The upcoming budget proposal to be presented by US President Joe Biden will usher in a few surprises for [crypto](/news/article/is-crypto-dead) industry stakeholders.

Among them is cracking down on the entire decentralized finance (DeFi) industry concerning wash sales, according to a [Wall Street Journal](https://www.wsj.com/articles/biden-budget-to-propose-saving-hundreds-of-billions-by-cutting-drug-prices-fraud-5fa0f927) news report.

[Wash sale](https://www.investopedia.com/terms/w/washsale.asp) is a strategy some traders and investors use whereby they trade or sell a security at a loss and then buy a similar security 30 days before or after the sale.

The Wash Sale Rule was enacted by the Internal Revenue Service (IRS) in the 1920s and helped prevent investors from using losses from their capital to their advantage when the time comes for them to pay their taxes. 

While the rule applies to stocks and was later extended to options, contracts, and other types of trading and securities, the Wall Street Journal reports it will soon be applied to crypto.
This will end the use of the strategy and change the notion of the [crypto](/news/article/kraken-crypto-exchange-plans-bank-launch) sector being regarded as a tax haven. 

This Biden crypto rule is part of ameliorating the crypto tax treatment that aims to raise around $24 billion to help reduce the country's deficit by about $3 trillion over the next decade.

## Biden crypto rule changes are not the first

The latest stance taken by the US is seen as a positive on the global [regulatory](/news/article/is-crypto-regulated-across-the-globe#:~:text=Although%20crypto%20is%20not%20regulated,trading%20volume%20of%20centralized%20exchanges.) stage. Many industry experts believe that following actions by other regulatory bodies in countries such as Canada and Australia will help prevent crypto traders from taking advantage of the tax system and ensure they contribute their fair share in taxes, just like other investors profiting from trading.

## Capital gains to be doubled 

Capital gains tax (CGT) is paid on the profit made from selling an asset. The new US budget proposes doubling CGT from 20% to 39.6% on long-term investments that result in a minimum of $1 million in profits.

Aside from this, the budget plans to increase levies imposed on wealthy Americans and corporations.


Biden Crypto Rules to End Wash Sales Strategy 

Bankrupt cryptocurrency lender Voyager Digital has been granted [court approval](/news/article/voyager-review-binance-deal) to sell more than $1 billion of its assets to Binance US, according to a [Bloomberg report](https://www.bloomberg.com/news/articles/2023-03-07/binance-us-approved-to-buy-voyager-after-judge-spurns-regulators#:~:text=Voyager%20Digital%20Ltd.%20won%20court,the%20approximately%20%241%20billion%20deal.) on 7 March.

US bankruptcy judge Michael Wiles granted the approval after four days of arguments presented by the company and the United States Securities Exchange Commission.
According to the judge's decision, the trading platform will close the sale and issue repayment tokens to impacted customers, giving them back approximately 73% of what they are owed.

Arguments from the SEC that redistributing funds to [Binance](/news/article/stop-minting-binance-stablecoin) US from Voyager would violate US securities laws were rejected. However, Peter M. Aronoff, a lawyer with the Department of Justice, said at the hearing that the federal officials are considering appealing Wiles' decision. The ruling comes days after 97% of 61,300 Voyager account holders favored the current Binance US restructuring plan.

## Voyager to decide on completing sale or liquidating on its own

The trading platform now has the option to complete the sale or liquidate on its own and turn over the proceeds to account holders, depending on how it views the ongoing federal investigations of Binance in the US.

The decision will also be influenced by Voyager's bankruptcy court dispute with [Alameda Research](/news/article/ftx-funds-political-donations-to-be-recovered), the sister company of FTX, which is demanding that Voyager hand over what was originally lent out. The company has agreed to reserve $445 million if it loses that dispute.

Customer payouts will be affected by Voyager's bankruptcy court dispute with Alameda Research and its decision to sell its assets to Binance. Brian Tichenor, the lead investment banker, said in a court hearing that if the approved restructuring plan is executed, customers will receive about $100 million more than if the trading company liquidated on its own.

The price of VGX tokens increased 32.9% to $0.50 in the four hours of the news before cooling off to $0.46 at the time of writing, according to CoinGecko data.


Binance US Cleared to Buy Voyager Assets 

One of the most popular US banks for cryptocurrency transactions, Silvergate Capital, is in danger of collapse. The firm is examining its position to decide whether it can continue its operations.

On 1 March, the bank reported to the US financial watchdog, the Securities and Exchange Commission (SEC), that it would not file its annual activities report on the deadline. It also reported to the SEC that it is deliberating its options to survive the crisis.

## Silvergate facing bankruptcy due to FTX contagion

Silvergate Capital is a bank that deals in crypto lending. It has become the first conventional finance house affected by the FTX contagion. Reportedly, it lent almost all its funds to the exchanges. Due to this, when the [FTX crypto exchange crashed](/news/article/curve-finance-leverage-ftx-crash), the California-based finance company suffered severe losses. 

Meanwhile, the [collapse of Sam Bankman-Fried's](/news/article/sam-bankman-fried) firm has affected several crypto-lending firms since November 2022. Some of the most prominent names are [BlockFi](/news/article/blockfi-bankrupt-court-documents), [Genesis](/news/article/genesis-bankruptcy-crypto-meltdown-continues) Global, and [Gemini Exchange](/news/article/gemini-crypto-exchange-falls-prey). 

In addition, many prominent lending partners are pulling out after the news of the bank's potential bankruptcy. The firms that have withdrawn include big names like [Coinbase Global](https://www.coinbase.com/price/global-cryptocurrency), [Galaxy Digital Holdings](https://www.galaxy.com/), [Crypto.com](https://crypto.com/), and [Paxos Trust](https://paxos.com/). The company will also have to deal with this loss of business.

## Silvergate shares plunged 

After the bank reported to the SEC about its financial situation, its share value plummeted. On Thursday, the firm's share value dropped by more than 55%. The overall stock price in the year has decreased by 67%.

Furthermore, [Silvergate has experienced losses](/news/article/silvergate-bank-loses-assets) of more than $1 billion in the past three months. Although many other firms also saw significant losses, Silvergate’s collapse could leave a lasting effect on the market. The main reason is that the firm is a traditional bank, which could likely shake investors' trust in the crypto market.


Silvergate Capital on Verge of Collapse

[Becca Balint](https://vtdigger.org/2023/02/28/becca-balints-1-million-crypto-benefactor-pleads-guilty-to-campaign-finance-fraud/), a member of the US House of Representatives from the state of Vermont, has been thrown into the spotlight again after Nishad Singh, an ex-executive of insolvent cryptocurrency exchange FTX who contributed $1 million in advertising money to her congressional push, pleaded guilty to campaign finance fraud on 28 February.

Singh said he is sorry for his role in the bankrupt crypto firm. He reiterated that he only knew by mid-2022 that Alameda Research, the hedge fund run by founder [Sam Bankman-Fried](/news/article/sam-bankman-fried-bail-co-signers-revealed) (SBF), was borrowing customer funds at [FTX](/news/article/ftx-funds-political-donations-to-be-recovered) without informing depositors.

The association of the politician with FTX has added more fuel to the fire as allies of SBF, which included Singh, contributed a minimum of $26,000 directly to support her campaign. Aside from that, the Democratic Party in Vermont was also a beneficiary of FTX contributions. 

SBF's inner circle continues to crumble. Singh is the third member of the once-thriving crypto firm to collaborate with US prosecutors with the hope of working out a deal. 
  
The latest link to Bankman-Fried's ally comes a few days after a superseding [indictment](https://vtdigger.org/2023/02/23/becca-balint-cooperating-with-federal-prosecutors-as-new-allegations-against-sam-bankman-fried-emerge/) filed on 23 February laid out an alleged scheme by the founder and former CEO to illegally move investor money to political campaigns to help improve his standing with representatives in Washington, DC.

Prosecutors believe his consistent donations were a way of pushing decision-makers to consider his preferred regulatory agenda for the entire decentralized finance economy.  

## Becca Balint is cooperating with authorities 

According to her campaign manager, Natalie Silver, Vermont's leader in the House of Representatives is fully cooperating with federal authorities in the investigation into SBF's scheme to pour a minimum of $1 million into a super PAC (political action committee) to support a candidate who favoured LGBTQ issues.   

After serving as a member of the Vermont Senate, Balint made history by becoming the first person from the LGBTQ+ community to be elected to Congress.


red image of becca balint and sam bankman-fried in front of sign saying guilty

Becca Balint Contributor Admits Fraud 

Yaya Fanusie, a cryptocurrency researcher and former CIA analyst, believes the slow start on US CBDC ([Central Bank Digital Currency](/news/article/uk-sought-cbdc-head)) development could lead to a loss of control over the global financial system. 

Fanusie, currently the policy head at the Crypto Council for Innovation, noted in a Bloomberg interview on 28 February that sanctioned states seek to transact on financial infrastructure that isn't heavily influenced by the US to move funds more freely across borders.

Further, he suggests that if the US [CBDC adoption](/news/article/central-bank-of-kazakhstan) continues to lag, it may result in unforeseen geopolitical implications and trouble over time. According to him, the state-issued central bank digital currencies could be a crucial element in the global adoption of such infrastructure. He also warned that the US could lose its influence over developing new standards in this area, negatively impacting its economic statecraft.

However, the US Federal Reserve has recently made progress in the US CBDC project, known as the [Digital Dollar Project](https://digitaldollarproject.org/wp-content/uploads/2023/01/Digital-Dollar-Project-White-Paper-2.0_2023.pdf), with the release of its latest whitepaper on 18 January. Nevertheless, the Federal Reserve has yet to receive approval from the US government to move forward with this project.

## China's advantage on early adoption of CBDC  

Fanusie, in the [Bloomberg interview](https://www.youtube.com/watch?v=BCRvX9s7xMA), noted China's advantage in the early adoption of CBDC since 2014 and the launch of the pilot version of its digital yuan (e-CNY) on 4 January, 2022. According to him, the e-CNY has already processed millions of transactions across millions of wallets.

Further, he added that an array of pilots are currently testing smart contracts to introduce programmability into CBDCs. Additionally, China is assisting other nations in adopting similar standards and collaborating for their CBDC to CBDC transactions. Fanusie noted that countries might have an unspoken "race" to gain a geopolitical advantage in the CBDC realm.

## Opponents' viewpoint

Some critics of central bank digital currencies believe governments leverage blockchain-backed CBDCs to retain financial oversight over their populace.

One such instance of this resistance occurred in the United States, where Congressman Tom Emmer, an advocate of cryptocurrency, put forward the CBDC Anti-Surveillance State Act to safeguard the financial confidentiality of American citizens against potential intervention by the Federal Reserve.


red image of US building and crypto coins

Delayed US CBDC Adoption Could Spell Trouble 

The US Federal Reserve has again rejected an application by Custodia Bank for membership of the Reserve System.

Despite the request for reconsideration, the central bank [upheld its decision](https://www.federalreserve.gov/newsevents/pressreleases/orders20230223a.htm), citing the application's inconsistency with the necessary legal requirements. Meanwhile, a district court has permitted the lawsuit between this crypto firm and the Federal Reserve to proceed.

In January, the central bank denied Custodia's membership application, which it had submitted in 2019. The board allows rejected applicants to request a review of their membership status.

The Fed stated that the Custodia Bank management framework was "inadequate" when it denied the application. Furthermore, the Fed issued [a joint declaration](https://cointelegraph.com/news/us-federal-agencies-release-joint-statement-on-crypto-asset-risks-and-safe-practices) with the OCC (Office of the Comptroller of the Currency), alongside the FDIC (Federal Deposit Insurance Corporation), stating that [cryptocurrencies](/news/article/cryptocurrency-adoption) are inconsistent with safe banking practices. 

This firm seeks to join the central system to be regulated under the same rigorous standards that traditional banks must adhere to and to pave the way for other [crypto banks](/news/article/crypto-banks-access) seeking to meet these heightened standards.

Upon its first refusal, it was stated that the operational strategy entailed notable challenges to its security and stability and asserted that the company lacked an excellent system for managing risks.

## Deadline for Custodia's amended complaint set for 1 March

Firm representative Nathan Miller stated on 17 February that the central legal issue being questioned is whether the Fed had the authority to make decisions regarding master accounts and that the crypto bank had attempted to find a sensible solution before being pressured by the Fed. The judge has instructed Custodia to submit its initial amended complaint to the court before 1 March.

On 22 February, a Wyoming District Court judge denied a motion by the Fed board to dismiss a lawsuit from Custodia. The case was filed due to the central bank's delay of more than two years in providing this crypto bank with a master account.

With a master account, it could access the Federal Reserve payment systems without involving a third-party bank. The Fed rejected the master account application in January 2020, which had been submitted two years earlier in October 2018.


custodia bank logo with red background and US federal reserve logo

Custodia Bank Application Denied by the Fed 

According to a [Bloomberg report](https://www.bloomberg.com/news/articles/2023-02-08/cryptocurrency-exchange-kraken-faces-probe-by-sec-over-unregistered-securities) published on 8 February, [renowned crypto exchange Kraken](/news/article/kraken-review) faces a probe by the US SEC (Securities and Exchange Commission) over unregistered securities.

[The probe is related to](/news/article/sec-probe-giving-advice-for-crypto-trading) some offerings the cryptocurrency exchange has made to US clients. According to someone familiar with the investigation who wishes to remain unidentified, proceedings are currently at an advanced stage and settlement could come in the following days.

It is currently unclear which offerings or tokens are under the microscope.

Moni Talks reached out to the SEC for further comments on the probe, but, as is the norm, the SEC does not comment on the status of a 'potentially existing' investigation.

## What does the probe mean for crypto exchange Kraken and the industry?

At the time of writing, we are unsure of the magnitude of the investigation. That said, if Kraken is guilty of breaching securities laws, the ramifications for the cryptocurrency exchange and the industry at large could be significant, especially after the FTX saga of Q4 2022.

If Kraken settles with the SEC, this could pressure other cryptocurrency firms to discuss deals with the agency. In December 2022, SEC Chair Gary Gensler commented on the runway for crypto firms to register with the regulator getting shorter.

The SEC is firm with its stance - most of the tokens offered by crypto firms are securities and should be subject to the rules of the regulator. It should be noted that all SEC investigations DO NOT lead to enforcement action. Instead, individuals or firms may have to pay a fine and/or face other penalties.

![kraken.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/kraken_677edbef91.png)
 
Source: [CoinMarketCap](https://coinmarketcap.com/exchanges/kraken/)

With a [trading volume of nearly $640M](https://coinmarketcap.com/exchanges/kraken/) at the time of writing, US-based Kraken is the third-largest cryptocurrency exchange. This statistic alone indicates that any potential legal ramifications on the cryptocurrency trading platform could have a telling impact on the industry.

This is not the first probe Kraken has faced. In 2022, Kraken paid a fine of more than $360,000 and invested $100,000 in sanctions compliance over allegations that the cryptocurrency trading platform [violated US sanctions against Iran](/news/article/kraken-exchange-under-investigation). The settlement was reached with the US Treasury’s Office of Foreign Assets Control (OFAC).

Global crypto regulations will come into effect soon, whether you like it or not, and several countries are actively working towards this.


Crypto Exchange Kraken Faces US SEC Probe 

Cryptocurrency firms that offer crypto trading advice will be scrutinised by the US SEC (Securities and Exchange Commission). The financial watchdog has announced its 2023 priorities to protect retail investor rights. 

On 7 February, the US regulator [released an official statement](https://www.sec.gov/news/press-release/2023-24) outlining its annual agenda. It indicated that the Division of Examinations would inspect crypto advisors and brokers' businesses. These firms need to have appropriate market exposure and the right strategies for advising traders.

## Firms offering advice need to be careful

The SEC has remarked that financial advisors need to be cautious while giving buying and selling advice. Moreover, they must be watchful of the digital assets they recommend. 

The commission’s Division of Examinations will observe how firms make referrals and recommend a product. The Division will also inspect whether its registered firms continually update their strategies for providing [crypto trading](/news/article/how-does-crypto-trading-work) advice. Advisors’ and brokers’ strategies should comply with the regulations and ensure risk management for traders.

![sec.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/sec_3bdabdfea6.png)
 
Source: Twitter

## What’s on the SEC's 2023 agenda?

The US crypto regulator publishes its priorities annually to outline its agenda. Previously, the SEC released its [priorities for 2022](https://www.sec.gov/news/press-release/2022-57). Its focus was more on ESG investment, private funds, and emerging technologies in the market. 

However, the regulators’ focus shifted toward digital investment advisors in 2023. As per the statement, the “changing landscape and associated risks in the securities market” prompted the change. 

The emphasis of the crypto regulators will be on the policies of Advisors Act policies. For this reason, SEC’s Division will continually scrutinise registered investment advisers (RIAs). It will ensure that the advisors comply with the policies and follow the standard procedures. The main objective behind this is to provide security to retail investors. 

On the other hand, ESG, private funds, emerging technologies, and operational resiliency are also part of the SEC’s agenda.



red image with man and woman giving advice with gold coins 

SEC to probe firms giving advice for crypto trading

News from the US reveals that Nexo Capital has agreed to pay $45 million in penalties to the SEC and the North American Securities Administrators Association (NASAA). 
 
This occurred due to Nexo's failure to list the agreement and sale of its Earn Interest Product. The crypto lender did not contest the SEC's conclusions.

The SEC and NASAA revealed the announcement in separate statements on 19 January. According to the SEC announcement, Nexo agreed to pay a $22.5 million penalty and discontinue its unlisted offer and sale of the EIP to US investors. 

A further $22.5 million will be paid in fines to satisfy identical claims brought by state regulatory agencies.

## Nexo news - NASAA view 

NASAA stated in a report that the settlement, in principle, follows an inquiry into suspected offers and sales of securities during the previous year. During the investigation, it was determined by Nexo that EIP investors might receive passive interest on digital assets by lending those assets to the business.

They also retained complete control over the revenue-generating operations used to create returns for investors.

The firm sold and advertised the EIP and other products to investors in the US through its website and social media platforms, implying that investors may get returns of up to 36% in some cases, NASAA said.

## Nexo news - SEC view

The SEC claimed that the commission considered Nexo's degree of cooperation throughout the settlement talks and the swift corrective actions taken to rectify their inadequacies. 

"We charged Nexo with failing to register its retail crypto loan product before providing it to the public, circumventing important disclosure rules needed to safeguard investors," said SEC Chairman Gary Gensler. 

"Where crypto firms fail to comply, we will continue to hold them accountable based on the facts and the law."
In this situation, he noted that Nexo, among other things, is discontinuing its unregistered loan product to all US investors.

## Nexo news - How settlement came about

Nexo's settlement is based on a cease-and-desist order agreement that prevented the company from breaching any Securities Act of 1933 requirements. 

At least 17 different state securities authorities conducted the inquiry, and they all agreed to the conditions of their settlement. While the respective states were not identified, the crypto lender agreed to pay a $424,528 fine to each of them.


yellow image of sec law paper and nexo logo

Nexo News: $45M Settlement Agreed

On 17 January, cryptocurrency exchange [FTX](/news/article/curve-finance-leverage-ftx-crash) revealed in a report to creditors that a significant amount of funds, estimated at $415 million, were stolen in a series of hacks. 

The company stated that despite efforts to recover lost assets, significant shortfalls remain at the FTX US and international exchanges.

FTX told the bankruptcy judge in Delaware last week that it has managed to [recover more than $5B](/news/article/ftx-news-assets-recovered) in various assets, including crypto, cash, and liquid securities. However, the exchange attributes a portion of the remaining shortfall to the hacks, reporting that $323M in crypto was stolen from the international exchange and $90M from the US exchange since filing for bankruptcy on 11 November.

The company's founder Sam Bankman-Fried has since challenged aspects of the report in a [blog post](https://sambf.substack.com/p/ftx-us-balance-update-2023-01-17) that provides information on the assets that FTX US holds. He has been [accused](/news/article/ryan-salame-exposed-ftx-truth) of using customer funds to cover the debts incurred of his crypto-focused hedge fund, Alameda Research.

Bankman-Fried contested FTX's recent financial report. He claimed that an "extremely misleading" impression of the company's finances had been presented by FTX lawyers at Sullivan & Cromwell. An S&C spokesperson declined to comment on the statement. According to SBF's "best guess," the company still has enough funds to repay US customers, whom he estimates are owed between $181M and $497M.

Attorneys at the firm stated in a recent court filing that they had rejected efforts by SBF to remain involved in the company's bankruptcy proceedings. Also, he has been denied access to the company’s records since stepping down as CEO in November.

## FTX's recovery report

The company neither provided an estimate of the amount owed to FTX US or international customers nor responded to SBF's blog post.

In a recent FTX update on its recovery efforts following the $415M hack, the company reported that it had recovered $1.7B in cash, $3.5B in liquid cryptocurrency, and $300M in liquid securities.

The crypto assets recovered to date include $685 million in Solana, $529 million in FTX's proprietary FTT token, and $268 million in Bitcoin, based on the crypto prices on 11 November, 2022.


Red image of hacker hacking. Dollars falling from sky and Sam Bankman-Fried smiling in foreground

FTX US Reports $415 million Hacked

Coinstar is about making buying crypto easier - the company based in the US operates coin-cashing machines. The idea is simple: all you have to do is pour your coins into the machine and it does the rest of the work for you.

After you put the coins in the machine, you have three options:

•	You can get cash which typically has a convenience fee.

•	You can get a no-fee eGift card.

•	You can donate to a charity of your liking.

## Buying crypto with Coinstar made easy

The coin-machine giant is partnering with Coinme to make exchanging [cash for crypto](https://coinme.com/coinstar/) more straightforward. Since crypto has gained popularity in recent times and is only available to purchase online, many people feel left out. 

Coinstar anbd Coinme are doing a phenomenal job at giving people the option to exchange their cash for crypto in three easy steps.

•	First, you need to create a Coinme account and claim your [crypto wallet](/news/article/crypto-wallet-multiple-currencies), which is free.

•	Second, find a Coinstar kiosk near you and buy a crypto voucher for cash at the coin-cashing machine.

•	Finally, redeem your voucher instantly and claim your crypto with Coinme.

## Crypto offered

Of course, since [blockchain technology](/news/article/what-is-blockchain) and crypto have taken the world by storm, you will have a lot of options when you exchange your cash for a crypto voucher. At this time, Coinme offers:

•	Bitcoin

•	Dogecoin

•	Ethereum

•	Litecoin

•	USD Coin.

•	[Chainlink](/news/article/chainlink-staking-to-boost-oracle-security).

•	Polygon

•	Stellar

If you are someone who has thought about or wants to get into the crypto world, this could be your chance in a straightforward way. With this partnership, the two companies, Coinstar and Coinme, are making buying crypto easier and more accessible than ever. Find a kiosk near you today to exchange cash for crypto vouchers and get started.


Coinstar: Buy Crypto with Cash

United States financial regulators have issued their first-ever combined warning to banks regarding cryptocurrency risks and the potential dangers of crypto markets and digital assets.

The regulators warned the financial institutions to guard against fraud, legal uncertainty, and deceptive disclosures by digital asset companies. [A notice was also sent to banks over the "contagion risk" posed by the sector](https://www.bbc.com/news/business-64159452).

It comes less than two months after the trading platform FTX went offline, which sent shockwaves across the cryptocurrency market. The joint statement from the Federal Reserve and Federal Deposit Insurance Corporation, alongside the Office of the Comptroller of the Currency, stated that they were closely watching the activity of banking organizations regarding cryptocurrencies.

According to the statement, "The events of the previous year have been characterized by high volatility and the exposing of weaknesses in the crypto-asset industry."

The authorities also stated that it was "very likely inconsistent with safe and sound banking procedures" to issue or hold tokens stored on public, decentralized networks.

## US regulators issue warning to banks on cryptocurrency risks

In addition, banks were encouraged to take action to prevent issues in the digital asset market from spreading to the broader financial system.

"Risks associated with the crypto-asset sector that cannot be mitigated or managed mustn't move to the financial system," it continued.

"The banking system is not a suitable environment for these risks."

The statement released on Tuesday follows several months of reluctance by watchdogs of the US financial industry to publish universal recommendations on cryptocurrencies, even though institutions have requested clearer advice from authorities.

[The failure of the FTX exchange](/news/article/is-crypto-dead) in November sent shockwaves through the sector. It was the second-largest cryptocurrency exchange in the world, serving as the gateway for millions of consumers to enter the market for digital assets.


sign pointing to safe or risky over red image of american flag and cryptocurrency coins

Cryptocurrency Risks Warning Issued to US Banks

In Binance news, a US Drug Enforcement Administration (DEA) investigation has found that a drug cartel operating in several countries used Binance to move millions of dollars in illegal profits.

## DEA tracks Cartel using exchange in latest Binance news

According to a [Forbes](https://www.forbes.com/sites/thomasbrewster/2022/12/19/mexican-drug-gang-money-laundering-over-binance-crypto-exchange/) report, popular crypto exchange Binance is the subject of a DEA investigation alleging that a Mexican-based international drug cartel used the exchange to funnel millions of dollars in profits.

The report said that the DEA, with help from Binance to identify the suspects, was able to track the gang, which dealt in methamphetamine and cocaine. The gang had operations in the US, Mexico, Europe, and Australia.

The report noted, "Between $15 and $40 million in illicit proceeds may have been funnelled through Binance".

The investigation began in 2020 following a search warrant. Several DEA informants using the crypto exchange localbitcoins.com communicated with users who offered crypto for cash.

The method used by the gang was as follows: a user sends [BTC](/coins/btc) or USDC to the seller's account and then meets in person to take the cash. The DEA identified the Mexican national as Carlos Fong Echavarria.

The report mentioned that the suspect misrepresented the source of the funds, claiming they were coming from family eateries and cattle farms. The arrest was made in 2021 after DEA agents confirmed that the account was used to launder funds.

Matthew Price, Binance's senior director of investigations, told Forbes that the blockchain was key.

He said this was an example of where blockchain transaction transparency "works against criminal actors", adding, "The bad guys are leaving a permanent record of what they're doing."

## Binance under the spotlight

The exchange has been under the spotlight lately. However, its CEO, Changpeng Zhao, reaffirmed in a recent [tweet](https://twitter.com/cz_binance/status/1605828931105435648?s=20&t=V_WM8ww3-B-TTZrIrpbaOA) that "crypto is not a good tool for illicit activities, unlike cash".

In a May blog post, Binance [said](https://www.binance.com/en/blog/ecosystem/crypto-and-money-laundering-an-inconvenient-truth-421499824684903925) that the exchange had helped the US Drug Enforcement Agency seize over 100 accounts connected to illegal drug dealers.

A recent [Reuters report](https://www.reuters.com/markets/us/us-justice-dept-is-split-over-charging-binance-crypto-world-falters-sources-2022-12-12/) also noted that Binance might be the subject of a probe by the US Department of Justice. However, a company spokesperson said any DOJ investigation is fueled by false insinuations.



red image of money laundering with binance logo

Binance News: DEA Uses Exchange to Track Cartel

United States Senators Elizabeth Warren and Roger Marshall [have proposed](https://fortune.com/crypto/2022/12/21/elizabeth-warren-new-crypto-bill-shockwaves/) the Digital Asset Anti-Money Laundering Act of 2022.
The move comes while crypto players are focused on the turmoil surrounding FTX and the contagion that followed its collapse.
What does the bill state?

The seven-page bill, introduced on 14 December, would regulate digital asset kiosks, also known as automated teller machines or ATMs, and expand the classification of money service businesses (MSBs).

MSBs would be required to have and implement written Anti-money laundering policies. The bill would finalise FinCEN's proposed reporting requirements and impose new ones, such as reporting transactions exceeding $10,000 under the Bank Secrecy Act.

In addition, the bill will direct the Treasury Department to develop a rule prohibiting financial institutions from interacting with "digital asset mixers, privacy coins, and other anonymity-enhancing technologies".

It would necessitate the establishment of review processes for the entities regulated by the [Securities and Exchange Commission](/news/article/sec-crypto-enforcement-warning), the Treasury Department, and the Commodity Futures Trading Commission.

Finally, the bill would impose reporting requirements on digital asset kiosk owners, FinCEN, and the Drug Enforcement Administration.

## Patrick Daugherty view

Patrick Daugherty is a lawyer at Foley & Lardner, where he directs the digital assets and Web3 practice, and teaches at Cornell Law School. He has commented on the bill's pros and cons.

According to him, on the positive side, it grants federal financial regulatory agencies such as the Securities and Exchange Commission, the Treasury Department, and the Commodity Futures Trading Commission the power to audit "money services businesses" for compliance.

However, Daugherty also believes the bill goes too far in defining a "money service business". According to Warren and Marshall, this could include [miners](/news/article/best-crypto-miner), validators, and [wallet](/news/article/best-cold-crypto-wallet-uk) providers.

## Peter Van Valkenburgh view

According to Coin Center's Peter Van Valkenburgh, the recent Elizabeth Warren and Roger Marshall bill may be unconstitutional.
He pointed out that the anti-privacy measures it outlines, making it impossible for users to make anonymous payments, such as political donations, would violate the First Amendment.

Plus, he added, the bill may be unconstitutional under the Fourth Amendment by "deputising" miners and software developers to collect and report private information with a warrant.

## What's next for the bill?

Elizabeth Warren and Roger Marshall introduced the bill in the Senate Banking Committee, intending to reintroduce it during the next congressional session, which begins in January.

According to a spokesperson, Senator Warren will continue to work in the next Congress to pass this bipartisan legislation into law.
The bill will be added to an already crowded field of [crypto](/news/article/best-crypto-rewards-card-uk) legislation. Rather than placing investor protection against free market ideals, Hilary Allen, a law professor at American University and one of the witnesses at last week's Senate Banking hearing, claims that the bill could bring in bipartisan support by focusing on national security.


yellow image of crypto coins and legal gavel with elizabeth warren in foreground

Elizabeth Warren Crypto Regulation Bill

Sam Bankman-Fried, the detained founder of the bankrupt crypto exchange FTX, reportedly signed documents on 20 December that will see SBF handed over to Federal Bureau of Investigation (FBI) agents and taken to the United States, where he will face criminal charges.

Bankman-Fried was [reported](https://cointelegraph.com/news/sbf-signs-extradition-papers-set-to-return-to-face-charges-in-the-us) to have agreed to be [extradited](/news/article/former-ftx-ceo-sbf-arrested) to the US just hours after his lawyer told a judge in the Bahamas that he was not ready to consent.

## SBF is to be taken to the US to face criminal charges

According to Bahamas Acting Commissioner of Corrections Doan Cleare, Bankman-Fried signed his surrender documents on Tuesday. Today, SBF will sign separate papers finalising his waiver of rights to fight extradition at the Magistrate's Court in Nassau.
[Bankman-Fried](/news/article/sam-bankman-fried-lost-billions) is expected to be accompanied by FBI agents on a private flight back to the US, where he faces eight counts in an accusation by the US Attorney for the Southern District of New York. 

According to the [New York Times](https://www.nytimes.com/2022/12/20/technology/sam-bankman-fried-bail.html), Bankman-Fried's legal team is negotiating with federal prosecutors to allow him to be released on bail if he is extradited to the US.

According to sources, the agreement, which requires the approval of the federal judge overseeing the SBF case, could include highly restrictive conditions such as home custody and electronic monitoring.

## Allegations on SBF 

The Department of Justice has accused SBF of campaign finance violations, commodities and securities fraud, conspiracy to commit wire and money laundering, and wire fraud.

If found guilty of all charges, he could face up to 115 years in prison.

[The Commodity Futures Trading Commission and SEC (Securities and Exchange Commission) have filed additional charges](/news/article/ftx-boss-denied-bail-in-bahamas) against the founder of FTX for allegedly breaking commodity laws and defrauding investors.

After three years of rapid growth, FTX and numerous related companies filed for bankruptcy last month. The exchange was worth US$32 billion at its peak.

Authorities in the Bahamas and the US continue to investigate the involvement of SBF in FTX's collapse last month. The exchange was headquartered in the Bahamas.



SBF Agrees to Return to US to Face Fraud Charges

Karl Sebastian Greenwood, the co-founder of the fraudulent cryptocurrency OneCoin scam, has pleaded guilty to charges brought by the United States Department of Justice (DoJ).

[He faces a maximum of 60 years in prison](https://cointelegraph.com/news/4b-onecoin-scam-co-founder-pleads-guilty-faces-60-years-jail) if convicted of all charges. The DoJ said on 16 December that Greenwood had entered a guilty plea in a federal court in Manhattan to charges of money laundering conspiracy, money laundering conspiracy, and wire fraud conspiracy. Each charge carries a maximum potential sentence of 20 years in prison.

With the OneCoin scam, Greenwood is alleged to have operated "one of the greatest worldwide fraud schemes ever committed", according to US Attorney Damian Williams. 

## OneCoin Scam Promoted as a 'Bitcoin Killer'

Williams further asserts that Greenwood promoted the OneCoin sam as a "Bitcoin killer" despite the tokens being "totally worthless". Greenwood and "Cryptoqueen" Ruja Ignatova were the founders of OneCoin. It was a Bulgarian company that sold a cryptocurrency with the same name, and Greenwood was the CEO of the OneCoin scam.

According to emails that the DoJ collected between the two parties before the company's establishment in 2014, the individuals referred to it as a "trashy currency". Outwardly, it appeared to be a multi-level marketing company, with members earning commissions for allegedly selling cryptocurrency bundles containing OneCoin and the capacity to mine more cryptocurrency. This was the company's stated intention.

OneCoin could only be converted into fiat currency through the Xcoinx exchange, a private platform. It was a [combination of a pyramid and a Ponzi scheme](/news/article/bitcoin-motion-trading-bot-scam) since investors could bring in new members without a tangible product on offer. Later investors were compensated with the money from the initial investors. 

According to the DoJ, Greenwood's position as the "global master distributor" of the fake cryptocurrency enterprise resulted in him collecting around $21.2 million (€20 million) monthly. On 5 April, 2023, Greenwood is scheduled to appear in front of District Judge Edgardo Ramos to receive his punishment.


red onecoin store boarded up with karl sebastian greenwood in foreground

OneCoin Scam Co-Founder Admits Fraud

Former US President and crypto critic [Donald Trump has launched his own NFT collectible](https://collecttrumpcards.com/) project, and the move has perplexed the crypto community.

Even conservatives and adamant MAGA supporters are baffled. Analyst Eric Wall compared the Trump NFT project to a "SimpDAO".

The word "SimpDAO" was coined after social media sensation Irene Zhao introduced IreneDAO. The NFT project gives 'Simps', or admirers, an opportunity to connect over their love for Trump while also receiving perks like one-on-one dinners and Zoom calls.

## Donald Trump NFT tokens unveiled

On Thursday, the former president made a "major announcement" through his social media platform, [Truth Social](https://truthsocial.com/). He unveiled a collection of 45,000 NFT [trading](/news/article/tradingview-uk-101) cards with artwork that featured himself in various outfits, such as superhero costumes, golf attire, and hunting gear.

He described the NFTs as containing incredible artwork about his life and career and that buying one is an entry to "a very exclusive community".

The [Polygon](/news/article/polygon-bridge-guide)-based NFTs cost $99 per token. Purchasers automatically enter sweepstakes with "thousands of prizes", including one-on-one dinners in Miami, Zoom calls, and rounds of golf with Trump. The tokens can be purchased using [ETH](/news/article/ethereum-price-in-uk) or fiat currency.

## Digital collectibles promotion

The former world leader urged fans to purchase the so-called Trump NFT tokens, which he expressed as "much like a baseball card", for "only" $99 each.

In a brief clip, he said, "America needs a superhero!" while loud music from Marvel World played in the background.
An animated version of the ex-president then appeared, posing in front of Trump Tower before tearing open his formal attire to reveal a muscular chest and a red T-logo bodysuit.

## Fan's reaction to "major announcement"

Critics on social media were amused and shocked by the announcement. Some people thought the ex-president might reveal details of his 2024 presidential election bid or other significant campaign announcements. While Trump's polarising moves are frequently embraced by his supporters, a surprising number of them have not supported him in this case.



pink image of nft motherboard. Donald Trump and USA flag in foreground. 

Trump NFT Collection Raises Eyebrows

The US fintech company [ZELF](https://zelf.co/) has launched a new Visa debit card that gives users a [crypto payment option](/news/article/best-crypto-card-uk) with anonymity.

The newly unveiled card can be used at more than 80 million Visa locations around the globe.

It also allows users to open a USD checking account easily. It only requires your name, phone number, and email address. As a result of this, users don't have the hassle of providing a long list of documents. You can create accounts without providing proof of address or social security number (SSN).

![zelf.png](https://s3.eu-west-2.amazonaws.com/prod-monitalks-media/zelf_9aa5caf3db.png)
 
ZELF’s virtual debit card is compatible with both [Google Pay](https://pay.google.com/) and [Apple Pay](https://www.apple.com/apple-pay/). The company claims that users can open an account within 30 seconds. They can also recharge the cards with both fiat and crypto. In cryptocurrencies, the currently available options include [Ether](/coins/eth), [USD Coin](/coins/usdc), and [Tether](/coins/usdt). However, users will likely have more than 20 other tokens in the coming years.

## ZELF and Visa collaboration

[Visa](https://usa.visa.com/) is one of the leading digital payment networks. Recently, it has been active in the fintech field and partnered with several firms. It has worked with many famous names in the industry, such as Chime, Airwallex, Finaxar, and others, to introduce innovative financial products.

Now, it has collaborated with ZELF - Bank of the Metaverse for this anonymous debit card. With the launch of this product, both companies are looking to provide a private and secure channel for [crypto payments](/news/article/blockonomics-explained). 

They have also reduced the verification requirements to promote digital asset adoption. The product is likely to attract new audiences and make crypto transactions more accessible for them.

The Chief Executive and Founder of ZELF, Elliot Goykhman, also believes that they can reach a "global unbanked population" because of lesser verification requirements. It will give them access to innovative and advanced financial services.


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