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On 18 September 2024, the United States’ Securities and Exchange Commission (US SEC) announced that Rari Capital Inc., along with its co-founders Jai Bhavnani, Jack Lipstone, and David Lucid, agreed to settle charges of misleading investors and acting as unregistered brokers. The case stems from Rari Capital’s operation of two blockchain-based investment platforms, the Earn and Fuse pools, which collectively held over US $1 billion in crypto assets at their peak. Additionally, the US SEC charged Rari Capital for conducting unregistered offerings of securities tied to these platforms. In a separate order, Rari Capital Infrastructure LLC, which took over operations of the Fuse platform in 2022, also settled charges related to unregistered securities offerings and broker activity. According to the US SEC’s complaint, Rari Capital’s Earn and Fuse pools functioned similarly to traditional investment funds, allowing investors to deposit crypto assets and receive tokens representing their...

On 18 September 2024, the Reserve Bank of Australia (RBA) and Treasury published a comprehensive joint report ‘Central Bank Digital Currency and the Future of Digital Money in Australia’ on the role of CBDC and digital money in Australia's financial future. The report summarizes the findings of ongoing research into CBDC, providing insight into the considerations for both retail and wholesale CBDCs in Australia. Additionally, it sets out a three-year roadmap for further work in this space, highlighting the potential benefits of digital money in enhancing financial systems. The report states that, as of now, there is no strong reason to introduce a retail CBDC (a digital currency for everyday use by the public) in Australia. This is because the current payment systems are already efficient, secure, and serve the public well. Report acknowledges that this could change over time as technology and economic conditions evolve. Therefore, the RBA and Treasury will continue to assess the...

In Fourth Quarter of 2024, DBS Bank of Singapore, is set to launch over-the-counter (OTC) cryptocurrency options and structured notes, targeting institutional investors and accredited wealth clients. This move makes DBS the first Asian bank to offer such products, which will include major cryptocurrencies like Bitcoin and Ethereum. The decision comes as the cryptocurrency market continues to expand, with DBS noting a significant rise in market activity in the first half of 2024. The total market value of digital assets increased by nearly 50%, while active trading clients on the DBS Digital Exchange (DDEx) rose by 36%, and assets under custody surged by 80%. This development will provide professional investors with new tools for managing their exposure to digital assets through sophisticated investment strategies. The new products will complement the existing digital asset services offered by DDEx, which already allows clients to trade cryptocurrencies and security tokens. With the...

On 17 September 2024, the US Securities and Exchange Commission (US SEC) announced a settlement with Prager Metis CPAs, LLC and its California affiliate Prager Metis CPAs LLP for violating federal auditor independence regulations in their audits of the now-defunct crypto asset platform, FTX. The settlement resolves allegations that Prager failed to comply with Generally Accepted Auditing Standards (GAAS) and engaged in negligence-based fraud in its auditing practices. Without admitting or denying the findings, Prager has agreed to pay US$1.95 million in penalties and undertake remedial measures to address these violations. The facts of the case, as presented, outline that between February 2021 and April 2022, Prager issued two audit reports for FTX, asserting that its audits complied with GAAS. However, the US SEC alleges that Prager failed to meet auditing standards, particularly in assessing whether the firm had the necessary competency and resources to undertake the FTX audits....

On 12 September 2024, the Commodity Futures Trading Commission (US CFTC) published amendments to Regulation Part 40, impacting the rule submission procedures for designated contract markets (DCMs), swap execution facilities (SEFs), and derivatives clearing organizations (DCOs). These amendments adjust the certification process, update product certification requirements, and improve transparency for market participants, including those involved with digital assets and cryptocurrency sectors. The amendments to Regulation Part 40 are aimed at enhancing the rule submission and certification processes for registered entities such as Designated Contract Markets (DCMs), Swap Execution Facilities (SEFs), and Derivatives Clearing Organizations (DCOs). In the Amendments the updated product certification requirement, which now mandates that entities provide more detailed information when certifying new products which includes thorough explanations on how the product complies with the legal and...

Sui Network, a layer-1 blockchain, has announced the integration of native USD Coin (USDC) and the Cross-Chain Transfer Protocol (CCTP), effective from September 17. This integration aims to enhance liquidity and facilitate cross-chain transactions, benefiting users and developers within the Sui ecosystem. The upgrade will transition liquidity from the current bridged version of USDC to the native form, though the Wormhole’s Portal bridge will continue operating without interruption. In preparation for this transition, the Ethereum-bridged USDC will be rebranded as “wUSDC” on block explorers. Nikhil Chandhok, Circle’s Chief Product Officer, highlighted the significance of this collaboration, emphasizing Circle’s dedication to advancing blockchain applications and improving payment experiences. This integration follows recent developments, including Grayscale's launch of the Sui Trust, which has contributed to the growing exposure of Sui and other cryptocurrencies. Sui Network,...

On  16 September 2024, the U.S. Securities and Exchange Commission (US SEC) issued a cease-and-desist order against Flyfish Club, LLC, a Delaware-based company, for offering and selling unregistered crypto asset securities in the form of non-fungible tokens (NFTs). The US SEC found that Flyfish raised approximately $14.8 million between August 2021 and May 2022 through the sale of about 1,600 NFTs, marketed as membership tokens for a luxury dining club in New York. The NFTs were deemed to be investment contracts, and Flyfish violated federal securities laws by failing to register the offering. The US SEC determined that investors had a reasonable expectation of profits from the resale of the NFTs, making them securities under the Howey test. Flyfish also collected $2.7 million in royalties from secondary market sales until early 2023. Between August 2021 and May 2022, Flyfish Club, LLC offered and sold approximately 1,600 non-fungible tokens (NFTs) to raise $14.8 million. These NFTs...

In the case Fabrizio D'Aloia v Persons Unknown Category A & B and Others [2024] EWHC 2342 (Ch), the claimant, Mr. Fabrizio D’Aloia, a successful businessman and founder of Microgame, brought a claim against several defendants after falling victim to a cryptocurrency scam. The defendants included Persons Unknown (alleged fraudsters) and multiple cryptocurrency exchanges, including Binance Holdings Limited, Polo Digital Assets Inc., Gate Technology Corp., Aux Cayes Fintech Co Ltd, and Bitkub Online Co Ltd. While claims against Binance were settled and those against Aux Cayes Fintech struck out, the case focused on the alleged liability of Bitkub in facilitating the laundering of the claimant's stolen cryptocurrency, specifically Tether (USDT). In its findings, the court first addressed the classification of cryptocurrency as property under English law. It was confirmed that USDT qualifies as property, following the precedent set in AA v Persons Unknown [2019] EWHC (Comm) 3556. This...

On 10 September 2024, UK Financial Conduct Authority (UK FCA) charged Mr. Olumide Osunkoya, a 45-year-old resident of London, for operating multiple unregistered crypto ATMs. Between 29 December 2021 and 8 September 2023, these machines allegedly processed approximately £2.6 million in transactions without the necessary registration from the UK FCA, marking the first criminal prosecution of its kind under the UK’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). Under UK law, any firm or individual involved in providing cryptoasset services must be registered with the UK FCA and ensure compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) standards. Cryptoasset services includes operators of crypto ATMs, which allow users to buy or exchange money for cryptoassets. Despite the legal requirement, Mr. Osunkoya allegedly operated his machines unlawfully, violating Regulations 86 and Regulation 92...

On 10 September 2024, while considering the second affidavit filed by Nischal Shetty, authorised representative for Zettai Pte. Ltd, the Singapore High Court made certain amendments to its earlier correspondence regarding the ongoing moratorium application by Zettai Pte. Ltd. The affidavit provided additional information and clarifications concerning Zettai’s restructuring efforts following a cyberattack in July 2024. The second affidavit filed by Nischal Shetty on 10 September 2024 clarified key aspects of Zettai Pte. Ltd.'s restructuring process and ongoing communication with creditors, with 431 creditors supporting the moratorium. It also corrected errors from the initial filing regarding user claims, clarified Zettai’s control of cryptocurrency tokens after the July cyberattack, and outlined ongoing discussions with potential investors for restructuring. The affidavit confirmed Zettai's compliance with court-mandated procedural requirements, ensuring transparency throughout the...

On September 9, 2024, the United States’ Public Company Accounting Oversight Board (PCAOB), with the approval of the United States Securities and Exchange Commission (US SEC), published the QC 1000 guidelines, to enhance quality control standards for public accounting firms. These guidelines aim to strengthen audit practices by implementing a risk-based, integrated framework that governs key operational areas such as governance, ethics, engagement performance, and monitoring. The QC 1000 guidelines are set to be implemented starting January 1, 2025, allowing firms time to align their systems with the new standards. The guidelines is expected to enhance the quality, reliability, and transparency of audit reports, thereby reinforcing investor confidence and ensuring the integrity of financial reporting across the market. The QC 1000 standard introduces an integrated framework that consists of six key components which firms must adhere to in their quality control systems. These...

On 5 September, 2024, the United States District Court for the Northern District of Illinois issued a Consent Order for Permanent Injunction and Other Equitable Relief in the case Commodity Futures Trading Commission v. Yakov Cohen, Yukom Communications Ltd., and others (Case No. 1:19-cv-05416). The court issued a permanent injunction against Yakov Cohen for his involvement in a fraudulent binary options trading scheme operated through Yukom Communications and its affiliated entities. The order bars Cohen from participating in commodity trading and related activities and mandates the disgorgement of US$7 million in profits unlawfully obtained through the scheme. This case is part of the United States’ Commodity Futures Trading Commission (US CFTC) broader enforcement efforts, which allege that Cohen and his co-defendants defrauded investors of more than US$165 million by manipulating binary options trades on platforms such as BinaryBook, BigOption, and BinaryOnline. The Yukom...