SEC and Binance Agree on Emergency Relief, Binance Will Continue to Operate

SEC Secures Emergency Relief to Protect Binance.US Customers’ Assets

The Securities and Exchange Commission today secured emergency relief in which the all the defendants in its litigation against Binance Holdings Limited, BAM Management US Holdings Inc., BAM Trading Services Inc., and Changpeng Zhao agreed to repatriate to the United States assets held for the benefit of customers of the Binance.US crypto trading platform. The order from the United States District Court for the District of Columbia also prohibits defendants BAM Trading Services Inc. and BAM Management US Holdings, Inc. (together, “BAM”) from spending corporate assets other than in the ordinary course of business. The order helps ensure that Binance.US customers are permitted to withdraw their assets from the platform and that those assets that remain on the platform are protected and remain in the United States through the resolution of the SEC’s pending litigation against Binance Holdings Ltd., BAM, and their founder, Zhao.

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Specifically, the order (1) requires all of the defendants to repatriate to the United States assets held for the benefit of BAM’s U.S. customers; (2) requires BAM to maintain U.S. customer assets in the United States for the duration of the litigation and to facilitate customer withdrawals; (3) expressly prohibits BAM from transferring any assets or funds, or from providing control over such assets or funds, to co-defendants Binance Holdings Limited, Changpeng Zhao, or their affiliates; (4) restricts BAM from spending assets or funds except for ordinary course business expenses and requires BAM to provide the SEC with oversight over such expenses; (5) prohibits all of the defendants from destroying records; (6) requires all of the defendants to submit expedited sworn accountings of certain assets to the SEC; and (7) requires all of the defendants to submit to expedited discovery by the SEC on the custody and security of customer assets.

SEC Charges PIMCO for Disclosure and Policies and Procedures Failures

The Securities and Exchange Commission today announced that registered investment adviser Pacific Investment Management Company LLC (PIMCO) will pay $9 million to settle two enforcement actions relating to disclosure and policies and procedures violations involving two funds PIMCO advises.

In the first action, the SEC found that, from September 2014 to August 2016, PIMCO failed to disclose material information to investors concerning the use by PIMCO Global StocksPLUS & Income Fund (PGP) of interest rate swaps and the material impact of the swaps on PGP’s dividend.

In the second action, the SEC found that, from April 2011 to November 2017, PIMCO failed to waive approximately $27 million of advisory fees as required by its agreement with the PIMCO All Asset All Authority Fund. Additionally, until at least 2018, PIMCO did not have adequate written policies and procedures concerning its oversight of advisory fee calculations and related fee waivers. PIMCO has since disbursed to investors the $27 million in fees that should have been waived, plus interest and a performance adjustment.

BlackRock May Have Found Way to Get SEC Approval for Spot Bitcoin ETF

Blackrock’s iShares Bitcoin Trust application to the U.S. Securities and Exchange Commission (SEC) this week might stand a better chance than previous attempts by other fund managers thanks to the promise of a “surveillance-sharing agreement” between exchanges.

On page 36 of the Nasdaq (where the proposed ETF will be listed) 19b-4 filing, it’s stated that to mitigate against market manipulation, Nasdaq will be brought in to enter into a surveillance-sharing agreement with an operator of a spot trading platform for Bitcoin.

BlackRock Bitcoin ETF

One easily imaginable but also kind of weird future for crypto would be:

1. Bitcoin, and I guess Ethereum, are respectable and fully domesticated parts of the traditional financial system. Big asset managers, managing money for pension funds or college endowments or insurance companies or your 401(k), buy billions of dollars of Bitcoin by calling up their sales coverage at Goldman Sachs or JPMorgan, and then hold all those Bitcoin in standard respectable institutional custody arrangements.

2. Pretty much every other cryptocurrency is banned in the US and eventually withers down to nothing.

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Anyway I’m not saying this is the most likely outcome, but the SEC definitely seems to want Part 2 (while grudgingly tolerating Bitcoin and Ethereum), and as for Part 1 here’s this:

“BlackRock Inc. is trying its hand at potentially getting the first spot-Bitcoin exchange-traded fund launched in the US….”

SEC enforcement chief rejects criticism of crypto crackdown

The crypto sector has said that existing U.S. regulations are inadequate and called for new rules. On Friday, Grewal questioned whether such new rules would work to tamp down misconduct.

“Even if you came up with a bespoke rule set, you have an entire industry where the ethos is built around noncompliance,” he said.

Getting a crypto bill through Congress is only the first hurdle, policy expert says

Though congressional leaders have continued to spar over the best course of action for crypto regulation, getting a bill to the president’s desk may only be the start of the battle.

Federal policy expert Dorothy DeWitt cautoned crypto companies on Friday that even if policy advances, rules can take a decade or more to pass.

DeWitt served as former chief finance counsel to the Senate and former director of the CFTC’s division of oversight.

“Rulemaking takes forever,” DeWitt said during a panel in New York Friday at an event hosted by Lowenstein Sandler law firm and Rutgers law school.

DeWitt pointed to the Dodd Frank Act, which was published in 2010, but its final rules were not passed through the CFTC until 2021.

“It’s really hard to get folks who have little interest [and] little understanding and who are afraid of really complex issues to come together,” she said.

PwC and KPMG drawn deeper into Brazilian retailer’s accounting scandal

The accounting firms PwC and KPMG have been drawn deeper into the scandal over collapsed Brazilian retailer Americanas after the publication of internal correspondence showing how the company hid billions of dollars of debt.

Americanas’ new management told the Financial Times that it was seeking “context” to explain correspondence between former executives and the two audit firms, which was uncovered by an independent investigation into almost $4bn of accounting irregularities that sent the company into bankruptcy in January.

The retailer last week said for the first time that fraud lay at the heart of the collapse. While it pointed the finger at former executives, the development also raised the stakes for the company’s advisers.

U.S. Government Owns Way More Bitcoin Than Any Other Country–So Why Aren’t They Selling It?

From the increasingly ferocious federal crackdown on the cryptocurrency business, it might appear the U.S. government cannot stand digital currencies. Yet there is a love-hate dynamic: the Treasury is sitting on a stash of 207,189 bitcoin, worth $5 billion, by far the largest such state-owned hoard.

While many other countries have been disposing of their crypto, according to new research provided exclusively to Forbes, the U.S. has been steadily adding to its supply as a result of asset seizures. Last year, the U.S. held 69,640 bitcoins according to the research a doctoral thesis by Sachin Jaitly, a general partner at investment advisor Morgan Creek Capital. That’s 94% of the bitcoin in global government coffers at the time.

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Leslie Sammis, a Tampa-based criminal defense lawyer whose practice includes several Binance seizure cases, says that it is more likely that Justice Department bureaucrats are waiting for more clarity on cryptocurrencies in general. “I think they probably have decided that they need Congress to make a law or the Department of Justice needs to come out with some policy before they start moving all those assets around,” says Sammis.