling transaction in a shorter amount of time.

The remaining stake that FTX has in Sequoia Capital has been put up for sale as part of the company’s ongoing attempts to sell its investments and satisfy its financial obligations to its creditors. Previously, Dorsey gave his blessing for the firm to sell certain assets, such as LedgerX, Embed, FTX Japan, and FTX Europe. This allowed the company to go through with the sale.

After being sued by Alameda Research for unpaid loan repayments, Voyager Digital has decided to put aside $445 million in response to the lawsuit. Dorsey has given his blessing to the move, and as a result, the firm will have to put the money away in order to pay off its debt.

The recent developments in the bankruptcy case involving FTX bring to light the persistent difficulties that cryptocurrency exchanges must overcome and the need of preserving their financial stability. Since the cryptocurrency sector is expected to continue expanding in the next years, it is essential that businesses place a high priority on openness and accountability in order to safeguard the interests of creditors and investors. The decision by Voyager Digital to put aside $445 million and the sale of the remaining shareholding held by FTX in Sequoia Capital both reflect a commitment to financial discipline and might assist to recover trust in the sector.

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Safeheron Discovers Security Flaw in MPC Wallets

by Blockchain News

MPC wallets are becoming more popular among financial institutions and developers of Web3 apps as a means of securing cryptocurrency assets. This trend may be attributed to the growing concern about the security of cryptocurrency holdings. These wallets are able to perform their intended functions as a result of the production of pieces of a private key that are owned by a number of different signers. In order for a transaction to take place, each fragment must have a certain amount of signatures in order for them to be considered genuine. In contrast to conventional multisig wallets, MPC wallets do not need the addition of any particular smart contracts to the blockchain in order to function properly. Moreover, MPC wallets are able to be blockchain-agnostic, which results in lower gas rates. This is a significant advantage.

Despite the fact that MPC wallets are generally considered to be more secure than single signature wallets, Safeheron discovered a security flaw in MPC wallets when they were used with Starknet-based applications. This flaw was discovered despite the fact that MPC wallets are compatible with Starknet. Some programs have the capability of obtaining a stark key signature and/or an api key signature, which enables them to sidestep the precautions that are imposed on the private keys that are held in MPC wallets. It’s possible that this will lead to illegal operations, such as the placement of orders, the completion of layer 2 transfers, or the cancellation of orders.

The exposure of this security flaw highlights how critical it is for the bitcoin community to continually test and enhance its security procedures. [Citation needed] [Citation needed] Since more and more financial institutions and Web3 app developers rely on MPC wallets to keep their funds secure, it is very essential that any flaws be discovered and repaired in order to prevent any security breaches. This is due to the fact that such vulnerabilities might lead to breaches in security. The exposure of Safeheron ought to serve as a lesson for anybody who uses cryptocurrencies, encouraging them to be vigilant and to put a priority on security in the transactions that they conduct.

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