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Steve Muchoki
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The United States financial watchdogs have widened their scope of cryptocurrency scrutiny following the implosion of the FTX exchange and Terra Luna UST last year, which resulted in a loss of about $100 billion. With the Terra Luna victims perhaps never being compensated, the United States regulators have hit the stablecoins market hard. Moreover, Congress has had a lot of discussions on algorithmic stablecoins.
This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws, but it also demonstrates the strength and commitment of the SEC’s dedicated public servants. https://t.co/wLTa2M5P8k
— Gary Gensler (@GaryGensler) February 16, 2023
Additionally, the New York Department of Financial Services (NYDFS) has instructed Paxos, a leading tokenisation infrastructure platform renowned for the Binance-backed BUSD issuance, to stop minting new stablecoins.
While the SEC argues that the stablecoins in the market are unregistered securities, whales have migrated en masse from Circle’s USDC and Tether USDT to the Bitcoin market.
Crypto analysts have forecasted more crackdowns will continue from the United States financial regulators.
Vista Network Charged with Cryptocurrency Fraud
According to the announcement, the Commodity Futures Trading Commission (CFTC) has accused Vista Network Technologies (Vista), a California-based company, and its CEO, Armen Temurian, of soliciting over $7 million of customers’ digital assets and misappropriation. According to the CFTC’s complaint filed in the US District Court for the Eastern District of New York, Temurian and his company solicited investors’ Bitcoin and Ethers and misappropriated them in a Ponzi-like scheme.
“This action demonstrates our ongoing commitment to using the tools at our disposal to hold bad actors accountable in the digital asset space,” said CFTC Acting Director of Enforcement Gretchen Lowe. “It is one more example of the CFTC’s efforts to protect retail customers from fraud related to digital asset commodities.”
Reportedly, Vista and the CEO advertised between 2017 and 2018 that the company would trade users’ digital assets and earn a 2.5 percent daily return or double in just 80 days. Additionally, Temurian promised the crypto investors that the digital assets would be traded using robot traders with reputations of high winning strikes.
Nonetheless, the CFTC noted that Temurian and the company had no trading robots or prior experience as financial advisors. Reportedly, Temurian used new investors’ digital assets to pay older customers.
Earlier this week, the United States SEC published proposed investment rules to curb fraudulent financial advisors.
We @SECGov just proposed to expand & enhance the role of qualified custodians when registered investment advisers custody assets on behalf of investors.
Thru our rule, investors would get the time-tested protections—and qualified custodians—they deserve.
What does this mean? ⬇️ pic.twitter.com/RerUGnpArI
— Gary Gensler (@GaryGensler) February 15, 2023
According to SEC Chair Gary Gensler, the published proposal means well to ordinary investors.
“I support this proposal because in using important authorities Congress granted us after the financial crisis, it would help ensure that advisers don’t inappropriately use, lose, or abuse investors’ assets,” Gensler said.
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