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welcome back to Chain reaction.
If you thought last week was crazy with the US Securities and Exchange Commission clamping down on major crypto companies like coin base and thunderyou should buckle up for this week's news.
Binance, the world's largest cryptocurrency exchange by volume, its CEO Changpeng Zhao and Chief Compliance Officer Samuel Lim they are being sued by the US Commodity Futures and Trading Commission (CFTC), according to a document filed Monday.
The company, Zhao and Lim are being sued for allegedly violating trading and derivatives rules.
The CFTC's filing alleges that the exchange never registered with it in any way and has "ignored federal laws" for US financial markets, including laws implementing controls to prevent and detect money laundering and financing of terrorism, among other elements.
After its launch in June 2017, the exchange became the world's largest crypto exchange within 180 days and has maintained that ranking ever since. Binance has spent $80 million on external partners such as KYC providers, transaction monitoring, market surveillance, and investigative tools to support its compliance programs, a company spokesperson shared with TechCrunch.
โThis filing is unexpected and disappointing as we have been working collaboratively with the CFTC for over two years,โ the spokesperson added. โHowever, we intend to continue to engage with regulators in the US and around the world. The best way forward is to protect our users and work with regulators to develop a clear and thoughtful regulatory regime."
The CFTC likely disagrees with that stance, as its filing indicated that Zhao and other parties involved in Binance's senior management "have failed to adequately monitor Binance's activities" and such actions have "actively facilitated violations of the law." of USA".
In response to the CFTC's announcement, Zhao tweeted โ4โ, which refers to a previous tweet from him from January using the number to tell others to โignore FUD, fake news, hacks, etc.โ FUD is an acronym for Fear, Uncertainty, and Doubt, and typically refers to when a business feels that it is at a disadvantage.
This action comes at a time when the crypto industry, especially the big players, is facing a lot of regulatory action from the US, which some see as a good thing for clarity, but others see as a good thing. unfair or stifling innovation. In the long term it will be determined if this action will have a positive impact on the US crypto ecosystem.
But even after a series of regulatory measures, the cryptocurrency market appears to be unaffected. Total crypto market capitalization increased slightly from $1.15 trillion to $1.18 trillion on the week, according to CoinMarketCap. data. At the time of writing, bitcoin and ether are up 4% and 3%, respectively, in the same time period.
This week on web3
Binance CFTC Lawsuit Shows โRegulators Will Keep Regulating And Regulating Moreโ (TC+)
Continuing on the theme above, TechCrunch dove into what Binance's CFTC lawsuit means for the big crypto industry, and the impact could be far-reaching. โCrypto is under attack,โ Yankun Guo, a partner at Chicago-based law firm Ice Miller, told TechCrunch+. โThe last six months have seen a wave of complaints and enforcement actions against top-tier names, including Coinbase, Kraken and KuCoin, and it was only a matter of time until Binance had their turn.โ The final impact on Binance could send shockwaves through the global digital asset market, another market participant noted.
Former FTX CEO Sam Bankman-Fried Charged with Allegedly Bribing Chinese Officials
The (former) executive of another crypto exchange was also in the news this week, but for different reasons. US prosecutors filed a superseding indictment against former FTX CEO Sam Bankman-Fried, alleging he bribed Chinese officials. According to court documents from the US District Court for the Southern District of New York, "in or about 2021," Bankman-Fried "authorized and directed a bribe of at least $40 million to one or more officials of the Chinese government".
Are cryptocurrencies commodities or securities? It depends on which US agency you ask. (TC+)
It's a confusing time to be a crypto company. The markets are volatile and business activity is shaky right now, but the biggest problem for crypto businesses seems to be that there is no clarity right now about the laws they are supposed to align with. In the latest CFTC lawsuit against Binance, some cryptocurrencies were alleged to be commodities, a view that differs from another major US government agency, the Securities and Exchange Commission (SEC), which believes that most crypto assets (other than Bitcoin) are securities.
US and South Korea seek extradition of Do Kwon to face charges
Do Kwon, the founder of Terraform Labs, which operates the TerraUSD stablecoin and its sister token LUNA, was arrested in Montenegro last week as he tried to board a flight to flee to Dubai with forged documents. Whats Next? We don't know which country Kwon will be sent to, as he now faces criminal charges in the US and his home country of South Korea. And both countries appear to be seeking Kwon's extradition.
Coinbase execs weigh in on future of US cryptocurrencies amid regulatory scrutiny (TC+)
Coinbase received a notice of Wells from the US Securities and Exchange Commission last week, and company executives took to Twitter Spaces to discuss the decision and what Coinbase's next steps will be to create legal frameworks for the crypto world. โRegulators should propose the rules, tell everyone the rules and we follow them,โ Chief Executive Officer Brian Armstrong said during the conversation. "Current laws are not clear and we would like more clarity."
the last pod
for the past week episodeJacquelyn interviewed Emin Gรผn Sirer, founder and CEO of Ava Labs.
Ava Labs has raised a total of about $640 million, according to crunchbase, and is backed by firms like a16z and Polychain Capital. In recent months, Ava Labs has announced a number of partnerships with major brands and companies, such as Amazon Web Services, which TechCrunch covered. exclusively.
Ava Labs created the Avalanche Layer 1 Blockchain, a platform that enables developers to build multifunctional blockchains and decentralized applications with a focus on speed and low transaction costs.
We talked about Gรผn Sirer's background; why he launched the layer 1 blockchain, Avalanche, in 2020; if the space has too many L1s; and how blockchains can scale more efficiently.
We also discuss:
- How layer 2 vision is broken
- US regulatory crackdown on cryptocurrencies
- Ava Labs growth in Asian markets
- Blockchain Partnerships and Business Development
- Ava Labs Focal Point for 2023 and Beyond
subscribe to Chain reaction in apple Podcast, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!
follow the money
- Crypto wallet company Ledger raises another $108 million
- Web3 Polytrade Protocol raises $3.8 million to improve world trade
- Fetch.ai Blockchain Startup takes $40 million to provide monetization and other tools for information generated by AI
- Aptos-based protocol Econia Laboratories raises $6.5 million to build decentralized order books
- Own Laboratories closes $50 million Series A round led by Blockchain Capital
This list was compiled using information from Messari as well as TechCrunch's own reporting.
