U.S. Digital Asset Companies Continue Product Launches, Market Expansion
By Robert A. Musiala Jr.
U.S. nonfungible token (NFT) marketplace OpenSea recently announced the launch of its new OS2 digital asset trading platform, which expands into token trading, including cross-chain token trading. According to a press release, the newly launched platform “represents an expansion of OpenSea from an NFT marketplace to a much broader platform for trading all types of digital assets.” In conjunction with the new platform launch, the OpenSea foundation announced the upcoming launch of the $SEA token, “a token designed to support engagement within the NFT and broader crypto ecosystem.”
In other news, Ripple, a major U.S. digital asset infrastructure and fintech company, recently announced “a partnership with Portuguese currency exchange provider Unicâmbio to support instant cross-border payments between Portugal and Brazil using Ripple Payments, which leverages digital assets for faster, cheaper, more efficient cross-border payments.” According to a company blog post, the collaboration “marks the first time that Ripple’s payments solution has been made available in Portugal.”
And eToro, a U.S. digital asset trading platform, recently announced that its EU subsidiary “has been granted a permit by the Cyprus Securities Exchange Commission (CySEC,) allowing the company, subject to submitting the relevant notification to all member states, to provide crypto services across the EU under the Markets in Crypto-Assets Regulation (MiCA).” eToro also announced that it has achieved its annual SOC 2 Type II compliance certification.
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Trade Group Publishes Stablecoin Priorities, EU Approves Stablecoin Issuers
By Keith R. Murphy
A recent publication by a digital asset trade group titled “Stablecoin Working Group Policy Priorities” sets out 14 payment stablecoin recommendations. Included among the recommendations are the promotion and protection of the primacy of the U.S. dollar in the global payment stablecoin ecosystem, that payment stablecoins should not be classified as securities, that issuers should be permitted to hold an account at the U.S. Federal Reserve to allow immediate access to cash and the ability to address redemptions timely, and to preserve the permissioned/pseudonymous structure of the current system to ensure that Know Your Customer requirements are applied to only initial issuance and not subsequent transactions.
In foreign stablecoin news, according to a recent report, 10 firms have been approved to issue stablecoins in the European Union under the EU’s Markets in Crypto-Assets regulatory framework. The report goes on to note potential effects of the European Union’s regulations on market opportunities.
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U.S. Digital Asset Firms Succeed in Challenging Government Agency Actions
By Robert A. Musiala Jr.
U.S. cryptocurrency exchange Coinbase recently announced that the U.S. Securities and Exchange Commission (SEC) has agreed in principle to dismiss its enforcement case against the exchange. In the enforcement action, SEC v. Coinbase, et al., the SEC alleges that since 2019, Coinbase has operated as an unregistered broker, unregistered exchange and unregistered clearing agency in violation of the Exchange Act, and that through its “staking” program, Coinbase offered and sold unregistered securities in violation of the Securities Act. The SEC’s allegations hinge on its argument that at least some of the digital asset transactions on Coinbase’s platform and through related services constitute “investment contracts.” In a company blog post, Coinbase said the SEC staff has agreed in principle to dismiss the lawsuit, subject to commissioner approval. According to the blog post, “today’s announcement confirms that this case should never have been filed in the first place. This is a victory not just for Coinbase, but for our customers, the United States, and individual freedom.”
In a related development, on Feb. 19, the SEC voluntarily dismissed its appeal of a lawsuit brought by the Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT) challenging the so-called dealer rule, through which the SEC had sought to broaden the definition of “dealer” to include proprietary trading firms, some hedge funds and crypto firms. According to a BA press release, “Dismissal of the agency’s appeal secures a complete victory for BA, CFAT, and the broader crypto industry, and sounds the death knell for the dealer rule.”
In another recent development, the BA announced that more than 75 members of the BA have “sent a letter to Congressional leaders encouraging a ‘yes’ vote on Sen. Ted Cruz’s Congressional Review Act resolution S.J.Res.3 to overturn the anti-crypto, anti-privacy DeFi broker rule.” The BA press release explains that “[b]y using the Congressional Review Act, Congress can repeal recently finalized rules like this one, that exceed agency authority or contradict legislative intent.” The DeFi broker rule was published by the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service on Dec. 27, 2024. The rule addresses reporting requirements for what a Treasury press release described as “trading front-end service providers interacting directly with customers on digital asset transactions, often referred to as ‘DeFi brokers.’”
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DOJ Actions Target Crypto Fraud Schemes
By Keith R. Murphy
According to a recent press release by the U.S. Department of Justice (DOJ), two Estonian nationals pleaded guilty and will be sentenced for running a cryptocurrency Ponzi scheme that victimized hundreds of thousands of people, including in the United States, for $577 million. The defendants reportedly sold contracts for a share of cryptocurrency that was purportedly mined by the defendants’ company HashFlare, but for which the company lacked the computing power to perform. Instead, the HashFlare dashboard simply showed customers falsified mining profits, according to the press release.
In related news, another recent DOJ press release announced that a Las Vegas businessman is going to trial, charged with falsely representing that his company was a profitable entity that utilized artificial intelligence software to mine cryptocurrency and verify cryptocurrency transactions. The defendant reportedly offered a fixed rate of return of 15 percent to 30 percent and obtained approximately $24 million from at least 400 investors during the period from late 2017 to July 2021. The charges reportedly include wire fraud, three counts of mail fraud and three counts of money laundering, with a trial to begin on April 8, 2025.
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New Malware Targets Crypto Wallets, Reports Publish 2024 Crypto Crime Data
By Robert A. Musiala Jr.
According to reports, North Korea’s Lazarus Group recently launched a new malware attack that uses obfuscated malware embedded in open-source repositories and popular development programs. The primary targets of the attack reportedly include several popular unhosted digital asset wallet applications, including MetaMask, Exodus and Atomic.
In other news, blockchain analytics company Chainalysis recently published two blogs with findings from its forthcoming “2024 Crypto Crime Report.” One blog post focuses on the use of crypto by sanctioned entities. Among other things, the blog notes that “[s]anctioned jurisdictions and entities received $15.8 billion in cryptocurrency in 2024, accounting for about 39 percent of all illicit crypto transactions.” The blog post goes on to provide overviews of major crypto sanctions evasion schemes and related enforcement actions in 2024.
A second recent blog by Chainalysis provides new data on crypto scams in 2024. According to the blog, “In 2024, cryptocurrency scams received at least $9.9 billion on-chain.” Among its many findings, the blog notes that in 2024, on-chain activity indicates that five crypto scam types grew: pig butchering, address poisoning, crypto drainers, livestream and blackmail/sextortion scams. The blog further notes that in 2024, year-over-year scam revenue grew nearly 40 percent in the category of pig butchering, 170 percent in crypto drainers and 15,000 percent in address poisoning.
In a related development, crypto security firm Cyvers recently published a report on crypto pig butchering scams. Among its many findings, the report notes that on the Ethereum network alone, pig butchering accounted for over $5.5 billion in losses across 200,000 identified incidents in 2024.
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