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On 23 September 2024, the US Commodity Futures Trading Commission (CFTC) issued an enforcement order against Piper Sandler Hedging Services LLC for violating the United States Commodity Exchange Act (US CEA) and related US CFTC regulations. The settlement followed an extensive investigation into Piper Sandler’s failure to maintain and preserve required business records, including communications by senior employees conducted through unapproved methods such as personal text messages. The violations pertained to recordkeeping requirements under Section 4g of the US CEA and US CFTC regulations 1.31, US CFTC regulations 1.35, and US CFTC regulations 166.3. The enforcement action is against the deficiencies in the firm’s supervisory systems, which allowed employees to use unauthorized channels for business communications, resulting in significant breaches of federal recordkeeping laws. The case is based on Piper Sandler’s long-standing failure to ensure that employees, including...

On 23 September 2024, the U.S. Securities and Exchange Commission (SEC) announced settled charges against Atom Investors LP, a Texas-based registered investment adviser, for violations of federal securities laws related to the firm’s failure to maintain and preserve critical off-channel communications. The US SEC did not impose any civil penalty on Atom Investors due to the firm’s self-reporting of the violations, substantial cooperation with the US SEC, and prompt remediation efforts. The US SEC’s order found that Atom Investors violated the recordkeeping provisions of the United States Investment Advisers Act of 1940 by failing to preserve records, including senior personnel communications, which were subject to federal retention requirements. Without admitting or denying the US SEC’s findings, Atom Investors consented to a cease-and-desist order and received a censure for its violations. Due to the firm’s immediate self-reporting, proactive remedial measures, and significant...

On 20 September 2024, the U.S. Commodity Futures Trading Commission (US CFTC) announced that William Koo Ichioka, a New York resident formerly of San Francisco, was ordered by Judge Vince Chhabria of the U.S. District Court for the Northern District of California to pay over US $36 million. This ruling includes US $31 million in restitution to defrauded investors and a US $5 million civil monetary penalty for his involvement in a fraudulent foreign currency and digital asset trading scheme. The scheme began in 2018 when Ichioka solicited investments under the false promise of guaranteed returns of 10% every 30 business days. He attracted investors by claiming that their funds would be invested in forex and digital asset commodities, including Bitcoin and Ether by portraying himself as a highly successful investor and used various platforms, including a website for his company, Ichioka Ventures, to lure participants. While he did invest portions of the funds in forex and digital...

On 20 September 2024, the U.S. Commodity Futures Trading Commission (US CFTC) issued an extension of its no-action relief for nonbank swap dealers (SDs) domiciled in the European Union (EU) and the United Kingdom (UK). This relief, originally granted under US CFTC Letter No. 21-20 and later extended through US CFTC Letter No. 22-10, allows these entities to comply with their home country’s capital and financial reporting requirements in lieu of US CFTC regulations. The new extension provides relief until 31 December 2026, or until the CFTC finalizes a decision regarding the comparability of foreign regulations to U.S. standards. The No-Action Letter permits these nonbank SDs to operate under their home country’s rules, provided they continue to meet specific conditions, including submitting financial reports to the CFTC, notifying the CFTC if their regulatory capital falls below 120% of the minimum required, and keeping the CFTC informed of their reliance on the No-Action position....

On 19 September 2024, Latvijas Banka announced the return of the Latvian FinTech Forum, scheduled for 5 November 2024, at the Small Guild in Riga. This event will convene key players from the FinTech ecosystem to discuss current industry issues and trends. Notably, the forum will feature the "Fintech Factor 2024" competition, organised by the international accelerator Tenity in collaboration with Latvijas Banka and the Fintech Latvia Association. Early-stage FinTech companies across Europe are invited to participate, with an attractive prize fund aimed at promoting their growth and providing networking opportunities. Early-stage FinTech companies from across Europe are invited to participate in the "Fintech Factor 2024" competition. The prize fund is designed to foster the growth of participating companies and includes ten hours of legal advice from esteemed firms Sorainen and Wallace, ten hours of growth mentoring from Tenity, a cash prize of 2,500 euros, as well as tickets to...

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...