Signature Bank Under Investigation by US Government Bodies

Signature Bank, a cryptocurrency-friendly bank, is reportedly under investigation by two United States government bodies over concerns that it did not take adequate measures to detect potential money laundering by its clients. According to a Bloomberg report on March 15, investigators with the Justice Department were examining whether Signature was taking preemptive measures to monitor transactions for “signs of criminality” and properly vetting account holders. A separate probe by the Securities and Exchange Commission was also “taking a look” at the bank, although details regarding the nature of the SEC’s probe were not reported.

The investigations may have contributed to the recent decision by New York state regulators to close the bank, although it is unclear when the investigations began and what effect, if any, they had on the closure. Signature and its staff are not accused of wrongdoing, and the investigations may be finalized without any charges or further action taken by the SEC or the Department of Justice.

The report comes after a class action lawsuit was filed by Signature shareholders on March 14, alleging that the bank and former executives claimed to be “financially strong” just three days before it was forcibly shuttered. Barney Frank, a former board member of Signature Bank, has claimed that the regulators wanted “to send a very strong anti-crypto message” and that the bank became the “poster boy” for this message, despite there being “no insolvency based on the fundamentals.”

Signature Bank was closed on March 12 as part of a series of bank closures that also included Silvergate Capital and Silicon Valley Bank. The DOJ and the SEC have reportedly since initiated separate investigations into the collapse of Silvergate Capital and SVB. The regulators will examine the events leading up to the bank’s collapse, including scrutinizing security filings that disclosed the sale of SVB shares by the firm’s CEO Greg Becker and CFO Daniel Beck that took place two weeks prior to its downfall.

The SEC has not formally commented on the matters, but SEC chair Gary Gensler said on March 12 that it “will investigate and bring enforcement actions if we find violations of the federal securities laws.” The investigations into Signature Bank and other cryptocurrency-friendly banks highlight the increasing scrutiny of the cryptocurrency industry by regulatory bodies, particularly in the United States.


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FTX Founder’s Lawyers Consider Delaying Criminal Trial

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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Forsage Founders Indicted for Alleged $340 Million “Global Ponzi” Scheme on Ethereum Blockchain

A federal grand jury in the District of Oregon has handed down indictments against the individuals who are believed to have been the masterminds behind the “global Ponzi” scam known as Forsage, which is said to have generated $340 million.

According to a statement released by the Department of Justice (DOJ) on February 22, the four Russian founders, Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov, have been formally accused of having key roles in the scheme that raised approximately $340 million from victim-investors. This information comes from the formal accusation.

U.S. Attorney Natalie Wight for the District of Oregon stated that “today’s indictment is the result of a rigorous investigation that spent months piecing together the systematic theft of hundreds of millions of dollars.” She also stated that “bringing charges against foreign actors who used new technology to commit fraud in an emerging financial market is a complicated endeavor only possible with the full and complete coordination of multiple law enforcement agencies.”

Forsage promoted itself as a low-risk, decentralized financial platform that was based on the Ethereum blockchain and offered customers the opportunity to create passive income over the long term. Blockchain analytics, on the other hand, allegedly shown that eighty percent of Forsage “investors” got back less money than they had initially contributed.

Analysis of the smart contracts, as reported by the Department of Justice (DOJ), indicated that monies that were obtained when new investors acquired “slots” in Forsage’s smart contracts were routed to older investors, which is consistent with the definition of a “Ponzi scheme.”

Forsage has an active Twitter account, on which they recently posted a thread saying that community members who take part in “The Ambassador Program” will be able to receive monthly incentives by accomplishing certain activities. The tweet was published on February 22.

The Securities and Exchange Commission filed charges of fraud and selling unregistered securities against the company’s four founders and seven promoters on August 1. At the time, acting chief of the SEC’s Crypto Assets and Cyber Unit Carolyn Welshhans said: “Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”

Back in 2020, the Philippines Securities and Exchange Commission had also raised concerns about Forsage, indicating that it may be a Ponzi scheme. However, one month later, the platform remained the second-most popular decentralized application (DApp) on the Ethereum blockchain.

When a prosecutor brings criminal charges against an individual or group and accuses them of committing an offense, this is referred to as a charge. However, an indictment is filed by a grand jury if prosecutors are successful in persuading a majority of the grand jury members that a formal accusation is warranted following an investigation.

The use of grand juries is widespread practice in the prosecution of significant federal and state criminal crimes.


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A British National Charged With Aiding North Korea in Violating US sanctions

A citizen of the United Kingdom who was wanted by the Department of Justice in the United States was apprehended by the Interpol office in Moscow (DoJ). The guy is suspected of participating in a plot to circumvent the restrictions imposed by the United States on North Korea.

Christopher Emms was taken into custody on February 21 in Moscow on the basis of a “red alert” issued by Interpol, as reported by the local media. The British national, who was 31 years old, was taken into custody at the hostel where he was sleeping.

In April 2022, it is believed that Emms, together with a citizen of Spain named Alejandro Cao De Benos, supplied North Korea with instructions on how it might utilize blockchain technology and cryptocurrencies to escape sanctions and wash dirty money. The 2019 Pyongyang Blockchain and Cryptocurrency Conference was both planned and coordinated by the two individuals.

Virgil Griffith, a person who once worked on the Ethereum project, is the third person involved in the plot. In November of 2019, he was taken into custody by the Federal Bureau of Investigation, and after entering a guilty plea, he was given a sentence of 63 months in jail. If found guilty on one count of conspiring to violate the International Emergency Economic Powers Act, Emms faces a possible maximum sentence of 20 years in jail.

Previously, Radha Stirling, the founder of Due Process International, which is a nongovernmental organization that helps defend human rights in the face of international enforcement agencies, stated that there was no strong evidence against Emms: “Precisely because he did nothing wrong; he provided no information to North Korea that doesn’t already appear on the first page of Google.”

After an eight-month travel restriction, Emms was finally free to leave Saudi Arabia in September 2022, after Saudi Arabia had rejected the American extradition request on the grounds that it had a legal foundation. He didn’t waste any time getting out of the country and went straight to Russia. However, despite the fact that the nation was the focus of the Department of Justice’s attempts to implement financial sanctions in the cryptocurrency industry, the local authorities made the decision to assist their American colleagues.


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Binance Expects Fines in U.S. Investigations

Binance, the biggest digital asset exchange in the world, is getting ready to resolve pending regulatory and law-enforcement investigations in the United States by paying fines and other types of penalties.

According to an article that was published in the WSJ on February 15 and that quoted the company’s chief strategy officer, Patrick Hillmann, Binance has been working with authorities to rectify previous compliance difficulties.

Binance is “working with authorities to find out what are the remediations we have to go through today to make apologies for that,” according to Hillmann, who is Binance’s Chief Compliance Officer.

He went on to say that the conclusion of the current investigations would most certainly be penalties, but that there is also the possibility that there may be other consequences.

In the United States, cryptocurrency exchange Binance has been the focus of many investigations, including one that was initiated in 2018 by the Department of Justice and concerns alleged breaches of laws against money laundering.

In addition, an investigation was conducted by the Commodity Futures Trading Commission in March 2021 to determine whether or whether the firm marketed cryptocurrency futures to consumers in the United States without first registering with the agency.

In February of this year, the Securities and Exchange Commission began an investigation into the U.S. subsidiary of Binance concerning trading entities that are tied to the company’s CEO, Changpeng Zhao.

Binance is “very confident and feeling extremely good about where those negotiations are going,” according to Hillmann, who also said that the company was unable to give a number on the amount of the penalties or a timeline on when they would be resolved with U.S. authorities.

According to him, this is a “particularly challenging period for us” since there is a lack of clarity on crypto in the United States.

The Securities and Exchange Commission (SEC) has lately intensified what some in the industry refer to as a “war on crypto.” This “war on crypto” seems to be aimed at specific staking services and stablecoins, both of which the SEC has determined to be subject to securities regulations.

The CEO of Binance said, in reference to the current enforcement effort, that it “would have a tremendously significant and long-lasting chilling impact in the United States.”

Paxos came into trouble with New York authorities earlier this week, which resulted in the company being barred from releasing any more of the Binance-branded stablecoin BUSD.

As a result of SEC enforcement action, the American cryptocurrency exchange Kraken was forced to cease its staking services and given a fine of thirty million dollars only a week ago.

Patrick Hillmann came to the conclusion that finding a solution to the problems with the United States authorities would be beneficial for the company and its future.

“It will be a fantastic time for our firm because it will enable us to put it behind us,” said the CEO. “It will allow us to put it behind us.”

Binance does not want to provide any more remarks on the topic and hence refused to do so.


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Eddy Alexandre Pleads Guilty to Commodities Fraud

In a New York district court, Eddy Alexandre, the CEO of a putative cryptocurrency trading platform known as EminiFX, pled guilty to commodities fraud. As part of his plea deal, he agreed to pay back millions of dollars to investors who had lost money due to his “cryptocurrency investment hoax.”

On February 10, the Department of Justice (DOJ) of the United States of America made the announcement that Alexandre had pleaded guilty to one count of commodities fraud. Alexandre will pay approximately $248 million in forfeiture in addition to restitution, the amount of which has not yet been determined.

In May, Alexandre was arrested and prosecuted for his part in EminiFX. He first pled not guilty to the charges, but on February 10 he changed his plea to guilty. He might get a term of up to ten years in jail if convicted.

Between approximately September 2021 and May 2022, Alexandre allegedly ran the crypto and forex trading platform and “solicited more than $248 million in investments from tens of thousands of individual investors,” as stated by Damian Williams, the United States Attorney for the Southern District of New York.

According to Williams, Alexandre claimed that EminiFX could provide “monthly returns of at least 5%,” but in fact, the CEO didn’t invest a “significant amount” of the money and “even utilized some funds for personal expenditures.” Williams alleged that Alexandre lied about EminiFX.

He promoted EminiFX as a platform for earning passive income by virtue of its use of a top-secret new technology for automating trading in crypto and foreign currencies, which allegedly “guaranteed” the returns on investment that were advertised.

Alexandre avoided answering the investors’ questions on the nature of the technology but assured them that they would see a return on their investments in just five months. Investors in the scam were given misleading information to the effect that they had obtained the promised 5% returns on their investments.

In point of fact, Alexandre lost tens of millions of dollars on the cash that he did invest; nevertheless, he did not make this information known to the investors.

He also transferred over 14.7 million dollars to his own personal bank account, spent approximately 155,000 dollars on the purchase of a BMW, and more than that amount on the monthly payments for a Mercedes-Benz.

Despite the fact that Alexandre committed fraud, he retained the support of a number of the investors in EminiFX.

According to a story published on the 10th of August by Bloomberg, a few individuals flew from outside the country to attend a plea hearing in August. One of Alexandre’s supporters said that the prosecution against him was racially motivated.

In addition to this, he is being sued in a separate civil case by the Commodity Futures Trading Commission (CFTC), which claims that Alexandre engaged in “fraudulent solicitation and misappropriation” in connection with cryptocurrency and foreign exchange trading.


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Voyager Digital Subpoenas FTX Executives

Subpoenas demanding information have been issued on former FTX CEO Sam Bankman-Fried and other FTX and Alameda Research officials by attorneys representing insolvent crypto broker Voyager Digital.

According to the filing made on February 6, the subpoenas have a very broad reach, and the attorneys for Voyager are asking for copies of all documents and communication that may have taken place between FTX businesses and the Securities and Exchange Commission or the Department of Justice.

In addition to a large number of additional papers, the attorneys have demanded information about the loan portfolio held by Alameda and Voyager, as well as FTX’s financial status both before and after the company filed for bankruptcy on November 11.

The other executives who were ordered to deliver the needed material by February 17 include a former CEO of Alameda named Caroline Ellison, the co-founder of FTX named Gary Wang, and FTX’s head of product named Ramnik Arora. Each of these people was issued with a subpoena.

Voyager and Alameda have extensive financial relationships, and Alameda is now attempting to recoup the $446 million that it has already given back to Voyager. It asserted in a document that was submitted on the 30th of January that since it had repaid Voyager inside the first ninety days after filing for its own bankruptcy, it had the legal right to “claw back” the monies for the benefit of its creditors.

After Alameda made a bid for Voyager’s assets that it was unable to honor, which cost Voyager $100 million and rendered Alameda’s claim subordinate to those of its other creditors, Voyager responded by claiming that its creditors had suffered “substantial harm” as a result of Alameda’s actions. Voyager made this claim in its lawsuit against Alameda.

In the meanwhile, according to a story published on February 7 by Law360, United States bankruptcy judge Michael Wiles said that he would be appointing a fee examiner to look into the professional costs associated with Voyager’s Chapter 11 case.

Wiles is said to have claimed that the professional fees expended inside the bankruptcy process were larger than he anticipated, and the rationale that was presented by the U.S. Trustee had apparently persuaded him that a fee examiner would be advantageous.

Wiles did observe, however, that an examiner may wind up costing the estate more than it would be able to save in other professional expenses, and he suggested putting a ceiling on the examiner’s own fees in order to prevent this from happening.


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Silvergate Bank Probed by DOJ for Ties to FTX Exchange

It has been claimed that the fraud section of the United States Department of Justice is conducting an investigation against the crypto bank Silvergate for its participation with the defunct FTX exchange and its affiliates.

According to a story published on February 3 by Bloomberg, which cited “people familiar with the subject,” the investigation is looking at Silvergate’s hosting of accounts that are tied to the companies of former FTX CEO Sam Bankman-Fried.

The cryptocurrency bank situated in California is not suspected of committing any crimes; nonetheless, detectives are trying to determine the extent to which the business was conducted with FTX and Alameda.

The failure of FTX in November had a significant negative effect on Silvergate, which resulted in a loss of one billion dollars in the most recent quarter. As a result of the collapse of the SBF empire, the bank was forced to lay off forty percent of its workforce and admit that it had taken out loans worth billions of dollars in order to avert a liquidity crisis and a bank run.

Investigators from the federal government are attempting to determine whether or not Silvergate and any other businesses that collaborate with FTX were aware of the issue.

According to Silvergate, Alameda signed up for a banking relationship with the institution in 2018, which was before to the release of FTX. According to the report, it asserts that it exercised appropriate due diligence and maintained continuing monitoring at the relevant period.

A spokesman from the financial institution said earlier this week that the company “has a rigorous compliance and risk management procedure.”

Josh Rager, a crypto trader, remarked on the potential effects that this most recent criminal probe may have on cryptocurrency exchanges that are connected to Silvergate.

On January 27, Silvergate announced that company will be temporarily suspending dividend payments, citing “recent volatility in the digital asset business.” At the time, it said that it had a “cash position that was in excess of their digital asset customer-related deposits.”

According to MarketWatch, Silvergate stock has dropped by 13% during the day, and it is now trading at $17.14 in after-hours trading. In addition, the price of SI is today 92% lower than it was in November 2021, when it was at its all-time high of $220.


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Randall Crater, Founder of “My Big Coin” Sentenced

Randall Crater, the person responsible for operating the fraudulent scheme known as “My Big Coin,” was given a sentence of one hundred months in prison and was ordered to make restitution payments totaling more than seven and a half million dollars to those who had lost money as a result of his scheme.

According to a statement that was released by the United States Department of Justice on January 31, the United States District Court Judge Denise Casper in the state of Massachusetts was the one who handed down the sentence that was given to Crater.

This sentence was handed down to Crater after he was found guilty by a federal jury on July 21 of four counts of wire fraud, three counts of unauthorised monetary transactions, and one count of operating an unregistered money-transmitting corporation. All of these charges were related to the same scheme. After adding up all of these fees, it became clear that Crater was running an unlicensed money transmission business.

Crater launched My Big Coin in 2013, and despite the fact that it was never intended to be a payment mechanism for cryptocurrencies, the company promoted itself as such. This resulted in the solicitation of potential victims between the years of 2014 and 2017, and the con was carried out right up to 2017.

According to Crater, the digital currencies that are available for purchase on My Big Coin are fully operational tokens that are backed by gold. Furthermore, the website has a collaboration with Mastercard to facilitate transactions.

In addition, Crater provided its users with access to a marketplace known as “My Big Coin Exchange,” which was promoted as a location at which users could trade their cryptocurrencies for fiat currencies such as the United States dollar and other currencies.

A substantial percentage of the $7.6 million in finance that Crater and his marketing team were successful in generating was used for the acquisition of a residence, many automobiles, and more than one million dollars’ worth of antiques, artwork, and jewellery.


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BlockFi Will Submit Assets And Liabilities For Bankruptcy On January 11

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In a recent announcement, the cryptocurrency lending company BlockFi stated that it will provide information regarding its assets and liabilities, in addition to the payments that it received prior to its bankruptcy filing in November.

BlockFi stated that it had provided its stakeholders with a presentation in which it detailed its intentions for future court filings and provided a breakdown of the bankruptcy proceedings. BlockFi also provided a breakdown of the bankruptcy proceedings.

The lending company claims that shortly after the company’s initial bankruptcy hearing in November, it made contact with 106 potential buyers. On January 30, the company will ask the court for permission to proceed with the bidding process and will ask for approval from the court regarding the bidding process. Both of these requests will be made in relation to the bidding process.

To be more specific, the company stated that no members of the BlockFi management team had withdrawn any cryptocurrency from the platform since October 14 and that none of them had “made a withdrawal bigger than 0.2 BTC in value at any time” since August 17. This information was provided in a blog post that was published on the company’s website.

In addition, the company stated that following the acquisition of a revolving credit line for $400 million from FTX US in July, it had increased basic wages and paid retention incentives for specific personnel.

On January 11, BlockFi announced that it planned to provide a summary of its financial affairs, in addition to providing an account of its assets and liabilities.

The announcement was made after the United States Department of Justice informed the judge overseeing the bankruptcy of BlockFi that it had seized more than 55 million shares of Robinhood. At the time of publication, these shares had a value of approximately $450 million. The criminal case against the cryptocurrency exchange FTX and the executives of the company resulted in the seizure of the shares.

The next scheduled meeting for the public hearing regarding the FTX bankruptcy case is scheduled for the 11th of January. On the other hand, an all-encompassing hearing for BlockFi is scheduled for the 17th of January.


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