The last Crypto Currier of 2023

All isn’t good in the world of crypto exchanges

DOJ unveils extensive monitoring over Binance operations—a 'wish list' for consultants

US regulators seem to be united in their efforts to shut Binance down. Ex-SEC official John Reed Stark described Binance’s new, exhaustive compliance commitments as a “consulting firm’s wish list” that will likely cause the platform to fail in a post on X. These commitments require Binance to grant authorities access to extensive information, including data about “former employees, agents, intermediaries, consultants, representatives, distributors, licences, contractors, suppliers, and joint venture partners,” as Stark notes.

Binance’s compliance with the U.S. DOJ demonstrates significant government oversight of the crypto exchange. Several DOJ criminal divisions, including those handling money laundering, national security, and counterintelligence, will scrutinise Binance’s activities. FinCEN will also have five years of oversight under a plea deal.

Stark's take on it:

"Binance’s settlement requires it to offer years of instantaneous access, audit, examination, and inspection to DOJ, FinCEN, and all types of financial regulators and law enforcement, exposing the company—and its customers—to a 24/7, 365-days-a-year financial colonoscopy."

His post is titled 'Breaking News: A Binance Double Whammy. 1) Newly Unsealed US DOJ Filings Could Mean the End of Binance; and 2) SEC Files Supplemental Pleading Against Binance, Strengthening the SEC Binance Lawsuit Exponentially' which pretty much says it all. (Cointelegraph)

SEC believes Binance’s DOJ settlement strengthens their case

The SEC is trying to use Binance's recent guilty pleas to strengthen its case against the exchange. The SEC has now reportedly argued that Binance's and its now-former CEO CZ's admissions last month should influence the court's view. The SEC sued Binance and Zhao in June for misleading investors, breaching securities laws, and mismanaging customer funds. Binance is seeking for the case to be dismissed. It has already pleaded guilty to criminal charges and agreed to a $4.3 billion fine for a Department of Justice probe, and as part of this, it has also settled with the CFTC, Office of Foreign Assets Control, and Financial Crimes Enforcement Network over registration, compliance, and sanctions issues. Binance acknowledged past compliance failures but has denied misappropriating funds or market manipulation, taking responsibility for its rapid, misjudged global expansion.

“Binance grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation, and Binance made misguided decisions along the way,” the company said on its blog. “Today, Binance takes responsibility for this past chapter.” (Pymnts)

HTX's troubles continue: $258 million flows out as investors react to ‘hack’ and cry foul

Investors are withdrawing assets from Justin Sun-led and owned cryptocurrency exchange HTX (formerly Huobi). The latest outflow of $258 million since 25 November follows a $30 million exploit on 22 November, but investors aren't withdrawing their assets just because of this hack. This is the fourth such hack to affect Justin Sun-linked crypto exchanges and platforms in two months: a $7.9 million loss on HTX on September 24, an $86.6 million breach on HTX's HECO Chain bridge on November 22, and a $100 million breach on Poloniex exchange on November 10 due to compromised private keys. Poloniex is backed by Justin Sun, who also founded Tron, a stablecoin network favoured by criminals. November was a big month for crypto hacks, mostly as a result of Sun-owned platforms. Nearly 70% of the over $350 million stolen last month was from Sun-linked entities.

Back to HTX, the exchange's reserves are 32.3% Bitcoin, all good, and 31.8% Tron, not so good. Reserves comprising 31.8% Tron does not spell epic safety. HTX ranks 16th in daily trading volume amongst crypto exchanges, with $1.6 billion traded in the last 24 hours (as of writing). CEO Sun assured full compensation for affected users post-restart, and is investigating the hack. Notably, HTX has been facing recent challenges, including regulatory scrutiny and reported detentions in China.?Some have voiced suspicion that Sun himself is behind the hacks.?(Finance Magnates) and (Bitcoin Insider)

Kazakhstan blocked 980 unlicensed?crypto?exchanges in 2023

Kazakhstan's aggressive stance on cryptocurrency regulation in 2023 has seen a nationwide crackdown that involved blocking access to 980 crypto exchanges that had not registered with the country's authority. February 2023 saw a new law mandating a national licence for creating, trading, and operating crypto exchanges and restricting any unlicensed crypto activities. Interestingly, the approach sees major platforms such as Coinbase blocked, whereas platforms that have faced more regulatory scrutiny elsewhere, including Binance, are deemed to have met the regulatory requirements and are authorised to operate in Kazakhstan. This situation underscores the tightening global regulatory environment for cryptocurrencies and the challenges facing exchanges operating internationally. (Cointelegraph)

All isn’t good elsewhere either. But at least you get a nice photo of tulip trading above ??

Craig Wright's Tulip Trading must prove ownership of?bitcoin?in hacking case, English court rules

An English court has told Craig Wright's company, Tulip Trading, that it needs to prove ownership of 110,000 bitcoins he claims to own in its lawsuit against Bitcoin developers. The developers in this case are fighting?Tulip Trading's lawsuit, which alleges they wrongfully refused to help Wright's company retrieve billions of dollars worth of bitcoin it allegedly had and allegedly lost in a hack. Specifically, Wright sued the developers for refusing to build a backdoor mechanism to help Tulip Trading retrieve the bitcoins it allegedly had and allegedly lost. This case was initially dismissed in 2022 but later reinstated on appeal. The preliminary trial will focus on verifying Tulip Trading's claim to the bitcoins and determining the reality of the purported hack. Tulip Trading and Wright's case goes totally against the ethos of bitcoin, crypto, and decentralisation. Ironic from someone who claims to be bitcoin's creator. (CoinDesk)

US crypto companies spent more on lobbying in 2023 than before FTX collapse

The U.S. crypto and blockchain industry spent $3 million more on lobbying in the first three quarters of this year than in the same time frame in 2022. This year, the industry spent around $19 million on lobbying. Coinbase emerged as the top spender, spending over $2 million on lobbying, with Crypto.com, the Blockchain Association, and Binance also contributing notably. This surge in lobbying increased despite the collapse of FTX in November 2022. FTX had been a major player in political donations and marketing, with former CEO SBF notoriously misusing customer funds for substantial political contributions.?(Cointelegraph)

UK FCA?crypto?skills gap is causing slow enforcement

The UK's National Audit Office (NAO) has critically addressed the FCA’s effectiveness at regulating the crypto sector. In its "Financial services regulation: adapting to change" report, the NAO pinpointed the FCA's sluggish response to crypto-related illegal activities. It noted that it took nearly three years for the FCA to act against unauthorised crypto ATM operators, culminating in the shutdown of 26 ATMs in July 2023. The NAO's statement underscored the FCA's delayed enforcement, despite requiring crypto firms to adhere to anti-money laundering regulations since January 2020. It also attributed the FCA's slow pace in registering crypto firms to a lack of specialised crypto expertise. This shortage of skills led to prolonged registration processes under money laundering regulations. As of January 27, only 41 out of 300 crypto firm applications had received FCA approval since January 2020, highlighting the regulatory challenges and inefficiencies in the UK's approach to crypto oversight. (Cointelegraph)

On a side note

Binance founder CZ’s next move could involve decentralised science

CZ has expressed interest in decentralised science (DeSci) since his recent departure from Binance. CZ's interest in this sector suggests potential growth for this dynamic sector. DeSci, which integrates DAOs (decentralised autonomous organisations), biotech, financing, publishing, data storage, and foundations, is recognised for its innovative approach in medicine, with over 20 DAOs actively participating. DeSci proponents argue for decentralisation, especially in the pharmaceutical industry, where current practises prioritise long-term drug dependency over optimal healthcare outcomes.

Critics of the current centralised medical model claim that companies favour healthcare economics that "require a patient to take a drug every day for their entire life and are often misaligned with good healthcare outcomes." Decentralisation, they argue, changes this dynamic. Tyler Golato, co-founder of Molecule, states, “Decentralization changes this — patients, researchers, parents of children with rare diseases and enthusiasts can contribute funding, work and data to projects in a more open-source way, and be incentivized and rewarded with governance and ownership in projects. This allows for genuinely novel ways to collaborate and develop biotechnology that is fundamentally aligned with cures.” This perspective suggests that DeSci could realign the focus of medical research and development towards more beneficial healthcare outcomes. (Cointelegraph)

On a festive note

The Crypto Currier is going to be off for the rest of the year and for the new year. Thank you for subscribing and see you next year! ??

?? ?? It’s Cryptmas in London! Our CMS UK Crypto team (where I work) would like to invite you to our first Cryptmas party on December 19th at 6pm at our London offices in Cannon Place ?? ?? There will be festive drinks and snacks, providing an opportunity to connect with friends and colleagues in the London crypto community. Please note that space is limited, and attendance will be allocated on a first-come, first-served basis. So, if you would like to attend, please register here and the events team will confirm your attendance soon.

?? ?? If you need a crypto-y stocking filler. Crypto Wars brings you the biggest scams in crypto*, faked deaths, disappearing people, Ponzi schemes and inventing money out of thin air and is available on Amazon and at book shops. *until 2022 happened

On another book note, or if you want a bigger stocking filler, the first (and only) UK textbook on crypto and digital assets law and regulation edited and put together by my CMS UK colleague Charles Kerrigan is out this Friday! I also got to co-write a chapter on crypto risk. It’s available to pre-order here

Disclaimer: The Crypto Currier offers information, not advice or recommendations.? It does not recommend any particular investment or investment strategy and focus on news, use cases and applications of the technologies rather than investment. You should carry out your own independent research including your own independent verification of facts and data. I write the Currier carefully but we can’t guarantee the accuracy or completeness of any information we publish and we accept no liability for any act or omission by a reader of our content. Opinions entirely my own and might be totally incorrect.