North Carolina House passes bill to commission study on holding Bitcoin

June 29, 2023 Coin Telegraph

bill

The study would examine the possible impact of holding crypto and how the state would custody digital currency.

A bill that would see North Carolina’s Department of State Treasurer study the feasibility and benefits of the state holding Bitcoin (BTC) has passed the lower house of the General Assembly.

On June 28, the North Carolina House of Representatives passed the bill which would commission a $50,000 study to examine “acquiring, securely storing, insuring, and liquidating” both gold bullion and “virtual currency [...] such as Bitcoin.”

The study would investigate what impact gold and cryptocurrency holdings would have if North Carolina held part of its funds in crypto and gold.

Specifically, it would research if such holdings would hedge against inflation and “systemic credit risks,” and if gold and crypto could reduce volatility, increasing the state’s portfolio returns.

Another #Bipartisan Victory in NC w/ passage of HB721 | #Bitcoin/#DigitalAssets/Custody Study Bill

-Passed 75-38
-GOP + Dems Came Together
-Directs/Funds @NCTreasurer to Study Benefits of #BTC + #Custody
-Led by @NC_Blockchain + @SoundMoneyDef

https://t.co/0veKPZlbVJ pic.twitter.com/nNYUbfmJd1
— Dan Spuller (@DanSpuller) June 28, 2023

The bill mulls potentially creating a state-administered depository for crypto that would see North Carolina as the custodian of its digital asset holdings.

The study would, however, examine the costs and benefits of using a “privately managed depository or another state’s depository.”

The 120-member House passed the bill, with 73 voting in favor, 40 against and seven absent.

The bill must pass the Senate before it’s either signed into law or vetoed by Governor Roy Cooper.

On May 3, North Carolina’s House unanimously passed a bill that would prohibit payments to the state using a central bank digital currency (CBDC).

The bill stipulated the United States Federal Reserve would also be barred from using North Carolina to test any future pilot CBDC.

The day before, on May 2, a one-year moratorium on crypto mining was passed by the Board of Commissioners for Buncombe County in North Carolina.

Opinion: GOP crypto maxis almost as bad as Dems’ ‘anti-crypto army’

‘Who the hell’ is Prometheum and what did it say to Congress about SEC compliance?

June 15, 2023 Coin Telegraph

aaron kaplan

A testimony given at a United States House of Representatives hearing by the blockchain firm’s co-founder, Aaron Kaplan, has drawn the attention of those in the crypto space.

The relatively under-the-radar crypto company Prometheum has been thrust into the spotlight after a recent testimony from its co-founder before a United States House Committee, discussing crypto regulatory clarity.

On June 13, Prometheum co-founder and co-CEO Aaron Kaplan appeared before the U.S. House at a hearing to discuss providing regulatory clarity to the crypto industry.

Contrary to recent commentary from crypto industry players such as Coinbase, Kaplan’s testimony appears to be supportive of regulating crypto under current securities laws — a view also shared by the Securities and Exchange Commission.

This Prometheum storyline has got to be the strangest thing I have seen in awhile in this industry. Has anyone actually looked into this? Beyond bizarre…
— Matt Walsh (@MattWalshInBos) June 14, 2023

Attention was also brought to Kaplan’s testimony on social media, including a widely shared June 14 Twitter thread from Castle Island Ventures partner Matt Walsh, who shared what he claims are “bizarre” facts about the company and its co-founder.

The thread has also prompted many — including Cardano and Ethereum co-founder Charles Hoskinson — to ask just who Kaplan and Prometheum are, and why they appear to be unheard of before.

Who the hell are these Prometheum guys? https://t.co/PHuqVGStlS
— Charles Hoskinson (@IOHK_Charles) June 14, 2023

The Wall Street-based Prometheum was founded in 2017 by Aaron and Benjamin Kaplan, co-CEOs of the firm. The pair are also listed as attorneys at the financial services-focused law firm Gusrae Kaplan.

Subsidiaries of the company are notable for their registrations with the SEC and approvals from the Financial Industry Regulatory Authority.

In May, subsidiary Prometheum Ember Capital was the first firm to offer custody of digital assets as a qualified custodian after receiving FINRA approval to operate as a special purpose broker-dealer for digital assets.

In October 2022, its subsidiary Prometheum Ember ATS launched its SEC-registered alternative trading system offering digital asset trading, clearing, settlement, and custody.

What did Kaplan say?

In his prepared testimony, Kaplan argued that multiple frameworks provided by the SEC have “clearly laid out” a “compliant path forward for crypto in the United States.”

He even provided a glowing review of the regulator, calling it “the most capable financial markets regulatory agency in the world.”

Prometheum's stance is clear: There is a path forward for digital assets in the U.S. through the current regulatory frameworks set up by federal securities laws. Hear Aaron Kaplan's testimony in front of the House Financial Committee here: https://t.co/qqVd0ryqe2 #digitalassets
— Prometheum (@PrometheumInc) June 14, 2023

Kaplan claimed crypto exchanges and custodians “are required to be regulated by the SEC” and slammed those not currently regulated as being “reckless, unlawful platforms.”

He went on to say existing securities laws and regulations apply to cryptocurrencies and those who argue for new crypto-specific laws are “simply not willing to comply.” He added new laws are “not in the best interest of the investing public or the blockchain industry.”

However, some have criticized the crypto firm, saying Prometheum doesn’t have much to show product-wise despite its years in business and regulator approvals.

During the hearing, Kaplan was asked by Representative Mike Flood if Prometheum offered trading for Bitcoin (BTC) or Ether (ETH), which together make up nearly 65% of the $1 trillion crypto market cap, according to CoinGecko.

Kaplan responded to both questions by saying it did not.

For those that didn’t stick around until the end of the @FinancialCmte hearing today, this exchange between @USRepMikeFlood and @PrometheumInc CEO Aaron Kaplan is an absolute must-watch.

Flood explicitly lays out why Prometheum’s claims that their SPBD approval is evidence of a… pic.twitter.com/yCDDKHiLea
— Alexander Grieve (@AlexanderGrieve) June 13, 2023

'Bizzare' claims

Meanwhile, theories about the company are are swirling on social media, with some alleging the firm's links to the Chinese Communist Party, pointing to 2019 SEC filings from Prometheum stating HashKey and Shanghai Wanxiang Blockchain are “strategic partners and joint venturers.”

Others have pointed to Prometheum’s team that includes former SEC and FINRA staffers.

Cointelegraph contacted Prometheum to ask for a comment surrounding some of these claims.

DeFi Dad, Hall of Flame: Ethereum is ‘woefully undervalued’ but growing more powerful

Crypto.com customer accused of $7M spending spree granted bail

March 21, 2023 Coin Telegraph

Bail

The judge said that imprisonment wasn’t necessary because Jatinder Singh couldn’t flee Australia without his Indian passport.

The Crypto.com customer who was accidentally sent $6.95 million from the exchange in 2021 and then allegedly went on a spending spree has been granted bail in Australia despite $2 million funds still unaccounted for.

In the Victorian County Court, prosecutors on March 20 tried to convince the judge that imprisonment would be the only way to ensure that Jatinder Singh would not flee the country.

The blunder by Crypto.com came about when a Bulgarian-based employee accidentally transferred $6.95 million to his account instead of what was meant to be a $100 refund in May 2021. The Melbourne man is alleged to have bought four houses and a car with the funds, along with sending a portion overseas.

Prosecutors argued that Singh is financially motivated to flee the country because only $4.9 million has been recovered, according to a report from the Herald Sun.

*The theft charges of Singh and Manivel are being dealt with by the Victorian County Court. Source: Country Court of Victoria*

Of the missing $2 million, over $1.45 million is believed to have been shifted offshore to Malaysia, the court heard.

Senior Constable Conor Healy told the judge that Singh “may have access to the outstanding money that has not been recovered yet,” while prosecutor Peter Botros argued that Singh posed an “unacceptable” flight risk because he was living without a visa, had no family in Australia and was unemployed prior to his arrest.

However, Judge Daniel Holding didn’t think this was enough to put Singh behind bars. He instead explained that confiscating Singh’s Indian passport and preventing him from applying for a new one at the Indian Embassy would be sufficient:

“If there is a condition that he not have a passport or he not apply for a passport … how does he manage to flee the country?”

Singh is facing a series of theft charges alongside his partner, Thevamanogari Manivel, who is the owner of the bank account to which the funds were transferred.

Both pleaded not guilty to the charges. They continue to claim that they rightfully won the $7 million through a Crypto.com contest.

While the incident occured in May 2021, it was not discovered until an annual audit in December 2021.

The Singaporean-based cryptocurrency exchange has since launched civil action in the Victorian Supreme Court to recover the losses.

The Victoria Supreme Court h ruled that the funds must be returned to the company.

Founder of $7.5M ‘brazen fraud scheme’ gets 8 years behind bars

February 1, 2023 Coin Telegraph

Founder of .5M ‘brazen fraud scheme’ gets 8 years behind bars

Antiques

Randall Crater was ordered to pay back the millions lost by victims of his fraudulent crypto scheme and spend 100 months in jail followed by a three-year supervised release.

Founder of “My Big Coin” Randall Crater has been sentenced to 100 months in prison and ordered to pay over $7.6 million to the victims of his fraudulent scheme.

The U.S. Department of Justice said on Jan. 31 that Crater was sentenced by United States District Court Judge Denise Casper in Massachusetts.

The sentence comes after Crater was convicted by a federal jury on July 21 on four counts of wire fraud, three counts of unlawful monetary transactions and one count of operating an unlicensed money-transmitting business.

Randall Crater, the founder of "My Big Coin," a purported cryptocurrency company, was sentenced today to more than eight years in federal prison for a multi-million dollar fraud scheme uncovered by #FBI Boston and @USPIS_BOS. https://t.co/567NYPndRU pic.twitter.com/a3eKaogij4
— FBI Boston (@FBIBoston) January 31, 2023

My Big Coin was founded by Crater in 2013 and falsely marketed as a cryptocurrency payment service, luring victims between 2014 and 2017.

Crater claimed the coins on My Big Coin were fully functional cryptocurrencies backed by gold and that the platform had a partnership with Mastercard.

Crater also marketed the “My Big Coin Exchange,” advertised as a crypto exchange where the coins could be swapped for U.S. dollars and other fiat currencies.

*Randall Crater’s LinkedIn account photo. Image: LinkedIn*

A significant portion of the $7.6 million obtained by Crater and his marketing team went toward a house, several cars and over $1 million in antiques, artwork and jewelry.

U.S. Attorney Rachael Rollins said in a statement the damage done by Crater inflicted a serious amount of trauma and financial hardship on his victims:

“For nearly four years, Mr. Crater perpetrated a brazen fraud scheme that preyed on investors and customers who put their faith in him and his fake business, resulting in victim losses of over $7.5 million.”

“His lies and deception inflicted real trauma, pain and hardship on the lives of 55 individual victims and their families who funneled their money into bank accounts Mr. Crater controlled and used to finance his extravagant lifestyle,” she added.

Even after his conviction, Crater continued to protest his innocence, stating in an Oct. 21 YouTube video that a My Big Coin credit card did in fact exist and claiming that an investor testified under oath to having used the card multiple times.

Legal action against Crater dates back to Sept. 25, 2018, when now-former Judge Rya Zobel of the Massachusetts District Court ruled against a motion to dismiss a case launched by the U.S. Commodity Futures Trading Commission (CFTC).

The Department of Justice officially filed criminal charges against Crater on Feb. 19, 2019.

After Crater’s 100-month tenure behind bars, he will be subject to a supervised release for the following three years.

Hours before his arrest, SBF denied being part of ‘Wirefraud’ chat group

December 13, 2022 Coin Telegraph

Alameda

SBF’s last tweet before his arrest for reportedly committing wire fraud was dispelling his involvement in a group chat purportedly called “Wirefraud.”

Merely hours before news of his arrest by Bahamian police, Sam Bankman-Fried took to Twitter denying his involvement or knowledge of a secret group chat named “Wirefraud” — which allegedly involved former FTX and Alameda ranking executives.

In a Dec. 12 response to a report from the Australian Financial Review (AFR), Bankman-Fried used Twitter to deny involvement in or knowledge of a “Wirefraud” group chat on messaging app Signal, which reportedly included members of Bankman-Fried’s inner circle, including FTX co-founder Zixiao “Gary” Wang, FTX engineer Nishad Singh and former Alameda CEO Caroline Ellison.

The AFR report said the chat was used to send secret information about FTX and Alameda's operations in the lead-up to its failure.

Bankman-Fried however said on Twitter that if the group chat was “true” he “wasn't a member” and was “quite sure it's just false” as he had “never heard of such a group.”

If this is true then I wasn't a member of that inner circle

(I'm quite sure it's just false; I have never heard of such a group)
— SBF (@SBF_FTX) December 12, 2022

Sam Bankman-Fried was, until very recently, expected to appear remotely before a United States House Committee hearing on Dec. 13 to explain the collapse of the FTX exchange, but was taken into custody by Bahamian authorities on Dec. 12 with extradition to the U.S. likely to follow.

Committee Chair Maxine Waters on Dec. 12 later confirmed that it “will not be able to hear” his testimony at the House Committees hearing due to the arrest.

Bankman-Fried was also requested to attend a separate hearing on Dec. 14 with the Senate Committee on Banking but had never confirmed his attendance, while his lawyers had reportedly refused to accept a subpoena compelling his testimony, according to a Dec. 12 joint statement from Senators Sherrod Brown and Pat Toomey.

Chief restructuring officer and FTX CEO John Ray in written testimony before his appearance at the House Committee hearing said FTX customer assets were “commingled” with Alameda’s.

Ray asserted Alameda “used client funds to engage in margin trading which exposed customer funds to massive losses” and the trading firm's business model required it to deploy those funds to “various [...] exchanges which were inherently unsafe.”

Rep. Cawthorn fined for ethics breach over Let’s Go Brandon token promo

December 7, 2022 Coin Telegraph

Coin Telegraph

The Ethics Committee couldn’t agree if the Representative sought to profit from his promotions but he was fined for it regardless and for also not declaring a “gift” of the token.

The outgoing United States House Representative Madison Cawthorn has been fined over $15,000 by the House Committee on Ethics for his promotion of a cryptocurrency in which he had an undisclosed investment.

A report released by the Committee on Dec. 6 after a seven-month-long investigation found Cawthorn “improperly promoted a cryptocurrency in which he had a financial interest” violating conflict of interest rules.

Cawthorn’s “direct and unambiguous” promotional commentary on social media followed an undisclosed purchase by the Representative of $150,000 worth of the token in December 2021.

He promoted the Ethereum-based token Let’s Go Brandon (LETSGO) — named after a slogan and meme that is used as a substitute to the phrase “F--- Joe Biden” — after Cawthorn was able to secure the purchase of around 180 billion LETSGO tokens “on terms more favorable than those available to the general public.”

The $150,000 sum Cawthorn paid to an unnamed person involved with the token saw him receive 180 billion LETSGO, which were trading for an average value of around $164,200 at the time. Cawthorn also did not pay transaction fees.

The $14,237 difference between the amount Cawthorn paid and the average value of the tokens at the time he received them was considered a “gift” by the Committee who recommended Cawthorn repay the amount “to an appropriate charitable organization.”

After his purchase of the tokens on Dec. 21, 2021, Cawthorn sold “nearly all” of them in three batches netting an overall loss by late January 2022 of nearly $7,500.

The Committee “did not reach a consensus” on whether Cawthorn intended to “personally profit from his promotional activities” and no “sufficient evidence” was found that Cawthorn used non-public information to time his transactions.

“Cawthorn also failed to file timely reports to the House disclosing his transactions relating to the cryptocurrency,” the report said. However, as the requirements on crypto disclosures “are relatively new” as per the report, the Committee found Cawthorn’s failure to disclose was not “knowing or willful” as he was “misinformed regarding the requirements.”

The outgoing Representative will also need to submit a transaction report detailing the purchase and sales of the tokens and pay a $1,000 late fee along with his over $14,000 charitable donation.

Cawthorn disclosed he still owns more than 15.3 billion LETSGO which has a current value of under $25.50 according to Coingecko data.

The Representative will leave office in January 2023 after serving one year for North Carolina's 11th Congressional District, being beaten in a Republican party primary in May by North Carolina Senator Chuck Edwards.

House