Newsfeed

A report from Chainalysis has revealed a significant increase in cybercriminals' use of cross-chain bridges to launder money, with illicit cryptocurrency transactions surging to $743.8 million in 2023 from $312.2 million in 2022, marking a 138% rise year-on-year. This shift in money laundering tactics signifies a move away from traditional exchanges to more sophisticated methods involving bridges and mixers. Notably, the North Korea-sponsored Lazarus Group has been identified as a key player in these activities, utilizing bridges to launder stolen funds, including a high-profile $100 million cryptocurrency theft from the Horizon Bridge of the Harmony blockchain in 2022. The laundering process involves transferring stolen funds across multiple blockchains and converting them into stablecoins before further transactions, highlighting concerns about the security of blockchain ecosystems and the challenges in tracking and preventing such activities. The report emphasizes the necessity...

VanEck has agreed to pay a $1.75 million fine to settle charges brought by the SEC related to its launch of a social media-focused ETF in 2021. The SEC found that VanEck failed to fully disclose the involvement of a prominent social media personality in marketing the ETF, which aimed to leverage "positive insights" from social media data. While the influencer's identity was not explicitly revealed, reports suggest it may have been David Portnoy, founder of Barstool Sports. The undisclosed deal involved the influencer's compensation being tied to the fund's growth, raising concerns about transparency and compliance with. The undisclosed arrangement with the influencer not only violated regulatory obligations but also undermined the integrity of the ETF's operations and management. This case underscores the regulatory scrutiny faced by firms seeking to capitalize on the growing popularity of ETFs and highlights the need for thorough due diligence and compliance procedures when engaging...

A group of FTX creditors, represented by Edwin Garrison, has initiated a class-action lawsuit against the prestigious law firm Sullivan & Cromwell (S&C), alleging that the firm knowingly aided and facilitated FTX's fraudulent activities. The lawsuit accuses S&C of involvement in a civil conspiracy, aiding and abetting fraud and fiduciary breaches, and participating in a RICO enterprise allegedly operated by FTX and its former CEO, Sam Bankman-Fried (SBF). Creditors assert that S&C's legal expertise, regulatory knowledge, and resources were instrumental in enabling FTX's deceptive practices, particularly through the actions of Ryne Miller, a former S&C attorney who later became General Counsel for FTX US. The creditors claim that S&C was aware of FTX's misused funds and regulatory issues but continued to provide services, profiting from its pre-bankruptcy work for FTX. The lawsuit highlights S&C's role in FTX's operations, including 'round-trip' transactions and the Robinhood purchase...

JPMorgan released a report suggesting that the Office of Foreign Assets Control (OFAC) could exert control over Tether (USDT) despite it being a non-US entity. The report highlighted Tether's connection with Tornado Cash, an Ethereum-based privacy enhancement platform, as indicative of this potential control. In response, Tether CEO Paolo Ardoino dismissed JPMorgan's concerns, attributing them to jealousy and criticizing the bank's track record of fines totaling $39 billion. Earlier, Ardoino labeled JPMorgan a "hypocrite" due to its increasing concentration of Tether holdings, highlighting tensions between traditional financial institutions and the growing influence of cryptocurrencies. While regulatory concerns surrounding stablecoins like Tether are not new, JPMorgan's report underscores the complexity of jurisdictional issues in the decentralized cryptocurrency space. Paolo Ardoino's response reflects a defensive stance common among cryptocurrency proponents, who often view...

Federal Reserve Governor Christopher Waller has expressed a positive outlook on the impact of the crypto industry on the U.S. dollar, stating that stablecoins tied to the dollar are actually enhancing the currency's global strength. Waller highlighted that the majority of decentralized finance (DeFi) trading utilizes stablecoins, with 99% of their market value linked to the dollar. He argued that the expansion of trading in the DeFi space is likely to reinforce the dominant role of the dollar rather than challenge it. While acknowledging potential risks if people transition from using dollars to digital currencies, Waller emphasized that recent developments have, if anything, strengthened the dollar's status as the global reserve currency. The stablecoin sector, led by Tether (USDT) and Circle (USDC), plays a significant role in crypto trading by providing stable assets for exchanging more volatile tokens. Despite the importance of dollar strength to the U.S. economy and...

Federal Reserve governor Christopher Waller emphasized the significant role of United States dollar-denominated stablecoins in fortifying the dollar’s status as a global reserve currency during a central banking-focused conference on February 15th. Waller highlighted the overwhelming linkage of stablecoin market capitalization to the U.S. dollar, estimated at 99%, underscoring stablecoins’ pivotal position within the decentralized finance (DeFi) ecosystem. Tether and USD Coin, the two largest stablecoins, dominate approximately 90% of the $139.5 billion total stablecoin market cap, facilitating reliable, liquid transactions in DeFi while shielding traders from the volatility of other cryptocurrencies. Waller’s remarks echo sentiments expressed by Federal Reserve Chair Jerome Powell, who categorizes stablecoins as a currency and advocates for robust federal oversight. Despite concerns about stablecoins introducing instability into the U.S. financial system, policymakers are moving...

Software firm Debt Box is contesting the United States Securities and Exchange Commission’s (SEC) motion to dismiss an enforcement action against it, characterizing the move as an attempt to evade possible sanctions and a permanent dismissal due to alleged misconduct. Debt Box argues that the SEC’s readiness to dismiss the case without prejudice is a strategic maneuver to retain the option of refiling the action in the future while avoiding accountability for inaccurate statements made to the court. The filing follows the SEC’s acknowledgment of making misleading statements and subsequent efforts to address the issue, prompting criticism from the presiding judge. Despite Debt Box's request, the SEC seeks to cancel a scheduled hearing, further intensifying the legal battle. Debt Box’s resistance to the SEC’s motion reflects a contentious legal battle, with implications for how regulatory agencies navigate enforcement actions. The SEC’s attempt to dismiss the case while addressing its...

The Tennessee House Banking and Consumer Affairs Subcommittee unanimously approved the Ensuring Likeness Voice and Image Security Act (ELVIS) on February 13, aiming to shield musicians from exploitation by artificial intelligence (AI). Introduced by Governor Bill Lee in January 2024 and supported by State Senate Majority Leader Jack Johnson and House Majority Leader William Lamberth, the bill targets unauthorized use of artists' voice, image, and likeness. With Nashville being a key hub for the music industry, generating billions for the local economy, the ELVIS Act holds significant implications for the state's workforce. During the subcommittee meeting, testimony from industry figures like singer Chrissy Metz and songwriter Jamie Moore emphasized the threat of AI-generated content to the music business, underscoring the importance of protecting creators' rights. As Nashville stands as a pivotal location for music creation and commerce, the bill's approval highlights Tennessee's...

Multinational financial services giant Citibank announced on Wednesday its venture into tokenized securities on the blockchain, aiming to advance distributed ledger technology adoption on Wall Street. Collaborating with Wellington Management and WisdomTree, Citibank conducted a "proof of concept" for the program, tokenizing a hypothetical Wellington-issued private equity fund on the Avalanche blockchain platform. The simulation tested fund distribution rules and the use of private fund tokens as loan collateral, demonstrating the feasibility of issuing and custodying tokenized assets in a controlled environment compatible with legacy banking systems. This move signifies Citibank's commitment to exploring blockchain-based solutions while maintaining regulatory compliance. The recent initiative by Citibank shows the growing interest among financial institutions in leveraging blockchain technology to modernize traditional finance. As blockchain adoption continues to gain momentum,...

European Union legislators in the European Parliament have endorsed the preliminary agreement on groundbreaking regulations for artificial intelligence (AI) on February 13, paving the way for the world’s first AI-focused legislation. The Internal Market and Civil Liberties Committees voted 71-8 to support the provisional agreement on the AI Act, which aims to establish guidelines for AI implementation across various sectors, including banking, automotive, security, and law enforcement. The regulations cover areas such as foundational models or generative AI, with provisions for copyright protection and safeguards against AI applications that threaten citizens' rights. Following member states' approval and concessions to alleviate administrative burdens, the AI Act is set to proceed to a parliamentary vote in April, with potential full implementation expected within 24 months. The endorsement of the AI Act by the European Parliament marks a significant milestone in global AI...

Kraken, a prominent cryptocurrency exchange, has initiated a verification process for its users in the United Kingdom, mandating verification of their self-custodial wallets. The move, reportedly driven by UK regulations, requires users to confirm ownership or control of their self-custodial wallets used for cryptocurrency transactions. Failure to comply by February 23, 2024, will lead to restrictions on the affected accounts. This action mirrors a broader trend among exchanges, aligning with increasing regulatory scrutiny on entities involved with digital assets. However, the challenge of verifying self-custodial wallets raises questions about privacy and regulatory compliance as regulators extend know-your-customer (KYC) regulations to cover such entities, highlighting ongoing debates in the crypto space.

The European Court of Human Rights has ruled against the demand for decryption of end-to-end encrypted (E2EE) messages in a case involving Telegram, emphasizing that creating backdoors to such services would threaten freedom of expression and expose innocent users to privacy breaches. The judgment, issued on Feb. 13, favored Telegram user Anton Podchasov, who contested his government's request to decrypt messages sent via the app's encrypted "secret chat" feature. The court highlighted that while encryption may be used by criminals to evade law enforcement, compromising encryption for everyone would endanger individuals' rights while enabling indiscriminate surveillance. The ruling underscored the importance of encryption in safeguarding privacy and freedom of expression, emphasizing alternative methods for monitoring encrypted communications that don't require encryption backdoors. The importance of encryption in protecting privacy and freedom of expression, rejecting demands for...