Coinbase Shares Its Written and Video Response to SEC Wells Notice

Coinbase responds to the SEC’s Wells notice

Last month, we shared that we received a vague and broad Wells notice from the SEC – today we’re sharing our response to the SEC. We provided a written and video submission to the SEC, and we discussed those submissions with the SEC a few days ago.

Coinbase is the same company that we were when the SEC allowed us to become public two years ago, after detailed discussions with us about the very aspects of our business that are now the subject of the Wells notice. We didn’t list securities then, and we still don’t. We’d like to in the future, but the SEC has still not complied with the law by providing companies like Coinbase with a way to register to be able to do that. We do not relish litigation against the SEC, but we will vigorously defend ourselves – and stand up for the rule of law for everyone.

Sam Bankman-Fried haunts the halls of Congress, lawmaker says

“His ghost is still in this room. He haunts the halls of Rayburn,” Sherman said, referencing the Rayburn House Office Building in which the hearing was held. “But let’s remember why he was here. For one reason: To prevent the SEC from having jurisdiction over cryptocurrency.”

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The Thursday afternoon hearing was held by the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology and Inclusion. During his remarks, Sherman said that Bankman-Fried was seeking “baby regulation” for crypto through the Commodity Futures Trading Commission rather than the Securities and Exchange Commission.

“All the money and power in this town is on the pro-crypto side because crypto bros make money literally by making money and they’ve made over a trillion dollars out of thin air,” Sherman said. “They’ll accuse the U.S. government of making money out of thin air. Maybe we do, but we’re the U.S. government. What we’re able to do benefits the American people in a democratic system. Nobody elected Sam Bankman-Fried.”

Silicon Valley Start-Up Founder Pleads Guilty To Securities Fraud For Overstating Revenue To Investors

Manish Lachwani pleaded guilty in federal court in San Francisco today to wire fraud and securities fraud charges in connection with his scheme to dupe potential investors into supporting the technology start-up he founded and led, announced United States Attorney Ismail J. Ramsey and FBI Special Agent in Charge Robert K. Tripp. The guilty pleas were accepted by U.S. District Judge Charles R. Breyer.

Lachwani, 47, of Los Altos, Calif., founded Silicon Valley-based HeadSpin, a company that provided clients with software tools and access to devices to test mobile applications. Lachwani founded the company in 2015 and served as its Chief Executive Officer until May 2020. Between April 2017 and April 2020, HeadSpin raised more than $100 million from investors over multiple rounds of fundraising, leading to a valuation of approximately $1.1 billion. According to his plea agreement, Lachwani admitted that he disseminated false and overstated revenue metrics to potential investors to lure investments into his company.

Using crypto for crime is not a bug — it’s an industry feature | Financial Times

One of the (many) times I have been heckled during a panel on crypto was when I argued that it shouldn’t be thought of as money. The only reason to use it other than for speculation, I said, was to buy drugs on the internet. This was a preposterous idea, the heckler retorted; crypto is used for so much more than that.

Crypto enthusiasts argue that it’s wrong to claim that it enables crime because the technology itself is “neutral” so cannot be blamed for any illicit activity. But this simply isn’t true: crypto was designed as a censorship-resistant payment mechanism that operates outside the traditional financial system and beyond the remit of regulators. Crypto transactions are not subjected to the same fraud detection, anti-money laundering or suspicious activity checks that traditional ones are. Operating outside the system is its very raison d’être. And one only has to look at how the crypto industry behaves to see that crime is not a bug; it’s a feature.

An SEC Dissenter Says the Regulator Must Ease Off Crypto

But the SEC’s aggressive approach doesn’t sit well with one of its most senior figures. Hester Peirce, one of the SEC’s five commissioners, has formally disavowed the agency’s tactics on multiple occasions. She says the SEC’s actions have been driven by what she calls “jurisdictional maximalization”—launching cases in order to grow its mandate—but haven’t actually helped the crypto sector become more compliant.

“One way to plant a flag is to bring enforcement action. It says: This is our space,” Peirce says. But in pursuing territorial gains instead of creating guidance to help crypto firms color within the lines, she claims, the SEC has lost its way. “We haven’t done our job as a regulator. We have not provided a road to compliance.”

Fugitive Mirror CEO Ordered to Pay $3.4 Billion in Fraud Case Involving Bitcoin

A US judge ordered a South African executive to pay more than $3.4 billion in restitution and fines for a fraud scheme involving Bitcoin — the highest-ever civil monetary penalty in any US Commodity Futures Trading Commission case.

Cornelius Johannes Steynberg, the founder and chief executive officer of Mirror Trading International Proprietary, committed fraud tied to retail foreign-currency transactions, among other violations, the agency said in a statement that announced the order by US District Judge Lee Yeakel.

Bitcoin Thief Photographed in Bathtub of Cash Gets Four Years

An Ohio man photographed lounging in a bathtub full of dollar bills must serve four years in prison for stealing 713 Bitcoin from a computer device seized by the government in a case against his older brother.

Gary Harmon, 31, was sentenced Thursday by US District Judge Beryl Howell in Washington, DC, where he pleaded guilty in January. He also agreed to forfeit crypto currencies and other property valued at more than $20 million, the US Justice Department said.

Ex-CFO of African Gold SPAC Gets 3 Years in Scheme to Trade Meme Stocks, Crypto

The former chief financial officer for a group of special purpose acquisition companies was sentenced to three years in prison for a scheme to embezzle more than $5 million to trade in crypto assets and meme stocks.

Cooper Morgenthau, 36, of African Gold Acquisition Corp., admitted stealing the money from the SPACs for more than a year beginning in June 2021. He was sentenced in a hearing on Thursday, Manhattan US Attorney Damian Williams said in a statement.

Morgenthau wired more than $1.2 million of African Gold’s money to his personal accounts, then lost almost all the money trading in meme stocks, according to prosecutors. He fabricated bank statements to African Gold’s accountants and auditor to cover the thefts, they alleged.

Supreme Court Deals Another Blow to SEC by Allowing Collateral Attacks on Administrative Proceedings to Proceed in Federal Court

Although the Supreme Court in Cochran decided merely a procedural question of federal court jurisdiction, it may open the floodgates to collateral attacks by respondents to pending administrative proceedings and mire the SEC in litigation. As such, Cochran represents another lost battle in the SEC’s ongoing war to preserve its administrative proceedings against constitutional challenges brought by respondents to /enforcement actions. Moreover, as discussed below, the Supreme Court has now been presented with another opportunity to resolve substantive questions about the constitutionality of SEC administrative proceedings.