The 5 Crypto Stories You Need to Know This Week (25 March 2023)

1. Coinbase Receives Wells Notice from SEC

Coinbase disclosed that they received a Wells Notice from the SEC, indicating that enforcement actions are coming.?

In a blog post, Coinbase Chief Legal Officer Paul Grewal wrote that the SEC remains concerned about the exchange’s staking service, noting that the agency had reviewed Coinbase’s listings and staking processes two years ago as part of the exchange’s move to go public.??

Let’s not forget that last month the SEC forced fellow exchange Kraken to stop offering staking services to U.S. customers.?

According to Grewal, Coinbase is prepared to fight these charges in court.?

Coinbase CEO Brian Armstrong accused the SEC of failing to engage with crypto companies on setting clear rules for the industry while also promising to take the fight to court.?

Definitely a development to follow.

2. Tron Founder Justin Sun Sued by SEC

The SEC sued Tron founder Justin Sun on allegations of selling and airdropping unregistered securities, fraud and market manipulation.

In a press release, the SEC said it was suing Sun, the Tron Foundation, the BitTorrent Foundation and BitTorrent (now known as Rainberry) over the sale of tronix (TRX) and bitTorrent (BTT) tokens, which the regulator described as unregistered crypto asset securities.

The regulator further alleged the defendants "fraudulently manipulat[ed]" TRX's secondary market through an "extensive wash trading" scheme.

Sun, who was named Grenada's ambassador to the World Trade Organization (WTO) last year, tried to artificially inflate TRX's trading volume through the wash trading scheme, the SEC alleged, by having his own employees "engage in more than 600,000 wash trades of TRX between two crypto asset trading platform accounts he controlled.?

Eight celebrities - including Lindsey Lohan, Jake Paul and Soula Boy - were simultaneously charged by the SEC for illegally touting TRX and BTT without disclosing their compensation.?

The court filing against Sun is available to read here .?

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3. Do Kwon Arrested; Charged with Fraud by U.S. Justice Department

Do Kwon, the Terraform Labs co-founder wanted in the U.S. and South Korea for last year’s $40 billion Terra UST/Luna implosion, was detained in Montenegro after being on the run for nearly a year.?

Police said in a statement that the fugitive was trying to fly to Dubai using a forged Costa Rican passport and a separate Belgian passport in his luggage.

Hours after his arrest, federal prosecutors in the Southern District of New York announced they were charging Kwon with conspiracy to defraud, commodities fraud, securities fraud, wire fraud and conspiracy to engage in market manipulation whilst asking for his extradition to the United States.?

Last month, the S.E.C. charged Kwon with masterminding “a multibillion-dollar crypto asset securities fraud.”

The question now is whether Kwon will now be extradited to the U.S. or to South Korea.?

4. White House Discusses Crypto Assets in “Economic Report of the President”

An annual report prepared by the Council of Economic Advisors takes a negative view of crypto assets.?

The report states :

“In addition to the decentralized custody and control of money, it has been argued that crypto assets may provide other benefits, such as improving payment systems, increasing financial inclusion, and creating mechanisms for the distribution of intellectual property and financial value that bypass intermediaries that extract value from both the provider and recipient. Looking under the hood at these arguments, however, shows a more complicated picture. So far, crypto assets have brought none of these benefits.”

For those interested, chapter 8 (p.237) is worth reading.

5. Florida Governor Ron DeSantis Proposes Law to Ban CBDCs

Florida Governor Ron DeSantis, widely expected to seek the Republican nomination for president in 2024, announced legislation that would ban CBDCs in Florida.?

The legislative proposal has three main goals:

• Prohibiting the use of a federally adopted CBDC as money?
• Instituting protections against a central global currency by prohibiting any CBDC issued by a foreign reserve or foreign-sanctioned central bank
• Calling on likeminded states to join Florida in adopting similar prohibitions

The press release states :?

“A federally controlled Central Bank Digital Currency is the most recent way the Davos elites are attempting to backdoor woke ideology like Environmental, Social, and Governance (ESG) into the United States financial system, threatening individual privacy and economic freedom. Unlike a decentralized digital currency, a CBDC is directly controlled and issued by the government to consumers, giving government bureaucrats the ability to see all consumer activity and the power to cut off access to goods and services for consumers.”

Texas Senator Ted Cruz separately introduced a bill that would block the Federal Reserve from creating any central bank digital currency without congressional approval, stating :

“The federal government has no authority to unilaterally establish a central bank currency. This bill goes a long way in making sure big government doesn’t attempt to centralize or control cryptocurrency and instead, allows it to thrive in the United States. We should be empowering entrepreneurs, enabling innovation, and increasing individual freedom—not stifling it.”?

It was a busy week for CBDCs overall, with India's central bank advocating for legislation that would allow retail CBDC users to delete any transactions from the network's ledger to maintain anonymity and the Central Bank of the UAE releasing its national CBDC strategy, which it expects to complete over the next 12-15 months.?

Privacy issues around CBDCs will be not only policy debates but political ones as well.

Expect to hear similar statements in the coming months.?

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