Compiled by: Jinse Finance
Since last year, U.S. law enforcement agencies have been cracking down on companies and practitioners in the encryption field. A professor at Rutgers Law School said that this may be the result of a combination of factors: first, the expansion of the scale of cryptocurrency projects has led to an increase in illegal income. Second, law enforcement agencies hope to encourage compliance development in the encryption industry.
Binance founder CZ(CZ)
Binance founder CZ(CZ)
In the early morning of May 1, 2024, Beijing time, CZ accepted the verdict in the U.S. District Court for the Western District of Washington. The judge in the CZ case rejected the 36-month sentence recommended by the Department of Justice and officially sentenced CZ to 4 months in prison. The judge said that after this painful lesson, he believed that CZ had the ability and willingness to reform.
CZ posted on social media to respond to his 4-month prison sentence. In the post, CZ expressed his gratitude for everyone's concern and support, whether it was letters, support on the X platform, or other forms, which inspired him and kept him strong. He said he would serve out his sentence, end this phase, and focus on the next chapter of his life (education).
In addition, CZ stated that he will continue to be a passive investor (and holder) in cryptocurrencies. He pointed out that our industry has entered a new phase and compliance is very important. CZ also talked about the silver lining of the whole process, that Binance has been under the microscope and the funds are SAFU (i.e. safe). Finally, he emphasized that protecting users is of vital importance.
In November 2023, he pleaded guilty to violating the Bank Secrecy Act for failing to maintain an effective anti-money laundering program.
For more details, please click:
CZ may serve prison sentence in the same jail as “crypto-anarchist” Jim Bell
"Full text of He Yizhi's letter to the US judge: What is a more realistic CZ like?"
Roger Ver
Roger Ver, an early Bitcoin investor
On May 1, 2024, Beijing time, Roger Ver, an early Bitcoin investor, was charged by the Department of Justice with mail fraud, tax evasion, and filing false tax returns. Roger Ver was arrested in Spain this week on U.S. criminal charges. The United States will seek to extradite Roger Ver to the United States for trial. The Department of Justice believes that Roger Ver has caused a total loss of at least $48 million to the IRS.
It is reported that Roger Ver originally lived in Santa Clara, California, and owned two companies, Memory Dealers.com Inc. and Agilestar.com Inc., which sell computers and network equipment. Since 2011, Roger Ver began to purchase Bitcoin for himself and his company. He is personally keen on promoting Bitcoin and even earned the nickname "Bitcoin Jesus". Roger Ver renounced his U.S. citizenship on February 4, 2014. After moving abroad, U.S. law required Roger Ver to file a tax return to report the capital gains from the sale of his assets (including Bitcoin) worldwide, and he was required to pay taxes on these capital gains.
Consensys
ConsenSys CEO Joseph Lubin
On April 26, the SEC sent a Wells notice to ConsenSys, accusing MetaMask of operating as an unlicensed broker. On the same day, Consensys sued the SEC, stating that “the SEC’s illegal seizure of power over ETH will spell disaster for the Ethereum network and Consensys.” The SEC’s encroachment on Ethereum goes against its past statements that cryptocurrency is a commodity, not a security (citing a 2018 speech by former director Bill Hinman), and also goes against the authority of the SEC’s sister regulator, the Commodity Futures Trading Commission (CFTC), over Ethereum.
On April 10, 2024, Consensys received a Wells Notice from the SEC indicating its intention to take enforcement action against the company for violating securities laws through its MetaMask wallet product. Consensys denied that it acted as a broker and stated that the wallet was “simple and interface” and “neither held customers’ digital assets nor performed any trading functions.”
For more details, please click:
Consensys sues SEC over attempt to classify Ethereum as a security
Justin Sun, founder of Tron
Justin Sun, founder of Tron
On April 17, 2024, the SEC amended its lawsuit against Justin Sun, stating that he frequently traveled to many places in the United States, thus giving the court corresponding jurisdiction.
The SEC claims that Justin Sun traveled to the United States for a total of more than 380 days between 2017 and 2019, including to New York City, Boston, Massachusetts, and San Francisco.
The SEC alleged that Justin Sun and his companies sold unregistered securities through TRON TRX tokens and BitTorrent (BTT) tokens, and that Justin Sun engaged in “manipulative wash trading.”
For more details, please click:
SEC: Justin Sun"frequently travels" to the United States and the United States has jurisdiction
Uniswap
Hayden Adams, founder of Uniswap
On April 11, 2024, Uniswap received the SEC Wells Notice, and founder Hayden Adams responded that he would fight to the end.
Hayden Adams, founder of Uniswap Labs, wrote. “I’m not surprised. Just angry, disappointed, and ready for a fight that will last years and may go all the way to the Supreme Court.”
Uniswap did not reveal the specific content of the Wells notice, but claimed in a blog post about the notice that UNI is not a security and does not meet the U.S. legal definition of a securities exchange or broker.
For more details, please click:
Uniswap team vows to fight SEC threats, UNI price plummets 10%
DoKwon, founder of Terraform Labs
DoKwon, founder of Terraform Labs
On April 5, 2024, a jury at the United States District Court for the Southern District of New York found Terraform Labs and DoKwon liable for crypto asset securities fraud.
In a filing with the U.S. District Court for the Southern District of New York on April 19, the SEC asked Kwon and Terraform to pay approximately $4.7 billion in disgorgement and prejudgment interest following the adjudication of the civil case, as well as a total of $520 million in civil penalties — $420 million from Terraform and $100 million from Kwon. The Commission, Terraform, and Kwon simultaneously filed briefs on possible remedies in the civil case, with the crypto company arguing for a maximum civil penalty of $3.5 million, while Kwon only argued for a fine of $800,000.
For more details, please click:
"The U.S. SEC requires Terraform Labs and Do Kwon to pay a $5.3 billion fine"
Do Kwon's huge fine shows that the SEC is stepping up its penalties against crypto companies
Sam Bankman-Fried (SBF), former CEO of FTX
Sam Bankman-Fried (SBF), former CEO of FTX
On March 28, 2024, SBF was sentenced to 25 years in prison in New York for defrauding billions of dollars. SBF was also fined $11 billion, including forfeiting agreements to sell assets such as private jets.
The U.S. Department of Justice said SBF should be severely punished, arguing that FTX, once valued at $32 billion, lost almost all of its funds due to his malfeasance. During the trial, prosecutors said SBF stole $8 billion in customer funds to fund venture capital, real estate purchases, political donations, etc.
For more details, please click:
"SBF was sentenced to 25 years in prison"
Ripple
Brad Garlinghouse, CEO of Ripple
On March 25, 2024, the SEC plans to ask a judge to fine Ripple Labs $2 billion.
On April 22, Ripple Labs filed a court document disputing the U.S. Securities and Exchange Commission’s request that the company pay a nearly $2 billion fine.
For more details, please click:
"The US SEC plans to ask the judge to impose a $2 billion fine on Ripple Labs"
Ripple objects to SEC's proposed $2 billion fine
Three Arrows Capital, BlockFi
Su Zhu, co-founder of Three Arrows Capital
On February 6, 2024, New Jersey Bankruptcy Court Judge Michael Kaplan approved a settlement agreement between the two companies to prevent further legal disputes.
For more details, please click:
"Three Arrows Capital and BlockFi's settlement agreement has been approved by a US judge"
Kraken
Kraken co-founder Jesse Powell
On November 20, 2023, the SEC charged cryptocurrency exchange Kraken with commingling customer and corporate funds while operating as an unregistered broker, clearing agency, and dealer.
Federal regulators claim that the San Francisco-based company violated federal securities laws by duplicating its actions against other cryptocurrency trading platforms.
For more details, please click:
Kraken accused by SEC of operating an unregistered platform and improperly mixing customer funds
Gemini, Genesis, DCG
Michael Moro, former CEO of Genesis
In October 2023, the New York Attorney General launched a "comprehensive lawsuit" against Digital Money Group, DCG CEO Barry Silbert, former Genesis CEO Michael Moro, Gemini, and Genesis, accusing them of defrauding more than 230,000 investors, including at least 29,000 New Yorkers, of more than $1 billion.
For more details, please click:
Gemini, Genesis, and DCG are sued by the New York Attorney General for alleged $1 billion fraud
Celsius, Alex Mashinsky, former CEO of Celsius
Alex Mashinsky, former CEO of Celsius
On July 14, 2023, Celsius and its former CEO Alex Mashinsky were successively charged by the SEC, the U.S. Department of Justice, the U.S. Commodity Futures Trading Commission, and the Federal Trade Commission. At the same time, Alex Mashinsky was arrested.
On June 13, 2022, Celsius suspended withdrawals, transactions, and transfers from all accounts. After that, Celsius stabilized its liquidity and operations while stating that it would explore the possibility of seeking strategic transactions and debt restructuring. In mid-July 2022, Celsius filed for bankruptcy in order to maximize value for all stakeholders.
For more details, please click:
Coinbase
Coinbase CEO Brian Armstrong
On June 6, 2023, the SEC charged Coinbase with operating as an unregistered exchange.
The SEC believes that Coinbase has violated the Exchange Act, the Securities Act and other codes due to a series of "unregistered" behaviors. Coinbase believes that the current rules of the digital asset industry are imperfect, and the SEC's behavior actually damages the competitiveness of the US economy.
For details, please click: "SEC strikes again. How do industry insiders view the Coinbase lawsuit?"
Binance
On June 5, 2023, the SEC filed 13 charges against the Binance entity and its founder CZ.
Binance was required to appoint an independent compliance monitor to report its compliance work to the U.S. government; the U.S. Treasury Department will retain access to Binance's books, records and systems for five years; the U.S. CFTC fined Binance's former chief compliance officer $1.5 million.
Binance’s total fine is $4,316,126,163, consisting of $3.4 billion from the U.S. Treasury’s FINCEN (Financial Crimes Enforcement Network) and $968 million from OFAC (Office of Foreign Assets Control).
Overview of the Disputes between the U.S. Department of Justice and Binance
Geosyn, Geosyn CEO Caleb Joseph Ward and former COO Jeremy George McNutt
Ward (left) and McNutt (right) at the Geosyn plant in Springtown, Texas, in 2022.
The SEC filed a lawsuit on April 24 in federal court in Fort Worth, Texas, alleging that Geosyn, its CEO Caleb Joseph Ward and former operating CEO Jeremy George McNutt defrauded approximately 64 investors between November 2021 and December 2022 through service agreements sold as securities.
The SEC also alleges that Ward and McNutt misappropriated approximately $1.2 million of investor funds for personal use, such as meals, nightclubs, vacations, guns, watches and legal fees, including McNutt's alleged use of the company's credit card for a $20,000 "Las Vegas nightclub wedding," Ward's celebration and a $49,000 family trip to Disney World.
For more details, please click:
"The U.S. SEC sues Bitcoin miner Geosyn, accusing its founder of defrauding $5.6 million"
