In this issue:

  • Traditional Financial Firms Expand Reach into Cryptocurrency Sphere
  • Cryptocurrency Donations Pour In to Fund Ukrainian Government and Charities
  • DOJ Secures Guilty Pleas and Charges Alleged Ponzi Scheme; SEC Launches NFT Probe

Traditional Financial Firms Expand Reach into Cryptocurrency Sphere

By Alex Karambelas

Early this week, a major investment bank announced that it plans to launch a digital asset custody platform later this year. This announcement follows the bank’s establishment of a dedicated digital asset team in 2021. According to reports, the investment bank will become “the first to enter the global digital custody space” with the launch of this new platform.

In related news, a payment solutions company announced on Tuesday that it will acquire a cryptocurrency fundraising firm. The firm operates the leading cryptocurrency donation marketplace, which allows over 1,300 nonprofits to accept cryptocurrency donations, according to reports. Speaking about this acquisition, the company’s CEO reportedly stated that “[c]ryptocurrency is quickly moving beyond early adoption and becoming increasingly mainstream as more people want to invest, transact and donate in crypto.”

A leading financial technology company announced this week that it will partner with a prominent blockchain-based digital identity network. According to a press release, this partnership will enable solutions to comply with “multi-jurisdictional requirements set out by the FATF (Financial Action Task Force) Travel Rule.”

In a final notable item, the world’s largest financial derivatives exchange announced that it plans to expand its cryptocurrency offerings by launching options on Micro Bitcoin and Micro Ether later this month. This latest move follows the introduction of Micro Bitcoin and Micro Ether futures by the exchange last year. In a statement released on Tuesday, a representative for the exchange reportedly stated, “[O]ur micro-sized options will enable traders of all sizes to efficiently hedge market-moving events with greater precision and flexibility or fine-tune their cryptocurrency market exposure.”

For more information, please refer to the following links:

Cryptocurrency Donations Pour In to Fund Ukrainian Government and Charities

By Keith R. Murphy

According to a recent report summarizing information compiled by Cointelegraph, the amount of tracked cryptocurrency donations sent to the Ukrainian government, charities and its military recently surpassed $37 million. The donations have been in the form of bitcoin, ether, tether and other altcoins made to funds and organizations in support of Ukraine.

Among other efforts to raise funds, a member of a well-known Russian feminist protest band listed for sale a single Ukrainian flag NFT for the benefit of Ukrainian civilian organizations. According to reports, the Ukrainian flag NFT ultimately sold for 2,238 ETH, or approximately $6.75 million, with the proceeds intended to purchase supplies for Ukrainian civilians and military members. The winning bid reportedly was placed on behalf of “UkraineDAO,” a pool of more than 3,200 donors set up to effectively purchase the NFT from itself.

In related news, the Ukrainian government canceled an anticipated airdrop for cryptocurrency users, with a government official indicating that no fungible tokens would be issued and that funds instead would be raised through the sale of NFTs. The proposed airdrop reportedly was subjected to a fake airdrop of billions of “Peace World Tokens” just prior to the official launch in an apparent effort to confuse donors. Users on social media have been advising others to be vigilant to avoid similar scams, including one where a false official cryptocurrency address for helping the Ukrainian government has been posted numerous times. 

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DOJ Secures Guilty Pleas and Charges Alleged Ponzi Scheme; SEC Launches NFT Probe

By Teresa Goody Guillén

In a Department of Justice (DOJ) press release last week, the U.S. attorney for the Southern District of New York announced that two of the founders and executives of BitMEX, Arthur Hayes and Benjamin Delo, pleaded guilty “to violating the Bank Secrecy Act … by willfully failing to establish, implement, and maintain an anti-money laundering program at BitMEX.” Under the terms of their plea agreements, Hayes and Delo each agreed to separately pay a $10 million criminal fine. The DOJ had charged the two men, along with co-founder Samuel Reed and employee Gregory Dwyer.

Another recent DOJ press release announced the indictment of BitConnect founder Satish Kumbhani for orchestrating a global $2.4 billion Ponzi scheme. According to court documents, the founder misled investors about BitConnect’s “Lending Program,” in which he and his co-conspirators touted purported proprietary technology as being able to generate significant profits and guaranteed returns by trading investors’ money on cryptocurrency exchange markets. Among other things, the indictment alleges that BitConnect operated as a Ponzi scheme by paying earlier investors with money from later investors, and that Kumbhani directed promoters to fraudulently manipulate and prop up the price of BitConnect’s cryptographic asset, BitConnect Coin (BCC), creating the false appearance of market demand. According to the indictment, Kumbhani is charged with wire fraud, operating an unlicensed money-transmitting business and three conspiracies: committing wire fraud, commodity price manipulation and international money laundering. Kumbhani’s whereabouts are reportedly unknown.

According to a recent report, the SEC is scrutinizing NFTs and the crypto exchanges where they trade to determine if any of the federal securities laws are being violated. The report states that over the past several months, the SEC has issued subpoenas demanding information about NFT offerings. A reported focus of the probe is on whether certain NFTs, including so-called fractionalized NFTs, are being used “to raise money like traditional securities.”

For more information, please refer to the following links:

SEC Scrutinizes NFT Market Over Illegal Crypto Token Offerings