US Exchange Approved for Crypto Futures; Wallet Integrates with Fintech Firm
By Christopher Lamb
A major U.S. cryptocurrency exchange recently announced that it has secured regulatory approval from the National Futures Association (NFA) to operate as a Futures Commission Merchant and offer eligible U.S. customers access to crypto futures. According to a blog post, the company “will now be the first crypto-native leader to offer access to regulated, leveraged and cash-settled crypto futures.”
According to a recent press release, one of the world’s leading derivatives marketplaces and leading provider of cryptocurrency benchmark indices announced plans to launch “two new APAC-specific reference rates for bitcoin and ether ... the CME CF Bitcoin Reference Rate APAC (BRRAP) and CME CF Ether-Dollar Reference Rate APAC (ETHUSD_AP) – which will provide a once-a-day reference rate for the U.S. dollar price of the two digital assets.” According to the release, the new reference rates will “allow market participants to more accurately and precisely hedge cryptocurrency price risk with timing more closely aligned to their portfolios.”
In a final notable item, Ledger, a maker of cryptocurrency cold storage hardware wallets, announced that it will integrate its Ledger Live crypto wallet app with a major U.S. fintech firm to allow “users in the US … [to] be able to directly buy BTC, ETH, BCH and LTC using their linked … account” with the fintech firm. According to a Ledger blog post, the integration will allow users who have purchased crypto with their account at the fintech firm to buy crypto in the Ledger Live wallet app with no extra verification.
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SEC Settles Charges Against Crypto Exchange; CFTC Targets Crypto Fraud
By Joanna F. Wasick
On August 10, the U.S. Securities and Exchange Commission (SEC) announced that crypto asset trading platform Bittrex Inc. and its co-founder and former CEO, William Shihara, agreed to settle charges brought in April that they operated an unregistered national securities exchange, broker and clearing agency. Bittrex Inc.’s foreign affiliate, Bittrex Global GmbH, also settled charges that it failed to register as a national securities exchange. As part of the settlement (which is subject to court approval), Bittrex and Bittrex Global agreed to pay $14.4 million, prejudgment interest of $4 million and a civil penalty of $5.6 million. The defendants have neither admitted nor denied the SEC’s allegations.
On August 11, the Commodity Futures Trading Commission (CFTC) announced that it filed charges against residents of Florida, Louisiana and Arkansas and their company, Fundsz, in connection with running a cryptocurrency and precious metals fraud. According to the complaint, since October 2020 the defendants solicited investors with lies that Fundsz produced outsized returns using a proprietary algorithm for trading crypto and precious metals. They also falsely claimed that Fundsz had a charitable purpose, supporting clean water, humanitarian, health, education and disaster relief efforts. In reality, the complaint alleges, Fundsz simply collected customers’ money and its purported gains were complete fiction. Defendants’ assets are now subject to a freezing order, and a hearing on the CFTC’s motion for a preliminary injunction is scheduled for later this month.
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DeFi Hacks and Crypto Scams Continue; FBI Warns of Scam Typologies
By Robert A. Musiala Jr.
According to recent reports, DeFi protocol Zunami Protocol has suffered a hack of its “zStables” stablecoin pools on Curve Finance. The hackers reportedly stole approximately $2.1 million from Zunami’s Curve Pool through a price manipulation exploit affecting Zunami Ether (zETH) and Zunami USD (UZD).
Another recent hack targeted a well-known blockchain venture capital (VC) fund. The attackers reportedly gained control over one of the VC fund’s social media accounts and published fraudulent posts promising a token giveaway. The fraudulent posts reportedly contained links to a “copycat” website designed to impersonate the VC fund and trick users into connecting their cryptocurrency wallets, which would allow the attackers to steal the victims’ cryptocurrency funds.
In a final notable item, the U.S. Federal Bureau of Investigation (FBI) recently published two public service announcements warning of scams involving non-fungible tokens (NFTs) and cryptocurrencies. In the first announcement, the FBI warned of criminals that “either gain direct access to NFT developer social media accounts or create almost identical accounts.” According to the announcement, “[l]inks provided in these announcements are phishing links directing victims to a spoofed website that … invite[s] victims to connect their cryptocurrency wallets … resulting in the transfer of cryptocurrency and NFTs to wallets operated by criminals.” The second FBI announcement warns of an increase in “cryptocurrency recovery schemes” in which fraudsters claim to provide the ability to recover lost funds. According to the announcement, the fraudsters “charge an up-front fee and either cease communication with the victim after receiving an initial deposit or produce an incomplete or inaccurate tracing report and request additional fees to recover funds.”
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