ALSO: Gemini Earn user could be made "whole," OneCoin scammer gets 20-year sentence and more |

Sept. 13, 2023

The biggest crypto news and ideas of the day 

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Welcome to The Node! This is Daniel Kuhn here to take you through the latest in crypto news and why it matters.

 

In today's news: Binance.US loses CEO and one-third of its workforce. Gemini "Earn" users could be made “nearly whole.” And a co-founder of the $4 billion OneCoin scam get 20 year prison sentence.

 

The takeaway:Consensus Magazine managing editor Ben Schiller writes about the track record of crypto lobbying in Washington D.C., as the Blockchain Association celebrates a five year anniversary.

 

Cut Backs, Made 'Whole'

Binance.US CEO Brian Shroder has left the crypto exchange along with one-third of its workforce. The company said the layoffs provide "seven years of runway," and pointed blame at “aggressive attempts to cripple our industry" by the U.S. Securities and Exchange Commission, which sued Binance in June alleging securities law violations. In better news, users of crypto exchange Gemini’s defunct “Earn” product could be made “nearly whole” under a proposed remuneration deal from creditors Genesis and Digital Currency Group. The plan will be voted on later this year, and may include in-kind repayments (meaning users get tokens, not dollars, back) — assuming it's not derailed by the ongoing spat between Gemini and DCG camps. (CoinDesk is a wholly owned subsidiary of DCG.)

 

Fire Sale?

Crypto exchange FTX amended its proposal to offload its multi-billion dollar crypto stockpile, hoping to assuage concerns recently flagged by the Department of Justice’s bankruptcy branch (and crypto traders). FTX has agreed to keep the U.S. Trustee and several creditor groups in the loop about its potential crypto sales, which could hit $100 million per week, but will not have to issue advance notice to the public. Meanwhile, lawyers for Sam Bankman-Fried said a DOJ attempt to block the ex-CEO of FTX’s proposed witnesses from testifying is "overreaching." And finally, it looks like SBF will remain in jail ahead of his October trial, despite pleas to be released over jailhouse conditions. SBF was initially granted bail following his extradition from the Bahamas, but was remanded into a notorious New York City complex after tampering with witnesses.

 

A message from Simpluris

If you purchased FEI or TRIBE tokens in the Genesis Event between March 31 and April 3, 2021, a class action settlement may affect your rights.

An NFT legal notice has been issued to wallets with instructions on how to file a claim. 

 

You can learn more about the settlement and file a claim here:  www.feitribesecuritiessettlement.com

 

Courts Say

A founder of OneCoin, a notorious $4 billion pyramid scheme that defrauded at least 3.5 million victims, was sentenced to 20 years in prison by a New York court. Karl Greenwood, the “global master distributor” of the Bulgaria-based project founded in 2014, will also forfeit $300 million, the estimated amount he pocketed from the multi-level marketing grift. His co-founder Ruja Ignatova, aka "CryptoQueen," remains at large. In another court room, this time in Florida, a judge blocked an attempt to criminally sanction Craig Wright (who claims to be Satoshi Nakamoto) for failing to correctly fill out financial disclosure forms, but has approved “remedial civil contempt proceedings" for the same transgression. W&K Info Defense, CSW’s former employer which requested the sanctions, was awarded some $143 million in damages from the Satoshi Nakamoto pretender in 2021 after a court found him guilty of misappropriating its intellectual property. 

 

A Promise, Endorsement, Sale and Launch

Coinbase CEO Brian Armstrong reaffirmed that the exchange will integrate Bitcoin Lightning ... soon enough. Separately, messaging app Telegram will give its 800 million users direct access to the TON blockchain, a "completely separate decentralized organization" spun out from its crypto project quashed by the SEC in 2020. Toncoin, the 11th largest by market cap, rallied 13% on the news. Telegram’s chief investment officer said the company “is not getting into Web3, but recognizes the value Web3 has for its users." Meanwhile, blockchain infrastructure provider Alchemy released new payment options, aiming to save its crypto dev clients 31%-80% in crypto fees amid the bear market. Finally, crypto derivatives exchange BitMEX’s prediction market is now live, beginning with a suite of betting contracts including whether SBF will be convicted and likelihood of a bitcoin ETF is approved.

 

The Takeaway: Lofty Lobbyists?

Blockchain Association CEO Kristin Smith counts three major achievements for U.S. crypto lobbyists. (CoinDesk)

This month, the Blockchain Association, crypto’s leading trade association in Washington D.C., marks its fifth anniversary. The lobby shop now has 114 member companies, per a press release today, including big names like Coinbase, Kraken, CoinFund, Pantera Capital, Ripple and Uniswap. 

 

It has an unwavering mission to “advance the future of crypto in the United States, promoting the potential of blockchain technology and shaping policy that ensures its success,” the release said. And that’s surely something most of us can get behind, whether we’re working directly in crypto or observing it in the media.

But these are tough times for crypto in the capital. Following the collapse of FTX last November, and a string of scandals preceding it, the industry is struggling to get its message across to lawmakers and regulators. Many members of Congress are openly hostile to crypto’s goals, and the days when Sam Bankman-Fried could get dinner with any big D.C. fish are long gone. Congress members are wary of political contributions and wary of speaking too fulsomely of helpfully regulating an industry that has often lost voters money. There are few votes in championing Web3 anymore. 

 

So has the Blockchain Association failed?

You could argue that. In the last five years, Congress has not passed any comprehensive crypto legislation and it doesn’t seem likely to any time soon. We’ve seen plenty of thoughtful bills proposed, including the second iteration of one from U.S. Senators Cynthia Lummis and Kirsten Gillibrand, and a Republican-supported stablecoin bill has received strong backing from key members of the House Financial Services Committee. But, with Gary Gensler’s launching a series of noisy enforcement salvos against companies like Coinbase, Kraken and Binance (and Binance’s U.S. subsidiary), many continue to complain about a lack of regulatory clarity. 

 

And, indeed, some have had enough of the U.S. entirely, choosing bases of operations in jurisdictions with more favorable and transparent regimes. 

 

I spoke to Kristin Smith, who has led the Blockchain Association for the last five years, about what her organization’s main achievements have been over that time. She points to three. 

 

First, she said, the association helped beat back a proposed rule from the Financial Crimes Enforcement Network (FinCEN), the U.S. Treasury’s money laundering watchdog, requiring exchanges to collect personal information on unhosted or self-hosted crypto wallets. Second, the association, she said, helped water down a crypto tax and expansive reporting requirement contained in President Joseph Biden’s 2021 omnibus infrastructure bill. Third, the association has helped member companies, such as Ripple, Coinbase and Grayscale, to push legal arguments as they fought Securities and Exchange Commission actions against them.

But you might call all these wins as maintaining the status quo rather than advancing the industry’s interests in a more positive direction. They are aimed at protecting businesses in an uncertain environment, instead of creating a world where crypto knows where it stands legally speaking.

 

Of course, nobody could have expected that SEC Chair Gary Gensler would have turned into such a crypto hawk. When he came to office in April 2021, he was widely seen as an industry ally, someone who had taught blockchain tech at MIT and understood its goals. In an op-ed for CoinDesk in December 2019, he had written “I remain intrigued by Satoshi’s innovation’s potential to spur change – either directly or indirectly as a catalyst. The potential to lower verification and networking costs is worth pursuing, particularly to lower economic rents and data privacy costs, and promote economic inclusion." Four years later, Smith, who is otherwise careful in her wording, is unabashed in calling Gensler “an enemy” of the industry. 

 

It’s true, too, that no one could have foreseen that Sam Bankman-Fried would go from a golden boy feted across the capital’s salons and steakhouses to being a defendant in a series of federal prosecutions that could land him in prison for decades. That isn’t the Blockchain Association’s fault. But the events of the last nine months, and the failure of lobbyists to enact meaningful change in D.C., might point to the need for a rethink and a fresh approach from crypto’s lobbyists. 


Smith is confident that the SEC will lose its legal arguments intended to frame every digital asset, bar bitcoin, as a security covered by existing securities law. But it’s likely to be a long slog. The anger felt widely at the collapse of FTX and a series of other high-profile crypto companies will take time to die down.

Smith said “the legislative process is slow and that sometimes it takes a decade or more to move things forward.” Let’s hope that in another five years, we’re writing a different type of “take” on crypto’s regulatory standing. But, it might be good for crypto lobbyists to be humble about their “achievements” in the meantime.

 

Read this article on the web.

 

– Ben Schiller, managing editor of Consensus Magazine

@btschiller

[email protected]

 

A message from Bitget

Bitget Marks 5 Years in Business by Looking Forward to the Next 5 – and Beyond

 

In 2018, the year Bitget launched, at least 23 other exchanges failed. The next year, that figure was 252, then 2020’s figure exceeded that. After that came FTX’s implosion. It’s no accident then that Bitget is still in business and is, in fact, thriving.

 

“In retrospect, 2018 marked the rise of Ethereum and the dawn of a cryptocurrency frenzy,” Bitget Managing Director Gracy Chen wrote in a letter to employees. “However, as crypto prices plummeted, most speculators fled, leaving only a resilient 10% still holding their ground. It was during this pivotal moment that Bitget emerged. We envisioned a crypto revolution that will reform the way finance works and people invest forever, creating a more equitable future.”

 

Bitget can be overlooked in the centralized exchange market.  Continue Reading

 
 

Off-Chain Signals 

  • Major US Crypto Markets Bill is Facing a Congressional Gauntlet – Unchained
  • Creator of Mila Kunis-backed Stoner Cats series pays $1M to settle SEC charge – Protos
  • Soulja Boy and Austin Mahone lose to SEC, Justin Sun still to respond – Protos
  • Compound founder Leshner on DeFi: ‘The institutions aren’t coming’ – Blockworks
  • MobileCoin, which powers Signal’s anonymous crypto payments, appoints new CEO – TechCrunch
  • Wash Trading Rampant on Decentralized (DeFi) Crypto Exchanges, Solidus Labs Says – Bloomberg (paywalled)
  • SEC Chair Gensler calls out crypto's 'wide-ranging noncompliance' in Senate hearing – CNBC
  • Hyped Banana Token Launch Wrecked By Contract Bug – The Defiant
  • zkSync Airdrop Farmer Deploys 21,877 Wallets – The Defiant
 

When CZ Says C'ya

 
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