Baker & Hostetler LLP

09/30/2024 | Press release | Distributed by Public on 09/30/2024 07:40

Weekly Blockchain Blog – September 30, 2024

09/30/2024|4 minute read
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In this issue:

  • Payments Firms Launch Crypto Products, New Crypto Adoption Data Published
  • SEC Action Targets Stablecoin Issuer, CFTC Targets Unregistered Crypto FCMs
  • FinCEN, OFAC, DOJ Bring Crypto Enforcement Actions; Crypto Hacks Continue

Payments Firms Launch Crypto Products, New Crypto Adoption Data Published

By Keith R. Murphy

According to a recent press release, a well-known U.S. payments and financial technology company announced that it will allow its United States merchants to buy, sell and hold cryptocurrency directly from their business accounts with the company. As noted in the release, this move follows the prior successful launch of this service to the company's retail customers and is in response to business owners' desire to have the same cryptocurrency capabilities as consumer clients. The company's business account clients reportedly also will be able to send and receive supported cryptocurrency tokens to and from external blockchain addresses.

In other news, a global payments technology company reportedly has launched its Tokenized Asset Platform to assist banks with the process of issuing fiat-backed tokens on the Ethereum blockchain. According to a report, the company's new platform provides the tools and infrastructure required to tokenize fiat currencies and may also enable tokenization and trading of real-world assets like commodities and bonds.

Finally, a recent report by Chainalysis notes that the Middle East and North Africa region (MENA) had an estimated $338.7 billion in on-chain value received during the one-year period from July 2023 to July 2024, ranking it the seventh-largest cryptocurrency market in the world in 2024. Among many findings in the report, it further notes that while centralized exchanges are the primary source of inflows across MENA, decentralized platforms and DeFi applications are gaining steady traction. Other analyses in the report indicate, among other things, that across MENA, stablecoins and altcoins are gaining market share from other more traditionally favored assets, such as bitcoin and ether.

For more information, please refer to the following links:

SEC Action Targets Stablecoin Issuer, CFTC Targets Unregistered Crypto FCMs

By Isabelle Corbett Sterling

The Securities and Exchange Commission (SEC) recently announced settled charges against two entities for fraudulent and unregistered sales of investment contracts involving TUSD, a purported stablecoin. According to the press release, one of the entities was the issuer of the purported stablecoin and the other was a developer and operator of a lending protocol. The SEC's press release alleges false marketing about an investment opportunity that was purportedly backed by U.S. dollars or their equivalent, when, in fact, the assets backing the investment were invested in a speculative and risky offshore investment fund in order to earn returns for the defendants. As much as 99 percent of the stablecoin reserves were invested in the offshore fund by September 2024, the SEC alleges, which exposed investors to substantial undisclosed risks. Both defendants consented to an injunction against further violations of the federal securities laws and to paying a fine of nearly $164,000 each as well as disgorgement by the issuer.

The Commodity Futures Trading Commission (CFTC) recently announced filed charges against four entities for failure to register as futures commission merchants (FCMs), seeking an order to cease and desist from violations of the Commodity Exchange Act and CFTC regulations. The press release says that each of the four entities offered CFTC-regulated products (binary options on the value of commodities such as foreign currencies and cryptocurrencies), handled customer funds and falsely claimed to be registered with the CFTC. At the end of the press release, the CFTC urged the public to verify CFTC registration status before committing funds.

For more information, please refer to the following links:

FinCEN, OFAC, DOJ Bring Crypto Enforcement Actions; Crypto Hacks Continue

By Robert A. Musiala Jr.

The U.S. Department of the Treasury (Treasury) recently announced that it is undertaking actions as part of a coordinated international effort to disrupt Russian cybercrime services. According to a press release, Treasury's Financial Crimes Enforcement Network (FinCEN) has issued an order "that identifies PM2BTC - a Russian virtual currency exchanger associated with Russian individual Sergey Sergeevich Ivanov (Ivanov) - as being of 'primary money laundering concern' in connection with Russian illicit finance." The order prohibits certain transmittals of funds involving PM2BTC by any covered financial institution.

The Treasury press release further notes that concurrently "the Office of Foreign Assets Control (OFAC) is sanctioning Ivanov and Cryptex - a virtual currency exchange registered in St. Vincent and the Grenadines and operating in Russia." As a result of the OFAC action, all property and interests in property of Ivanov and Cryptex that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.

In another recent press release, the U.S. Department of Justice announced charges against two individuals based in Los Angeles and Florida for alleged conspiracy to steal and launder more than $230 million in cryptocurrency from a victim in Washington, D.C. According to the press release, the defendants fraudulently gained access to the victim's cryptocurrency accounts, transferred the victim's funds into their possession, then laundered the proceeds, "including by moving the funds through various mixers and exchanges using 'peel chains,' pass-through wallets, and virtual private networks (VPNs) to mask their true identities."

In other news, according to recent reports, crypto exchange BingX has been hacked. The hackers reportedly stole approximately $43 million in cryptocurrencies in multiple tranches, then traded the stolen crypto on decentralized exchanges.

For more information, please refer to the following links: