New SEC Guidance on Disclosing Crypto Exposure May Be Huge Boost to Enforcement

SEC Asks Public Companies for More Information About Crypto Exposure

The Securities and Exchange Commission is asking public companies to detail their exposure to distressed crypto entities following the collapse of trading platform FTX and its affiliates.

In a notice posted to its website Thursday, the SEC said companies may have disclosure obligations related to the direct or indirect impact that recent crypto bankruptcies may have had on their businesses. It provided a list of sample questions that agency staff may pose to certain issuers based on their circumstances.

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Some of the SEC’s queries focused on counterparty risk that public companies may have to crypto-market participants that have filed for bankruptcy, faced heavy redemptions or suspended withdrawals from customers.

New Ransom Payment Schemes Target Executives, Telemedicine

“The Venus group has problems getting paid,” Holden said. “They are targeting a lot of U.S. companies, but nobody wants to pay them.”

Which might explain why their latest scheme centers on trying to frame executives at public companies for insider trading charges. Venus indicated it recently had success with a method that involves carefully editing one or more email inbox files at a victim firm — to insert messages discussing plans to trade large volumes of the company’s stock based on non-public information.

“We imitate correspondence of the [CEO] with a certain insider who shares financial reports of his companies through which your victim allegedly trades in the stock market, which naturally is a criminal offense and — according to US federal laws [includes the possibility of up to] 20 years in prison,” one Venus member wrote to an underling.

‘Shark Tank’ star says $15M payout from FTX was wiped out: ‘It’s all at zero’

O’Leary said he told the disgraced crypto tycoon, “Look Sam, I am just one investor, but my account has a zero in it, and there are no accounting records. Where did the money go? I need to find where the money went.”

O’Leary admitted that he fell into the “groupthink” pitfall, drinking the Kool-Aid on institutional investors’ frenzy to get in on crypto exchanges.

“We all look like idiots. We relied on each other’s due diligence,” he said.

Inside the Frantic Texts Exchanged by Crypto Executives as FTX CollapsedThe day before the embattled cryptocurrency exchange FTX filed for bankruptcy, Changpeng Zhao, the chief executive of the rival exchange Binance, sent an alarmed text to Sam Bankman-Fried, FTX’s founder.

Mr. Zhao was concerned that Mr. Bankman-Fried was orchestrating crypto trades that could send the industry into a meltdown. “Stop now, don’t cause more damage,” Mr. Zhao wrote in a group chat with Mr. Bankman-Fried and other crypto executives on Nov. 10. “The more damage you do now, the more jail time.”

FTX Bankruptcy Team Said to Meet With Federal Prosecutors in NY

John J. Ray III, who was appointed FTX’s chief executive officer last month, met this week with the US attorney’s office for the Southern District of New York. Though details of the meeting weren’t immediately available, it suggests potential overlap between the criminal investigation and bankruptcy probe, which has unearthed FTX’s chaotic corporate governance under founder and former CEO Sam Bankman-Fried. Ray’s team has also raised concerns about the commingling of digital assets between FTX and sister trading house Alameda Research.

Lawyers for FTX from Sullivan & Cromwell, including former Securities and Exchange Commission enforcement director Steve Peikin and former Manhattan federal prosecutor Nicole Friedlander, were also present at the meeting, the people said.

US Watchdog Says Banks Shying Away From Stumbling Crypto IndustryU.S. banks have been cooling in their crypto interest since this year’s twin failing of Terra (and its currency, LUNA) and FTX, said Michael Hsu, the acting chief of the Office of the Comptroller of the Currency (OCC).

“Overall, I can say – and this is going to be obvious – is that there was more interest before Terra/LUNA and FTX than since Terra/LUNA and FTX,” said Hsu, whose banking agency released its “Semiannual Risk Perspective” report Thursday, in which cryptocurrency risks were given heightened prominence.

The report included a new section on digital assets as a “special topic in emerging risk,” and it pummeled the industry, saying its risk management practices “lack maturity.”