Binance fined over $4 billion, founder pleads guilty and resigns

November 21, 2023

Binance fined over $4 billion, founder pleads guilty and resigns

Binance founder Changpeng "CZ" Zhao pleaded guilty to money laundering charges and agreed to step down as CEO of Binance, the largest global cryptocurrency exchange. He will pay a $50 million fine and faces the possibility of 18 months in prison.

Binance agreed to pay $4.3 billion in restitution for widespread wrongdoing including failure to implement proper anti-money laundering programs, unlicensed money transmitting, and sanctions violations. Binance will be allowed to continue operating, but will be subjected to a three-year-long monitorship program to ensure AML and sanctions compliance.

Simultaneously with the DOJ action, Binance reached agreements with the CFTC, FinCen, and OFAC on ongoing legal issues. Notably, the SEC lawsuit was not among those settled.

CZ posted a long thread on Twitter, admitting "I made mistakes, and I must take responsibility," carefully sidestepping mentioning what any of those mistakes were.

"Binance and CEO Plead Guilty to Federal Charges in $4B Resolution", U.S. Department of Justice [archive]

November 21, 2023

Aragon DAO votes to sue its founding team

(attribution)

Aragon is a prominent project that creates DAO infrastructure. Ironically, its own DAO-based governance has been fraught, with the group facing a governance crisis in May over conflicts between the DAO and the Aragon Association (a small group of "stewards" for the project).

Now, after the Aragon Association decided without consulting the DAO to dissolve itself and wind down the project's governance tokens (while keeping some of the funds), the DAO has voted to sue the group. The DAO has accused the group of improperly taking investors' money to put it "into their new secretive company". They've allocated $300,000 to legal efforts.

"A DAO is funding a lawsuit against its own founding team", The Block [archive]
"Aragon DAO votes to fund legal action against its founders", CoinTelegraph [archive]
Proposal to sue the Aragon Association

November 20, 2023

Bittrex finally closes up for good

(attribution)

After paying a then-record $29 million fine for sanctions violations in October 2022, shutting down US operations in March 2023, filing for bankruptcy in May, and paying $24 million to settle a lawsuit from the US SEC in August, Bittrex is finally throwing in the towel. The company announced that it was closing its global operations, and urged customers to withdraw funds stored with the exchange within only two weeks. The also informed customers who held US dollars on the exchange that they would not be allowed to withdraw, and would have to convert their dollars to Euros or cryptocurrency.

Bittrex used to be a major player in the US cryptocurrency market, with over 20% of US market share in 2018. However, the exchange's dominance had dwindled to below 1% as of 2021.

"Bittrex Global to wind down operations, urges customers to withdraw funds", The Block [archive]

November 20, 2023

DOJ reportedly seeking $4 billion resolution to Binance investigation, with possible criminal charges against CEO

(attribution)

According to Bloomberg, ongoing negotiations between the U.S. Department of Justice and Binance have involved penalties greater than $4 billion as part of ending an ongoing, multi-year probe into the exchange. Such a settlement would not insulate founder Changpeng "CZ" Zhao from criminal charges.

The negotiation may involve a deferred prosecution agreement, in which the US would file a criminal complaint but agree not to prosecute so long as Binance met agreed conditions under a monitoring process.

It remains to be seen if this is the avenue the DOJ and Binance will go with. A Bloomberg source speculated that a decision could come within the next few weeks.

"US Is Seeking More than $4 Billion From Binance to End Case", Bloomberg [archive]

November 20, 2023

Kraken sued by U.S. SEC

(attribution)

Kraken is the latest cryptocurrency exchange to face a lawsuit from the U.S. Securities and Exchange Commission. According to the SEC, Kraken violated securities laws by listing tokens like Polygon (MATIC) and Solana (SOL), which the SEC has argued in this and in other lawsuits are unregistered securities.

Furthermore, the SEC claims that Kraken commingled corporate and customer funds, "at times pa[ying] operational expenses directly from bank accounts that hold customer cash."

Kraken's new CEO, Dave Ripley, posted on Twitter that the company "plan[s] to vigorously defend [their] position" that they do not list securities.

SEC v. Kraken

November 20, 2023

DOJ cracks down on $225 million crypto romance scam

(attribution)

At least according to the rather shady Tether stablecoin provider, the U.S. Department of Justice has been working on an investigation into a massive "pig butchering" romance scam and human trafficking operation based out of Southeast Asia.

According to Tether, they "voluntarily fr[oze] approximately 225 million in USDT tokens" in connection to the investigation.

Some romance scammers hoping to lure victims into sending them cryptocurrencies are themselves victims of human trafficking operations, where they are held victim and forced to send such messages.

"Following Investigations by Tether, OKX, and the U.S. Department of Justice, Tether Voluntarily Freezes 225M in Stolen USDT Linked to International Crime Syndicate", Tether [archive]

November 18, 2023

dYdX insurance fund loses $9 million in apparent attack

(attribution)

Around 40% of the "insurance fund", intended to protect dYdX users from having to backstop other traders' losing trades, was drained in what dYdX CEO described as "pretty clearly a targeted attack against dYdX". An attacker manipulated the market for the Yearn Finance token, which is not normally heavily traded on dYdX, but which experienced a surge in trades around the attack. By taking advantage of flaws in dYdX's risk management, the attacker was able to rack up big losses and then force the dYdX insurance fund to pay out.

"dYdX’s insurance fund lost $9 million as a result of 'targeted attack': CEO", The Block [archive]

November 18, 2023

Kronos trading firm suffers key breach

(attribution)

The cryptocurrency trading firm Kronos Research announced on Twitter that they had stopped trading while they investigated "unauthorized access of some of our API keys". They claimed that "potential losses are not a significant portion of our equity". They later confirmed the loss at around $26 million.

November 17, 2023

Aqua web3 gaming marketplace shuts down

(attribution)

It's not that blockchain gaming was a flop, they were "just too early" (said CEO Sean Ryan). The Aqua gaming NFT marketplace announced their shutdown, attributing it to "challenges in raising funds and the slower-than-expected growth within the web3 gaming sector". Users were instructed to transfer their funds off the platform by December 1.

The company launched its marketplace in September 2022, backed by $10 million from the DIGITAL venture fund.

"Ethereum Gaming NFT Marketplace Aqua Shuts Down Citing Slow Industry Growth", Decrypt [archive]

November 17, 2023

The Blockchain Group suspends stock trading in apparent financial crisis

(attribution)

French blockchain firm The Blockchain Group announced that they had requested trading be halted on the company's shares and postponed a planned company meeting. The announcement disclosed "financial difficulties" that had caused the company to try to obtain rescue financing. They also said that they had begun discussions with creditors around possible restructuring.

The Blockchain Group is behind a number of different services, including a crypto wallet called Eniblock and an open source software bounty project called Bountysource. Users of the Bountysource project have been complaining about issues receiving payments since as far back as May 2023.

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