Tag: United States

Crypto Industry Increases Lobbying Efforts During Crypto Winter

by Blockchain News

The crypto industry has been ramping up its lobbying efforts in recent years, particularly during the crypto winter that began in 2021. A new study published by the Money Mongers on February 23, 2023, sheds light on the increasing amount of money spent on lobbying by market participants in the United States.

According to the study, which analyzed data from OpenSecrets, a nonpartisan nonprofit organization that tracks lobbying expenses in the U.S., the crypto industry’s lobbying budgets increased by 922% over the past five years. In 2017, when Bitcoin’s price soared for the first time, the industry spent only $2.5 million on lobbying efforts. Last year, that number jumped to $25.57 million, and in 2021 alone, stakeholders raised their expenses by 121.41% to $11.54 million.

The study also found that the U.S.-based crypto exchange Coinbase was the largest spender, paying $3.3 million to 32 lobbyists in 2022. The Blockchain Association ranked second, with 18 lobbyists and $1.9 million spent, while Robinhood ranked third with 20 lobbyists and $1.84 million spent. Binance.US, the American subsidiary of the world’s largest crypto exchange, occupied only the ninth spot on the list with $960,000 spent in 2022.

Despite the increase in lobbying efforts, the overall expenditure of crypto companies on lobbying in America is modest compared to other industries. The pharmaceutical industry, for example, spent over $350 million in 2022 on federal lobbying efforts.

It’s worth noting that lobbying is an important aspect of any industry, as it allows stakeholders to advocate for policies that support their interests. In the case of the crypto industry, lobbying efforts may help shape regulations and laws that facilitate the growth and adoption of cryptocurrencies. It’s also worth noting that the increase in lobbying efforts may reflect the industry’s growing maturity and willingness to engage with policymakers.

Overall, the Money Mongers study highlights the increasing importance of lobbying in the crypto industry, particularly in the United States. As the industry continues to mature and grow, we can expect to see more lobbying efforts aimed at shaping regulations and laws that support its development.

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Grayscale CEO challenges SEC’s denial of application

by Blockchain News

Michael Sonnenshein, CEO of Grayscale Investments, stated in a recent interview that he “can’t imagine” why the United States Securities and Exchange Commission (SEC) “wouldn’t want” to protect Grayscale investors and return the true asset value to them. Sonnenshein made this statement in response to a question regarding why the SEC “wouldn’t want” to protect Grayscale investors.

Sonnenshein explained that the SEC “violated the administrative procedures act” by denying approval for the Grayscale Bitcoin Trust (GBTC) to be a spot Bitcoin (BTC) exchange-traded fund (ETF), in June 2022, during an interview that took place on February 25 on What Bitcoin Did, a popular podcast that is hosted by Peter McCormack. The podcast is called What Bitcoin Did.

He stated that this act ensures that the regulator does not show “favoritism” or act “arbitrarily,” adding that the SEC acted “arbitrarily” by approving Bitcoin Futures ETFs while rejecting “GBTC’s conversion.” He explained that this act ensures that the regulator does not show “favoritism” or act “arbitrarily.”

Grayscale Investments saw the SEC’s approval of the first Bitcoin exchange-traded funds (ETFs) as “a indication” that the SEC was “changing its approach about Bitcoin,” according to Sonnenshein’s observation.

He stated that there is a “couple billion dollars” of capital that would immediately go back into investors’ pockets, on a “overnight basis,” if GBTC was approved as a spot Bitcoin ETF, and that this capital would “bleed back” up to the fund’s net asset value. He said this would occur if the fund was approved as a spot Bitcoin ETF (NAV).

Sonnenshein noted that this is because GBTC is now trading at a discount to its NAV. However, if it were to convert to an ETF, there would “no longer” be a discount or a premium; instead, there would be a “arbitraged mechanism” incorporated in the product.

He reaffirmed that Grayscale is now “suing the SEC now,” and that the company may have a ruling appealing the SEC’s rejection of its original application as early as “fall 2023.”

In addition to this, he said that Grayscale has more than “a million investor accounts,” and that investors from all around the globe trust on the company to “do the right thing for them.”

Sonnenshein “can’t fathom” a scenario in which the SEC would have no interest in “protecting investors” or “returning that value” to those investors.

He continued by saying that Grayscale isn’t going “to shy” away from the fact that it has a “commercial interest” in this approval, noting that if the application to challenge the SEC is denied, Grayscale may be able to appeal the case to the United States Supreme Court. He said that Grayscale isn’t going “to shy” away from the fact that it has a “commercial interest” in this approval.

This comes as a result of the Securities and Exchange Commission (SEC) filing a 73-page brief with the United States Court of Appeals for the District of Columbia in December 2022, outlining its reasons for denying Grayscale’s request to convert its $12 billion Bitcoin Trust into a spot-based Bitcoin ETF in June 2022. The brief was submitted in response to Grayscale’s request to convert its Bitcoin Trust into a spot-based Bitcoin ETF.

The conclusions that Grayscale’s approach did not adequately safeguard against fraud and manipulation were the primary considerations that led to the SEC’s determination.

The regulator has arrived at a same conclusion in a number of past applications for the creation of spot-based Bitcoin ETFs.

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Former facilities worker who allegedly set up a secret cryptocurrency mining operation

by Blockchain News

After skipping a planned court appearance to respond to accusations, a former facilities worker who is accused of setting up a covert bitcoin mining operation inside a Massachusetts school’s crawl space is slated to be arrested. The hearing was to answer to the allegations.

According to several sources in the media, Nadeam Nahas’ arraignment on the allegations of vandalizing a school and making fraudulent use of power was due to take place on February 23.

A form of warrant known as a default warrant is the kind of warrant that courts issue when a person fails to appear in court or comply with an order. This type of warrant gives law enforcement officials the authority to arrest the individual in question.

It is alleged that Nahas, who is said to have previously worked in the facilities department for the town of Cohasset, Massachusetts, United States, stole electricity worth almost $18,000 in order to power his cryptocurrency mining operation in 2021, between April 28 and December 14, specifically between the dates of April 28 and December 14.

According to the reports, the local authorities were notified about the operation for the first time in December 2021. This occurred after the director of facilities at Cohasset noticed computers, wiring, and ductwork that appeared to be out of place given that they were located in a crawl space close to the school’s boiler room.

There were a total of 11 computers discovered at the location, and after a three-month investigation, Nahas was determined to be a suspect in the case.

In March, Nahas handed in his resignation from his job with the municipality of Cohasset.

It is very unlikely that this is the first time someone has been accused of stealing energy for the purpose of mining cryptocurrencies.

Officials in Malaysia destroyed Bitcoin (BTC) mining rigs worth $1.2 million in July 2021 after seizing them from citizens who were stealing energy to mine Bitcoin. The rigs had been taken from citizens who were mining Bitcoin illegally.

A year earlier, in August of 2019, Bulgarian police made the arrest of two individuals for unlawfully siphoning off more than $1.5 million in energy to run two cryptocurrency mining farms.

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The Fed Rejects Custodia Bank’s Membership Application

by Blockchain News

Custodia Bank, a bank that deals in cryptocurrencies, asked the United States Federal Reserve to reconsider its membership application to the Federal Reserve System. However, the United States Federal Reserve turned down this request. A district court has allowed a lawsuit between Custodia Bank and the United States Federal Reserve to continue.

Custodia’s application “was inconsistent with the requisite elements under the law,” according to an earlier decision made by the Federal Reserve Board, which was cited in the central bank’s announcement on February 23 on the denial of membership.

The Federal Reserve rejected Custodia’s membership application in January, about four years after the company first submitted the request in 2019. Applicants have the right, according to the regulations of the board, to request that membership choices be reconsidered.

The reason the Fed gave for rejecting Custodia’s application was that the company’s management structure was “insufficient.”

In addition to this, it referred to a joint statement that it had prepared jointly with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. In this declaration, it said that cryptocurrencies were “inconsistent with safe and sound banking practices.”

Custodia has said that it would want to become a member of the Federal Reserve System in order to be subject to the same regulations that are imposed on conventional banks. In addition, this would pave the way for other cryptocurrency institutions to be subject to the same stringent requirements.

This week, on February 22, a judge in a district court in Wyoming dismissed a petition by the Federal Reserve board to dismiss a complaint filed by Custodia about a delay of more than two years in the opening of a master account with the Federal Reserve.

With a master account, Custodia would be able to access the payment systems of the Federal Reserve without having to use any other banks as intermediaries. Custodia’s request for a master account with the Fed was turned down on January 27, more than two years after the company first submitted its request for the account in October 2020.

After that, the Fed made a motion to dismiss the case since the account rejection rendered the complaint meaningless. Custodia, on the other hand, submitted a proposed amended complaint to the court on February 17, alleging that the Federal Reserve unfairly singled out and rejected its application as part of a “concentrated and coordinated” effort with the administration of President Joe Biden and requesting that the court reverse the decision.

Nathan Miller, a spokeswoman for Custodia, was quoted as saying in a statement that was released on February 17 that the case “zeroes in on the main legal issue: whether Congress ever authorized the Fed jurisdiction to determine master accounts at all.” He also said that the Fed “pressed the hand” of the cryptocurrency bank, stating that the institution “tried every avenue to find a sensible route ahead.”

A deadline of March 1 has been set by the judge for Custodia to submit its first revised complaint to the court.

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Binance.US Could Be in Violation of Securities Law

by Blockchain News

Binance.plan US’s to buy over one billion dollars’ worth of assets that had belonged to the bankrupt cryptocurrency lending company Voyager Digital has been met with opposition from the United States Securities and Exchange Commission (SEC).

The Securities and Exchange Commission (SEC) is of the opinion, as stated in a document that was filed on February 22 with the United States Bankruptcy Court for the Southern District of New York, that certain aspects of the asset restructuring plan of Binance.US’ acquisition may violate securities law.

Formal inquiries have been opened by the Securities and Exchange Commission (SEC) into the possibility that Binance.US and other associated debtors violated anti-fraud, registration, and other requirements of the federal securities laws. The Securities and Exchange Commission expressed special worry on the safety of assets during the course of the intended purchase.

The SEC contends that the information provided in the planned purchase of Voyager assets does not adequately outline whether Binance.US or affiliated third parties will have access to customer wallet keys or control over anyone who has access to such wallets. The SEC’s argument is based on the fact that the information was provided in connection with the planned purchase of Voyager assets.

In addition, the lawsuit claims that inadequate measures have been provided to guarantee that user assets are not moved outside of the Binance.US platform. Additionally, the SEC contends that Binance.US has not stated its internal controls and processes that are designed to protect the assets of its customers.

The Securities and Exchange Commission (SEC) has requested that Binance.US address these concerns by providing information on who has access to client funds and the required controls after the transaction has been executed.

The first phase of Binance.strategy US’s and disclosure statement for its bid on Voyager is the primary focus of the SEC’s attention at this time. The U.S. regulator’s primary worry is that the firm will retain the right to sell bitcoins belonging to Voyager in order to distribute them to account holders. However, the company will not use this power.

On the other hand, “however, the Debtors (Binance.US) have yet to establish that they would be able to make such transactions in conformity with the federal securities laws.”

According to the petition, a number of different cryptocurrency transactions will need to take place in order to rebalance money before they can be redistributed to account holders. The SEC thinks that these transactions may violate certain provisions of the Securities Act.

The regulating body contends that the disclosure statement provided by Binance.US and the other debtors does not address the likelihood that these transactions violate any applicable laws. It is hypothesized that this possibility might have an effect on the estimated 51 percent of recovered monies that were distributed to Voyager account holders and claims.

In the filing, there is a footnote that discusses the possibility of Voyager purchasing and then selling certain digital assets in order to rebalance their asset holdings. The possible sale of Voyager Tokens (VGX), which were issued by Voyager, has been brought to the attention of the SEC because it “may constitute the unregistered offer or sale of securities under federal law.”

According to the SEC, there is a possibility that Binance.US is performing the functions of an exchange in violation of the laws that are currently in place under the Exchange Act. If this is the case, Binance.US is in violation of the law because it is not registered as a national securities exchange and does not have an exemption from these requirements.

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Revenue for United States-based Coinbase Exchange Beats Expectations for 4th quarter

by Blockchain News

Coinbase, a cryptocurrency exchange that operates in the United States, has disclosed that its revenue for the fourth quarter of 2022 has above projections. This comes despite the fact that the exchange’s transaction volume has been steadily declining over the last several months.

The exchange reported a net revenue for the quarter of $605 million, which was much more than the revenue prediction of $589 million that was supposedly provided by Wall Street industry professionals.

Coinbase reported a 12% decrease in transaction volumes in comparison to the preceding quarter. Despite this, the business credited its 5% improvement in total revenues for the period to a 34% increase in subscription and service fee income.

In spite of Coinbase’s repeated assertions that the business does not consider its staking products to be securities, staking revenue for the company has reduced when compared to the prior quarter. This is due to the fact that the fall in the value of cryptocurrencies has been bigger than the overall growth in the amounts of staked bitcoin.

An inquiry of the exchange’s staking products is now being carried on by the United States Securities and Exchange Commission. This inquiry is quite similar to the one that led to its rival, the cryptocurrency exchange Kraken, reaching a settlement with the regulator for the amount of $30 million. Specifically, this investigation is looking into whether or not Kraken engaged in any illegal activity.

According to Coinbase, 2022 was a “tough year for crypto markets,” with the industry facing substantial headwinds due to both macroeconomic developments and incidents such as the bankruptcy of crypto hedge fund Three Arrows Capital and exchanges Voyager and Celsius. Coinbase attributed these headwinds to the fact that the sector was operating in a highly competitive environment.

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US Congress needs to take control of crypto legislation

by Blockchain News

According to Kristin Smith, CEO of the Blockchain Association, a prominent U.S. crypto industry nonprofit, the United States Congress needs to take control of crypto legislation and make it a more “open process” where the entire marketplace is looked at “comprehensively.” This recommendation comes from Smith, who serves as the president of the Blockchain Association.

During an interview with Bloomberg on February 22, 2019, Smith said that the cryptocurrency business need U.S. politicians to lead crypto legislation, despite the fact that this would make the process “extremely long.” In the meanwhile, regulators will “step in.”

Smith mentioned that despite regulators “moving very quickly,” progress on legislation is happening “behind closed doors,” implying that it is essential for more industry involvement in a “open process,” which would involve Congress. He said this to suggest that it is vital for more industry involvement in a “open process.”

Smith is of the opinion that “very particular facts and circumstances” are at the root of the problem with legislators taking the lead on legislation via enforcement actions and settlements.

She stated that it is a tough situation for Congress to be in at the present due to the fact that many people in Washington, D.C. who “were close” to the former FTX CEO Sam Bankman-Fried and FTX feel “burned” and “betrayed” over the collapse of the cryptocurrency exchange in November 2022.

Smith is optimistic that stablecoin legislation will soon be implemented in the United States because, according to Smith, Congress has been looking into it “since 2019” and “the work has been done.” She said that it “came close” to occurring the year before, just before to the failure of FTX.

She went on to say that the dangers associated with cryptocurrencies are distinct from those associated with conventional financial services, and that as a result, regulators need to spend more time looking at market regulation and “tailor to those risks.”

Smith suggested that stablecoin and “market side” regulation should be a higher priority than focusing on legislating crypto-related criminal activity, saying that public ledgers make it “much more transparent” than what we see in the traditional financial system. This idea stemmed from Smith’s assertion that stablecoins and “market side” regulation were more important than focusing on legislating crypto-related criminal activity.

This comes after the chief policy officer of the Blockchain Association, Jake Chervinsky, took to Twitter on February 15 to state that regardless of how many enforcement actions the Securities and Exchange Commission and the Commodity Futures Trading Commission bring, they are “bound by legal reality.” Chervinsky also stated that “neither” has the authority to “comprehensively regulate crypto.” This news comes after Chervinsky made these statements.

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Former FTX CEO Sam Bankman-Fried to Appear in court remotely

by Blockchain News

A request has been made by representatives for Voyager Digital’s unsecured creditors to have the former CEO of FTX, Sam Bankman-Fried (SBF), as well as numerous top-level officials from FTX and Alameda Research deliver papers and appear in court remotely for a deposition the next week.

According to a document that was filed on February 18 in the United States Bankruptcy Court for the Southern District of New York, it was indicated that a “Subpoena to Testify at a Deposition in a Bankruptcy Case” had been served on Bankman-Fried.

It was served by the Official Committee for the Unsecured Creditors of Voyager Digital Holdings, which is a defunct cryptocurrency loan exchange. They informed him that he needed to present for the “remote deposition” on February 23.

In addition, it ruled that Bankman-Fried had until February 20 to submit all of the “documents and conversations” that were sought.

This arises as a result of the fact that it was disclosed in a court filing on February 6 that attorneys for Voyager had filed a subpoena on Bankman-Fried in addition to Alameda CEO Caroline Ellison, FTX co-founder Gary Wang, and FTX’s head of product Ramnic Arora.

By the 17th of February, it was mandatory for every single person to provide up the desired information.

In the past, Judge John Dorsey had granted FTX debtors permission, in accordance with the regulations of the bankruptcy court, to issue subpoenas requesting information and documents from former FTX coworkers as well as family members of Bankman-Fried.

It was disclosed on February 16 that Bankman-bail Fried’s could potentially be revoked after Judge Lewis Kaplan stated that there was “probable cause” to believe that he engaged in attempted witness tampering. Judge Kaplan stated that there was “probable cause” to believe that Bankman-Fried attempted to tamper with a witness.

Previous court filings that were submitted on February 3 indicated that Bankman-holding Fried’s company, Emergent Fidelity Technologies, had also applied for protection under the bankruptcy code.

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ShapeShift Responds to Elizabeth Warren

by Blockchain News

According to a recent statement, the noncustodial cryptocurrency exchange platform ShapeShift refuted Senator Elizabeth Warren’s claims of “illicit financing,” suggesting that she used the platform as a scapegoat to “push” her most recent crypto bill. Senator Warren had accused ShapeShift of “illicit financing.”

The cryptocurrency exchange ShapeShift claimed in a tweet sent out on February 19 that Senator Elizabeth Warren made “mistakes” in her “analysis” of the platform during a hearing held by the Senate Banking Committee on February 14 and titled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets.” The hearing was entitled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets.”

In a subsequent tweet, ShapeShift refuted Warren’s claims that it was involved in “illicit funding” by asserting that it “never handles user monies” and that it is unable to “enable this.”

This comes as a result of Warren’s comments made at the senate hearing in which he implied that ShapeShift had hidden reasons for reorganizing itself as a DeFi platform in July of 2021.

Warren said that the reorganization was done to entice users to “wash” their money through the site.

In addition to this clarification, Shapeshift said that it is “not an exchange,” expanding on the fact that it is an open-source cryptocurrency dashboard that “connects users” to various protocols and platforms.

It went on to say that it cares about the “same things” as Warren, specifically naming “user safety” and “access to innovation” as areas of concern that are shared by the two parties.

By providing a link to its discussion forum, ShapeShift urged Warren and other individuals to “constructively participate” in the issue of financial independence and innovation with its community.

This comes only a day after Erik Vorhees, the CEO of ShapeShift, took to his personal Twitter account on February 18 and stated that he is looking forward to “submitting a proposal” to the Shapeshift DAO governance process in response to Elizabeth Warren’s criticism of the platform. Vorhees made this statement in response to Warren’s criticism of the platform.

Warren has been an outspoken critic of cryptocurrencies in recent months. He said in an interview on January 25 that the United States Securities and Exchange Commission (SEC) should “double down” on its attempts to regulate cryptocurrencies since the sector is nervous about what lies ahead.

She said 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 laundering, and sanctions evasions.”

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Paul Pierce settles with SEC for $1.4 million

by Blockchain News

A former NBA player named Paul Pierce has reached a settlement with the United States Securities and Exchange Commission in the amount of $1.4 million on allegations that he promoted a cryptocurrency token project on social media.

Pierce is accused of promoting EthereumMax (EMAX) tokens via social media platforms without revealing that he had received money for the promotion and of making “false and misleading representations” about the project, according to an announcement released by the SEC on February 17. In addition to his publishing posts on Twitter that reportedly showed incorrect information regarding revenues, promoters allegedly paid the former NBA great 244,000 worth of EMAX, as stated by the SEC.

In the past, the regulatory body for financial markets has gone against celebrities who were pushing EthereumMax tokens. Pierce was accused of failing to disclose a payment of $250,000 to publish a story on her Instagram promoting EMAX tokens. In October 2022, the SEC announced that it had reached a settlement with Kim Kardashian in the amount of $1.2 million for charges that were very similar to those that Pierce was facing.

SEC Chair Gary Gensler stated that “this case is yet another reminder to celebrities: The law requires you to disclose to the public from whom and how much you are getting paid to promote investment in securities, and you can’t lie to investors when you tout a security.” “This case is yet another reminder to celebrities that the law requires you to disclose to the public from whom and how much you are getting paid to promote investment in securities,” “When celebrities advocate investment options, including crypto asset securities, investors should be cautious to do research to see whether the investments are suited for them, and they should be aware of the reasons why celebrities are making such recommendations,”

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Bitcoin (BTC) $ 27,181.28 1.72%
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