Welcome to Law Decoded, your weekly summary of the main developments in the field of regulation.
The FTX drama escalated last week when the Royal Bahamas Police arrested its former CEO, Sam Bankman-Fried, at the request of the United States government. Within hours, politicians, crypto executives, and influencers had launched their Twitter apps to comment on the arrest of the former CEO, who had to miss his testimony before the US Congress. However, the text of SBF's intended testimony was obtained by the media, in which blamed the listing of FTX.US in the Chapter 11 bankruptcy of John J. Ray III, a restructuring attorney who took over as CEO of FTX after the bankruptcy filing.
The body of accusations against FTX and SBF personally is piling up. The United States Securities and Exchange Commission (SEC) accused Bankman-Fried of violating anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. At the same time, the Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Sam Bankman-Fried, FTX and Alameda Research, alleging violations of the Basic Products Exchange Law and demanding a jury trial. A new indictment, signed by the United States Attorney for the Southern District of New York, Damian Williams, runs to 14 pages and contains eight beads.
Bankman-Fried reportedly reconsidered her previous decision to challenge extradition and is expected to appear in court in the Bahamas on December 19 to seek a reversal. By consenting to extradition, he could appear before a US court, where, if convicted, he could receive up to 115 years in prison. However, there is "a lot to play for" in the case until he gets a final judgment within the next few months or even years. legal commentators told Cointelegraph.
Senators Warren and Marshall Introduce Cryptocurrency Money Laundering Legislation
US Senators Elizabeth Warren and Roger Marshall introduced the Digital Assets Anti-Money Laundering Act of 2022. The seven-page bill would expand the classification of a money services business (MSB), prohibit financial institutions from using technology such as digital asset mixers, and regulate digital asset kiosks, also known as ATMs.
Money service businesses would be required to have written anti-money laundering policies and implement them. The bill would end the reporting requirements already proposed by FinCEN and would impose new requirements, including the reporting of transactions greater than $10,000 in accordance with the Bank Secrecy Act.
Canada bans crypto leverage and margin trading
The Canadian Securities Administrators (CSA), the council of Canada's provincial and territorial securities regulators, issued an update on crypto trading platforms operating in the country. According to the statement, all crypto trading companies operating in Canada, both local and foreign, have to comply with newly expanded terms, which prohibits them from offering margin or leverage trading services to any Canadian client. The expanded terms also require cryptocurrency exchange service providers in Canada to segregate custodial assets from the business that owns the platform.
Nigeria Prepares to Pass Bill Recognizing Bitcoin and Cryptocurrencies
The Nigerian government will reportedly soon pass a law that will recognize the use Bitcoin (BTC) and other cryptocurrencies as a means of keeping up with global practices. If the Securities and Investments (Amendment) Bill 2007 becomes law, it would allow the local Securities and Exchange Commission to "recognize cryptocurrency and other digital funds as capital for investment."
Report comes almost 24 months after Nigeria crypto activity banned in February 2021with the Central Bank of Nigeria (CBN) ordering local crypto exchanges and service providers to cease activity and forcing banks to close the accounts of any person or entity found to be engaged in trading activities.
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