FinCEN Extends Crypto Rule Comment Period, Crypto Payment Products Launch
By: Robert A. Musiala Jr.
This week the U.S. Financial Crimes Enforcement Network (FinCEN) published a notice extending the comment period for its proposed rule that would impose new requirements on certain transactions involving convertible virtual currency or digital assets with legal tender status. The comment period has been extended to March 29, 2021.
In cryptocurrency payments news, according to a recent press release, a major U.S. nonprofit organization dedicated to eliminating cancer has announced a partnership with The Giving Block, a cryptocurrency donations company, to launch a new cancer research project that will be exclusively funded with cryptocurrency donations. Separately, cryptocurrency exchange LVL has reportedly begun taking preorders for a new cryptocurrency debit card product issued in partnership with a major U.S. financial services firm. And two major cryptocurrency exchanges, Kraken and eToro, recently published market reports with analysis of current trends in the cryptocurrency industry.
In a final notable item, earlier this month, reports found that someone transferred 74.6 million Synthetix Network Tokens (SNX), worth over $1 billion, on the Ethereum network through a contract called “Synthetix: Reward Escrow.” The transaction fee for the transfer was a mere $7.54. Synthetix is a decentralized finance protocol for trading asset-pegged synthetic tokens on Ethereum. This transaction is one of the largest single cryptocurrency transactions to date.
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Enforcement Agencies Target Cryptocurrency Crimes in US, Japan and China
By: Joanna F. Wasick
A cryptocurrency trader, Jeremey Spence (aka Coin Signals), was recently charged in Manhattan federal court for running a Ponzi scheme involving more than $5 million and 170 victims. According to an announcement released this week by the U.S. Attorney, Spence solicited deposits for a number of cryptocurrency funds he operated by making false representations to investors, including that they would see 148% returns. In fact, Spence’s client accounts lost money, and Spence used new investor money to pay out earlier investors. Criminal charges have been brought by the U.S. Attorney, and the Commodity Futures Trading Commission has filed a separate federal civil enforcement action.
Earlier this week, Jerry Ji Guo was sentenced in a California federal court for conducting a fraud in which he represented himself as an initial coin offering consultant and promised his clients that he would perform marketing and publicity services for them. Instead of doing so, Guo embezzled his clients’ funds. Guo was ordered to pay over $4 million in restitution and was sentenced to six months in prison.
Also this week, the U.S. Department of Justice announced a coordinated international law enforcement action to disrupt a sophisticated form of ransomware known as NetWalker. The action includes charges against a Canadian national in relation to the attacks, the seizure of over $400,000 in cryptocurrency from ransom payments and the disablement of a dark web communication resource.
Last week in Japan, about 30 people were charged with trading almost $100 million worth of cryptocurrency while knowing it was stolen off a Tokyo-based exchange three years ago. Japanese authorities allege the people were exchanging the cryptocurrency on a darknet marketplace. Separately, according to a recent report, a key executive from cryptocurrency exchange Huobi is currently in custody of Chinese police in relation to an investigation of the exchange’s over-the-counter trading service.
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