Federal Judge Orders SEC to Show Cause to Avoid Sanctions for "Misleading" Court on Asset Freeze

SEC Attorneys Hit by Judge With Reprimand and Possible Sanctions in Debt Box Case

A federal judge on Thursday warned Securities and Exchange Commission (SEC) attorneys that he may sanction them for allegedly convincing a court to freeze a crypto firm’s assets under “false and misleading” pretenses, a court filing shows.

According to an order issued by U.S. District Judge Robert Shelby of the U.S. District Court in Utah, the SEC’s attorneys could be sanctioned for making “misleading” arguments about crypto project Debt Box’s alleged efforts to transfer its assets and investors’ funds overseas, leading a court to freeze the project’s bank accounts. The SEC’s “misrepresentations… undermined the integrity of the case’s proceedings,” in addition to causing Debt Box “irreparable harm,” Judge Shelby said in an order.

Binance Copped a $4 Billion Plea but Is Still Fighting the SEC

The SEC wasn’t involved in the monthslong settlement talks that led Binance and its founder, Changpeng Zhao, to plead guilty and settle Treasury’s civil charges, according to people familiar with the matter.

The SEC’s absence reflects the high cost of settling with a civil law enforcer that can’t put people in prison but can put American crypto companies out of business. Even before the SEC sued Zhao, Binance and its U.S. affiliate, the parties couldn’t come close to agreeing on settlement terms, people familiar with the matter said.

Settling on the SEC’s terms at the time may have required Binance to close most of its U.S. crypto-trading business and accept a claim that its affiliates engaged in manipulative trading, the people said.

Binance is now ‘totally different’: Interview with CEO Richard Teng

Binance CEO Richard Teng has assured the “gaps in compliance” from the early days of Binance are firmly in the past and that the crypto exchange is now “totally different.”

Teng, the former head of regional markets for Binance, was elevated to the position of CEO on Nov. 21 after Changpeng ‘CZ’ Zhao stepped down from the role, pleading guilty to charges levied against him by the U.S. Department of Justice.

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Teng believes that the “overcast” conditions clouding Binance in recent months are lifting following its staggering $4.3 billion settlement with the United States Justice Department relating to a raft of violations of U.S. regulations and sanctions programs.

Mallinckrodt Avoids $40 Million SEC Fine in Medicaid Overcharge Case

The SEC said in an administrative proceeding Thursday that the Centers for Medicare and Medicaid Services informed Mallinckrodt as early as 2016 that the company was using an incorrect rebate rate for its sales of Acthar Gel, a drug used to treat several rare autoimmune diseases, which meant it was overcharging state Medicaid programs for the drug.

Mallinckrodt, which didn’t admit or deny the SEC’s findings, agreed to hire a compliance consultant to conduct a comprehensive review of the company’s disclosure and internal accounting controls, as well as implement the consultant’s recommendations.

The SEC said it wouldn’t impose the $40 million penalty because of Mallinckrodt’s financial position and because it had committed to retain a consultant. The company in November announced it had completed its financial restructuring and emerged from chapter 11 bankruptcy.

SEC’s Hester Peirce Urges Better Crypto Regulation Efficiency

In a recent statement at the Blockchain Association Policy Summit, SEC Commissioner Hester Peirce emphasized the need for the Securities and Exchange Commission (SEC) to regulate the cryptocurrency industry more effectively. Highlighting the importance of clear and focused regulatory efforts, Peirce critiqued the SEC’s current approach, citing the handling of the case against crypto startup LBRY as an example.

Peirce’s remarks shed light on the SEC’s challenges in regulating the rapidly evolving crypto sector. She pointed out inconsistencies in the agency’s enforcement actions, specifically questioning why certain firms were charged while others were not. The LBRY case, where the SEC charged the firm in March 2021 for selling unregistered securities and won a subsequent legal battle, was labeled by Peirce as a “low point.” She criticized the SEC’s resource allocation and the seemingly arbitrary nature of its enforcement actions in the crypto industry.

The SEC Commissioner stressed the importance of prioritizing cases involving “real harm” and suggested that the SEC streamline its process through rulemaking. According to Peirce, this approach would conserve resources and provide clearer guidance to the industry, preventing firms from interpreting enforcement actions to understand regulatory expectations.

Ex-US prison counselor admits accepting bribe from Galleon’s Rajaratnam

Report this ad But a person familiar with the matter has previously said the inmate was Rajaratnam, who was convicted and sentenced in 2011 to 11 years in prison for insider trading and was released early in 2019.

William Tidwell, 49, did not mention Rajaratnam by name when appearing before a judge in Boston to admit to accepting about $90,000 in exchange for giving favorable treatment to a wealthy inmate at the Federal Medical Center Devens in Ayer, Massachusetts.

But a person familiar with the matter has previously said the inmate was Rajaratnam, who was convicted and sentenced in 2011 to 11 years in prison for insider trading and was released early in 2019.

Lazarus Group Stolen $3B in Cryptocurrency Likely to Fund North Korean Projects

North Korea-linked hacker organization Lazarus Group has stolen $3 billion in cryptocurrency over the past six years, according to a report by cybersecurity firm Recorded Future.

The report released on Thursday reveals that in 2022 alone, the group plundered $1.7 billion in cryptocurrency, likely to fund North Korean projects.

Blockchain data analysis firm Chainalysis indicates that out of this total, $1.1 billion was stolen from decentralized finance (DeFi) platforms. A September report published by the U.S. Department of Homeland Security (DHS) as part of its Analytic Exchange Program (AEP) also highlighted Lazarus’s exploitation of DeFi protocols.

Supreme Court Oral Argument in Jarkesy Laser-Focused on Seventh Amendment Trial Right in Agency Civil Penalty Enforcement Actions

At the outset, caution should always be taken in trying to discern the outcome of cases from oral arguments. That being said, during oral argument, the focus, save a few passing remarks on the ALJ removal issues, was on the Seventh Amendment jury trial right.

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The Justices’ focus on the Seventh Amendment, and near-total silence on the non-delegation and removal issues, can be interpreted in different ways. For various reasons, each Justice may have concluded that these issues can be decided solely based on the briefing on the non-delegation and removal questions. The questioning could also signal that the Court’s conservative wing intends to affirm the Fifth Circuit’s holding on the Seventh Amendment, and that they need not make any findings on the non-delegation or removal issues. However, given that the Fifth Circuit’s ruling on the non-delegation and removal issues effectively struck down several federal statutes as unconstitutional, given the federal government’s need for uniformity on the operation of executive-branch agencies, and given that the Court granted certiorari on all three questions, the Justices may see benefits in reaching all three questions. But again, we counsel caution in reading too much into the lack of questions on an issue; instead, we focus here on what the questions actually asked may reveal.