Examining the intersection of cryptocurrency and government

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Welcome to State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. I’m your host, Nikhilesh De. 

I was on vacation for the last week-and-a-half but before I left, I sent a list of things to watch for to my colleagues that in hindsight, was wholly inadequate. Anyway, here’s my effort to catch up. 

Alex Mashinsky outside a New York courthouse on July 25, 2022. (Anna Baydakova/CoinDesk)

It was a really busy [checks notes] 11 days, huh? 

The legal and regulatory aspects of the crypto ecosystem continue to evolve. 

I was on vacation for a bit. Here is a list of things that happened in crypto regulatory land in that time (that I’ve seen):

• Alex Mashinsky of Celsius was arrested and pleaded not guilty to charges of securities fraud, commodities fraud, wire fraud and conspiracy to manipulate the price of CEL (Celsius’ token). The Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Trade Commission also filed lawsuits (the FTC and Celsius settled, though executives including Mashinsky, Shlomi Daniel Leon and Hanoch “Nuke” Goldstein didn’t). 
• The federal judge overseeing the U.S. Securities and Exchange Commission’s case against Ripple Labs published a decision on the motions for summary judgment, ruling that while Ripple violated securities laws in its institutional sales, it did not do so in putting XRP on exchanges and letting the retail public buy the tokens through those intermediaries.
• The SEC acknowledged and started the clock on a bunch of bitcoin exchange-traded fund (ETF) applications. 
• The Group of 20 said it welcomed Financial Stability Board recommendations on stablecoin and crypto asset activity arrangements.
• The U.S. Secret Service seized around $58 million in funds belonging to Deltec Bank as part of an investigation into an international money laundering investigation. A Deltec spokesperson said it had been cooperating with U.S. law enforcement and intended to file a claim for the cash. 
• A Marathon Digital Holdings shareholder is suing the company’s directors and officers, alleging they lied about Marathon’s revenue and operations. 
• BlockFi’s leadership saw FTX’s balance sheet but continued to use the platform, a filing by its creditors said. 
• A state court signed off on the Nevada Department of Business and Industry’s move to place crypto custodian Prime Trust into receivership. 
• A group of senators introduced a bill that would impose bank-like regulations on decentralized finance.
• Coin Center’s suit against the U.S. Treasury Department over the pending section 6050I provision in the bipartisan infrastructure law was dismissed due to a lack of “ripeness” – or as the court put it, the issue is too hypothetical right now.
• The Federal Reserve launched its FedNow instant payments service.
• Republicans in the House Financial Services and Agriculture Committees introduced a new version of its market structure bill, which will go to markup in both committees this week. 
• FTX’s new management filed suit to recover more than $1 billion in cash and shares from its old management.
• The U.S. Department of Justice accused former FTX CEO Sam Bankman-Fried of leaking the personal diary of former Alameda Research CEO Caroline Ellison, who he had previously been in a relationship with, to discredit her as a witness in his upcoming criminal trial. Bankman-Fried’s attorneys denied that he was trying to discredit her, but acknowledged that he had provided a New York Times reporter with unspecified materials not obtained through discovery. 
• The U.S. Department of Justice folded its National Cryptocurrency Enforcement Team into its broader cyber unit, according to the Wall Street Journal.  
• The SEC told the judge overseeing its case against Terraform Labs that the Ripple ruling created two different standards, suggesting it may appeal the ruling in its case against Ripple. 
• Apparently a group of investors are getting close to acquiring a crypto media business. 

What’d I miss? Shoot me an email.

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Twitter @nikhileshde. 

You can also join the group conversation on Telegram. 

See y’all next week!

It is now more important than ever to set industry standards and align on practical short-term and long-term objectives through pointed conversations with the best legal minds and Washington D.C.’s most important decision makers. 

Join us at State of Crypto: Policy and Regulation on October 24 in Washington D.C. for an unprecedented opportunity to evaluate, dissect and ultimately shape crypto regulatory frameworks that support a vibrant, secure and healthy future for the digital economy. 

Save 10% with code SOC10. Learn more and register.

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