This Year's Crypto Crackdown: All the Major Crypto Firms Facing Charges

A lawsuit by the Securities and Exchange Commission accusing the cryptocurrency trading platform of skirting federal law has forced it to shut down. Beaxy, the company that specializes in cryptocurrency trading, became the latest firm to be involved in a wide-ranging crackdown on what is alleged to be illegal cryptocurrency activity.

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29th of March

As a result of the SEC's charge against Beaxy for failing to register as a securities exchange, the cryptocurrency exchange ceased operating. As well as the SEC's allegations, it was alleged that Artak Hamazaspyan, the company's founder, misappropriated $900,000 in customer funds for personal and gambling purposes.

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27th of March

There has been a lawsuit filed by the Commodity Futures Trading Commission against Binance, the world's biggest crypto exchange, and Changpeng Zhao, its chief executive. According to the complaint, Binance had manipulated its platform to keep money flowing while avoiding compliance, including by allowing U.S. customers to trade on its platform despite not being registered under U.S. law (Zhao said the suit was “unexpected and disappointing”).

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24th of March

U.S. prosecutors have charged Do Hyeong Kwon with fraud after he was arrested in Montenegro for creating the stablecoin TerraUSD and its companion token Luna, adding to a civil suit brought against him by the Securities and Exchange Commission in February, nine months after the sudden collapse of both tokens in February 2017.

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22nd of March

In addition to Justin Sun and three of his companies being charged with unregistered securities, the SEC also charged eight celebrities with illegally promoting the tokens, including Akon, Lindsay Lohan, and Lil Yachty. Sun and three of his companies were charged with the sale of Tronix and BitTorrent, both of which are unregistered securities.

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22nd of March

According to Coinbase, it was informed that the SEC may have identified possible violations of securities law. It was the SEC's attention that was focused partly on Coinbase's "staking" service, wherein Coinbase allows customers to set aside their cryptocurrency in order to process transactions on blockchains in order to be rewarded. Coinbase said that the move had been disappointing, and that regulators had provided conflicting statements on the matter.

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28th of February

A federal investigation into the crypto giant has started after Nishad Singh became the third executive from the once dominating cryptocurrency exchange FTX pleaded guilty to criminal fraud charges. After the exchange collapsed late last year and Sam Bankman-Fried was criminally charged, a federal investigation is underway into the crypto giant.

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22nd of February

According to a filing with the government, the Federal Trade Commission has announced that it is investigating crypto lender Voyager Digital-a company that filed for bankruptcy in 2022-for making misleading and unfair claims about cryptocurrency to the public, as noted in the document.

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9th of February

During its investigation into whether Kraken had violated securities law, the Securities and Exchange Commission concluded that Kraken had failed to register the staking service under securities law and had agreed to pay $30 million in penalties to the agency and to cease providing staking services to U.S. clients. As part of the settlement, the company that runs Kraken did not admit to or deny the SEC's allegations.

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19th of January

In the wake of the SEC's investigation into the way that cryptocurrency lender Nexo Capital handled customers' interest on their cryptocurrency savings, Nexo agreed to pay the agency $45 million in fees and fines, though Nexo had never admitted that it had committed any wrongdoing.

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18th of January

There has been a recent announcement from the Department of Justice that the Hong Kong-based cryptocurrency exchange Bitzlato has been accused of processing more than $700 million in illicit funds and failing to comply with U.S. regulatory standards. The charges were brought against the company's founder Anatoly Legkodymov and the exchange.

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12th of January

Several months ago, the SEC filed a lawsuit against cryptocurrency lenders Genesis Global Capital and Gemini Trust. Both companies are owned by Cameron and Tyler Winklevoss, twins known as Facebook creators known for their claims of originating the idea of the social network. Genesis filed for bankruptcy a week later as they were offering investors unregistered securities in exchange for a program dubbed Gemini Earn whereby high interest would be paid on deposits.

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BIG NUMBERS

$19,873. Those are the prices Bitcoin fell to on March 10, when the largest cryptocurrency in terms of market capitalization fell below $20,000 for the first time since January, a sign that the token may be on the verge of a bubble. In November 2021, the stock reached an all-time high of $68,990, which is a 71% decrease from the all-time high. By March 29, Bitcoin had recovered to a level of over $28,000, surpassing its previous high of over $27,000.

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THE KEY BACKROUND

According to SEC Chairman Gary Gensler, the once-freewheeling cryptocurrency sector will likely be subjected to harsher federal regulation in the coming years. In 2021, Gensler claimed that the crypto market, which he called "the Wild West," was rife with fraud, scams, and abuse because the tokens surged in price without adequate protection for investors. In his book, Gensler suggests similar investor protection rules should also apply to cryptocurrency exchanges, and argues that some cryptocurrencies are securities - an argument that has been challenged by a variety of crypto firms - and that these rules should apply to all equities and derivatives. While Crypto markets experienced a surge in prices for tokens such as Bitcoin in 2021, the same year, after rising inflation and fears of a recession lowered the market value for cryptos by nearly $2 trillion. As many cryptocurrency companies collapsed or laid off thousands of employees between June and August, some popular cryptocurrencies, including Bitcoin, Ethereum, and BNB, fell by 70%, 75% and 65% respectively from their record highs. The year ended with FTX and Alameda Research, the crypto trading firm whose operations were closely tied to FTX's, and whose founder, John Bankman-Fried, was indicted for a number of fraud charges in connection with FTX's operations.

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THE ANGLE

Two major banks that have been serving the cryptocurrency industry in the past have been shut down in conjunction with a crackdown on crypto firms. Bitcoin fell below $20,000 for the first time in nearly two months as a result of the announcement made by cryptocurrency banking giant Silvergate Bank in March that it would suspend operations and liquidate its assets. It has also been reported that the Justice Department is investigating the bank for its dealings with FTX and Alameda Research, though the bank has not been accused of any wrongdoing or fraud, according to Trade Algo, and is simply being investigated for its dealings with these companies. As part of the probe into Silicon Valley Bank, New York regulators also closed Signature Bank-also known for its crypto operations-and took over the bank by the FDIC after it received a flood of withdrawal requests shortly after the bank had collapsed.