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Celsius Network Considers Legal Action Against Crypto Blogger

Celsius Network, a crypto lending platform, has been considering legal action against Tiffany Fong, a crypto blogger and Celsius creditor, for sharing leaked internal information regarding the company’s bankruptcy case. Fong, who has roughly $119,000 worth of crypto assets locked on Celsius, has been reporting on the bankruptcy case via YouTube and other social media platforms since the firm paused withdrawals in mid-June 2022 and filed for Chapter 11 bankruptcy the following month.

According to a recent court filing, Celsius’ legal counsel, Kirkland & Ellis International, has been working on the case for Fong since January 26, 2023. The filing shows that the law firm had worked 77 billable hours worth roughly $72,000 on an invoice titled “Tiffany Fong litigation” as of April 14, 2023. While no concrete legal action has been formulated yet, the filing suggests that Celsius’ legal counsel has been looking into the leaked information Fong reported on via her social media accounts.

Fong claims that she received the leaked information privately from disgruntled former Celsius employees, and has reported on various internal details, such as company bids on Celsius assets, alleged audio of private company discussions, and alleged transaction activity of executives such as former CEO and founder Alex Mashinsky.

In the filing, Celsius’ law firm also outlined that it was drafting cease and desist letters for Fong and a motion to compel, which generally asks courts to enforce a request for information relevant to a case. While Fong maintains that she has not done anything illegal, Celsius Network is seeking to prevent further dissemination of internal information related to its bankruptcy proceedings.

Fong’s attendance at the 2023 NYC NFT event has added fuel to the fire. In a Twitter post on April 15, she revealed that she had found Alex Mashinsky and his wife, Krissy Mashinsky, in public and approached them. A video posted to Twitter also shows the Mashinsky couple hurriedly walking away as other crypto content creators, such as BitBoy Crypto, approach alongside Fong in an attempt to engage them in conversation.

Celsius Network’s bankruptcy case is ongoing, with the company’s legal counsel actively pursuing action against Fong for leaking internal information. The case highlights the potential legal consequences of sharing confidential information regarding a company’s bankruptcy proceedings, even if the information is provided by former employees.

Bittrex Faces Potential Legal Action from US SEC

The US Securities and Exchange Commission’s (SEC) enforcement division is reportedly considering recommending legal action against Bittrex, a Seattle-based cryptocurrency exchange, over alleged violations related to investor protection. Bittrex’s general counsel, David Maria, confirmed that the enforcement unit had notified the company about the potential action in March. By that time, Bittrex had already begun the process of winding down its US operations.

The SEC’s notice of potential enforcement action, also known as a Wells notice, stated that Bittrex had violated laws by operating as an exchange, broker-dealer, and clearinghouse without registering with the regulator. In late 2022, Bittrex reportedly discussed with the SEC how to register its operations but found that there was no opportunity to comply with the SEC’s rules without essentially ceasing all of its revenue-producing activities in the country.

Bittrex has been operating in the US since 2014 and has been one of the larger cryptocurrency exchanges in the country. The exchange has faced regulatory scrutiny in the past, including in 2018 when it was denied a license to operate in the state of New York.

The SEC’s potential legal action against Bittrex comes amid increasing regulatory scrutiny of the cryptocurrency industry in the US. The SEC has been actively targeting cryptocurrency exchanges and other players in the industry for non-compliance with securities laws and regulations.

Many in the cryptocurrency industry have called for clearer regulatory guidelines to provide more certainty and stability to the market. The lack of regulatory clarity has been cited as a barrier to institutional adoption of cryptocurrencies, which some believe could help to legitimize the industry and bring in more investment.

In response to the potential legal action from the SEC, Bittrex has said that it is committed to complying with all applicable laws and regulations and that it has been working with regulators to ensure compliance. The exchange has also stated that it will continue to operate in other jurisdictions outside of the US.

In conclusion, the potential legal action from the SEC against Bittrex underscores the increasing regulatory scrutiny of the cryptocurrency industry in the US. While many in the industry have called for clearer guidelines, regulators are taking a more active approach to enforcement, which could have significant implications for the industry going forward. Bittrex’s decision to wind down its US operations highlights the challenges faced by cryptocurrency exchanges in navigating the complex and evolving regulatory landscape.

Ripple CEO Brad Garlinghouse Criticizes Former SEC Chair Jay Clayton's Regulatory Approach

The Chief Executive Officer of Ripple, Brad Garlinghouse, has voiced his disagreement with the regulatory posture taken by Jay Clayton, who formerly served as Chair of the US Securities and Exchange Commission (SEC). This criticism surfaced in response to statements made by Clayton during an interview with CNBC on June 29, 2023. Clayton was discussing the SEC’s more aggressive legal stance against corporations, especially those operating in the cryptocurrency industry.

The Securities and Exchange Commission (SEC) started taking a number of regulatory measures against cryptocurrency organizations and exchanges at the beginning of 2023 in an effort to safeguard investors. The regulatory environment has been significantly disrupted as a result of these moves, which has increased the level of legal uncertainty for a variety of crypto organizations. In an interview with CNBC, Clayton said that legal action should only be conducted against corporations that have good legal grounds, and he emphasized that regulatory agencies should provide claims and policies that are capable of withstanding the examination of a court.

In his response to Clayton’s interview, Garlinghouse pointed out the irony of the situation, particularly in light of the fact that the SEC had previously initiated a case against Ripple when Clayton was in charge of the agency. Ripple, Garlinghouse, and Christian Larsen, the co-founder of Ripple, were accused in a lawsuit that was filed in December 2020 of arranging a “unregistered, ongoing digital asset securities offering,” and it was claimed that they made more than $1.3 billion from the sale of XRP. Garlinghouse brought out the inconsistency between Clayton’s words and his actions and emphasized the flimsy legal foundation of the SEC’s case against Ripple, which intended to categorize XRP as a security. He did this by pointing out the discrepancy between Clayton’s words and his actions.

The disclosure of Clayton’s remarks from June 2023 has emerged as a topic of conversation among the parties engaged in the current court procedures, which are still ongoing. The Securities and Exchange Commission (SEC) submitted a petition in October asking the court to dismiss the allegations against Garlinghouse and Larsen without prejudice, which further stirred the current discussion about the regulatory environment for cryptocurrencies.

Wintermute Accuses Near Foundation and Aurora Labs of Failing to Honor USN Redemptions

Wintermute, in an unexpected public disclosure, has raised a serious allegation against the Near Foundation (NF) and Aurora Labs regarding the redemption process of the USN stablecoin. In a series of tweets, Wintermute’s CEO, Evgeny Gaevoy, criticized the entities for not honoring their public and private commitments to redeem USN tokens for USDT, leading to substantial financial repercussions for Wintermute and possibly setting a detrimental industry precedent.

USN’s Troubled Journey

Initially launched as an algorithmic stablecoin similar to Terra’s UST, USN underwent a transformation to a non-algorithmic model backed by USDT amid the market’s instability. Despite the changes and a subsequent collateral deficit, NF announced the USN Protection Programme, assigning Aurora Labs to oversee its operation. However, the program has since been marred by a failure in implementing redemption promises.

The Unresolved Transaction

Wintermute, in its role in asset liquidation for the FTX bankruptcy estate, sold 11.2 million USN, expecting to redeem the tokens for over $11M for FTX creditors. This expectation was based on NF’s assurances and Aurora’s private confirmations. The subsequent refusal to redeem these tokens has left Wintermute in a state of limbo, with negotiations leading to a disappointing offer from NF amounting to only a fraction of the original value.

The Path Forward

Highlighting the lack of accountability and clarity from NF and Aurora, Wintermute is preparing to take legal steps. Gaevoy’s disclosure is not only a call for resolution but also a signal to the industry about the importance of corporate responsibility and transparency. The company is reaching out to others similarly impacted and is firm on its stance to switch to an adversarial mode if their calls for redemption continue to be ignored.

The unfolding scenario raises questions about trust and integrity in the crypto market, as prominent entities like NF and Aurora Labs face scrutiny. Wintermute’s commitment to transparency and the industry’s ethical standards is evident as they navigate through this challenging episode.

Google Sues Unknown Entities for Malware Scheme Disguised as AI Chatbot Bard

Google LLC has initiated legal proceedings against three anonymous individuals, accusing them of orchestrating a sophisticated malware distribution scheme under the guise of offering upgrades to Google’s AI chatbot, Bard. The lawsuit, filed on November 13, 2023, in the Northern District of California, San Jose Division, identifies the defendants as “Does 1-3,” reflecting Google’s current lack of specific identification.

Google alleges that the perpetrators have been exploiting the company’s trademarks, particularly those related to its AI products like “Google, Google AI, and Bard.” By creating misleading social media profiles and pages that mimic Google’s branding, these individuals have reportedly been luring victims into downloading malware. The fraud involves invitations to download free copies of Bard and other AI tools, purportedly from Google.

One striking example provided by Google includes a screenshot of a bogus “Google AI” social media profile used by the con artists. These profiles and pages are designed to deceive users into believing they are interacting with legitimate Google products.

Upon following the provided links, users unwittingly download malware, which is particularly engineered to hijack social media login credentials. This scheme is said to target businesses and advertisers primarily, exploiting their reliance on social media for marketing and communications.

In response to these fraudulent activities, Google has requested the court to grant a comprehensive restraining order and award damages, including attorneys’ costs. The tech giant is also seeking permanent injunctive relief for the harms caused by the defendants, any profits gained from the fraud, and other equitable relief deemed appropriate by the court.

This lawsuit emerges at a time when AI services, especially chatbot services, are experiencing a significant increase in global users. Recent data reveals Google’s Bard bot attracting 49.7 million individual visits each month, while OpenAI’s ChatGPT records over 100 million monthly logins and approximately 1.5 billion unique website visits.

Over the past year, major tech companies like Google, OpenAI, and Meta have been embroiled in various legal disputes. In July, Google faced a class-action lawsuit, underscoring the legal complexities in the rapidly evolving AI and digital services sector.

This case underscores the critical need for heightened digital security measures as AI technology becomes more integrated into everyday digital interactions. Google’s lawsuit not only seeks to safeguard its own intellectual property but also aims to protect unsuspecting users from malicious cyber activities disguised as legitimate AI offerings.

SEC Accuses Kraken of Operating Without Registration, Alleges Mixing of Funds

The U.S. Securities and Exchange Commission (SEC) has filed a complaint against Payward Inc. and Payward Ventures Inc., collectively known as Kraken, for operating their cryptocurrency trading platform without the necessary registrations. The complaint, filed in San Francisco, alleges violations dating back to September 2018. Kraken is accused of functioning as an unregistered exchange, broker, dealer, and clearing agency, amalgamating the roles of these entities without proper registration. This reportedly deprived investors of crucial protections, such as SEC inspection and safeguards against conflicts of interest.

The SEC’s complaint outlines several concerns, including Kraken’s provision of a marketplace for securities transactions, effectively operating as an exchange; engaging in securities transactions for customers, thus acting as a broker; buying and selling securities for its own account, functioning as a dealer; and serving as an intermediary in settling transactions in crypto asset securities, thereby operating as a clearing agency. The complaint also alleges that Kraken’s business practices, including deficient internal controls and poor recordkeeping, pose risks to customers. Notably, Kraken is accused of commingling customer funds with its own, leading to potential loss risks.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the agency’s stance on Kraken’s preference for profits over investor protection. The SEC seeks injunctive relief, disgorgement of profits plus interest, and penalties. Earlier in February, Kraken agreed to a $30 million penalty and ceased offering crypto asset staking services.

This lawsuit is part of a wider SEC crackdown on cryptocurrency exchanges operating without proper registrations. Similar allegations were made against other exchanges like Binance and Coinbase. The SEC’s list of unregistered securities includes tokens like ALGO, MATIC, and NEAR. Kraken’s response, as expressed by CEO Dave Ripley, disputes the SEC’s claims and defends their position of not listing securities. The debate continues over the SEC’s approach to cryptocurrency exchanges and the absence of clear regulatory pathways.

CFTC's Stern Warning to Crypto Exchanges Following Binance Case

As of late, the Commodity Futures Trading Commission (CFTC) has adopted a resolute position against Binance, which is the biggest cryptocurrency exchange in the world. As the former Chief Executive Officer of Binance, Changpeng Zhao (CZ) has resigned from his position after entering a guilty plea to charges that include violating anti-money laundering laws in the United States. Binance has agreed to pay penalties totaling more than $4.3 billion as part of a deal with the authorities in the United States. Among them is the personal contribution of fifty million dollars made by Zhao. This case exemplifies the dedication of the Commodity Futures Trading Commission (CFTC) to enforce trading restrictions in the United States, especially against firms that let consumers in the United States to trade unregistered bitcoin derivatives.

The Statement Released by Commissioner Caroline D. Pham

A statement was issued by CFTC Commissioner Caroline D. Pham that made it very apparent that the CFTC is unyielding in its pursuit of non-American corporations that violate trade laws in the United States. The comments that she made highlight the worldwide authority of the Commodity Futures Trading Commission (CFTC) as well as its desire to uphold market integrity, regardless of the geographical location of the businesses that are engaged. It is a major hint that the Commodity Futures Trading Commission (CFTC) intends to expand its regulatory reach abroad, guaranteeing compliance with laws that are in place in the United States.

The Influence on the Market for Cryptocurrencies

The steps that were taken against Binance serve as a lesson for other cryptocurrency exchanges that are active on a worldwide scale. The CFTC is ready to take serious legal action against any firm that fails to comply with the regulations governing trading in the United States, as this indicates. The regulatory environment for cryptocurrencies in the United States has undergone a substantial alteration as a result of this event, which is seen as a fundamental shift in the regulatory stance towards cryptocurrency exchanges. This position serves as a message to other platforms that operate in the United States marketplaces, indicating that compliance with rules imposed by the United States is vital and cannot be negotiated.

As a conclusion, the actions and remarks made by the Commodity Futures Trading Commission (CFTC), in particular those made by Commissioner Caroline D. Pham, highlight a heightened regulatory attention on cryptocurrency exchanges, particularly those that are operating outside of the United States. This new development demonstrates a significant change in the approach that is being taken toward regulation in the cryptocurrency market in the United States. It highlights the significance of complying with trade regulations in the United States for all organizations that are involved in the sector. Cryptocurrency exchanges throughout the world are being pushed to reevaluate and tighten their compliance practices in order to align themselves with legislation in the United States as the regulatory environment continues to grow.

Celsius Crypto Lender's Bankruptcy: Large Withdrawals Clawbacks

Celsius Network, the troubled cryptocurrency lender, has hit a crucial stage in the ongoing drama that is comprised of its bankruptcy. An option for settlement has been made available to the firm’s substantial account holders as part of its Modified Joint Chapter 11 Plan of Reorganization, which indicates that the company has just taken this step. This strategy tackles the “Withdrawal Preference Exposure,” with a particular emphasis on the liabilities of account holders who made significant transfers during the ninety days previous to the petition date of July 13, 2022.

A notice of intent to inform creditors was submitted by the administrators of the Celsius bankruptcy. The notice said that account holders who withdrew more over $100,000 within the 90-day timeframe may be asked to repay these monies. Those individuals who have “withdrawal preference exposure” of more than $100,000, who are not excluded parties, who did not vote to reject the reorganization plan, and who did not opt out of releases are included in the particular category that is being targeted. By making a payment equal to 27.5% of the total money by the 31st of January in 2024, these persons will be able to satisfy their responsibility.

It is important to note that account holders who have an exposure of less than or equal to $100,000 are excluded from this action and do not have to take any steps to settle their Withdrawal Preference Exposure. However, there is a possibility that individuals who do not reach a settlement may be subject to legal consequences from the Litigation Administrator after the Effective Date.

Because of the logistical challenges involved in receiving payments in cryptocurrencies such as Bitcoin and Ethereum, or via a setoff of dividends, the payment for the settlement can only be done in cash. This is because the Plan’s Effective Date would be greatly complicated by these forms of payment. In addition to providing the requisite bank account information for wire transfers, the Election Form also includes instructions on how to make this cash contribution directly to the appropriate party.

In a larger sense, this action taken by Celsius is a component of the company’s attempts to restructure itself after it filed for bankruptcy assistance. In light of the fact that the firm’s financial sheet included a deficit of $1.2 billion, the corporation filed for bankruptcy on July 13, 2022. A portion of the holdings will be returned to account holders as part of the restructuring plan, which has been accepted by creditors. Additionally, a new mining business will be formed out of the assets that are still within Celsius’s control.

Binance Faces Lawsuit Over Alleged Support for Hamas in Israel Attack

Three families affected by the Hamas attack on Israel on October 7 have taken legal action against a constellation of actors including the governments of Iran and Syria, the world’s leading cryptocurrency exchange Binance, and its former CEO Changpeng Zhao. The lawsuit, lodged in the Southern District of New York, alleges that these defendants provided “substantial assistance” to the terrorist activities of Hamas, thereby implicating them in the devastation wrought on the victims and their families.

This legal action represents a significant moment in the ongoing struggle against terrorism financing, especially in the context of the digital age where cryptocurrency platforms like Binance can be manipulated for illicit financial transactions. The lawsuit details how Binance allegedly facilitated financial activities for Hamas, including processing transactions that directly supported their terrorist operations between 2017 and mid-2023. This action raises critical questions about the adequacy of existing regulations and the responsibilities of digital financial platforms in monitoring and preventing the misuse of their services for terrorism financing.

The case is particularly notable for highlighting the role of Iran and Syria, both designated by the U.S. as state sponsors of terrorism, in supporting Hamas’ operations. The plaintiffs argue that these governments’ material support was critical in enabling the October 7 attack, further complicating the geopolitical landscape surrounding terrorism financing and the responsibilities of nation-states in curbing such activities.

Binance’s recent settlement with the United States Department of Justice, which included Anti-Money Laundering (AML) violations and a hefty $4.3 billion fine, underscores the lawsuit’s allegations. This settlement, which came after Binance was accused of allowing illicit actors, including terrorist groups like Hamas, to bypass U.S. regulations, serves as a backdrop to the current legal challenge.

The lawsuit, beyond seeking compensatory and punitive damages, shines a spotlight on the urgent need for robust regulatory frameworks that can effectively address the challenges posed by the use of digital currencies in terrorism financing. It also emphasizes the critical responsibility of financial platforms in implementing stringent monitoring mechanisms to prevent their exploitation by terrorist entities.

This case could potentially set a precedent for how similar cases are approached in the future, especially concerning the accountability of digital financial platforms and the role of nation-states in facilitating or combating terrorism financing. As the legal proceedings unfold, they will undoubtedly attract global attention, highlighting the complex interplay between technology, finance, and international security in the fight against terrorism.