nydfs

Signature Bank’s Closure Due to ‘Crisis of Confidence’ in Its Leaders – Not Crypto, Says Regulator: Report

March 16, 2023 The Daily Hodl

Coinbase to Suspend Trading of BUSD Amid Regulatory Crackdown

February 28, 2023 Bitcoin.com

New York state announces another upgrade to its virtual currency monitoring capacity

February 21, 2023 Coin Telegraph

The New York State Department of Financial Services did not describe its new capacities, but said they will contribute to the detection of a variety of illegal activities.

The New York State Department of Financial Services (NYDFS) has announced enhancements to its ability to detect illegal activities with virtual currency among the entities its regulates. The new capacities are part of its efforts to keep pace with the industry and respond proactively to the virtual currency market, it said.

The NYDFS released a short statement on its new abilities on Feb. 21 that contained no specifics about the “new insider trading and market manipulation risk monitoring tools.” However, the statement promised:

“The new enhancements will provide the Department with additional capabilities to detect potential insider trading, market manipulation, and front-running activity associated with Department-regulated entities’ and applicants’ exposure or potential exposure to listed virtual currency wallet addresses.”

NYDFS superintendent Adrienne Harris said, “These tools will help us combat financial crime and fraud, hold regulated entities accountable, and further strengthen our national leadership in virtual currency supervision.”

Announcements of unspecified new technological abilities seem to be part of the NYDFS enforcement playbook. The agency announced “expedited procurement of additional blockchain analytics technology” last year as part of its enforcement of sanctions against Russian companies after that country’s invasion of Ukraine.

#ICYMI: DFS Superintendent Adrienne A. Harris Strengthens Department's Ability to Detect Fraud in the Virtual Currency Industry. pic.twitter.com/BMvJnNBCVp
— NYDFS (@NYDFS) February 21, 2023

The agency also regularly issues guidance for the entities it regulates, advising banks on engaging with cryptocurrencies in December and claiming to be the first regulator to release guidelines for stablecoin issuance in June.

The NYDFS was recently instrumental in Blockchain infrastructure platform Paxos Trust’s decision to stop minting the Binance USD (BUSD) stablecoin after it opened a probe of the coin. Earlier this year, it extracted a $100 million settlement from Coinbase for allegedly keeping a backlog of 100,000 suspicious transaction alerts. In August, it reached an agreement with Robinhood Crypto for a $30 million penalty for anti-money laundering compliance issues.

In addition, the NYDFS is reportedly investigating Gemini’s Earn lending program.

New York state introduced its virtual currency BitLicense, well known for its strict requirements, in 2015. That licensing regime has been controversial, with even New York City mayor Eric Adams criticizing it as “stifling.”

Nearly 3 Billion BUSD Stablecoins Have Been Removed From the Market in 6 Days

February 19, 2023 Bitcoin.com

Terraform Labs and CEO Do Kwon Charged by SEC With Multibillion-Dollar Crypto Fraud

February 16, 2023 Bitcoin.com

Circle blew the whistle on Binance reserves to NYDFS: Report

February 13, 2023 Coin Telegraph

Binance USD

The company's complaint to the New York regulator reportedly came before the SEC's lawsuit against Paxos over BUSD and NYDFS ordering the firm to "cease minting" the stablecoin.

New York State’s Department of Financial Services, or NYDFS, reportedly received a complaint from stablecoin issuer Circle regarding Binance’s reserves prior to its crackdown on BUSD.

According to a Feb. 13 Bloomberg report, Circle alerted NYDFS in an autumn 2022 complaint that Binance’s reserves were insufficient to support its tokens, seemingly including stablecoin Binance USD (BUSD). A person familiar with the matter reportedly said Circle’s team had uncovered the information through blockchain data.

Circle’s actions came prior to the United States Securities and Exchange Commission’s plans to file a lawsuit against Paxos, claiming that BUSD was an unregistered security. NYDFS announced its own regulatory action on Feb. 13, ordering Paxos “cease minting Paxos-issued BUSD” and reiterating its requirements for tokens under its regime to be fully backed by cash or cash equivalents.

In a Feb. 13 statement responding to the SEC lawsuit, Paxos said BUSD was “not a security under the federal securities laws”, adding:

“BUSD issued by Paxos is always backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts. We will engage with the SEC staff on this issue and are prepared to vigorously litigate if necessary.”

Paxos issued the following statement on February 13. Read the full statement here: https://t.co/jbfcBAiCgf pic.twitter.com/T7k80QtKyX
— Paxos (@PaxosGlobal) February 13, 2023

The crypto regulatory action was the latest in the United States affecting crypto firms as the SEC reached an agreement with Kraken to stop its staking services for U.S. users. The financial regulator also continues to engage with Ripple in a lawsuit over XRP, claiming that the tokens were securities under its purview.

BUSD Redemptions Soar Near $290 Million in 8 Hours After NYDFS Consumer Alert

February 13, 2023 Bitcoin.com

Paxos Receives Wells Notice from SEC, NYDFS Orders Issuer to Stop Minting BUSD

February 13, 2023 Bitcoin.com

New York financial regulator investigates Gemini over FDIC claims: Report

January 30, 2023 Coin Telegraph

Coin Telegraph

Many Gemini Earn users reportedly claimed assets in their accounts had been protected by the Federal Deposit Insurance Corporation.

New York State’s Department of Financial Services is reportedly investigating cryptocurrency exchange Gemini over claims the firm made in regards to assets under its Earn lending program.

According to a Jan. 30 report from Axios, the “New York State agency that regulates Gemini” — the Department of Financial Services handles firms falling under the states’ BitLicense regime, including the crypto exchange — was investigating following reports many users believed assets in their Earn accounts had been protected by the Federal Deposit Insurance Corporation, or FDIC. The government agency previously issued cease and desist orders to five crypto firms making similar claims, including FTX US.

It's unclear if Gemini may have violated federal laws due to some customers seemingly taking away that the FDIC protected Earn products rather than assets held at financial institutions that are subject to such insurance. Under the Federal Deposit Insurance Act, individuals are prohibited from "representing or implying that an uninsured product is FDIC–insured or from knowingly misrepresenting the extent and manner of deposit insurance."

Genesis, the crypto lender responsible for operating the Earn program in partnership with Gemini, halted withdrawals in November 2022, citing “unprecedented market turmoil.” The firm subsequently filed for Chapter 11 bankruptcy in January. Reports at the time suggested up to $900 million in Earn user funds could have been locked.

Since the fallout with the Earn program, Gemini has been the target of regulators and crypto users alike. In January, the U.S. Securities and Exchange Commission charged the exchange with offering unregistered securities through Earn, while a group of investors filed a lawsuit against Gemini founders Tyler and Cameron Winklevoss in December, alleging fraud.

Cameron Winklevoss has claimed on social media that Digital Currency Group CEO Barry Silbert — DCG is the parent company of Genesis — as well as Genesis were responsible for defrauding more than 340,000 users in Gemini’s Earn program. According to the Gemini co-founder, Silbert, DCG, and Genesis orchestrated "a carefully crafted campaign of lies" aimed at covering up the lending firm’s lack of capitalization.

Cointelegraph reached out to the New York Department of Financial Services, but did not receive a response at the time of publication.

Regulators in New York Taking Aim at Crypto Firms That Mishandle Customer Funds: Report

January 23, 2023 The Daily Hodl

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