Tag: Penalties

Cyprus Tightens Crypto Regulations with Hefty Penalties for Non-Compliance

by Blockchain News

Cyprus is set to introduce stringent penalties for unregulated cryptocurrency service providers (CSPs), according to the Cyprus Mail. The government has submitted a legislative amendment to the “Prevention and Suppression of Money Laundering Law,” aiming to align the country with international anti-money laundering (AML) and combating the financing of terrorism (CFT) standards. The amendment was presented to the Parliamentary Committee on Legal Affairs on October 10, 2023.

The proposed amendments stipulate that all CSPs dealing with crypto assets must register with the Cyprus Securities and Exchange Commission (CySEC). Failure to comply will result in penalties ranging from fines of up to €350,000 to imprisonment for up to five years, or a combination of both. This move reflects Cyprus’s commitment to minimizing risks associated with money laundering and terrorist financing.

The Cyprus Bar Association has expressed reservations about the amendments, particularly the requirement for CSPs registered in other EU member states to also register in Cyprus. In response, the Ministry of Finance highlighted that monitoring responsibility for such entities initially lies with the state where they are registered.

CySEC is also considering issuing guidelines related to the “Travel Rule” to further enhance regulatory oversight. Discussions are ongoing to ensure the proper and timely implementation of this regulation.

The Travel Rule, originally part of the Bank Secrecy Act in the US, mandates financial institutions to share transaction details with other institutions involved in fund transfers. This rule, adapted for the cryptocurrency industry, aims to prevent money laundering and terrorism financing by ensuring transaction details “travel” with the transfer. In cryptocurrencies, exchanges and wallet providers must share customer information, enhancing transparency and regulatory compliance.

The UK’s Financial Conduct Authority (FCA) has outlined compliance expectations for cryptoasset businesses regarding the ‘Travel Rule’ as well, effective from September 1, 2023. The rule mandates the collection, verification, and sharing of transaction information to align with anti-money laundering and counter-terrorist financing standards.

This development is particularly relevant to Cyprus’ recent regulatory tightening, as both countries aim to align their cryptoasset industries with international standards set by the Financial Action Task Force (FATF).

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5 Charged for Hydro Token Market Manipulation

by Blockchain News

The US Department of Justice (DOJ) has charged five individuals with conspiring to manipulate the market in relation to an alleged scheme involving the Hydro (HYDRO) token. The charges include conspiracy to commit securities price manipulation and wire fraud. The three individuals charged with manipulating the market for Hydro are Michael Ross Kane, the former CEO of Hydrogen Technology Corp.; Shane Hampton, Hydrogen’s chief of financial engineering; and George Wolvaardt. The other two individuals were charged separately for their alleged roles in the scheme. Tyler Ostern, the former CEO of Moonwalkers, and Andrew Chorlian, a blockchain engineer from Hydrogen Technology Corp., were also charged for their involvement in the alleged manipulation scheme.

According to the indictment, from June 2018 through April 2019, Kane, Hampton, and Wolvaardt defrauded market participants looking to trade the Hydro tokens that Hydrogen issued. Wolvaardt, who was the chief technology officer for a market-making firm called Moonwalkers Trading Limited, designed a trading bot that executed a number of high-value “spoof orders” at obscure intervals to make it appear as though there was high demand for the token. The bot also bought and sold large volumes of the token from the same account, a practice known as wash trading.

The alleged manipulation of the Hydro token price resulted in the co-conspirators making an approximate total of $2 million in ill-gotten profits. The DOJ claims that following the artificial manipulation of the token’s price, the co-conspirators sold large chunks of their holdings.

Kane, Hampton, and Wolvaardt have each been charged with one count of conspiracy to commit securities price manipulation, one count of conspiracy to commit wire fraud, and two counts of wire fraud. If found guilty on all charges, they each face a maximum penalty of five years imprisonment in relation to the conspiracy to commit securities price manipulation charge and a staggering 20 years in prison on each of the other charges. Ostern and Chorlian have each been charged with one count of conspiracy to commit securities price manipulation and wire fraud. If found guilty, they face a maximum penalty of five years in prison.

In a separate case brought by the Securities and Exchange Commission, Hydrogen Technology Corporation and former CEO Michael Ross Kane were ordered to pay $2.8 million in remedies and civil penalties. On April 20, a New York District Court judge ruled against Hydrogen Technology Corporation and Kane in the case. The SEC alleged that Hydrogen and Kane had made false and misleading statements to investors about the company’s financial performance and the development of its technology.

In conclusion, the charges against the five individuals for market manipulation of the Hydro token highlight the importance of transparency and fairness in the cryptocurrency market. The DOJ’s efforts to prosecute individuals who engage in fraudulent activities in the cryptocurrency market sends a strong message that such activities will not be tolerated.

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India to set maximum penalty for violating crypto norms at fine of $2.7 million or 1.5 years in jail

by Cointelegraph

On Tuesday, BloombergQuint (Bloomberg India) reported that the penalty for non-compliance with the Indian government’s crypto policies could range from a maximum fine of 20 crore rupees ($2.7 million USD) or 1.5 years in jail. Prime Minister Narendra Modi will likely give cryptocurrency investors a deadline to comply with new rules and declare their assets. Whilst the regulatory environment in the country holds a high degree of uncertainty, reports have indicated that investors’ crypto must be soon be held in exchanges operating under the oversight of the Securities and Exchange Board of India, or SEBI.

This would mean that private wallets would not be legal under the proposed legislation, and investors who use them could be subjected to the aforementioned judicial penalties. In addition, Modi’s government plans to institute a minimum capital threshold for investing in cryptocurrencies.

India is taking a hard-line stance against crypto in part due to the perceived rise in fraud, money laundering, and terrorist financing in the sector in recent years. Another element, however, is that the competition from privately-owned or privately-issued cryptocurrencies would, in theory, threaten the Reserve Bank of India’s plans to launch a digital rupee. The official text from an ongoing controversial crypto bill in the country is as follows:

“To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India; however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”