cryptowhistleblower.com's Daren Firestone discusses Terra and whistleblowers on The Garrulous Gavel
Daren recently sat down with fellow whistleblower attorney, Jonathan Tycko, for Jonathan’s podcast, The Garrulous Gavel. They discussed emerging legal issues around crypto and blockchain technology, the recent Terra not-so-stable coin debacle, and how whistleblowers can help uncover fraud in the crypto business. You can listen here.
It’s an effort to streamline compliance guidance.
FinCEN has issued a long-awaited notice of proposed rulemaking for a process to issue “no action letters” to offer guidance to companies on whether FinCEN would bring an enforcement action against them for noncompliance with the Bank Secrecy Act. Crypto companies that exchange money want to know whether they are subject to the BSA and its know-your-customer and anti-money laundering requirements. FinCEN can’t guarantee a free pass, since other agencies (SEC, CFTC) can enforce the BSA, but a letter would provide a good deal of comfort.
Celsius meltdown is one more brick from the wall.
Crypto-watchers have been warning about Celsius for months: see, for example, here and here. The Celsius meltdown has hit the broader crypto market hard.
Will Congress listen?
Today, 26 self-described “computer scientists, software engineers, and technologists” sent a letter to Congress “in support of responsible fintech policy.” The signatories, who included a lecturer at Harvard with expertise in cryptography and the principal engineer of Google Cloud, proclaimed, “We strongly disagree with the narrative — peddled by those with a financial stake in the crypto-asset industry — that these technologies represent a positive financial innovation and are in any way suited to solving the financial problems facing ordinary Americans.
Questions of market manipulation raised over BAYC
This month, there were reports of potential insider trading related to Bored Ape owner Yuga Labs’ acquisition of Meebits, the popular creator of 3D NFT avatars. “According to data from blockchain security firm PeckShield, 14 Ethereum addresses with no clear history of NFT purchases had bought 159 Meebits between March 5 and March 11. This occurred just before Yuga Labs said it would purchase the rights to Meebits and CryptoPunks from Larva Labs.
Who is taking crypto compliance seriously?
I had the opportunity to attend the Chainalysis Links conference in NY this week. I may have been the only whistleblower attorney there. Investigators can use tools like Chainalysis to expose fraud for the government. Not all whistleblowers are insiders. SEC rules, for example, make it clear that “independent analysis (evaluation of information that may be publicly available but which reveals information that is not generally known)” is eligible for a whistleblower award.
A lively reminder from the federal bench that cryptocurrencies can be traced.
In a recently unsealed opinion, U.S. Magistrate Judge Zia M. Faruqui found probable cause that a defendant named in a criminal complaint had violated U.S. sanctions by operating an unnamed payment platform to send cryptocurrency to an unnamed sanctioned country (likely Russia, Iran, or North Korea). It’s unusual for a magistrate judge to issue an opinion on the existence of probable cause to support a criminal complaint. Usually, prosecutors file criminal complaints with little public judicial commentary.
The U.S. government is wary of crypto.
The United States government is not anti- or pro-crypto. But it has begun cracking down on some of the most alarming abuses of blockchain technology. As President Biden put it in his March 9, 2022 executive order, “The growing use of digital assets in financial activity heightens risks of crimes such as money laundering, terrorist and proliferation financing, fraud and theft schemes, and corruption. These illicit activities highlight the need for ongoing scrutiny of the use of digital assets.