USDCrackdowns & Courts This Week: SEC Drops Cases, Crypto Firms Strike Back
KuCoin's CFTC Settlement Delayed Amid Trump Era Policy Shift
KuCoin’s planned settlement with the CFTC is delayed following a policy shift under the Trump administration that deprioritizes enforcement against crypto firms. CFTC attorney John Murphy indicated that securing approval for a previously negotiated deal is unlikely soon, as the commission currently lacks a majority to finalize cases. KuCoin was charged with multiple violations of the Commodity Exchange Act and money laundering laws, following which it settled for $297 million with the DOJ and agreed to exit the US market for two years. Both parties have requested an additional 60 days to negotiate further amidst these regulatory challenges.
Metaplex Faces Legal Backlash Over $7.3M Sweep of Unclaimed SOL Into DAO Treasury
Metaplex, a leading NFT protocol on Solana, is facing legal threats and community backlash over its plan to sweep 54,000 unclaimed SOL (approximately $7.3 million) into its DAO treasury. Critics, including Burwick Law, argue this could violate consumer protection laws and constitute unjust enrichment. The controversy arises from “resize rent” fees paid by users during NFT minting that remain unclaimed due to a lack of awareness or guidance. Burwick Law, representing thousands of NFT investors, suggests a refund mechanism instead of the sweep, proposing that 90% of the funds be returned to users and 10% retained for network maintenance. As of now, Metaplex has not publicly addressed these concerns. This occurs amid declining NFT market volumes, with trading activity down 60% in February compared to previous months. The NFT sector remains volatile, reflecting ongoing legal, security, and trust issues impacting major players.
U.S. Judge Moves Binance Money Laundering Lawsuit from Washington to Florida for Efficiency
A U.S. judge transferred a money laundering lawsuit against Binance from Washington to Florida, citing overlapping claims and judicial efficiency. U.S. District Judge Barbara Rothstein emphasized the case's similarity to an earlier suit filed in Florida in June 2023 by Michael Osterer, involving stolen cryptocurrency laundered through Binance. Despite plaintiffs' concerns about potential delays, Judge Rothstein ruled that joint litigation is more efficient, adhering to the “first-to-file” rule. The consolidation could impact how courts view the liability of cryptocurrency exchanges in theft and laundering cases amid increasing regulatory scrutiny of Binance's compliance practices.
UN Report: Southeast Asian Gangs Use Crypto to Launder Billions, Launch Custom Coins and Exchanges
A UNODC report reveals that organized crime syndicates in Southeast Asia are increasingly using cryptocurrency to launder billions, developing their own coins and exchanges. Notably, the Huione Guarantee platform, now rebranded as Haowang, has processed over $24 billion in fraud-linked crypto and boasts 970,000 users. The report identifies industrialized cybercrime operations, including scams like "pig butchering," generating substantial profits. Custom stablecoins and private exchanges enable criminals to bypass financial regulations. With rising activities noted in Africa, South America, and the Pacific, the report underscores the urgent need for governments to address these criminal networks and close regulatory loopholes.
Matter Labs Faces Lawsuit for Alleged IP Theft by BANKEX
Matter Labs, developer of ZKSync, is being sued by defunct firm BANKEX for alleged intellectual property theft. The lawsuit claims former BANKEX employees Alexandr Vlasov and Petr Korolev misappropriated technology to establish Matter Labs, which has secured over $450 million in venture capital. BANKEX CEO Igor Khmel alleges that Vlasov and Korolev secretly developed Matter Labs while working on a project for Ethereum co-founder Vitalik Buterin. Matter Labs denies the allegations, asserting that ZKSync is original technology. BANKEX's lawyer maintains confidence in the validity of their claims as they prepare for court proceedings.
Meteora DEX Sued for Alleged $69 Million Rug Pull Linked to M3M3 Meme Coin Launch
The Solana DEX Meteora is facing a class action lawsuit in New York, alleging a $69 million rug pull during the launch of its M3M3 meme coin. Plaintiffs, including Jonathan Clarke and Rodrigo Ferreira Da Cruz Vogt, claim founder Benjamin Chow and Kelsier Ventures orchestrated a scheme that allowed them to dominate 95% of the token supply within 20 minutes using 150 insider wallets. This alleged covert control led to inflated prices and significant investor losses. The suit follows another related case linked to the LIBRA token, which also involved Chow and Kelsier Ventures and resulted in political fallout in Argentina. M3M3, initially valued at $0.186, has since plummeted over 98% to just $0.003. The plaintiffs are represented by Burwick Law and Hoppin Grinsell LPP, both prominent in the crypto legal landscape, emphasizing the need for transparency in token launches under federal securities laws.
SEC Drops Fraud Case Against Hex Founder Richard Heart, Declaring Victory for Crypto and Free Speech
The SEC has decided not to refile its securities fraud complaint against Richard Heart, founder of Hex, which the court had previously dismissed for lack of jurisdiction over Heart’s activities. Heart celebrated this outcome as a win for open-source software, cryptocurrency, and free speech. He claimed it marked significant regulatory clarity for his projects, including HEX, PulseChain, and PulseX. The SEC initially alleged Heart's unregistered securities offerings had earned him over $1 billion. Additionally, the PulseChain token (HEX) peaked at $0.031 in December 2024 but has since dropped 76% amid a downturn in altcoins.
Australian Court Rules in Favor of Block Earner, Dismissing ASIC's Appeal Over 'Earner' Product
The Australian Federal Court ruled in favor of crypto lender Block Earner, dismissing the ASIC's appeal to impose penalties related to its crypto-linked ‘Earner’ product. The court determined that the product constituted a loan rather than a managed investment scheme, which did not require an Australian financial services license (AFSL). Earlier rulings had also alleviated Block Earner from penalties, with ASIC originally seeking up to $350,000. Despite the victory, Block Earner has no plans to reintroduce the ‘Earner’ product, emphasizing the need for updated regulations to foster fintech innovation in Australia. ASIC is currently reviewing the decision.
SEC Charges PGI Global Founder Ramil Palafox with $198 Million Crypto Fraud Scheme
The SEC has charged PGI Global founder Ramil Palafox with running a fraudulent cryptocurrency scheme that raised approximately $198 million, misappropriating over $57 million for personal luxury items, including Lamborghinis. Between January 2020 and October 2021, Palafox lured investors with promises of high returns from crypto trading, using new investments to pay earlier ones in a "Ponzi-like" manner. The SEC is seeking permanent injunctions against Palafox, including bans on future involvement in securities marketing, along with disgorgement of profits and civil penalties. A parallel criminal case has been initiated, supported by the FBI and IRS.
Celsius Victims Demand Justice as Alex Mashinsky Faces May 8 Sentencing for $7B Collapse
Alex Mashinsky, former CEO of Celsius Network, faces sentencing on May 8 for his role in the company's $7 billion collapse, following the submission of over 200 victim impact statements to the US federal court. These poignant narratives, totaling more than 400 pages, reveal the severe emotional and financial devastation experienced by users who trusted the once-prominent crypto lending platform. Many victims detail substantial losses, with one individual reporting over $7 million in assets lost and a lawsuit from Celsius for withdrawing funds shortly before its bankruptcy in July 2022. The collapse followed Mashinsky's misleading assurances of financial stability, which contributed to a false sense of security among investors. Victims, expressing feelings of betrayal and anger, call for a maximum sentence of 30 years as a response to the profound impact of the fraud, including shattered families and unfulfilled financial aspirations, underscoring the tragedy's far-reaching effects.
Long Island Father Sentenced to 18 Years for $12 Million Crypto Scam Involving Son
Eugene William Austin Jr., also known as Hugh Austin, was sentenced to 18 years in prison for orchestrating a cryptocurrency investment scam with his son, Brandon, defrauding over two dozen victims of $12 million. The pair presented themselves as crypto brokers offering high-yield investment opportunities, garnering approximately $5 million and $4 million in separate deals. Instead of generating returns, they funded a lavish lifestyle. In addition to the prison sentence, Austin was ordered to pay $12.66 million in restitution and forfeit over $6 million and a 2022 Jaguar SUV. Brandon Austin received a four-year prison sentence previously.
Dragonchain Token Soars 104% as SEC Dismisses Lawsuit Over Unregistered Securities
Dragonchain's DRGN token experienced a dramatic 104% surge following the announcement of a dismissal of the lawsuit by the SEC, which had alleged unregistered securities offerings since its original complaint in August 2022. The SEC's decision to drop the case is linked to recent policy changes, particularly in light of its Crypto Task Force's reassessment of cryptocurrency regulations. Dragonchain has consistently maintained that its DRGN token functions as a utility token rather than an investment. As a result of the news, trading volume for DRGN skyrocketed by 11,600%, totaling $1.4 million. Despite this rally, the token remains 98% below its all-time high of $5.46, with a market capitalization of $28.74 million. This dismissal marks a significant shift in the SEC's approach under the Trump administration, aiming to realign its regulatory efforts regarding cryptocurrencies.
This article has been refined and enhanced by ChatGPT.
