News Updates August 05, 2022

1. All Crypto Exchanges Including Binance to be Investigated by SEC: Senator’s Office

There will be no escaping Uncle Sam’s wide sweeping net of crypto regulation according to staff from Senator Cynthia Lummis’ office.

The U.S. Securities and Exchange Commission is investigating Coinbase, the country’s largest exchange, and has also set its sights on global giant Binance according to Lummis office staff.

Both Coinbase and Binance have bent over backward to appease regulators with the latter operating a separate division (Binance.US) with limited services to American customers.

Apparently, this is still not enough for the SEC, whereas the more crypto-friendly regulator, the Commodity Futures Trading Commission (CFTC), is more likely to adopt an approach that is not based on enforcement and lawsuits.

Every U.S. crypto exchange is in various stages of being investigated by the SEC said staff, according to a Forbes report on Aug. 4.

2. Breaking: Crypto Exchange WazirX Bank Assets Frozen Over Money laundering Charges

The Indian Cryptocurrency Exchange, WazirX has landed under the radar of the Enforcement Directorate (ED). In the latest developments, the ED searched the premises of WazirX’s Director.

 *ED Froze WazirX $8.13 million bank assets* 

According to reports, After conducting the searches, the ED has frozen their bank assets worth over Rs 64.67 crores (Approx $8.13 million). The government agency has accused the crypto platform of assisting instant Loan APP Companies in the laundering of fraudulent money. It added that the funds were being purchased and transferred via virtual crypto assets.

This big news came after Indian lawmaker, Pankaj Chaudhary mentioned that Enforcement Directorate is looking into two cases related to the Wazirx. It allegedly violated the Indian Foreign Exchange Management Act (FEMA).

As per the Times of India, Indiana Lawmaker said that crypto transactions between WazirX and the loan app were not recorded on the blockchains. This raised an alarm among the Indian agencies. However, show cause notice was issued under the provisions of the FEMA against the crypto platform.

It added that WazirX allowed outward remittance of digital assets worth over Rs 2.790 crore (approx $351 million) to some unknown wallets.

3. Bitcoin (BTC) Reclaims $23,000 After Short-Term Deviation

Bitcoin (BTC) has reclaimed a minor horizontal support level at $22,700 and could soon make another attempt at breaking out from a longer-term pattern.

BTC has been increasing inside an ascending parallel channel since June 19. More recently, it reached the resistance line of the channel on July 30, was rejected and has been falling since. 

Currently, it is trading above a confluence of support levels at $23,000, created by the middle of the aforementioned channel and a potential ascending support line that has been in place since July 13.

4. IRS expands crypto question on tax forms 1040

* The Internal Revenue Service has made some changes to the income tax form.

* According to the available updates, IRS has revised the crypto part in tax form 1040.

* It has expanded the crypto question part in the form 1040, expanding the details.

The US Internal Revenue Service has continued looking for extended crypto investors’ details. The ongoing global changes and increased regulations demand detailed answers from taxpayers regarding crypto. IRS has expanded the area in form 1040, which included a query about crypto investments. The updated form has been expanded and includes some new questions.

It had already changed the taxpayer form back in March when all taxpayers, instead of just crypto investors, had to answer questions about crypto. The increased regulation will help the government know about the investors and possible gains from their investments. The new draft for form 1040 has evident changes compared to the form 1040 draft for 2021. The complete details are given in the following sections.

Here is a brief overview of the changes made by the IRS in the form 1040 and how it will impact the market.

5. Binance CEO meets with President of Central African Republic to discuss crypto adoption

The Central Africa Republic is still attracting the cryptocurrency world after officially declaring Bitcoin (BTC) legal tender. Since the new legislation, the country’s leaders have engaged different crypto stakeholders as part of utilizing the sector’s benefits. 

In this line, the country’s president Faustin-Archange Touadéra met with Changpeng Zhao (CZ), CEO of Binance cryptocurrency exchange to discuss different elements of crypto including adoption. 

The meeting was confirmed by Zhao through a tweet posted on August 5 where he revealed that they discussed matters of education and crypto regulation framework. 

As reported by Finbold, the head of state maintains that Bitcoin adoption is in the right direction especially during challenging economic times. 

Elsewhere, Zhao has been on a global push aiming to promote crypto adoption in various counties. For instance, in July 2022, Zhao revealed that he held meetings with the presidents of Senegal and Ivory Coast as part of his initiative aimed at driving up the adoption of cryptocurrency in Africa and beyond.

Although questions have been raised regarding Africa’s readiness to adopt cryptocurrencies, CZ maintains that the region is ready and has since partnered with platforms like Jokkolabs, one of Africa’s first social impact hubs.

Through the collaboration, Binance seeks to launch a blockchain awareness and education program across Francophone Africa.

6. Thailand's Central Bank Extends Retail CBDC Study to Pilot Phase

Pre-empting positive interpretation of the move, the Bank Of Thailand reiterated "it does not have plans to issue Retail CBDC."

The Bank of Thailand, the nation's central bank, said on Friday that it is extending the scope of retail central bank digital currency (CBDC) development by starting a pilot study.

* The central bank said in an announcement that it "deems it necessary to extend the scope of retail CBDC development to a pilot phase." However, it also reiterated its stance and said that it does not have plans to issue a retail digital currency.
Deputy Governor of the Bank of Thailand, Vachira Arromdee, noted in the release that central banks around the world were seeing "the potential of retail CBDC as being the foundation of the future financial system."

* The latest pilot would be in addition to previous wholesale CBDC projects and the proof of concept study for retail CBDC being conducted with the help of the corporate sector.

* The pilot phase will be aimed at testing real-life application of a retail CBDC and will be conducted with the support of the private sector. This will help the Bank of Thailand formulate related policies and improve the CBDC design, the announcement said.

* The first of two tracks of the pilot will focus on assessing "the system's efficiency and safety" by "conducting cash-like activities, such as paying for goods and services, within limited areas and scale of approximately 10,000 retail users selected by the Bank."

* This first track is expected to begin at the end of 2022 and last until mid-2023.

  • The Bank of Thailand has earlier said "don't use crypto for payments" and Thailand's SEC has banned the use of crypto as a means of payment from April 1, 2022.

7. Coinbase Hit With Another Class Action Lawsuit Following SEC Allegations

The latest class action against the exchange acts for anyone who bought “Coinbase securities” over the past year and a half

* The class action alleges Coinbase knew it listed digital assets which should have been registered with the SEC

* Lawyers also argue Coinbase held users’ digital assets knowing they could end up as property of a bankruptcy estate

Beleaguered US cryptocurrency exchange Coinbase is staring down yet another class action lawsuit.

Law firm Bragar Eagel & Squire filed the suit on Thursday in the US District Court of New Jersey, alleging Coinbase made false or misleading claims about its business activities and compliance policies for more than a year, according to a statement.

Specifically, the multi-faceted claim asserts Coinbase held customer’s digital assets knowing they could end up as the property of a bankruptcy estate, potentially forcing customers to be treated as the exchange’s “general unsecured creditors.”

Coinbase is alleged to have allowed US customers to trade digital assets which the exchange “knew or recklessly disregarded” which should have been registered with the Securities and Exchange Commission (SEC).

The New York law firm is acting on behalf of “all persons and entities” who bought “Coinbase securities” between April 14, 2021 and July 26, 2022. A Coinbase spokesperson did not immediately return a request for comment.

“The foregoing conduct subjected [Coinbase] to a heightened risk of regulatory and governmental scrutiny and enforcement action,” the law firm said in its statement.

But while it’s still early days for the suit, the allegations echo the SEC’s claims of Coinbase masquerading as an unregistered securities exchange.

8. Number of crypto-related disputes before English courts on the rise

Following a recent judgment in a dispute over the ownership of an account worth around £30 million ($36.4 million), a legal expert has said that the English courts have swiftly adapted to the ever-increasingly complicated challenges concerning crypto assets.

Notably, there has been a “flurry” of cases brought before English courts in the years after the UK Jurisdiction Taskforce published its legal framework on crypto assets and smart contracts, according to a report by the international law firm Pinsent Masons on August 4.

As per Pinsent Masons legal director Jennifer Craven:

This case arises as a result of HDR Global Trading Ltd. asking the High Court to decide whether the owner of an account established on HDR’s trading platform, BitMEX, belonged to Nexo or its former director, Georgi Shulev.

When Nexo’s board replaced Shulev as a director, HDR was forced to freeze the account, resulting in a dispute over possession of the account.

It highlighted the increasing prevalence of settlement agreements involving cryptocurrency or technology-related matters and the requirement for parties to a dispute to seek out the right legal competence.

 *More than 800 Bitcoin in the account*

The court was told that Shulev opened the account, which held more than 800 Bitcoin and is today worth over £30 million, using the email address associated with his firm. 

Shulev claimed that he established the account in his personal capacity and that part of the cryptocurrency assets it included were his. However, Nexo maintained that the account was a business trading account and that all of the assets it contained belonged to the firm.

Ultimately, Shulev and Nexo reached a settlement before the High Court hearing, although its influence on the case was disputed.

Shulev was to give Nexo access, control, and ownership of his HDR account in exchange for $1 million, but Shulev eventually contended that the settlement agreement’s definition of ‘assets’ was too wide and ambiguous to be enforceable, allowing Nexo to add to what he was obliged to provide to justify not paying him.

Yet, the court decided that Shulev hadn’t fulfilled his part of the settlement agreement and had relinquished any rights to Nexo’s corporate trading account, ordering Shulev to transfer $10 million in crypto assets before Nexo paid $1 million in installments.

The court also ordered Shulev and Nexo to tell HDR that the account would be released to Nexo.