Ethereum Developer Virgil Griffith Remanded In Custody For Violating Bail Terms By Accessing Coinbase Wallet

Ethereum Developer Virgil Griffith Remanded In Custody For Violating Bail Terms By Accessing Coinbase Wallet

Ethereum developer Virgil Griffith has been remanded in custody. He’s said to have reportedly violated the terms of his bail, per reports from Inner City Press. Griffith was granted bail in December 2019.

Griffith May Be In Jail Until His Trial In September

The remand order was given after a federal judge found out that he had violated the terms of his bail by seeking access to his Ethereum assets held by exchange Coinbase in May 2021.

Griffith, a former researcher with the Ethereum Foundation, will likely spend the next two months in jail as he is scheduled to be tried on September 21. If found guilty, he faces up to 20 years in prison.

The developer is being charged with conspiracy to violate the International Emergency Economic Powers Act.

Griffith is said to have allegedly assisted North Korea in laundering money through cryptocurrency in order to avoid US sanctions. The developer was arrested in November 2019.

Although he was denied bail initially, he was finally granted a bond order for $1 million in December 2019. Griffith’s father reportedly offered his house worth $835,000 as security for bond. His sister also secured the bond with her property.

The developer was granted bail on the condition that he would not access his accounts and would remain under house arrest with his parents in Alabama.

However, he is said to have violated these bail terms when he tried to access his cryptocurrency account by contacting Coinbase to request the removal of account security functions.

Although Griffith’s lawyers claimed the attempt to access the account on Coinbase was made by proxy. The lawyers argue that his family only contacted Coinbase to ascertain if the assets in Griffith’s account could cover his legal fees. The lawyers said,

“Given the impending trial date, Mr. Griffith may need to sell certain assets to fund his legal defense…In connection with their strategy to assess and access necessary resources to fund his defense, and after consulting counsel, his mother made an online request to access a US-based and regulated cryptocurrency exchange, Coinbase…”

US District Judge P. Kevin Castel said Griffith’s attempt to access the assets suggested a flight risk since the assets Griffith held had surged in value into the $1 million range.

Virgil Griffith’s Failed Attempt To Dismiss Case

Griffith had previously filed a motion to dismiss the conspiracy charges in October 2020. He claimed that his April 2019 conference presentation consisted of public information that was widely available. Therefore he did not provide a service to North Korean officials. This argument was not accepted as the US government labeled the statement as absurd.

Griffith’s case also gained support from the Crypto community, who championed his release. Ethereum (ETH) co-founder Vitalik Buterin had defended and declared his solidarity with Virgil Griffith last year. He said that Griffith didn’t do any wrong as he only tutored in his presentation.

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Author: Jimmy Aki

Poloniex To Face Regulatory Action For Violating Securities Laws In Canada

Poloniex To Face Regulatory Action For Violating Securities Laws In Canada

The Canadian securities regulator, the Ontario Securities Commission, has accused the cryptocurrency exchange Poloniex of flouting Ontario securities law.

Ontario Regulator Files Statement Of Allegations Against Poloniex

The regulator filed a statement of the allegation on Tuesday, claiming that Poloniex failed to seek approval as a crypto trading platform operating in the province.

The Canadian agency identified Poloniex’s crime of holding digital assets in custody as a third party and argued that any assets held on a trading platform could be securities. The regulator went on to explain:

“While Poloniex purports to facilitate the trading of the crypto assets in its investors’ accounts, in practice, Poloniex only provides its investors with instruments or contracts involving crypto assets. These instruments or contracts constitute securities and derivatives.”

The regulator currently seeks CA$1 million ($830,000) fines for each “failure to comply.” The first hearing on the matter is scheduled for June 18.

The OSC had previously warned crypto exchanges in the province that trade securities and derivatives to get in contact with the regulator or face regulatory action.

The agency set a deadline of April 19, 2021, for exchanges to comply with the registration requirement, which had more than 70 exchanges in compliance. However, Poloniex did not take part.

Cryptocurrencies Labelled As Securities

As the crypto market encounters a volatile period amid worldwide support, regulators have become more cautious about enforcing regulations.

However, one thing that has stirred confusion regarding cryptocurrency regulations is identifying what type of digital assets are labeled as securities. In the US, regulators like the Securities and Exchange Commission have targeted crypto firms for selling tokens as unregistered securities.

A good example is Ripple Inc, the payment solutions provider sued by the SEC in December last year for allegedly selling its XRP tokens in unregistered security offerings to investors. In March, the SEC also sued crypto startup LBRY Inc, accusing the company of selling unregistered securities in the form of its token.

Unlike the US, Canada has been more friendly regarding crypto regulations. The North American country is also the first to support Bitcoin exchange-traded funds (ETF) in the region.

This year the OSC already approved three Bitcoin ETF issuers. The first two approved include the Purpose Bitcoin ETF (BTCC) and the Evolve Bitcoin ETF (EBIT), both listed on the Toronto Stock Exchange.

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Author: Jimmy Aki

BitGo Settles with Treasury’s OFAC for Violating Multiple Sanctions Programs

BitGo Settles with Treasury’s OFAC for Violating Multiple Sanctions Programs

The settlement of $98,830 with OFAC is for 183 apparent violations.

The Office of Foreign Assets Control (OFAC), a financial intelligence and enforcement agency of the U.S. Treasury Department, has settled an enforcement action with BitGo for failing to prevent users in Crimea, Cuba, Iran, Sudan, & Syria from using its service.

“Turns out Treasury *doesn’t* need more KYC to enforce sanctions laws,” commented Jake Chervinsky, General Counsel at Compound Finance.

Palo Alto-based BitGo is an institutional digital asset custody, trading, and finance service provider.

The company reached a settlement deal of just under a million dollars with the OFAC on Wednesday. Chervinsky called this “a pretty good settlement for BitGo, especially considering it was not a voluntary disclosure.” The official announcement states,

“BitGo agreed to remit $98,830 to settle its potential civil liability for 183 apparent violations of multiple sanctions programs.”

The violations were reported to be processed between March 10, 2015, and December 11, 2019, on behalf of persons located in the Crimea region of Ukraine, Cuba, Syria Iran, or Sudan that were using the company’s non-custodial secure digital wallet management service.

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Author: AnTy

‘Warning Shot’ for DeFi: BitMEX Charges are ‘Incredible Bearish’ for this Burgeoning Sector

Prosecutors in the United States filed criminal charges against BitMEX, accusing it of violating the federal Bank Secrecy Act.

The CFTC has been investigating one of the biggest derivatives exchanges for some years now. Still, the effect of this news on the prices of digital currencies is expected to be bearish but only in the short term.

It will actually be bullish in both medium and long term and “likely be a boon for other regulated futures exchanges that offer significant leverage. Gambling is gambling,” said Bill Barhydt, co-founder & CEO at Abra.

But while regulation will help the market at large, it may not be such a good thing for the decentralized finance (DeFi) sector.

Time for DeFi Providers to Wake Up

According to Barhydt, it is actually a “warning shot” for DeFi service providers who think registrations don’t apply to them, “That’s pure nonsense. Lawyer up now.”

With the DOJ talking about the BitMEX co-funders to “soon learn the price of alleged crimes,” which will be paid in “fines, restitution, and federal prison time,” — it’s time for DeFi providers to wake up.

“DeFi services are not sufficiently decentralized today to have no central off switch. That means the companies behind them are at risk. Oracles are another problem…Set your alarms for the moment of truth,” Barhydt said.

As we saw only recently during the KuCoin hack, several crypto projects froze the stolen funds, putting a big question mark on the decentralized nature of them all, which wasn’t even the first time.

Given that DeFi has the highest beta, “flight to safety” is another reason why the BitMEX incident is not bullish for DeFi, said trader and economist Alex Kruger.

Moreover, while the authorities are going after managers individually over the criminal allegations, for the market, smart contract creators and promoters won’t be far fetched, regardless if it is even true, he added. And what the market thinks matters.

A Small Winter for DeFi

Over the past few months, the DeFi sector grew immensely, from about $1 billion in mid-June to $14.6 billion earlier this week, as per Debank.

For the past few weeks, DeFi tokens have been cooling down, with yields significantly lower than they were a month ago.

While the impact of the news on the price of Bitcoin and altcoin might be over, we could see “relative weakness across DeFi.”

As seen in the past 24 hours, the cryptos lost 4% to 12% compared to the DeFi ones, which are down 10% to 25%.

As we reported, a small DeFi winter has also been expected.

“Most DeFi bluechips trade like classic bubbles bursting,” said trader Qiao Wang who sees it more like the spring 2013 bubble, meaning this won’t be a multi-year nuclear winter, because of the strong and improving fundamentals, total market cap of these tokens still small, and more brrrr likely to come next year.

“2021 will be great, IMO,” he added.

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Author: AnTy

SEC Settles Enigma’s 2017 $45M ENG Token Sale, Pay $500k Fine and Refund Investors

The ICO project Enigma has settled with the US Securities and Exchange Commission (SEC) over charges of violating the securities law.

Enigma MPC is a blockchain startup that raised $45 million in a token sale from 2017. The SEC announced on Wednesday the settlement requires Enigma to refund all the investors it harmed by using a claims process, registering its tokens with the SEC as securities, filing reports to the agency and paying a $500,000 penalty fee. Back in 2017, Enigma sold ENG tokens that the SEC deemed as securities.

No Securities Registration Requirements Exemption

As the SEC says, Enigma wasn’t qualified to be exempted from the securities registration requirements. A blog post from the Enigma official website says the company is going to set up very soon the claims process, while the firm’s CEO Guy Zyskind explained how the settlement has been reached after many discussions conducted with the SEC. Here are his words on Enigma’s plans for the future:

“[It] clears the way for our development team to return its full attention and energy to our original and continued vision: building groundbreaking privacy solutions that improve the adoption and usability of decentralized technologies, for the benefit of all.”

Enigma Mainnet Was Just Launched

Zyskind also mentioned how the settlement allows the team working at Enigma to focus on the actual protocol, the company’s mainnet that launched last week included. Ever since it opened, the Enigma mainnet gained over 20 validators, says the company. It’s Cosmos SDK-based and secured by the new coin called Secret (SCRT). At the moment, Enigma is trying to legally swap its Ethereum-built ENG token for the new SCRT token. Here’s exactly what the blog post says about this:

“We are continuing discussions with our legal counsel and regulators to identify an effective means of facilitating a swap that complies with all relevant securities regulations, but for the time being, our team is not able to proceed. We appreciate your patience and will update you as things move forward.”

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Author: Oana Ularu

Coin Center Advocacy Group Informs UK AML Regulations Could Violate Users’ Privacy And Rights

Coin Center Advocacy Group Informs UK AML Regulations Could Violate Users’ Privacy And Rights
  • Regulators want to increase AML and CTF regulations
  • Coin Center considers they are violating users’ rights and privacy

According to the nonprofit research and advocacy center called Coin Center, the proposed anti-money laundering (AML) and counter-terrorism financing (CTF) regulations violate users’ privacy rights.

Coin Center has urged Her Majesty’s Treasury not to implement these regulations.

Could AML And CTF Policies Affect Privacy?

As cryptocurrencies and blockchain technology expand, regulators around the world are trying to control the market with new regulations. According to a recently released announcement, Coin Center informs that the proposal to broadening the scope of the UK’s AML and CFT regulations would violate UK citizens’ free speech and privacy rights.

They explained that this expansion is going to be affecting citizens’ rights as codified in the International Covenant on Civil and Political Rights (ICCPR) and in the European Convention on Human Rights (ECHR). The ICCPR and the ECHR prohibit institutions upon the privacy of persons unless the intrusions follow clear rules.

Coin Center also informs that the imposition of financial surveillance on every user of virtual currency would not be able to meet the standards imposed by the ICCPR and the ECHR. About speech rights, Coin Center wrote:

“Regarding speech rights, any law or regulation attempting to ban, require licensing for, or compel the altered publication (e.g. backdoors) of open-source cryptocurrency software would be unconstitutional under First Amendment-like protections for speech afforded to UK citizens by the ICCPR and ECHR.”

Coin Center believes that it is important to protect human dignity and autonomy. Moreover, they say that transactions are increasingly guarded and controlled by powerful intermediaries and also governments.

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Carl T