Author: Staff

A recent ruling by a Bahamas court has temporarily prevented the country’s government from consenting to U.S. prosecutors pursuing additional criminal charges against Sam Bankman-Fried, the indicted founder of the now-defunct cryptocurrency exchange FTX.

The move comes after U.S. federal prosecutors in Manhattan threatened to drop five charges of foreign bribery, bank fraud, and conspiracy against Bankman-Fried if the Bahamas did not comply with their request. These charges were not initially included in Bankman-Fried’s original eight-count indictment from last December, which primarily focused on the collapse of FTX. However, they were later appended following his extradition, as FTX was headquartered in the Bahamas.

According to Reuters, the Bahamas Supreme Court has now stated that the country’s foreign affairs minister and the attorney general cannot consent to the new charges until Bankman-Fried has an opportunity to formally object. Justice Loren Klein acknowledged that Bankman-Fried’s concerns had a reasonable chance of success.

This ruling introduces additional uncertainty regarding whether Bankman-Fried’s scheduled trial on October 2 will encompass all 13 charges he currently faces. Bankman-Fried, 31, maintains his plea of not guilty.

In recent court filings on Monday, Bankman-Fried’s legal team sought to dismiss a sixth charge related to U.S. campaign finance violations, arguing that the Bahamas had not consented to it. Furthermore, they requested that the six charges be either dismissed or tried separately from the allegations of customer theft, investor deception, and lender fraud.

Bankman-Fried’s lawyers stated, “To proceed otherwise would cause significant prejudice to Mr. Bankman-Fried and should not be permitted.”

The U.S. Attorney’s office in Manhattan declined to comment on Tuesday regarding the matter.

According to the extradition treaty between the United States and the Bahamas, the host country must grant consent before defendants can be prosecuted for charges introduced after their extradition.

Additionally, Bankman-Fried has raised objections to some of the original charges, asserting that they rely on a now-invalidated fraud theory known as “right to control,” which was deemed invalid by the U.S. Supreme Court last month. This theory allows for the conviction of a defendant for depriving someone of economically valuable information, beyond tangible property.

Prosecutors argue that this theory does not apply to Bankman-Fried’s case. U.S. District Judge Lewis Kaplan is expected to hear arguments on Thursday regarding these developments.

On June 12, United States Representative Warren Davidson introduced the “SEC Stabilization Act” in the House of Representatives, a bill that aims to make significant changes to the Securities and Exchange Commission (SEC). One of the key provisions of the bill is the removal of SEC Chair Gary Gensler from his position.

In a statement, Davidson expressed his concerns about the current state of U.S. capital markets and the need to protect them from what he considers to be a “tyrannical” SEC Chair. He emphasized the importance of introducing legislation to address the perceived abuse of power and ensure the long-term best interests of the market. 

🚨 NEWS – Today I filed the SEC Stabilization Act to restructure the @SECGov and #FireGaryGensler.

U.S. capital markets must be protected from a tyrannical Chairman, including the current one. It’s time for real reform and to fire @GaryGensler as Chair of the SEC. Statement ⬇️ pic.twitter.com/0VUHxUAhtB

— Warren Davidson 🇺🇸 (@WarrenDavidson) June 12, 2023

Davidson stated, “It’s time for real reform and to fire Gary Gensler as Chair of the SEC.”

This bill aligns with Davidson’s earlier announcement of his intention to introduce such legislation, which was made in response to a tweet by Paul Grewal, the legal chief of Coinbase. Representative Tom Emmer is the co-author of the bill and supports its purpose. Emmer highlighted that the SEC Stabilization Act aims to establish common-sense changes that prioritize investor protection and prevent the SEC Chair from acting based on personal whims.

According to a report from Fox News, the bill seeks to remove Gary Gensler from his position as SEC Chair and redistribute power between the Chair and commissioners. Additionally, it proposes the addition of a sixth commissioner, prevents any party from holding a majority on the commission, and introduces the creation of an executive director role.

Although the statements from the lawmakers did not explicitly mention cryptocurrencies, both Davidson and Emmer are known for their support of digital assets and have been critical of Gensler’s leadership at the SEC. Emmer, in particular, has referred to Gensler as a “bad faith regulator.” Notably, Davidson serves as the vice chair of the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology, and Inclusion, underscoring his involvement in matters related to the crypto industry.

Do Kwon, the co-founder and CEO of Terraform Labs, may be subjected to multiple sentences in both the United States and South Korea, as confirmed by a senior South Korean prosecutor leading the investigation.

Currently, Kwon is under house arrest in Montenegro, having been granted bail by a Montenegro court on June 5. Kwon, along with Terraform Labs’ chief financial officer Han Chang-Joon, are legally required to reside at Chang-Joon’s legal residence in Montenegro while awaiting a decision on extradition.

Speaking to Bloomberg, prosecutor Dan Sunghan explained that extraditing Kwon to South Korea would be more appropriate to seek justice and recover damages for the victims. Sunghan emphasized that the initial investigation into the collapse of the Terra ecosystem took place in South Korea, and local authorities possess more evident compared to their American counterparts.

“The most effective way to achieve justice is to conduct the investigation and trial in South Korea,” Sunghan stated.

The prosecutor also highlighted that South Korean authorities have indicted several individuals involved in Kwon’s alleged wrongdoing.

However, when questioned about the possibility of Kwon facing trials in both the US and South Korea, Sunghan acknowledged that such a scenario is an option. He explained that if South Korean authorities do not address all the charges Kwon is accused of within the US, Kwon could potentially be extradited to the US for prosecution after serving his sentence in South Korea. The combined sentences from both countries could potentially exceed 40 years.

Sunghan expects Kwon’s sentence to be the longest ever handed down in South Korea.

Notably, Kwon’s cold wallet, which allegedly holds 10,000 Bitcoin, remains untraceable. Authorities have observed the movement of funds from the wallet, but its location and the method used to withdraw the funds remain unknown.

“This is the largest financial fraud or financial securities fraud case that has ever occurred in South Korea,” remarked Sunghan.

Kwon was apprehended by Montenegro authorities on March 23 when he attempted to leave the country using counterfeit documents. Subsequently, both US and South Korean authorities requested his extradition. According to prosecutor Dan Sunghan, the extradition process can take up to nine months to complete.

In a recent development, the United States Securities and Exchange Commission (SEC) has taken legal action against two prominent cryptocurrency exchanges, Binance and Coinbase. This move represents a significant milestone in the ongoing efforts of regulatory bodies to assert control over the cryptocurrency industry.

The SEC’s accusations are primarily directed towards Binance and its founder, Changpeng Zhao, alleging a web of deceitful practices and charging them with multiple offenses. One of the central claims made by the SEC is that Binance and Zhao failed to genuinely separate the US company from the US exchange it was spun off from. While Binance.US claimed to have restricted its customers from transacting on Binance.com since 2019, the SEC contends that the exchange secretly enabled high-value US customers to continue trading on its main platform. Furthermore, the SEC accuses Zhao of exerting undisclosed control over Binance.US, despite publicly presenting it as an independent trading platform for US investors.

The SEC’s complaint also reveals evidence suggesting that Binance’s leadership was aware of their violations of US regulations. Additionally, the SEC alleges that assets were redirected to a separate entity owned by Zhao, known as Sigma Chain, which facilitated “wash-trading” to artificially inflate Binance.US trading volume.

In a separate lawsuit, the SEC has accused Coinbase of operating as an unregistered broker, exchange, and clearing agency, thus jeopardizing the security of its customers. Various state financial regulators, including those from California and Alabama, have filed legal actions alleging that Coinbase operated as an unregistered securities dealer. The Director of the SEC’s Division of Enforcement, Gurbir S Grewal, emphasized that Coinbase was well aware of the applicability of federal securities laws but deliberately chose not to comply.

However, the lawsuits don’t appear to have spooked crypto investors much. Bitcoin, the most-traded cryptocurrency, dropped sharply Monday but jumped back up Tuesday. It now stands at $26,000 as of this writing.

Considering the potential repercussions of these lawsuits, the African crypto industry may be affected in the long run. While the immediate impact remains uncertain, several key implications are worth considering:

1. Regulatory Scrutiny: The SEC’s crackdown on Binance and Coinbase may prompt African regulators to adopt a more cautious approach towards cryptocurrencies. They may be inclined to tighten existing regulations or introduce new ones to mitigate potential risks and protect investors.

2. Investor Confidence: The lawsuits serve as a reminder that regulatory actions can impact the cryptocurrency market. This might lead to a temporary decline in investor confidence, as individuals and institutions take a more cautious stance, waiting for greater regulatory clarity before engaging further in cryptocurrency activities.

3. Market Opportunities: If Binance and Coinbase face significant challenges in the US market, they may redirect their focus to other regions, including Africa. This could result in increased investment and the introduction of new cryptocurrency services in African countries, potentially fostering economic growth and technological innovation.

4. Increased Scrutiny on Local Exchanges: African cryptocurrency exchanges may experience heightened scrutiny from both domestic and international regulators. Local exchanges will likely need to ensure compliance with existing regulations and demonstrate transparency to avoid legal consequences.

5. Need for Regulatory Collaboration: The SEC’s actions highlight the importance of regulatory collaboration between African countries and international bodies. Coordinated efforts and information sharing can help establish consistent regulatory frameworks across borders, enabling a more conducive environment for cryptocurrency-related activities.

While the immediate impact of the SEC’s lawsuits on Binance and Coinbase might not significantly rattle crypto investors, the long-term consequences for Africa’s cryptocurrency ecosystem remain uncertain. Stakeholders, including regulators, exchanges, and investors, will need to closely monitor the situation and adapt to the evolving regulatory landscape to ensure sustainable growth and mitigate potential risks.