FTX Founder Denies Knowledge of Money Laundering Scheme
Last week, the criminal trial of FTX founder and CEO Sam “SBF” Bankman-Fried continued in New York, with Bankman-Fried testifying as part of his defense. He claimed to have no knowledge of the creation of North Dimension, an alleged entity used to launder customer funds from FTX through Alameda Research. Bankman-Fried stated that former chief regulatory officer Dan Friedberg provided him with the paperwork for North Dimension, which he signed without questioning.
Bankman-Fried also denied knowing why FTX moved user funds from a bank account with Alameda to North Dimension. He suggested that banks may have preferred North Dimension to avoid association with well-known crypto-connected hedge funds like Alameda.
Furthermore, Bankman-Fried indicated that FTX’s former chief technology officer, Gary Wang, played a role in creating the “allow negative” button for Alameda Research. This feature allowed the hedge fund to trade more funds than it had available. Bankman-Fried expressed uncertainty about the situation at the time and believed any negative balance would be reflected on FTX.
California Lawmakers Propose Cap on Crypto ATM Withdrawals
California legislators have introduced the Digital financial asset transaction kiosks bill, aiming to limit crypto ATM withdrawals to $1,000 per day due to increasing scams. The proposed law would also restrict operator fees to $5 or 15% (whichever is higher) starting in 2025. If approved, the bill would take effect on January 1, 2024. The legislation follows lawmakers’ visit to a crypto ATM in Sacramento, where they discovered markups as high as 33% on certain crypto assets compared to exchange prices. On average, crypto ATMs charge fees ranging from 12% to 25%.
Senator Calls for DOJ Action Against Binance and Tether
US Senator Cynthia Lummis has urged the Department of Justice (DOJ) to consider pressing charges against crypto exchange Binance following the terrorist group Hamas’ attack on Israel. Lummis, along with Representative French Hill, sent a letter to Attorney General Merrick Garland, requesting the department to “reach a charging decision on Binance” and swiftly conclude investigations into alleged illicit activities involving Tether. The lawmakers expressed concerns about potential violations of applicable sanctions laws and the Bank Secrecy Act.
UK Crypto Firms Violate Promotion Rules
The UK Financial Conduct Authority (FCA) has reported that since the introduction of new crypto promotion rules on October 8, firms have repeatedly failed to provide sufficient risk warnings and information about the risks associated with crypto. The FCA claims that crypto-promoting companies have breached the rules at least 221 times. While some of these breaches involve illegitimate schemes offering high-yield returns on crypto investments, legitimate businesses have also faced action from the FCA.
Hot Take: Heightened Scrutiny on Crypto Industry
The ongoing trial of FTX founder Sam Bankman-Fried highlights the need for greater regulatory oversight in the cryptocurrency industry. As allegations of money laundering and improper practices emerge, it is crucial for authorities to hold individuals and companies accountable. Additionally, proposed legislation in California and calls for action against Binance and Tether demonstrate a growing recognition of potential risks and scams within the crypto space. To protect investors and maintain trust in cryptocurrencies, stricter regulations and enforcement are necessary. As the industry continues to evolve, it is essential for regulators to adapt swiftly to safeguard against illicit activities.
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