Terraform Labs CEO Asks for Dismissal of SEC Charges

In a recent motion filed to dismiss the charges leveled against him by the Securities and Exchange Commission (SEC), Do Kwon, co-founder and CEO of Terraform Labs, argued that the claims are invalid and that the SEC lacked proper jurisdiction to bring charges against him and his company. Kwon’s counsel stated that the tokens and projects developed by Terra were “aimed at the world” and did not specifically target U.S. investors, making the SEC’s claims invalid.

The SEC had previously claimed that tokens including MIR, LUNA (LUNA), and UST are securities, but Kwon pushed back against this argument in his motion to dismiss the charges. The South Korean district court recently dismissed security violation charges against the co-founder of Terraform Labs, Hyun-seong Shin, deeming LUNA as a non-security under Korea’s Capital Markets Act. This ruling makes Kwon’s motion right only in connection to LUNA.

However, recent developments suggest that Kwon’s legal troubles may not be over. In a press conference after the Seoul Southern District Prosecutor’s office indicted 10 people involved in the collapse of the Terra stablecoin ecosystem, the prosecutor reportedly identified Signum as the Swiss bank account where Kwon transferred more than 10,000 Bitcoin (BTC) from the Terra platform and the Luna Foundation Guard to a cold wallet, which was then converted to fiat.

The Financial and Securities Crime Joint Investigation Unit of the Seoul Southern District Prosecutor’s office is reportedly monitoring Bitcoin owned by Luna Foundation Guard and has determined that the transferred amount, which aligns with the SEC complaint, is approximately $100 million (equivalent to 130 billion won). The prosecutors clarified that the $100 million was not kept solely in the Signum account and was dispersed in various locations. It was verified that a portion of the funds was transferred to the Kim & Chang law firm account to cover legal fees, while the rest amounted to billions of won.

Kwon’s legal troubles began when the SEC filed charges against him and his company, which preempted his arrest in Montenegro, where he currently faces extradition. South Korean authorities had issued an arrest warrant for Kwon in September, and U.S. federal prosecutors unveiled criminal charges against him shortly after he was arrested a month ago.

In conclusion, while Do Kwon has requested the dismissal of SEC charges against him, recent developments suggest that his legal troubles may not be over yet. It remains to be seen how this situation will develop and how it will affect the future of Terraform Labs.


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POSA Publishes Two White Papers

On February 21, a collection of white papers was released by the Proof of Stake Partnership (POSA), a nonprofit industry organization. These white papers investigate the legal status of deposit tokens in regard to their respective subfields of the law, namely securities law and tax law, within the framework of the securities legislation and tax law of the United States, respectively. Contributors originating from more than ten various departments belonging to a range of industrial organizations and representatives of those departments were instrumental in facilitating the publication of these pieces.

The act of producing transferable receipt tokens on blockchains that use a proof-of-stake consensus mechanism as their method for obtaining network consensus is referred to as liquid staking. Liquid staking is also known as proof-of-stake consensus. In the context of cryptocurrencies, this activity is referred to as “staking.” The statement that inspired the term “liquid staking” also gives its name to the practice, which is referred to as “liquid staking.” In order to establish ownership of cryptographic assets that have been staked or prizes that have been received for the purpose of staking, these tokens are put into circulation and employed in the process of establishing ownership of those assets. Staking the tokens itself is one method for accomplishing this goal. The POSA is opposed to the description of “liquid staking derivatives” because, according to their argument, it paints a false picture of the qualities that are associated with the tokens. The POSA stated that the tokens should now be referred to as “liquid staking tokens,” and they advocated for this change as a direct result of the event that took place. Since the Ethereum Merge took place, there has been a perceptible increase in the number of people who are contemplating taking part in liquid staking. This boost in interest comes as a direct result of the Ethereum Merge.


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Team behind Friendsies NFT project refutes claims

The team that is responsible for the nonfungible token collection Friendsies has refuted assertions that they are “abandoning” the NFT project in the wake of a flood of allegations that they engaged in “rug pulling.” The allegations were made in response to a flood of allegations that the team engaged in “rug pulling.” After the squad was accused of indulging in “rug pulling,” these allegations were made to defend their actions. These claims were leveled as a kind of pushback against the mountain of evidence suggesting that the team engaged in “rug tugging.”

On February 21, the people who are driving the NFT project published a message to their Twitter followers stating that they would be “putting a stop” on Friendsies and “any future digital commodities” for the time being. The statement was posted on Twitter. They said that this decision will become effective right away. They justified their choice by arguing that the market provided a variety of challenges for them to overcome, which the decision had to take into consideration.

After around forty minutes had elapsed, the Twitter account that was in question was disabled, and the account of the organization that was responsible for beginning the campaign, Friendswithyou, was made private. Both of these actions were taken immediately after. As a direct consequence of this fact, stories have surfaced stating that the designers “rugged” for remuneration to the tune of almost five million dollars.

Since then, the Twitter account that is affiliated with the project has been revived, and the people behind the campaign have strongly disputed allegations that they had “given up” on the project altogether. The internet has been replete with reports that they are giving up on the project and moving on to other things, which may be translated as “throwing in the towel.” In spite of this, the account that was initially established by the company’s founders is being kept a secret by the management that is in place at the moment.


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Partnership to Tokenize Artifacts Recovered from the Titanic

A cooperation that is being developed by the business that is responsible for stewarding the sunken vessel will result in the artifacts that have been salvaged from the wreckage of the Titanic being tokenized using blockchain technology.

RMS Titanic (RMST), a business located in Hong Kong called Venture Smart Financial Holdings, and Artifact Labs, a company specializing in Web3 technology, have formed a collaboration to begin tokenizing rare relics from the Titanic in order to unleash a wide variety of Web3 capabilities.

Certain items from the lost ship Titanic will be maintained as nonfungible tokens (NFTs), which will enable the general public to take part in shared ownership of the artifacts. The RMST is the only organization authorized to retrieve items from the Titanic and the larger debris field that it left behind from the ocean floor in the northern Atlantic Ocean.

Tokenizing the intellectual property that is associated with the artifacts will be the responsibility of Venture Smart Financial Holdings, which will be given this duty. To facilitate “compliance money raising” for the purpose of funding continued research, recovery, preservation, display, and licensing of RMST’s assets, the tokenized instruments are planned to be provided to accredited investors. This will establish an avenue for “compliant capital raising.”

Using the in-house NFT blockchain system that Artifact Labs has developed, the company will issue NFTs for each of the 5,500 objects that were salvaged from the sunken ship. It has been decided that any future items that are recovered from the location where the Titanic came to rest would likewise be issued as NFTs.

It is said that these NFTs provide collectors with a variety of special experiences, such as invitations to VIP events and exhibits, seminars led by historians, and other unique opportunities. Outside of the actual displays that will take place in Atlanta and Las Vegas, the NFTs will develop a digital method to engage with the RMST material.

The statement states that the first collection of Titanic NFTs would include an extremely limited number of digital artifacts. This will serve as the cornerstone for the Titanic Web3 community.

Artifact Labs is also aiming to establish a decentralized autonomous organization (DAO) called the Titanic DAO. This would provide members the opportunity to take part in a variety of activities and suggestions pertaining to upcoming exhibits at the Titanic site.

The production of educational programs, digital material and films, research, collaborations, and events will also be facilitated by the DAO. Additionally, it is anticipated that members of the DAO will have some input about the conservation and display of objects salvaged from the debris.

The treasury of the Titanic DAO will be administered by members with the use of governance tokens, and it will be financed using the revenues from the sale of NFT.


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Dozens of AI-Powered Chatbot Tokens Found to Be Part of honeypot schemes

PeckShield, a company that specializes in blockchain security, has sounded the alarm after discovering hundreds of tokens that falsely claim to be tied to the artificial intelligence (AI) powered chatbot ChatGPT.“

In a post dated February 20, the company disclosed that at least three “BingChatGPT” tokens seem to be part of honeypot scams. A honeypot strategy is a kind of smart contract that deceives a user into contributing Ether (ETH), which the attacker subsequently captures and collects.

In what is commonly known as a “pump and dump” scheme or a “rug pull,” PeckShield reports that at least two of the identified tokens have already lost nearly 100% of their value, while a third is at a loss of 65%. This type of scheme involves the purchase of an asset with the intention of quickly selling it at a higher price.

Typically, the organizers of a pump-and-dump scheme would orchestrate a campaign of deceptive claims and hype to entice investors to purchase tokens, and then they will discreetly sell their interest in the plan as prices go up. This is done in order to make a profit from the scam.

According to PeckShield, at least one of the malicious actors behind the tokens is known as “Deployer 0xb583,” and he is responsible for the creation of “dozens of tokens using a pump and dump strategy.”

PeckShield did not provide an explanation as to why the malicious actors are using the name BingChatGPT for their tokens; however, it is possible that the scammers are attempting to capitalize on the announcement made on February 7 that OpenAI’s ChatGPT technology will be integrated into Bing as well as Microsoft’s Edge web browser.

It’s possible that using the name “Microsoft Token” is an effort to fool victims into believing they are connected to Microsoft in some way, in order to capitalize on the buzz surrounding AI chatbots.

A research published on February 16 by the blockchain analytics company Chainalysis stated that approximately 10,000 new tokens created in 2022 exhibited all the on-chain hallmarks of being pump-and-dump operations. This information was recently made public.

According to the Blockchain analytics company, there were 1.1 million tokens released in 2018, but only 40,521 had a “effect on the crypto ecosystem.” This means that there were at least 10 swaps during four consecutive days of trading in the week after their introduction.

The company said that of of the 40,521 tokens that were introduced in 2022 and got sufficient momentum to be worth investigating, 9,902 or 24 percent had a price fall in the first week that was suggestive of likely pump and dump behaviour.

The company noted that it examined 25 specific tokens and found that “they were almost certainly designed for a pump and dump,” with malicious honeypot code that prevents new buyers from selling the token. While a price drop on its own is not an indication of wrongdoing on the part of token creators, the company noted that it examined 25 in particular and found that “they were almost certainly designed for a pump and dump.”


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DekaBank to Launch Blockchain-Based Tokenization Platform

Together with the digital asset startup Metaco, the German bank DekaBank, which has been in business for 105 years, is now working on the preparations necessary to launch a tokenization platform that is powered by blockchain technology.

Sack has said that the infrastructure for the tokenization platform will become accessible in the not too distant future, and that this will result in the introduction of the first minimum viable product in our cryptocurrency custody solution. Moreover, he believes that this will take place very soon. He went on to explain that it is extremely conceivable that the tokenization platform will have its first set of test transactions this year. He said that this year is the most likely time for this to occur.

In collaboration with the digital asset management platform Metaco Harmonize, the next blockchain platform that will be used by DekaBank is now in the process of being developed. The statement about the financial institution’s relationship with Metaco was made in an official capacity on January 31. It is the intention of the bank to make use of Harmonize as the key platform for what it refers to as a “institutional digital asset offering.”

According to Sack, the next sale will include tokenizing assets like as shares, bonds, and money in order to create a new token economy viable. This will make it possible to buy and sell tokens. In addition, he said that “Metaco is the key to this economy since it is our major management solution for tokenized assets on different blockchains.” The reason for this is due to the fact that Metaco is the driving force behind this economy.

The CEO said that the process of tokenization takes use of a number of other blockchains, such as Ethereum and Polygon, amongst others. “It is not yet clear if there is one blockchain that will become the standard,” he stated. “It is possible that several blockchains will coexist.” There is a possibility that more than one blockchain may emerge as the industry standard.


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Australia Opens Public Consultation on National Taxonomy of Crypto Assets

In response to the ongoing regulatory arms race taking place throughout the world, Australia has initiated a public consultation over the classification of its own cryptocurrency assets. The national authorities want to differentiate between four primary categories of items that are connected to the cryptocurrency business.

The Australian Treasury issued a consultation document on “token mapping” on February 3, claiming that it would serve as a fundamental step in the government’s multistage reform strategy to regulate the market. This announcement was made. It is intended to contribute to “a fact-based, consumer mindful, and innovation-friendly” approach to the formulation of public policy.

In this study, some fundamental definitions for cryptographic concepts are proposed using a methodology that is both “functional” and technology-neutral.

At the most fundamental level, it provides an explanation of the fundamental ideas behind cryptographic networks, cryptographic tokens, and smart contracts. A decentralised computer network that is capable of hosting crypto tokens is what the Treasury envisions when it talks about what a crypto network is. The storing of information and the processing of user commands are its two fundamental functions. According to the research study, Bitcoin and Ethereum are the two public crypto networks that have the largest name recognition.

A unit of digital information that may be “exclusively utilised or controlled” by a person who does not administrate the host hardware where the token is recorded is referred to as a crypto token. This is the definition of a crypto token. According to the research report, one of the most important characteristics that set crypto tokens apart from other types of digital records is the ability to exercise “exclusive use and control.”

A computer code that is submitted to the database of a crypto network is what constitutes a smart contract. It entails intermediaries or agents executing tasks under promises or other arrangements or processes being carried out by cryptographic networks without the need of intermediaries or agents, as well as without the use of promises.

Using these straightforward concepts as a foundation, the study presents its taxonomy of four distinct categories of crypto-related products:

Although the study does not present any legislative efforts and rather suggests to begin the conversation on this taxonomy, the authors of the article predict that a significant section of the crypto ecosystem will be able to comply with current regulations with only minor modifications. It is the parts of the ecosystem whose services are being assured by public, self-service software that may need the development of a whole new regulatory framework.

The Treasury Department will keep an open mind and listen for input until March 3. Midway through the year 2023, a similar report will be published on the potential licencing and custody framework for cryptocurrencies. This will be the next key stage in the ongoing process of a national regulatory debate.

The consultation document that His Majesty’s Treasury of the United Kingdom had prepared for the crypto regulation was also released on February 1. In it, the financial authority stressed the lack of requirement in the separate law, given that the current Financial Services and Markets Act is capable of covering digital assets. This is due to the fact that the Financial Services and Markets Act was amended in 2013.


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HSBC is looking for a top executive to work with asset tokenization

The British multinational bank HSBC, which controls the greatest amount of assets in Europe, has increased its focus on digital currencies in recent years. The financial institution is seeking to hire a senior executive who will focus on asset tokenization.

On January 30, HSBC announced the opening of a post for a GPBW product director of tokenization, and the deadline for applications was set for February 13. According to the description of the role, the “tokenization director” would be responsible for “creating and executing” a worldwide tokenization offer as well as representing the bank in front of regulators and the digital assets ecosystem.

The applicant has to be familiar with digital assets, particularly asset tokenization and custody, and have “deep insights” into the sector as a whole as well as the important wealth markets in various geographical locations.

This signifies the acceleration of HSBC’s interest in digital currencies, which had previously been represented in a number of cooperation between the two companies. The bank began offering its rich customers in Singapore and Hong Kong a metaverse investment product in April 2022. The target audience for this investment was the metaverse. Earlier, the company became a member of the Global Markets Advisory Committee of the United States Commodity Futures Trading Commission.

However, the most significant area of interest for HSBC is the expansion of digital currencies used by central banks throughout the world (CBDCs). Noel Quinn, the CEO of HSBC Group, provided an overview of the company’s commitment to supporting digital currencies issued by central banks in September 2021. However, he emphasised concern over the dangers connected with cryptocurrencies and stablecoins.

The British bank was a participant in the proof-of-concept CBDC project that was run by the Federal Reserve Bank of New York for a period of twelve weeks. It was present during the unveiling of the Universal Digital Payment Network, which is a platform for distributed ledger technology (DLT) that would serve a role comparable to that of the SWIFT network for banks, but for stablecoins and CBDCs instead. Additionally, HSBC is one of the 14 commercial and central banks who are working together with SWIFT to test transactions including CBDCs and tokenized assets on preexisting financial infrastructure.


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Elizabeth Warren Wants SEC to Double Down on Crypto Enforcement

Elizabeth Warren, a senator in the United States who is well-known for her scepticism regarding cryptocurrencies, recently issued a call to action for the Securities and Exchange Commission (SEC) to “double down” on its attempts to regulate virtual currencies. She did so by urging the SEC to “double down” on its attempts to regulate virtual currencies. She is drawing attention to the fact that those involved in the bitcoin industry are now doing their business “scared” of what is going to happen by behaving in this way.

The words that Warren made were a part of an interview that took place on January 25 with the American Economic Liberties Projects. The interview was conducted by the American Economic Liberties Projects. It was Elizabeth Warren who first brought up these accusations.

The senator was of the opinion that ever since Gensler was inaugurated in as chairman of the SEC in April 2021, the Commission “has made a decent start” toward repairing some of the issues that were caused by the previous leaders of the SEC during the time that the Trump Administration was in power. This statement was made in reference to the fact that Gensler took over as chairman of the SEC in April 2021. This comment was made in response to the fact that Gensler assumed his position as chairman of the SEC in April of 2021. The senator believed that this was the case and expressed his opinion as such.

Warren stated that the previous administration of the SEC “basically gave the green light” to set up a market for cryptocurrencies that was “full of garbage tokens, unregistered securities, rug pulls, Ponzi schemes, pump and dumps, money launderings, and sanctions evasions.” Warren was referring to the fact that the market for cryptocurrencies was “filled with garbage tokens.” When Warren said that the cryptocurrency market was “packed with trash tokens,” he was alluding to the fact that the market was flooded with worthless tokens. When Warren referred to the market for cryptocurrencies as being “stuffed to the gills with garbage tokens,” he was making a reference to the fact that the market was awash with tokens that had no value.


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Wrapped Tokens Issued by FTX or Alameda Slumps, No Longer Redeemable

Following the filed Chapter 11 bankruptcy from FTX, the wrapped tokens issued by the crypto exchange or its sister trading shop Alameda Research have now undergone a price decline.

According to data from Coingecko, Wrapped bitcoin on Sollet is down by over 60% in the past 24 hours, falling from its native bitcoin’s current $16,811. In contrast, Wrapped ETH on Sollet is also down but by only about 8% to $1,209 over the same 24 hours time frame. Native ETH is trading at $1,261, at the time of writing.

Notably, for both wrapped tokens, soETH and soBTC, Coingecko is displaying a warning notice on its website that reads: “soBTC tokens are wrapped BTC tokens issued by FTX or Alameda. Both these entities have filed for Chapter 11 bankruptcy, and the BTC tokens are no longer redeemable.”

Wrapping tokens, such as the one for Bitcoin or Ethereum, on Solana make these assets available for usage on the Solana blockchain so users can hold or trade them instead of the actual Bitcoin or Ethereum.

Founder of Roktiapp, an open source portfolio tracking app, commented on these wrapped assets saying since most Solana wrapped assets were custodied by the now collapsed crypto exchange FTX and Alameda research means the wrapped tokens are no longer redeemable and will probably go to 0.

Reactions concerning the wrapped assets were just individuals trying to warn others that the wrapped tokens were not real tokens. A tweep with the Pseudonymous meow tweeted,

“The worst case scenarios for soBTC came true – nothing is backing it, rogue devs have access to FTX accounts & no one takes any responsibility.”

So far, news concerning the collapse of FTX keeps getting worse.

Yesterday, Blockchain.News reported FTX is soon to have its European License suspended by Cyprus regulators. Meanwhile, on Nov 9, CySEC requested FTX Europe to “suspend its operations and to proceed immediately with a number of actions for the protection of the investors.”

Image source: Shutterstock


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Bitcoin (BTC) $ 43,964.78 0.16%
Ethereum (ETH) $ 2,246.03 1.87%
Litecoin (LTC) $ 72.45 1.18%
Bitcoin Cash (BCH) $ 244.59 1.76%