Japan’s federal court rejects the former Mt. Gox CEO, Mark Karpeles’ appeal, upholding his two-year jail term.
The ruling sees the infamous Mt. Gox case stretch on as Mark’s attorney’s vow to reopen the case following an “unfortunate verdict.”
According to Associated Press report, a Japanese high court upheld a lower court’s ruling on the Mt. Gox saga, a crypto exchange that went bankrupt after 850,000 Bitcoins were hacked from the exchange. Mark Karpeles, the former CEO of the Japan based crypto exchange is the center stage of the case charged with manipulation of electronic data.
The lower court found the Frenchman guilty of manipulation of data sentencing him to two and a half years in suspended prison time – meaning he won’t serve jail time. The court also dropped two charges from the original prosecutions – embezzlement of funds and a breach of trust to the Mt. Gox users.
However, Karpeles appealed the ruling maintaining the hack was completely external and he had nothing to do with it. He believes the case on Mt. Gox will drag on for a decade before the root cause of the hack is established given the relatively new area of the crypto space back then.
The prosecutors at the district court had asked the court for a ten-year jail term for Karpeles following a class action lawsuit filed against him by former Mt.Gox users.
An innocent plea
The Namaste order from the high court however will not stop Mr. Karpeles attorneys from proving his innocence in the MT. Gox hack saga. The lawyers argue that the prosecutors misunderstand the overall working around a crypto exchange hence their continued pursuit over the CEO while he had nothing to do with it. The statement from Karpeles following the upholding of the guilty verdict read,
“Today’s verdict was unfortunate, and I am reviewing its contents alongside my lawyers and will decide how to proceed from there in the coming days.”
Currently, reports from Japan show that Mark Karpeles has launched Tristan Technologies, a blockchain based operating system much to the criticism and disdain of Mt.Gox users. One distraught user claims Karpeles is finding a way to clean his image and get back into the blockchain space.
Telegram withdraws its appeal against the U.S Federal Court ruling forbidding the distribution of GRAM tokens to its TON blockchain investors.
The move comes as the final straw in what has been a long-running battle between the messaging app firm and the U.S Securities Exchange Commission (SEC).
In a document sent to the United States Court Of Appeals for The Second Circuit, earlier on Monday, May 25, 2020, Telegram confirmed its final push towards offering its GRAM tokens has come to an end after withdrawing its appeal.
Telegram’s $1.7 billion ICO offering tokens distribution was halted earlier in March as U.S federal court declared it an illegal securities offering to which Telegram appealed. However, following the public announcement by the CEO of Telegram, Pavel Durov, put an official end to Telegram’s role in the TON blockchain project, as the company as officially ended their fight for the project. The statement reads,
“The parties in the above-referenced case [Telegram Group, Inc., Ton Issuer, Inc. and U.S SEC] have filed a stipulation withdrawing this appeal pursuant to Local Rule 42.1”
Telegram’s death spiral from TON
After a long six month battle in court, Telegram finally conceded to the SEC agreeing to hold the distribution of the GRAM tokens. The $1.7 billion ICO raised in two rounds back in 2018 will be returned to investors.
The money will be returned in two ways, to which U.S investors are only allowed the first option; take back 72% of your investment immediately as agreed in the contract or loan the money back to Telegram with a guarantee of getting back 110% of the total invested funds in April 2021.
The company faces possible lawsuits following the non-distribution of the tokens with others claiming the terms offered for a refund are not fair. Despite Telegram leaving the TON blockchain project, the development of the open-sourced project will continue as the code is available on GitHub.
Digitizing the dollar is a key factor in maintaining its appeal as a global currency, Trump’s nominee to the Federal Reserve, Judy Shelton, says.
In a congressional hearing on Thursday, Fed nominee, Judy Shelton, said the Federal Reserve should be “compelled to think” about a central bank digital currency (CBDC) given the mileage the innovation offers to rival countries such as China. Shelton believes the U.S should rely on fintech innovations to keep themselves abreast in financial matters and retain the dollar as the global reserve currency.
Tom Cotton (R-Arkansas), was critical of the benefits the that CBDCs offer saying that having a digital dollar will increase the dominance of the country and maintain the countries power in global influence. Asking Shelton’s opinion on the possible development of a digital dollar. Shelton said,
“The dollar is the most important soft instrument of power that we have across the globe. Yes, it is a dominant reserve currency but we can’t rest on our laurels in that regard.”
The accelerated efforts on development of a digital currency by both Facebook’s Libra project, and the People’s Bank of China (PBoC) CBDC is a key point that Ms. Shelton focused on too. She emphasized that the U.S. should not lag behind as it seeks to retain its control as the largest reserve currency in the world. She said,
“Rival nations are working very diligently to have an alternative to the dollar. I think it is very important that we get ahead of the curve to ensure that the dollar continues to offer the best currency in the world.”
With Shelton having shown affinity to blockchain, cryptocurrencies, CBDCs and stablecoins before, her appointment to the Fed board shows light at the end of the tunnel in regulation of cryptocurrencies across the states.
The New York Attorney General Office (NYAG) has responded to Bitfinex’s appeal to have the authority stop the ongoing investigations against them and Tether. This filing was made with the Appellate court in New York and seems to be slowly mounting pressure on both Tether and Bitfinex whose NY operations were halted as early as January 2017.
Bitfinex and Tether’s Fund Mismanagement Background
Investigations on securities misconduct and operating as one entity began when the NYAG raised claims that Bitfinex was using funds from Tether’s USDT reserves to meet its liquidity needs. This was later spiked by the arrest of Crypto Capital officials, a financial institution, which operated as a shadow bank for crypto projects until authorities cracked down on some illegal activities they had facilitated.
Bitfinex found itself in the middle of the Crypto Capital collateral damage having stored around $625 million funds with the ‘crypto bank’. This forced the crypto exchange to use proceeds from Tether to meet withdrawal demands despite the prohibitions on such activities. In doing so, Bitfinex was looking to meet a short of $850 million arising from the frozen funds but instead attracted the authorities. Reports from the NYAG office claim that the two entities have common shareholders and executives; a position which may have influenced the funds movement.
The NYAG Argument for Investigating Bitfinex
In the latest filing, the NYAG defended itself based on the Martin Act which gives this office the authority to initiate investigations before starting legal proceedings on financial market misconduct. Basically, the appeal will determine the extent to which the NYAG can request for information or start a legal process to prosecute Bitfinex and Tether.
However, Bitfinex in their defense had claimed that the human resources in New York linked to the firm’s operations is not sufficient to place it within the state’s jurisdiction. According to the NYAG, this is not entirely correct given the exchange’s Chief Strategy Officer was based in New York as well as a number of representatives. Furthermore, there has been evidence to show that the Bitfinex platform has been accessed from New York in 2019 despite its ban for almost 2 years.