Sunday, July 14, 2024

New year, same old troubles — The FTX saga continues in 2023: Law Decoded, Dec. 26-Jan. 2

Although having been granted the opportunity to enjoy Christmas and the New Year with his family, former FTX CEO Sam Bankman-Fried has very few reasons for optimism in 2023. The United States Department of Justice has launched an investigation into the whereabouts of approximately $372 million in missing digital assets from FTX and its U.S.-based subsidiary, FTX US. According to SBF, the incident was perpetrated by either a former FTX employee or someone who had unauthorized access to a former employee’s computer.

It would be great to know which former employees started to transfer out funds from Alameda Research just days after Bankman-Fried was released on a $250 million bond. The Alameda wallet was found to be swapping bits of ERC-20s for Ether (ETH) and Tether (USDT), and then those assets were funneled through instant exchangers and mixers. SBF later denied any involvement in the movement of funds.

While the government agencies are queuing to sue the FTX and its founder Sam Bankman-Fried, the group of former customers made an effort to get their money back first. Having filed a lawsuit in the United States Bankruptcy Court for the District of Delaware, four plaintiffs seek to obtain the priority rights to return digital assets held by FTX US or to its customers.

The next episode of the FTX saga is scheduled for Jan. 3, when the former FTX CEO will appear in court. Reportedly he will plead not guilty to the alleged FTX and Alameda-related financial frauds. And that is not surprising. As legal counsel commented to Cointelegraph, SBD would be “unlikely to receive a favorable deal from prosecutors,” even if he entered a plea deal.

Japan to lift the ban on foreign stablecoins in 2023

Japanese regulators are reconsidering some major cryptocurrency restrictions related to the use of stablecoins like Tether or USD Coin. The new stablecoin regulations in Japan will allow local exchanges to handle stablecoin trading under the condition of asset preservation by deposits and an upper limit of remittance. Allowing stablecoin distribution in Japan will also require more regulations related to Anti-Money Laundering controls, the Financial Services Agency of Japan said. 

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Executives from $1.5B South Korean crypto exchange fraud jailed

Six executives involved in the $1.5 billion (2 trillion won) South Korean crypto exchange fraud V Global have received prison sentences. V Global operated between July 2020 and April 2021, roping in around 50,000 investors by promising 300% returns alongside sizable payments for referring new customers. According to South Korean media, two high-ranking execs, named Mr. Yang and Mr. Oh, got eight years and three years apiece for their role in defrauding investors. Another four unnamed execs received three-year sentences and five years of probation.

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Crypto investors sue Winklevoss twins over interest accounts on Gemini

Tyler and Cameron Winklevoss, founders of the Gemini cryptocurrency exchange, are reportedly facing a new lawsuit from investors over the interest-earning program Gemini Earn. Disgruntled investors have filed a lawsuit against Gemini founders accusing the firm of fraud and violations of securities laws. The complaint states that the Winklevoss brothers refused to “honor any further investor redemptions” after halting those due to exposure to troubled trading firm Genesis Global Capital.

The plaintiffs alleged that the products have not been registered, which prevented them from receiving disclosures to better assess the risks of using Gemini Earn. Launched last year, the Gemini Earn platform was designed to generate as much as 8% interest on their crypto holdings.

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