United States

Binance’s explosive growth led to compliance failures – CEO Richard Teng on $4.3B settlement

December 3, 2023 Coin Telegraph

Binance

The new CEO of Binance takes stock of the exchange's future following a landmark $4.3 billion settlement with United States authorities in a one-on-one interview with Cointelegraph.

“As part of the settlement, CZ cannot be involved in the day-to-day running of the company’s operations,” Richard Teng explains.

Despite that, the incumbent CEO of Binance cuts the figure of a man reveling in the challenges ahead.

“I’m taking the baton and pushing ahead with our growth agenda while working very closely with global regulators.”

Teng believes that the “overcast” conditions clouding Binance in recent months are lifting following its staggering $4.3 billion settlement with the United States Justice Department relating to a raft of violations of U.S.

$4.3B settlement a result of early gaps in compliance

The exchange has paid dearly for mistakes made during its meteoric growth from 2017 onwards. Teng recalls how Zhao built Binance from a team of six people to a global operation consisting of thousands of employees that serves a user base estimated to be more than 166 million.

“In those very early days while we were building up the company, there were gaps in terms of compliance.

The shortcomings of its early compliance regime have led to the largest crypto-related settlement in U.S.

“U.S.

Binance’s obligations to U.S. authorities

Binance is now left to shoulder the ongoing cost and scrutiny that its settlement with U.S. This includes a five-year monitorship and significant compliance undertakings to ensure “Binance’s complete exit from the United States."

Teng wouldn’t be drawn into the details of Binance.US’s ongoing legal battle with the U.S.

Sam Bankman-Fried will not file any post-trial motions, say lawyers

December 1, 2023 Coin Telegraph

Binance VIP traders got sneak peak of US settlement: Report

December 1, 2023 Coin Telegraph

Binance

At an exclusive dinner in Singapore, certain Binance executives reportedly told traders about the pending settlement with U.S. officials, allowing the exchange to stay in business.

Executives of cryptocurrency exchange Binance reportedly gave a heads-up to its top market makers regarding a potential $4.3-billion settlement with authorities in the United States.

According to a Dec. 1 Bloomberg report, Binance traders at an exclusive September dinner in Singapore were informed about a tentative deal the crypto exchange had with U.S. Some Binance executives reportedly told certain traders at the event that the exchange could easily afford the $4.3-billion penalty to stay in business.

Then Binance CEO Changpeng “CZ” Zhao was reportedly not in attendance at the event, but Richard Teng, who succeeded Zhao following the settlement, was mingling with guests.

According to Teng’s posts on X (formerly Twitter) from September, the then head of regional markets was in Singapore for the Token2049 conference, the Milken Institute Asia Summit, the Singapore Grand Prix for Formula 1 and “plenty of side events.” Cointelegraph will release an exclusive interview with the Binance CEO at 6:00 pm UTC on Dec.

Glad to be speaking at Ethereum_sg. Busy week in Singapore with Token 2049, Milken, plenty of side events and rounded up by Singapore F1 night race https://t.co/FBirPWgRLg
— Richard Teng (@_RichardTeng) September 12, 2023

As part of its settlement, Binance must pay $4.3 billion to various U.S. at the time of publication, as a court considered his request to return to the United Arab Emirates before sentencing in February.

Courts will provide ‘good guidance’ for crypto — CFTC commissioner

November 30, 2023 Coin Telegraph

CFTC

Kristin Johnson proposed several potential paths for handling digital assets in the United States — through Congress, having private companies address governance and the courts.

Kristin Johnson of the United States Commodity Futures Trading Commission (CFTC) said there are many ways of handling cryptocurrencies in the country, but legislating through courts could provide a solid, if slow, path.

Speaking at the Blockchain Association’s Policy Summit in Washington, D.C. 30, Johnson said the “best outcome” for corporate governance of crypto firms would be to have companies implement their own plans. She cited policymakers introducing reporting requirements for Binance as part of a $4.3 billion settlement with the crypto exchange.

We’re honored to welcome @CFTCjohnson to the #BAPolicySummit stage for our next session as she sits down with @GeorgiaQuinnEsq of @Anchorage pic.twitter.com/FpgQRjPZ0B
— Blockchain Association (@BlockchainAssn) November 30, 2023

According to the CFTC commissioner, Congress could also step in and provide clarification as to the definition of a security — one of the key points behind the U.S.

“If we rely on the courts we will get good guidance, but it won’t come quickly,” said Johnson.

Though the CFTC and SEC have both at times settled lawsuits with different crypto firms rather than going to trial, many companies have asked for their day in court.

Cathie Wood’s ARK buys $1.5M SOFI shares as SoFi exits crypto

November 30, 2023 Coin Telegraph

Cathie Wood’s ARK buys .5M SOFI shares as SoFi exits crypto

Coin Telegraph

Cathie Wood’s ARK has been actively accumulating shares of SoFi, which announced plans to terminate crypto services by the end of 2023.

ARK Invest, a cryptocurrency investment firm founded by Bitcoin (BTC) advocate Cathie Wood, bought about $1.5 million of SoFi Technologies (SOFI) shares on Nov. 29, the day the latter announced its exit from crypto.

On Nov. 29, ARK bought 200,275 SOFI shares to allocate to its ARK Fintech Innovation ETF (ARKF), according to a trade notification seen by Cointelegraph. The amount is worth $1.47 million, based on SOFI’s closing price on Nov. 29, or $7.35 a share, according to data from TradingView.

ARK’s latest SOFI purchase came on the day SoFi Technologies officially announced its decision to terminate cryptocurrency services by Dec. 19, 2023.

“After careful consideration, we’ve made the decision to discontinue our crypto services by the end of this year,” SoFi said, directing its customers to migrate their crypto holdings to the online crypto wallet Blockchain.com.

ARK has been actively buying SoFi shares throughout the year, buying a total of 1,772,991 SOFI for ARKF so far. ARKF’s SoFi exposure is worth around $13 million at today’s prices.

SoFi stock has seen some volatility in 2023, surging to $11.45 in July after starting the year at just $4.5. SoFi shares have been gradually declining since then, dropping below $7 in mid-November.

*SoFi Technologies (SOFI) shares’ year-to-date price chart. Source: TradingView*

In addition to buying SoFi, ARK has been actively buying Robinhood (HOOD) shares, bagging 221,759 HOOD on Nov. 29. Robinhood’s trading app allows one to buy and trade cryptocurrencies like Bitcoin in the United States. The platform officially announced plans to expand its business into the U.K. on Nov. 30, without mentioning whether cryptocurrency would be part of the offering.

While buying SoFi and Robinhood, ARK has continued to sell the Coinbase (COIN) stock. On Nov. 29, ARK sold around 38,000 COIN shares from the ARKF ETF, totaling nearly $5 million.

ARK did not immediately respond to Cointelegraph’s request for comment.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

Binance settlement ‘net positive’ for cryptocurrency industry — Mike Novogratz

November 30, 2023 Coin Telegraph

Binance

Galaxy Digital CEO Mike Novogratz believes Binance has satisfied regulators and users after its $4.3 billion settlement with United States authorities.

Binance’s $4.3 billion settlement with the United States Department of Justice (DOJ) is being hailed as a positive move for the company and the wider cryptocurrency industry, according to Galaxy Digital’s Mike Novogratz.

In an interview with Bloomberg on Nov. 29, the CEO of the cryptocurrency investment firm expressed his belief that the high-profile settlement should assuage concerned investors and users of the global exchange:

“I think they’re de-risked in lots of ways. People were worried about dealing with Binance. There’s a lot less to worry about now.”

Novogratz also weighed in on the considerations for major investment firms dealing with exchanges, as well as traditional finance (TradFi) players, with regulatory oversight continuing to take center stage in the United States.

Binance didn’t steal money

The Galaxy Digital CEO said that a reasonable approach underpinned by investments and relationships with companies that “take their jobs seriously” remains key while stressing that mainstream finance has also found itself on the wrong side of regulators in recent years.

“If you went through the list of TradFi banks who have been sanctioned or fined by different regulators in the last 24 months, it’s a shocking list. So you’re not looking for zero mistakes, otherwise, there’d be no one to deal with,” Novogratz said.

He added that concerns over Binance potentially being shut down or that the exchange had “stolen people’s money” in a situation similar to FTX simply was not the case:

“It came down to some pretty serious violations of KYC [Know Your Customer] protocols, and they’ve worked to correct them, they paid their fine, and they’re moving on,” the Galaxy Digital CEO said.

“I think it’s a net positive for their company. I think it’s a net positive for our industry.”

Bitcoin price “will be significantly higher”

Novogratz also weighed in continued anticipation of a Bitcoin (BTC) exchange-traded fund (ETF) being approved in the U.S. and the looming mining reward halving in 2024.

“There’s a bunch of good things happening for Bitcoin. We are going to get an ETF. There’s a lot of anticipation, and some of that’s built into the price,” Novogratz said.

The investor added that if and when an ETF is approved, a number of investment and asset managers, including the likes of BlackRock, Fidelity, ARK Invest and Galaxy Digital, will mobilize their sales forces to convince people to adopt Bitcoin:

“The price is going to be significantly higher, especially at a time when the Fed is probably cutting rates. Could we go to old highs by this time next year? Of course we could.”

Novogratz also noted that the Bitcoin halving sets things up for “a wonderful story,” while the 2024 U.S. elections could also play a role.

“That uncertainty should help Bitcoin in the fact that the U.S., Europe and Japan still can’t come close to being fiscally responsible is why people got invested in Bitcoin in the first place,” Novogratz said.

Magazine: The truth behind Cuba’s Bitcoin revolution: An on-the-ground report

US Treasury sanctions crypto mixer Sinbad, alleging North Korea ties

November 29, 2023 Coin Telegraph

Coin Telegraph

The government department has previously imposed sanctions on crypto mixers Blender and Tornado Cash despite many in the space pushing back on actions against software tools.

The United States Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions on cryptocurrency mixer Sinbad, alleging the platform was responsible for laundering funds for the North Korea-based hacking group Lazarus.

In a Nov. 29 announcement, OFAC said Sinbad had “processed millions of dollars’ worth of virtual currency from Lazarus Group heists,” including the June 2022 hack of Horizon Bridge, the March 2022 hack of Axie Infinity’s Ronin Bridge and the June 2023 hack of Atomic Wallet. The hacks resulted in a combined loss of roughly $850 million at the time.

“Mixing services that enable criminal actors, such as the Lazarus Group, to launder stolen assets will face serious consequences,” said Wally Adeyemo, deputy secretary of the Treasury. “The Treasury Department and its U.S. government partners stand ready to deploy all tools at their disposal to prevent virtual currency mixers, like Sinbad, from facilitating illicit activities.”

This is a developing story, and further information will be added as it becomes available.

SEC seeks public input on Franklin Templeton, Hashdex Bitcoin ETFs

November 29, 2023 Coin Telegraph

Bitcoin Price

The request for public comment are standard for ETFs under review and have an open period of 35 days.

The United States Securities and Exchange Commission has announced the next steps in its consideration of the proposed Franklin Templeton and Hashdex spot Bitcoin (BTC) exchange-traded fund (ETF) bids.

The agency has requested written comments on both proposals to approve or deny the applicants’ Forms 19b-4.

SEC Form 19b-4 is a public disclosure approved by the SEC Trading and Markets Division separately from Form S-1, the offering prospectus subject to Corporate Finance Division approval. The SEC’s requests have an open period of 35 days from their publication in the Federal Register for both comments and responses to comments.

*The SEC release on the Franklin Templeton Bitcoin ETF. Source: SEC*

The proposed rule changes — effectively applications — that would allow the trading of the ETFs were filed in late September. The Hashdex ETF would be traded on the New York Stock Exchange Arca and Franklin Templeton’s on Cboe BZX. On Nov. 15, the SEC extended its deadline for deciding on the applications.

The questions address issues related to potential ETF approval. Commenters are invited to assess the funds’ susceptibility to manipulation and whether or not the exchanges that will host them are of significant size.

Franklin Templeton commenters are further asked to consider price manipulation on the BTC market, the company’s surveillance sharing agreement with Coinbase, which would aid in price discovery and supplement efforts to detect manipulation and fraud, and correlation between BTC spot and futures prices.

SEC extends comment window for Franklin Templeton and Hashdex #Bitcoin ETFs pic.twitter.com/aEYTa5Yg1n
— Daniela (@DeFinanzasYT) November 28, 2023

Hashdex’s proposed fund structure is more complex than Franklin Templeton’s. Its proposed Hashdex Bitcoin ETF would be structured as a futures ETF that holds spot BTC. Rather than depending on a Coinbase surveillance sharing agreement, Hashdex would acquire BTC from other exchanges on the CME and rely solely on that mechanism for pricing.

The SEC asked whether the CME has significant size in light of the fund structure and whether sufficient liquidity will be available. Finally, commenters are asked about sponsor Toroso Investments’ calculations to determine the relationship between the BTC price on the CME and on unregulated exchanges. The sponsor manages and controls the fund.

Magazine: Bitcoin ETF optimist and Worldcoin skeptic Gracy Chen: Hall of Flame

Coinbase warns customers about subpoena in apparent CFTC Bybit probe

November 28, 2023 Coin Telegraph

CFTC

Cryptocurrency exchange Bybit restricts use in the United States, although it may be possible to get around it.

Coinbase is warning that it has received a subpoena from the United States Commodity Futures Trading Commission (CFTC), according to X (formerly Twitter) users who have posted copies of the message. The CFTC is seeking information about the Bybit cryptocurrency exchange.

Recipients have speculated that any Coinbase customer who also used Bybit received the message. Coinbase may provide information on users’ accounts and transaction activities to the CFTC unless the subpoena is reversed by a court by Nov. 30, according to the Nov. 27 message.

Dubai-based Bybit stated earlier this year in its terms of service that it does not provide service in the United States, but it is reportedly accessible using a virtual private network (VPN).

The day following Coinbase’s communication, Bybit announced that it had reached 20 million users. It described itself as a “top-three cryptocurrency exchange.” According to the exchange’s statement:

“Prudent risk management and enhanced AML [Anti-Money Laundering] compliance have led Bybit to gain licenses in the UAE, Kazakhstan, and Cyprus.”

Bybit announced it would be imposing Know Your Customer (KYC) verification on users in July 2021, although it is not clear when that took place. Bybit posted KYC instructions for its customers in September 2022.

In September, Bybit said it would leave the United Kingdom market in October when new Financial Conduct Authority rules came into force. It removed two sanctioned Russian banks from its payments list in August.

I've been off Twitter watching some football. One of my friends sent me this email he received from Coinbase. I do not know how many people are subject to this, what the scope is, etc. However, it looks like Coinbase and ByBit do not mix well together! pic.twitter.com/L3qqDBp2TN
— Suitman (Clinically Insane) (@NotSuitman) November 28, 2023

The CFTC labeled itself the “premier” enforcement agency for crypto in its roundup of fiscal year 2023 cases. It initiated 47 cases in the digital assets sector in that period, representing 49% of the cases filed. Among those cases were suits against FTX, Celsius, Voyager Digital CEO Stephen Ehrlich and Binance.

Neither Coinbase nor Bybit responded to Cointelegraph requests for comment.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Jump Crypto filed docs confidentially in SEC v. Terraform Labs case

November 28, 2023 Coin Telegraph

Coin Telegraph

The trading firm and its CEO, Kanav Kariya, allegedly manipulated the price of TerraUSD to gain roughly $1.3 billion in profits.

A federal judge has accepted materials from Jump Crypto Holdings in discovery for the United States Securities and Exchange Commission (SEC) case against Terraform Labs.

In a Nov. 28 filing in U.S. District Court for the Southern District of New York, Judge Jed Rakoff approved the confidential treatment of certain materials produced by Jump Crypto Holdings, the crypto arm of Jump Trading. The firm was reportedly under scrutiny from the SEC for its alleged involvement in the events leading to the depegging of TerraUSD (UST) and the downfall of Terra — one of the major events kicking off the crypto market downturn of 2022.

“[T]he Court retains discretion to make public any confidential materials in connection with future motion practice or trial,” said the filing. “If such disclosure is contemplated, the Court will provide prior notice to counsel for Jump so that counsel may be heard on any objections.”

Before Terra’s collapse, Jump Crypto played a significant role in the firm’s ecosystem, participating in funding rounds supposedly to establish a UST reserve. Investors filed a lawsuit against Jump Trading in May, alleging the firm and its CEO, Kanav Kariya, manipulated the price of UST to gain roughly $1.3 billion in profits.

In February, the SEC charged Terraform Labs and co-founder Do Kwon for allegedly “orchestrating a multi-billion dollar crypto asset securities fraud.” The case was still ongoing at the time of publication, but both the SEC and Kwon and Terraform Labs filed motions for summary judgment in October.

Authorities in Montenegro arrested Kwon in June for using falsified travel documents, later sentencing the Terraform co-founder to four months in prison. On Nov. 24, a Montenegrin court approved Kwon’s extradition subject to approval by the minister of justice, meaning he may be sent to either the United States or South Korea to face charges.

Magazine: Terra collapsed because it used hubris for collateral — Knifefight

$4.3B settlement a result of early gaps in compliance

Binance’s obligations to U.S. authorities

Binance didn’t steal money

Bitcoin price “will be significantly higher”

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