Huang is also annoyed at zachxbt's observations about the multiple hacks of C.R.E.A.M. Finance, which zachxbt wrote had been exploited three times "due to negligence". "Putting aside that Cream Finance was exploited two, not three times", Huang hilariously writes in the lawsuit, taking issue with the fact that zachxbt supposedly intentionally omitted that some funds were returned and that Huang claims to have been no longer involved with the project by that point. It's not made clear in the lawsuit which of the three hacks recorded on Web3 is Going Just Great — to the tune of $37.5 million (February 2021), $25–30 million (August 2021), and $130 million (October 27, 2021) — supposedly didn't happen.
Machi Big Brother sues zachxbt
Crypto personality and creator of C.R.E.A.M. Finance Jeffrey Huang, aka "Machi Big Brother", has filed a defamation lawsuit against crypto sleuth zachxbt. Huang alleges that zachxbt has defamed Huang with false claims via a Medium article that accuses Huang of multiple pump-and-dump schemes that enriched Huang to the tune of 22,000 ETH (~$38 million at today's prices).
Wyre finally shuts down
The crypto payments platform Wyre finally announced they would be winding down "due to market conditions". This came after a January announcement from the CEO, where it was not entirely clear whether the company was shutting down or just massively "scaling back".
Wyre had been a partner of Binance US, through which Binance was able to accept USD deposits. However, Binance US is now the target of SEC regulatory action, and has suspended US dollar deposits. Wyre wrote in their announcement that the closure "is not due to any regulatory agency direction". Sure thing.
Binance to leave the Netherlands after failing to obtain license
As they are wont to do, Binance set up shop in the Netherlands without getting permission from the country's regulators. However, after being warned and then fined €3.3 million (~$3.35 million) in January, they apparently finally decided it was time to try to comply with requirements.
Sadly for them, they were unable to obtain a VASP registration in the country, and their "many alternative avenues to service Dutch residents in compliance with Dutch regulations" didn't pan out either. They announced that, effective immediately, they would no longer be accepting new customers from the region. Existing customers in the country will soon be only able to withdraw assets, and will not be able to purchase assets or trade on the platform.
Binance US cuts staff following SEC lawsuit
The US arm of Binance has cut around 50 positions, amounting to approximately 10% of its US employees. In a message to employees, Binance.US CEO Brian Shroder explained, "Because of our preparation for a prolonged and very costly legal battle, the Board asked Management to right-size our organization and reduce our burn rate to ensure long-term viability".
Shroder is, of course, referring to the recent lawsuit from the SEC as well as a lawsuit from the CFTC that was filed in March.
Binance looks to exit Cyprus
Although Binance's Cyprus arm was only registered in October 2022, the company is already looking to deregister in the country. According to Binance, they're pulling back in smaller EU countries in order to "focus on our efforts on fewer regulated entities in the EU", where they will need to come into compliance with the recent MiCA legislation by the time it comes into effect.
CoinEx settles with New York for $1.7 million
The Hong Kong-based cryptocurrency exchange CoinEx has agreed to pay $1.17 million in refunds to investors and $600,000 in penalties for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange. The lawsuit was initially filed in February, and alleged that the company "engaged in repeated and persistent fraudulent practices".
The company is also banned from operating in the state going forward. The agreement requires CoinEx to implement geoblocking to prevent people with New York IP addresses from accessing the platform, and prohibits the company from creating new accounts for US customers or allowing US customers to do anything other than withdraw their assets.
- "Banned In New York, CoinEx Returns $1.7 Million to Settle Lawsuit", Decrypt
- "Attorney General James Recovers $1.7 Million from Cryptocurrency Platform for Operating Illegally", press release by New York Attorney General Letitia James
FPG halts withdrawals after $15–20 million hack
The institutional cryptocurrency broker Floating Point Group (FPG) announced to customers on June 14 that they would be suspending all activity on their platform following a "cyber security incident" that had occurred on June 11. "While the loss at this point is still being investigated and analyzed, the number as we understand it today is between $15M-$20M in cryptocurrencies lost," they wrote on Twitter.
The group announced that they were working with "the FBI, the Department of Homeland Security, our regulators and Chainalysis" to investigate the attack. The group had previously earned SOC 2 certification for its cybersecurity controls.
Texas securities regulator alleges in cease-and-desist that Abra crypto lender has been insolvent for months
In an emergency cease-and-desist issued on June 15, the Texas State Securities Board alleged that the Abra crypto lending firm was "insolvent or nearly insolvent" as of interviews conducted on March 31. The filing alleged that Abra and its founder William Barhydt had made investment offerings that were materially misleading, accusing them of securities fraud. Despite not contesting securities regulators' conclusion that Abra was insolvent, Abra repeatedly posted statements on social media such as the one on June 11, where they wrote "Abra is not bankrupt".
According to the complaint, although Abra claimed it stored customer funds with the Fireblocks crypto custodian, they had actually been "secretly transferring assets" to Binance.
The regulator also alleged that Abra had around $30 million in assets with Babel Finance, $30 million with Genesis, and $10 million with Three Arrows Capital — three companies in various stages of liquidation or bankruptcy. They also have $8.8 million with Auros, a firm that was in liquidation but has since exited the process.
Delio crypto lender suspends withdrawals
South Korean cryptocurrency lending platform Delio announced to its customers on June 14 that they would be suspending withdrawals. In a letter to customers, they wrote that the decision was taken in response to the withdrawal suspension by Korean yield platform Haru Invest the previous day, which they said had led to a "sharp increase in market volatility and increased confusion among investors". Haru's suspension had caused a "sudden surge of withdrawals on our end", said Delio CEO James Jung.
Delio, like Haru, advertised yields of more than 10%.
- "출금 중지 조치 안내", Delio (in Korean)
- "Two Crypto Platforms Halt Withdrawals in an Echo of the Sector’s 2022 Woes", Bloomberg
Banq goes banqrupt
Banq, a subsidiary of the Prime Trust crypto custodian, has filed for bankruptcy. Banq is a "crypto-friendly" payment processor based in Nevada, though according to the bankruptcy documents, former CEO Scott Purcell decided to try to pivot the company away from payments and into NFTs without approval from the board of directors. Banq's parent company, Prime Trust, has also been the subject of insolvency rumors recently.
In the bankruptcy filings, Banq alleges that $17.5 million in assets were stolen by former officers, described in the listing as "computers, trade secrets, proprietary information and technology, business records, etc." The transfer allegedly was made to Fortress NFT Group, a rival company founded by the former CEO, CTO, and CPO. A lawsuit from Banq filed against Fortress and the executives in May 2022 alleges that the executives "stole not only Banq's technology, but also significant other value of Banq's, and used the purloined property to launch Defendants Fortress NFT and Planet NFT using Banq's assets, employees, trade secrets and proprietary technology, claiming all of it to be their own." They also claim that the defendants deleted files and engaged in other fraudulent activity to try to cover up the theft.