Coinbase (COIN) will pay a $50 million fine to the New York State Department of Financial Services to settle charges that it wasn’t conducting sufficient background checks in violation of anti-money-laundering laws. Coinbase, which traded down 5% on the news, is also required to invest $50 million over the next two years to bolster its compliance program. In other regulatory news, the Federal Reserve and two banking watchdog institutions issued a warning for banks Tuesday, saying crypto “is highly likely to be inconsistent with safe and sound banking practices” while the UK’s top crime agency posted a job listing for a “cryptocurrency investigator.”
Working It Out?
Genesis CEO Derar Islim said a solution to the institutional crypto brokerage’s liquidity issues will take more time, in a letter to clients on Wednesday. This comes after executives for Gemini, a U.S.-based crypto exchange that froze withdrawals on its Earn lending platform, asked to hash out a deal to return an estimated $900 million in client funds loaned to Genesis. Meanwhile, DNP3, a popular Twitch streamer who helped build the Goobers NFT project and Gridcraft metaverse network, admitted to losing investor funds on Tuesday due to his “gambling addiction.” It is unclear how much money was lost. Finally, Core Scientific will shut down mining rigs it hosted for its largest client, Celsius Mining, due to allegations of unpaid bills. Both companies are undergoing Chapter 11 bankruptcies.
Peppy Protocols
Ethereum Name Service, the protocol beyond “.eth” address names, gained 2.8 million domain registrations in 2022. That represents 80% of the service’s total names since launch. Over on beleaguered blockchain Solana, SOL has seen a notable price rally (as other coins like BTC and ETH trade sideways) after the recent launch and airdrop of a new “dog token” called BONK. Reminiscent of earlier memecoin mania, the Shiba Inu-themed token has allegedly returned ~2,220% to protocol stakers. (If you missed the BONK rally, please think twice before aping in.) Last, in signs of real-world momentum, Square Enix, the corporate owner of the Final Fantasy gaming series, told investors in a letter it will be “focused on blockchain entertainment” in 2023 while a new think tank report found Indians have moved nearly $4 billion in crypto to foreign exchanges since the introduction of strict crypto tax and regulatory regimes in India.
Sound Bites
“It’s going to be a very tough task for Bankman-Fried to ultimately prevail at trial.”
– White collar crime specialist Mark A. Kasten, discussing the FTX founder’s upcoming October trial, on CoinDesk TV’s “First Mover”
The Takeaway: SBF’s Delusions
(Getty Images)
News broke yesterday that Sam Bankman-Fried, mastermind of the multi-billion dollar FTX-Alameda Research fraud, would plead not guilty to charges including conspiracy and wire fraud. Some, drawing on conspiratorial theories, have taken this as a sign that Bankman-Fried will pull strings with friends in high places to finagle his way towards innocence.
This might be strategic. Bankman-Fried might be holding out for an improved plea deal. Maybe he thinks a show of confidence can restore faith in him, or be enough to convince a jury of his innocence. But an equally likely explanation for the decision to go to a trial in October is that Bankman-Fried and his allies are delusional.
Either way, he’s unlikely to win. In fact, Bankman-Fried could earn a longer sentence at trial than through a plea deal. His willingness to testify may suggest he was not offered a deal for pleading guilty, or was offered a very bad one, which would not be surprising given the apparent strength of the criminal case against him.
Perhaps most importantly, Bankman-Fried’s trial will be entered into public records in detail. Through the discovery and trial processes, we’re going to learn an immense amount, not only about Bankman-Fried, but about the behavior of others at FTX and Alameda – and quite possibly about external allies who are currently still in the shadows.
FTX and Alameda executives Caroline Ellison and Gary Wang will be cooperating with prosecutors, and Ellison has already said she committed crimes at Bankman-Fried’s direction.
Still, there are fears Bankman-Fried’s political donations and friends in high places may apply pressure to get him off. That’s not how things generally work in the U.S. justice system – where other, subtler forms of corruption and influence-peddling prevail. But, in the grand scheme of political clout, Sam Bankman-Fried is a johnny-come-lately, and a bit of a small fry.
Theranos CEO Elizabeth Holmes cultivated some of the most powerful people on the planet in a very intimate way for nearly a decade – Henry Kissinger, a veritable Dark Lord of U.S. influence and power, sat on her Board of Directors. Compared to Holmes’ buddying up to Kissinger, Bankman-Fried’s seemingly close relationship to SEC Chair Gary Gensler is inconsequential. And even Kissinger couldn’t help Holmes avoid a prison sentence.
But if Bankman-Fried isn’t banking on help from powerful friends, why on earth would he roll the dice on a criminal trial? The answer is simple: he, and perhaps his parents, appear to be deeply delusional about his guilt. During his “speaking tour” after FTX’s collapse, Bankman-Fried defied the advice of his lawyers and spoke about his actions and mind state up to and during the collapse of his crypto exchange.
As the demand for trustworthy and comprehensive trading services increases in the wake of the FTX collapse, Gate US is looking to fill the void after obtaining several licenses and approvals, with plans to become authorized to operate in more US states before commencing services in 2023. Continue here.
