Sen. Warren vows reintroduction of AML bill that extends to DAOs and DeFi

February 15, 2023 Coin Telegraph

While the Senator did not expand on other details of the upcoming bill, she suggested that DeFi should not be exempt from AML laws.

A bi-partisan anti-money laundering (AML) bill that covers “decentralized entities” such as decentralized finance (DeFi) protocols and DAOs will soon be reintroduced to Congress, according to United States Senator Elizabeth Warren.

Warren, a vocal crypto critic, argued at the Feb. 14 Senate Banking Committee’s hearing entitled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets” that the crypto community wants decentralized entities running on code to be exempt from AML requirements:

“In other words, they want a giant loophole for DeFi written into the law so they can launder money whenever a drug lord or a terrorist pays them to do so.”

Due to this, Warren said she would re-introduce the Digital Asset Anti-Money Laundering Act of 2022 that she first introduced on Dec. 15, 2022. It was read twice before being referred to the Senate Banking Committee and has received no further traction since.

If legislated as it was, the seven-page bill would have prohibited financial institutions from using digital asset mixers such as Tornado Cash, which are designed to obscure blockchain data.

*Senator Warren speaking at the “Crypto Crash” committee hearing on Feb. 14. Source:* *U.S. Senate Banking Committee*.

It also would have resulted in unhosted wallets, miners, and validators being required to write and implement AML policies.

The Senator noted current AML laws “don’t cover big parts of the crypto industry,” and claimed crypto exchange ShapeShift took advantage of the lack of regulation when it restructured itself as a DeFi platform in July 2021, adding:

“They said we're making this shift, quote, ‘to remove itself from regulated activity.’ Translation: Launder your money here.”

Warren claimed “big-time financial criminals love crypto,” and argued that crypto was “the method of choice for international drug traffickers,” North Korean hackers and ransomware attackers, adding:

“The crypto market took in $20 billion last year in illicit transactions, and that's only the part we know about.”

These figures are backed up by a Jan. 12 report from blockchain analytics firm Chainalysis, which found that the total cryptocurrency value received by illicit addresses reached $20.1 billion throughout 2022.

According to a United Nations official speaking at a Counter-Terrorism Committee meeting in October 2022, cash is still the preferred choice for financing terrorists although they are beginning to turn to crypto more frequently.

North Korean hackers operating with Lazarus Group have also faced headwinds attempting to use crypto with the exchanges Binance and Huobi again freezing accounts, and in the process millions worth of crypto, linked to the notorious outfit.

Terra co-founder Do Kwon says he’s not ‘on the run’

September 19, 2022 Coin Telegraph

arrest warrant

Kwon didn’t reveal his whereabouts in a series of Tweets responding to claims he fled Singapore after an arrest warrant was issued on Wednesday.

Do Kwon, the co-founder of the Terra ecosystem, took to Twitter on Saturday asserting he’s “not ‘on the run’ or anything similar” after the Singapore Police Force (SPF) said Kwon wasn’t in the city-state.

On Sept. 14, South Korean authorities issued an arrest warrant for Kwon and five other associates for alleged violations of the country’s capital markets laws. All were known to be in Singapore at the time, with prosecutors also attempting to revoke their passports a day later on Sept. 15.

“For any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide,” Kwon tweeted.

I am not “on the run” or anything similar - for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide
— Do Kwon (@stablekwon) September 17, 2022

Kwon did not reveal where he was, saying crypto Twitter has “no business knowing my GPS coordinates.” He added they are defending themselves in “multiple jurisdictions” and look forward to “clarifying the truth over the next few months.”

We are in the process of defending ourselves in multiple jurisdictions - we have held ourselves to an extremely high bar of integrity, and look forward to clarifying the truth over the next few months
— Do Kwon (@stablekwon) September 17, 2022

Singapore does not have an extradition treaty with South Korea, but the SPF stated it will assist Korean authorities within the scope of its domestic laws and international obligations and didn’t provide any further details.

In May, the Terra ecosystem Kwon co-founded arguably had the biggest crash in cryptocurrency history after its algorithmic stablecoin TerraUSD Classic (USTC), originally TerraUSD (UST) lost its US dollar peg to hit a low of $0.006 in June.

Its sister asset, now known as Terra Luna Classic (LUNC) met a similar fate with an all-time low of $0.0000009 in May after hitting its all-time high of over $119 the month prior. The twin collapses caused panic among traders, with selling pressure leading to a wider collapse in the digital asset market.

Previously, South Korean prosecutors banned Terra employees from leaving the country in June to stop the possibility of them fleeing to avoid investigation, Do Kwon was already residing in Singapore at the time.

In July, South Korean authorities raided 15 firms including seven crypto exchanges connected to the collapse of Terra reportedly gaining access to data related to USTC and LUNC transactions.

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Experts explain what ‘Big Short’ Michael Burry’s stock exit means for crypto

August 17, 2022 Coin Telegraph

Coin Telegraph

“Predicting a stock crash is a lot like predicting an earthquake. You know one will happen every so often but you can never tell exactly when or how severe it will be,” said Mati Greenspan.

Michael Burry, the investor who famously shorted the 2008 housing bubble, has dumped nearly all the stocks in his portfolio during Q2, suggesting there may be carnage ahead for stock and crypto markets.

According to a 13F disclosure filed with the Securities and Exchange Commission (SEC) on Aug. 15, Burry’s hedge fund Scion Asset Management shed around $292 million worth of shares across companies from Apple and Meta to pharmaceuticals giant Bristol-Myers Squibb, leaving only a minor position in a private prison company.

Michael Burry selling everything and buying a large position in a private prison company after seeing the IRS is hiring 87,000 new agents pic.twitter.com/lT5ny4SdlC
— Wall Street Memes (@wallstmemes) August 15, 2022

As Bitcoin (BTC) and crypto have a strong correlation to the stock market, especially in relation to macroeconomic events such as Federal Reserve interest rate hikes and the Russian/Ukraine conflict, Burry’s bearish outlook on stocks may also be a warning sign for the crypto sector.

However, asked by Cointelegraph whether Burry’s actions could spell potential gloom for the crypto markets, Quantum Economics founder and CEO Mati Greenspan said he is relatively unfazed by Burry’s moves, despite his track record of predicting bearish scenarios.

Greenspan stated that it's near impossible to predict the time and scale of crashes, and suggested that there is generally always something bearish on the horizon that could potentially send stock and crypto prices crashing.

“Predicting a stock crash is a lot like predicting an earthquake. You know one will happen every so often but you can never tell exactly when or how severe it will be.”

He also stressed that investors shouldn’t jump at every piece of FUD that circulates online, noting that “investing is a long-term play and doesn't normally work out for people who jump at shadows.”

Earlier this month, Burry warned investors that despite the recent rally in crypto and stocks, “winter is coming.” He pointed to U.S. consumer credit rates rising by $40 billion per month in contrast to its historical average of $28 billion month over month as reasons for such.

Seeking Alpha analyst Garret Duyck, however, offered a different take to Greenspan, outlining in an Aug. 16 article that Burry’s concerns over macro factors such as consumer credit, housing and business conditions may be something investors should take note of.

“I take notice when Michael Burry is a bear and right now he is a huge bear. By liquidating the positions in his portfolio, save one, he is putting his money where his mouth has been: out of the market.”

“The macro data seems to support his hypothesis. I'm seeing weakness all over the place. The consumer is struggling while housing and business conditions are projecting job weakness. Earnings estimates are too generous and negative earnings will materially impact equity valuations which are already stretched.” he added.

Burry’s predictions

While Burry’s predictions have had varying accuracy since he rose to fame by shorting the 2008 housing bubble, some of his most recent takes on crypto have generally come into fruition.

For example, in March 2021 Burry described Bitcoin (BTC) as a “speculative bubble that poses more risk than opportunity” as he predicted a crash would soon unfold. This coincided with the price of BTC going from $59,000 in March to around $34,000 by the End of May.

In June he followed that up by labeling the price action in stock and crypto markets as the “Greatest Speculative Bubble of All Time in All Things.” And while BTC went on a surge to a new ATH in November of around $69,044, no one needs reminding of how much the market has crashed since then.

Crypto Crash