Cryptocurrency News

[LFC]

I wonder how many MAGAts "invested" in this.

Trump ally Steve Bannon two years ago heavily promoted his own brand of cryptocurrency that he said would be a boon for MAGA supporters everywhere.

However, ABC News reports that the "FJB" ("F*ck Joe Biden") cryptocurrency hyped by Bannon back in 2021 has been plunged into "chaos" and has lost 95 percent of its peak value.

What's more, some investors in the cryptocurrency say that Bannon and partner Boris Epshteyn have broken their promises to donate money made from the coin to the Wounded Warriors Project and other nonprofit organizations.

"Prior to its acquisition by Bannon and Epshteyn, the original $FJB developers had already made a $10,000 donation to the nonprofit Wounded Warriors veterans' service organization -- and the two Trump allies said they would expand on that," writes ABC News. "But according to a spokesperson of the Wounded Warriors Project, as of January this year, no donations have been made by $FJB to the organization since Bannon and Epshteyn took over in December 2021."

The lack of donations to the Wounded Warriors Project is particularly concerning because Bannon and Epshteyn are still charging 8 percent transaction fees to buyers of the coin -- and those fees are ostensibly supposed to go to the charity.

[LFC]

I guess that's one way to increase your teacher's salary.

A Massachusetts teacher is facing charges after authorities say he carried out an elaborate cryptocurrency mining operation out of the school where he worked. Nadeam Nahas, 39, was teaching at Cohasset High School when a town facilities inspector visited the school and found an unusual electrical setup in one room.

The excessive number of computers, electrical wires, and temporary duct work prompted Cohasset Police Detectives to be called to the school and “investigate a report of a possible Crypto Currency mining operation that was discovered in a remote crawl space under the school,” Cohasset Police Chief William Quigly said in a statement to Gizmodo.

Police were alerted by the town’s IT director and requested the assistance of the U.S. Coast Guard Investigative Service and the Department of Homeland Security to investigate the crawl space under the school. The teams safely removed all equipment and forensically examined its origin over a three-month period leading them to identify Nahas as a person of interest.

Authorities first discovered the makeshift mining setup in December 2021 which revealed that not only was Nahas allegedly carrying out an illegal operation, he was also using taxpayer money to work off the electric grid. Because Crypto’s a digital currency, it can be mined using specialized computer processors, but can’t be done efficiently at a standard house. The amount of electricity needed to run the processors is far more than any home could handle.

Larry Glazer, a crypto expert and managing partner at Mayflower Advisors in Boston, told CBS News that it “can’t be done efficiently at home in New England because the cost of electricity is so prohibitively expensive.” Speaking about Nahas, Glazer added, “You had an employee who was effectively stealing electricity from the community from the taxpayers, and from the town.”

[LFC]

That's one hell of a loan.

The folks handling the ongoing FTX bankruptcy admitted Thursday it is still on the hook for around $9 billion in customer funds that it simply cannot locate under the morass of financials left over from the exchange’s collapse.

In a presentation titled Preliminary Analysis of Shortfalls at FTX.com, the company said it has finally inventoried all the wallets associated with FTX.com where it said there is a “massive shortfall” since it has only been able to identify just under $2.2 billion in customer assets, but of that only $694 million is considered actual liquid currencies. Compare that to the $11.2 billion in outstanding funds that were locked to customer accounts, and you’re left with around $9 billion still lost to the machinations of FTX’s former bosses.

The presentation implies much of this stemmed from ex-FTX CEO Sam Bankman-Fried’s alleged scheme to move customer funds from FTX to his hedge fund Alameda Research. The presentation showed that Alameda borrowed a net $9.3 billion from FTX.com wallets and accounts, though it remains unclear just how much of the shortfall is related to missing customer funds. The Securities and Exchange Commission had previously claimed Alameda had more than $8 billion of FTX customer funds tied up in its own accounts.

[LFC]

Ted Cruz is trying to pump up crypto, maybe because his investment in it is underwater.

Senator Ted Cruz is pushing for the wider adoption of cryptocurrency, and one route may be through his fellow Capitol Hill lawmakers seeking to satisfy their sugar cravings.

The Texas lawmaker this week filed a reintroduction of a resolution that would require the US government to work with contractors running vending machines and food services at the Capitol that accept cryptocurrencies for payment.

The resolution also encourages gift shops in Capitol buildings to allow customers to use digital assets to pay for purchases. The resolution does not specify any particular cryptocurrencies.

"Cryptocurrency is generating new jobs, encouraging entrepreneurs to invent new values and creating new hedges against inflation, and presenting new opportunities," said Cruz in a statement released Thursday. He filed his first resolution on the matter in 2021.

Cruz himself has put money into the crypto space. Last year, he bought up to $50,000 worth of bitcoin. He's also said he wants to make Texas an "oasis" for bitcoin and other digital assets.

[snip]

Bitcoin on Friday was trading around $22,925, below the range of $36,000-$37,000 at the time Cruz bought the popular cryptocurrency in January 2022. Bitcoin and the broader crypto market have been suffering through a so-called crypto winter marked by a steep valuation slide.

[goldenvalley]

Mar 7, 2023 19:35:56 GMT LFC said:

Ted Cruz is trying to pump up crypto, maybe because his investment in it is underwater.

Senator Ted Cruz is pushing for the wider adoption of cryptocurrency, and one route may be through his fellow Capitol Hill lawmakers seeking to satisfy their sugar cravings.

The Texas lawmaker this week filed a reintroduction of a resolution that would require the US government to work with contractors running vending machines and food services at the Capitol that accept cryptocurrencies for payment.

The resolution also encourages gift shops in Capitol buildings to allow customers to use digital assets to pay for purchases. The resolution does not specify any particular cryptocurrencies.

"Cryptocurrency is generating new jobs, encouraging entrepreneurs to invent new values and creating new hedges against inflation, and presenting new opportunities," said Cruz in a statement released Thursday. He filed his first resolution on the matter in 2021.

Cruz himself has put money into the crypto space. Last year, he bought up to $50,000 worth of bitcoin. He's also said he wants to make Texas an "oasis" for bitcoin and other digital assets.

[snip]

Bitcoin on Friday was trading around $22,925, below the range of $36,000-$37,000 at the time Cruz bought the popular cryptocurrency in January 2022. Bitcoin and the broader crypto market have been suffering through a so-called crypto winter marked by a steep valuation slide.

Funny.  I would expect him to be a goldbug...hard assets, not imaginary cyber money.  

[LFC]

The FTX saga is still getting worse.

Bankrupt cryptocurrency exchange FTX made transfers of about $2.2 billion to company founder Sam Bankman-Fried through related entities, the company's new management said.

Overall more than $3.2 billion was transferred through payments and loans to company founders and key employees, FTX said in a statement on Wednesday.

These payments were made chiefly from Alameda Research hedge fund, FTX said, adding that it made these disclosures by filing schedules and statements of financial affairs with the bankruptcy court.

The crypto exchange said the transfers did not include over $240 million spent to purchase luxury property in the Bahamas, political and charitable donations made directly by the FTX debtors, and substantial transfers to non-debtor units in the Bahamas and other jurisdictions.

[indy]

I'm with the Crypto bros. in that I don't want it regulated.

We may differ on why however because I want it banned instead.

[jackd]

You don't think it's like bingo, or the neighborhood book?

[LFC]

The SEC is calling an investment an investment, and the crypto exchanges aren't happy about that.

Coinbase (COIN.O) debuted on the U.S. stock market on April 14, 2021 - the same day U.S. senators confirmed Gary Gensler to lead the Securities and Exchange Commission (SEC), the country's top markets regulator.

Gensler, who has called the crypto sector a "Wild West" riddled with fraud, is now embroiled in a battle with the world's largest publicly-traded crypto firm over a core debate: whether digital assets are investment contracts akin to stocks or bonds that should be regulated by the SEC.

Friction between crypto proponents and the regulator have been brewing under Gensler's leadership, with both sides growing increasingly loud in their criticisms.

The escalating tension exploded into public view on Wednesday when Coinbase CEO Brian Armstrong and the company's chief legal officer Paul Grewal posted online that the firm had been told that SEC staff intend to recommend enforcement action, adding that Coinbase was willing to fight it in court.

Coinbase shares have tumbled 12% since Wednesday's disclosure.

SEC and Coinbase spokespeople declined to comment. For months, the two have been in discussions over regulation and the agency's investigation into Coinbase, according to two sources.

In July, the firm disclosed an SEC probe into its asset listing processes, staking programs and yield-generating products.

Discussions between the SEC and Coinbase broke down in recent weeks, with one source saying the two sides had moved "further apart." The SEC appears to be going after Coinbase's entire business as operating outside of U.S. laws, the source said.

The crypto industry believes it operates in a regulatory gray area not governed by existing U.S. securities laws - and that new legislation is needed to regulate the industry.

"We continue to think rulemaking and legislation are better tools for defining the law for our industry than enforcement actions," Coinbase's Grewal said on Wednesday. "But if necessary, we welcome the opportunity for Coinbase and the broader crypto community to get clarity in court."

Prior to Gensler's arrival, the SEC engaged in targeted enforcement, but the Democratic chair has ratcheted up focus on crypto platforms themselves. The SEC's crackdown on crypto gathered pace after November's collapse of Sam Bankman-Fried's FTX exchange.

[LFC]

More on the SEC looking into crypto.

Part of cryptocurrency's appeal is that it has, until now, been largely independent of intermediary entities (such as banks and stock exchanges) and has eluded regulation by institutions such as the Securities and Exchange Commission (SEC) and the U.S. Department of the Treasury (USDT). This lack of oversight has allowed cryptocurrency to operate on an almost instantaneous basis among a large cohort of users. However, for these same reasons, crypto has also shown itself to be extremely volatile, susceptible to fraud, and lacking sufficient investor protections.

The SEC is leading the charge for more regulatory oversight of cryptocurrency products and platforms that may be engaging in the sale and offering of securities. Securities — as opposed to other assets such as commodities — are strictly regulated and require detailed disclosures to inform investors of potential risks. Since the first cryptocurrency (Bitcoin) launched in 2009, the question of how exactly to fit the components of this new, decentralized financial ecosystem into traditional categories has been widely debated.

I had never heard of the "Howey Test" before. That last provision is a real problem for an instrument literally based on nothing.

When determining whether a digital asset is a security, the SEC considers whether the asset constitutes an "investment contract." For an asset to be considered an investment contract, it must meet the three criteria of the Howey Test which was developed and named after the Supreme Court case SEC v. W.J. Howey Co., 328 U.S. 293 (1946). The Howey Test requires that there must be (1) the investment of money (2) in a common enterprise (3) with a reasonable expectation of profits to be derived from the efforts of others.

[LFC]

Oh, Sam. It's no wonder the DOJ wanted him in custody so badly. He would have been a serious flight risk.

Prosecutors have accused FTX founder Sam Bankman-Fried of conspiring to bribe Chinese government officials in a new indictment on Tuesday. The filing in the Southern District of New York alleges that the former billionaire directed the transfer of at least $40 million in cryptocurrency to one or more Chinese government officials in November 2021 in order to get access to accounts that had been frozen by Beijing authorities. The 31-year-old previously pleaded not guilty to charges stemming from the collapse of FTX. Prosecutors say Bankman-Fried used customer deposits at FTX to cover losses at the platform’s sister hedge fund, Alameda Research.

[LFC]

The federal government continues to tighten the screws on crypto companies that want to act as unregulated exchanges. We've seen how well that has worked out.

The US Commodity Futures Trading Commission (CFTC) yesterday sued Binance, the world's largest cryptocurrency exchange, saying the company and its founder, Changpeng Zhao, are charged with "willful evasion of federal law and operating an illegal digital asset derivatives exchange."

Binance committed "numerous violations of the Commodity Exchange Act and CFTC regulations," the agency said. In a press release announcing the civil enforcement action, the agency said its litigation "seeks disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the CEA and CFTC regulations."

The CFTC alleges that the defendants operated the trading platform "through an intentionally opaque common enterprise, with Zhao at the helm as Binance's owner and chief executive officer." The agency said the defendants "chose to knowingly disregard applicable provisions of the CEA while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit." Samuel Lim, Binance's former chief compliance officer, was charged with aiding and abetting the violations.

CFTC Chairman Rostin Behnam said, "For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of US law."

A Reuters article said Binance was founded in Shanghai in 2017 but operates with "a holding company based in the Cayman Islands," and "has never revealed the location of its core exchange. The CFTC charged the holding company and two other Binance units."

[LFC]

Pretty much a confession that a crypto exchange can't function in a world of rules. It has to be wide open and you just have to trust them and their competence. You know, just like FTX.

[LFC]

Irrespective of my feelings about Elon Musk, anybody investing in something this ridiculous should kind of expect it to be highly risky, easy to manipulate, and generally, well, ridiculous.

Elon Musk asked a U.S. judge on Friday to throw out a $258 billion racketeering lawsuit accusing him of running a pyramid scheme to support the cryptocurrency Dogecoin.

In an evening filing in Manhattan federal court, lawyers for Musk and his electric car company Tesla Inc (TSLA.O) called the lawsuit by Dogecoin investors a "fanciful work of fiction" over Musk's "innocuous and often silly tweets" about Dogecoin.

The lawyers said the investors never explained how Musk intended to defraud anyone or what risks he concealed, and that his statements such as "Dogecoin Rulz" and "no highs, no lows, only Doge" were too vague to support a fraud claim.

"There is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion," Musk's lawyers said. "This court should put a stop to plaintiffs' fantasy and dismiss the complaint."

In a footnote, the lawyers also rejected the investors' claim that Dogecoin qualified as a security.

The investors' lawyer, Evan Spencer, said in an email: "We are more confident than ever that our case will be successful."

Investors accused Musk, the world's second-richest person according to Forbes, of deliberately driving up Dogecoin's price more than 36,000% over two years and then letting it crash.

They said this generated billions of dollars of profit at other Dogecoin investors' expense, even as Musk knew the currency lacked intrinsic value.

Investors also pointed to Musk's appearance on a "Weekend Update" segment of NBC's "Saturday Night Live" where, portraying a fictitious financial expert, he called Dogecoin "a hustle."

The $258 billion damages figure is triple the estimated decline in Dogecoin's market value in the 13 months before the lawsuit was filed.

Dogecoin Foundation, a nonprofit, is also a defendant and seeking the lawsuit's dismissal.