Compliance Chiefs in the Crosshairs

Crypto Market Turmoil Highlights Personal Risks for Compliance Chiefs

The recent crash in the price of some cryptocurrencies, along with a series of hacks and bankruptcies as well as potential new regulatory regimes, underscores the importance of compliance programs in helping protect crypto firms from running afoul of the law.

But the increased pressure and attention placed on the industry has stoked the anxiety of individual crypto compliance officers and other legal professionals, who see regulators more willing to hold them personally accountable for the problems at their firms, according to industry experts.

10 Axioms That Crypto-Shills Don’t Want You to Know

Like most crypto-skeptics, I have no personal or political agenda and do not profit from anti-crypto advocacy. In other words, I have absolutely no stake in the fintech game and opine with objectivity, fairness and impartiality. My conclusions are based solely on exhaustive research and 30+ years of experience working, teaching and writing within the juxtaposition of law, technology and business, including almost 20 years at the SEC investigating and prosecuting investment fraud relating to technology.

Along these lines, this article gathers from the burgeoning community of crypto-skeptics ten of the most glaring truths and secrets that the legion of lawyers, consultants, lobbyists, promoters and other crypto-profiteers would rather keep secret, untold and even unspoken.

Who’s Afraid of Gary Gensler? Coinbase Braces for a Fight

Last time the SEC came after Coinbase for a specific product or asset was a year ago, when it threatened to sue if Coinbase moved forward with its planned high-yield Lend offering. At that time, Ripple CEO Brad Garlinghouse, who has been fighting the SEC since 2020, tweeted a “Die Hard” meme at Coinbase CEO Brian Armstrong: “Welcome to the party, pal.” Mark Cuban also urged Armstrong to “go on the offensive.”

But 13 days after the SEC threat, Coinbase gave in and dropped the product.

This time, the company can’t back down so quickly. Delisting the tokens, as a source at Coinbase told me, would “undercut our whole position.”

What is regulation by enforcement — and is it bad?

Congress has inched toward new rules for crypto, often with support from the industry. Sens. Kirsten Gillibrand and Cynthia Lummis have indicated their bipartisan crypto bill is unlikely to pass this year, but could have sections approved through committee. Sens. Debbie Stabenow and John Boozman introduced a separate bipartisan bill on Wednesday that would give the CFTC oversight of bitcoin and ether and require exchanges to register with the agency.

But in the meantime, the battles will continue in court. Before the insider case, the SEC was reportedly probing Coinbase itself for alleged securities laws violations. (Coinbase denies it lists securities.) Crypto companies likewise press their argument for how they should be regulated in court, as seen in both the ongoing Ripple fight and Grayscale’s lawsuit over the SEC’s rejection of its bitcoin ETF.

Coinbase Hit With Another Class Action Lawsuit Following SEC Allegations

Beleaguered US cryptocurrency exchange Coinbase is staring down yet another class action lawsuit.

Law firm Bragar Eagel & Squire filed the suit on Thursday in the US District Court of New Jersey, alleging Coinbase made false or misleading claims about its business activities and compliance policies for more than a year, according to a statement.

Specifically, the multi-faceted claim asserts Coinbase held customer’s digital assets knowing they could end up as the property of a bankruptcy estate, potentially forcing customers to be treated as the exchange’s “general unsecured creditors.”

Coinbase is alleged to have allowed US customers to trade digital assets which the exchange “knew or recklessly disregarded” which should have been registered with the Securities and Exchange Commission (SEC).

NYC’s Comptroller Strikes Back at Republicans’ ESG Criticisms

New York City Comptroller Brad Lander, who helps oversee about $240 billion in pension funds, said efforts by conservative US states to thwart the financial industry’s plans to address climate change are just a cover to defend the interests of oil companies.

Lander is referring to the growing backlash by elected officials from Republican-led states including Texas and West Virginia against companies that have curbed business with the oil and gas industries. A bevy of states have enacted laws in the past year to curtail ties to companies that engage in so-called boycotts of the energy industry.

Congress looks favorably on crypto as FTX fuels huge increase in donations

It’s been an ugly summer for the cryptocurrency industry everywhere but on Capitol Hill.

Despite a pileup of a bad news — layoffs at major companies, ongoing hacks, and the collapse of several high-profile crypto projects that have devastated Main Street investors — the sector is on a hot streak in Congress.