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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...

On 5 September 2024, U.S. District Judge Katherine Polk Failla issued a ruling in the ongoing legal case between the U.S. Securities and Exchange Commission (US SEC) and cryptocurrency exchange Coinbase. The court granted in part and denied in part Coinbase’s motion to compel the production of documents by the US SEC. This ruling comes as part of the wider lawsuit, where the US SEC has alleged that Coinbase has been operating as an unregistered securities exchange, broker, and clearing agency, violating federal securities laws. Judge Failla's decision allows Coinbase access to some of the requested documents, particularly those relating to the classification of certain digital assets as securities, which is central to the US SEC's complaint. However, the court denied Coinbase's broader request to subpoena internal communications, including those of US SEC Chair Gary Gensler and other key personnel. The court also ruled in favor of the US SEC’s motion to permanently seal specific...

On 6 September 2024, Sarah Pritchard, the Executive Director of Markets and International at the UK’s Financial Conduct Authority (UK FCA), addressed the Capital Markets Industry Taskforce, presenting the UK FCA’s reform agenda aimed at strengthening the UK's position in global wholesale markets. Pritchard discussed the recent overhaul of the UK’s listing rules, which arguably is one of major changes in over 30 years. These Listing rules reforms are intended to streamline the listing process, reduce regulatory burdens, and attract more companies to the UK’s capital markets. The new rules, which came into effect on 29 July 2024, simplify the regulatory framework while maintaining high standards of corporate governance and disclosure. Pritchard emphasized that the goal is to empower investors with the right information to make informed decisions rather than enforcing a one-size-fits-all regulatory regime. In addition to the listing rule reforms, Pritchard elaborated on the UK FCA’s...

On 4 September 2024, the Board of Governors of the Federal Reserve System announced enforcement action against the United Texas Bank. The Federal Reserve and the Texas Department of Banking issued a Cease and Desist Order against United Texas Bank, headquartered in Dallas, Texas on 29 August 2024 in relation to foreign correspondent banking and virtual currency customers. The order followed an extensive examination of the bank, which revealed non compliance in the institution's corporate governance, risk management, and compliance with federal anti-money laundering (AML) laws, as well as the Bank Secrecy Act (BSA). These deficiencies, identified in a review conducted by the Federal Reserve Bank of Dallas and the Texas Department of Banking, required immediate regulatory action to safeguard the financial system. United Texas Bank is a Texas state-chartered bank and a member of the Federal Reserve System. On 22 May 2023, an examination was conducted by the Federal Reserve Bank of...

On 3 September 2024, a case conference was convened in the General Division of the Singapore High Court concerning Zettai Pte. Ltd., the parent entity of WazirX, in relation to its application for a six-month moratorium. The application, prompted by the company’s financial difficulties arising from a USD 234 million cyberattack on WazirX, seeks to stay all legal proceedings and enforcement actions against the company while it undergoes restructuring. At the conference, the Court scheduled the matter for hearing on 25 September 2024, at which Zettai will present arguments in support of the moratorium, aimed at allowing the company time to reorganize its affairs and engage in negotiations with its creditors. The moratorium, if granted, would provide Zettai with the breathing space needed to reorganize its operations without facing immediate legal challenges from creditors or other parties. The court has set deadlines for submissions in preparation for the hearing. Zettai was instructed...