A group of Paraguayan lawmakers is spearheading a bill that seeks to enact a temporary ban on cryptocurrency mining operations in Paraguay for 180 days or until the industry’s activities are properly regulated. The bill alleges that 28% of the energy losses of the National Power Administration (ANDE) correspond, in part, to illegal bitcoin mining […]
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Senators Ron Wyden and Cynthia Lummis requested an investigation of the U.S. Securities and Exchange Commission (SEC) in a letter on Jan. 11.
The two lawmakers asked the SEC’s Inspector General, Deborah Jeffrey, to open an investigation into a security breach that occurred two days earlier as well as the agency’s failure to follow best cybersecurity practices.
The breach saw an unknown party illegally access the SEC’s X account and post a false announcement suggesting that the agency had approved a spot Bitcoin ETF. Though the SEC did in fact approve ETFs of that type one day later, the agency said that the original message was false and confirmed the breach.
Senators said the SEC should have used multi-factor authentication and phishing-resistant hardware tokens (ie. security keys). They asked for the investigation to focus on these matters and find any other security gaps. Senators requested an update on the investigation by Feb. 12, 2024.
Senators Wyden and Lummis did not suggest that the SEC violated any specific rules through the oversights that allowed the breach to occur.
The two senators noted that the White House’s Office of Management and Budget (OMB) issued a memo in January 2022 requiring agencies to use multi-factor authentication and security keys. Though they acknowledged that this policy does not apply to social media websites, they said that the memo makes it clear that such features are necessary to protect against attacks.
Senators did not suggest that the SEC violated certain rules through which it requires companies to disclose securities breaches. However, senators did imply hypocrisy in this area: they called SEC’s failures “inexcusable, particularly given the agency’s new requirements for cybersecurity disclosure.”
Senators also highlighted the “obvious potential” for market manipulation in their complaint. Indeed, Bitcoin saw sudden losses as the SEC revealed the false nature of the announcement. The price of Bitcoin (BTC) fell from $46,865 to $45,415 within two hours of 9:00 p.m. UTC on Jan. 9, marking a loss of about 3%.
Despite the critical nature of the SEC’s failures, the lack of any specific violations makes it unclear what consequences the agency might face.
Several U.S. lawmakers have approached the Biden administration, requesting an investigation into the alleged use of cryptocurrency by terrorist groups. This request came in the form of a letter dated Nov. 15.
The letter refers to earlier reports alleging that crypto wallets linked to Hamas and the Palestinian Islamic Jihad have received upwards of $41 million and $93 million, respectively. However, it also acknowledges the existence of “conflicting reports” from blockchain analytics firms that challenge these numbers.
The estimates originated on Oct. 10 in a Wall Street Journal article that cited statistics from two blockchain analytics firms. One primary source, Elliptic, later said that the $93 million estimate actually applied to a crypto exchange serving many customers rather than a single terrorist group. The $41 million amount originated with a separate analytics firm called BitOK; the company has seemingly not reassessed that estimate.
Now, in their current letter, lawmakers are asking the U.S. government to disclose the number of digital wallets linked to Hamas and other terrorist organizations that it has identified as well as the cryptocurrency balance of those wallets. Furthermore, the letter asks whether the U.S. government has blocked or seized any of those cryptocurrency assets or any non-crypto assets and asks for other related details.
Furthermore, the letter points out that the U.S. government has seized substantial amounts of illicit funds, suggesting a need for transparency about these procedures. It asks when those funds might be forfeited, to whom they might be distributed, and whether any funds seized from terrorist organizations could be distributed to Israel in order to offset the cost of other government spending packages.
The lawmakers addressed their letter to U.S. President Joe Biden and Secretary of the Treasury Janet Yellen, asking the administration to find and disclose the above facts.
The letter is signed by more than 50 lawmakers. Signatures from Republican lawmakers include those from Majority Whip Tom Emmer, Chairman of the House Committee on Financial Services Patrick McHenry, and Congressman French Hill.
One Democratic lawmaker who has signed the letter is Congressman Ritchie Torres, well-known for his past support for pro-cryptocurrency legislation.
Notably, Democratic Senator Elizabeth Warren, who had previously led an effort to cite these contested statistics in an earlier letter, was absent from the list of signatories. Her earlier letter asked the government to impose measures to prevent the use of crypto in terrorist funding.
The United Kingdom government has rejected a proposal made by the House of Commons Treasury Committee to regulate crypto retail trading in the same way it oversees gambling, highlighting that it “firmly disagrees” with the committee’s stance.
A panel of British lawmakers called for regulating the U.K. crypto market similar to gambling in a May 17 committee report. The Treasury Committee said that crypto investment activity is consistent with the principle of “same risk, same regulatory outcome.”
In a July 20 response to the committee, U.K. Economic Secretary to the Treasury Andrew Griffith rejected the proposal and said that the treasury firmly disagrees with the “Committee’s recommendation to regulate retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service.”
In the U.K., all forms of gambling are governed under the Gambling Act 2005. Businesses, including bingo halls, lotteries, betting shops, online bookmakers and casinos, are under scrutiny to curb compulsive gambling and implement Anti-Money Laundering measures.
Related: UK Treasury drops plans for Royal Mint NFT
The government response noted that such an approach has the potential to completely counter the globally agreed recommendations from international organizations and standard-setting bodies. The British government believes the committee’s recommendations can potentially create unclear and overlapping mandates between financial regulators and the Gambling Commission.
The government added that it is already working on regulating the crypto market, and proposed regulatory legislation was put before parliament and debated last month. Talking about setting standards for the crypto industry and crypt firms, the government stated:
“HM Treasury and the FCA [Financial Conduct Authority] will work with the industry to ensure crypto firms are made fully aware of the standards required for approval at the FSMA gateway. Further communications will be provided in due course to ensure standards for approval are clearly available to crypto firms operating in the UK.“
The government also said that this legislation may come into force by late 2023 and that the committee’s recommendations were also considered.
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Magazine: Unstablecoins: Depegging, bank runs and other risks loom
Two members of the United States House of Representatives have added their names to a list of lawmakers criticizing Securities and Exchange Commission (SEC) Chair Gary Gensler’s approach to digital asset regulation.
In a letter to Gensler dated July 19, Reps. French Hill and Dusty Johnson suggested legislation was a more effective approach to addressing regulatory issues in the digital asset space rather than the SEC’s position to “regulate by enforcement.” The two lawmakers are the respective chairs of subcommittees in the House Financial Services Committee and House Agriculture Committee that examine digital assets.
“Legislation would do far more to prevent future collapses of digital asset firms than enforcement actions,” said the letter. “A statutory framework would establish a process for firms to come into the regulatory parameter and comply with consumer protections, rather than relying on enforcement actions to punish a bad actor after the damage has already been done.”
The SEC cannot continue to regulate by enforcement. The lawsuits filed against digital asset firms are not protecting the public and are stifling innovation and growth.
My letter to SEC Chair Gensler ⬇️ pic.twitter.com/RjoBNs5YQs
— Rep. Dusty Johnson (@RepDustyJohnson) July 19, 2023
Hill and Johnson hinted at certain actions by the SEC “seemingly timed to coincide with related Congressional activity, which appears calculated for maximum publicity and political impact.” Other members of Congress have questioned Gensler on the timing of the SEC’s charges against former FTX CEO Sam Bankman-Fried, given he had been scheduled to testify before the House Financial Services Committee in December 2022.
Related: SEC’s Gensler offered to serve as an adviser to Binance in 2019, lawyers claim
The two lawmakers also referenced a recent summary judgment affecting crypto regulation, likely referring to an SEC v. Ripple ruling suggesting XRP (XRP) was not necessarily a security. In the wake of the court decision, other House representatives have called on Gensler to reconsider the commission’s current approach to regulating crypto. The SEC chair said he was “disappointed” in the ruling due to its impact on retail investors and the commission would be assessing the situation.
Lawmakers in the House Financial Services Committee are considering a draft market structure bill aimed at clarifying the roles the SEC and Commodity Futures Trading Commission would play in regulating crypto. The bill has yet to be officially introduced and may be amended based on feedback from lawmakers and industry leaders.
Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?
Six members of the United States Congress have called on the U.S. Securities and Exchange Commission (SEC) and Department of Justice to investigate Prometheum, claiming the firm has ties to the Chinese Communist Party.
In a July 10 letter, Alabama Sen. Tommy Tuberville and five members of the House of Representatives alleged Prometheum co-CEO Aaron Kaplan may have provided false testimony at a June 13 hearing on regulatory clarity in the crypto space. The U.S. lawmakers claimed Prometheum was connected to investors with “with ties” to the Chinese Community Party: Shanghai Wanxiang Blockchain and HashKey Digital Asset Group.
According to Tuberville and the Representatives, Kaplan’s testimony before Congress suggested Prometheum had been developed independently of Wanxiang and HashKey, allegedly contradicting information the firm had provided in SEC filings. The lawmakers called on SEC Chair Gary Gensler and Attorney General Merrick Garland to look into the matter.
.@SenTuberville op-ed: It’s past time for the DOJ and the SEC to investigate Prometheum’s ties to Chinahttps://t.co/57yMDtMt7V
— 1819 News (@1819News) July 10, 2023
Related: Blockchain Assoc. requests info on Prometheum over ‘suspicious’ approval
Many lawmakers within the Republican party — which includes the six members who signed onto the July 10 letter — have often invoked concerns about affiliations with China-based entities or the country’s government in considering regulation or laws on digital assets. Former Sen. Pat Toomey and Minnesota Rep. Tom Emmer both issued warnings on using China’s digital yuan at the Beijing 2022 Winter Olympics.
Cointelegraph reached out to Aaron Kaplan for comment but did not receive a response at the time of publication. However, a June 23 Wall Street Journal op-ed by Aaron Kaplan and co-CEO Benjamin Kaplan claimed Tuberville’s concerns on Prometheum’s alleged ties to China were “without merit” and relied on “out-of-date information.”
“We formally terminated all co-development work and strategic relationships with Wanxiang and its affiliates on Oct. 21, 2021,” said the co-CEOs. “Prometheum has severed all intellectual property and technology ties to Wanxiang, giving it and its affiliates no access to any information that could expose the U.S. or its citizens to risk.”
Aaron Kaplan said the firm left the U.S.-based crypto advocacy group Chamber of Digital Commerce in early 2023.
Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.
Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?
U.S. Senator Tommy Tuberville of (R-AL) and Members of Congress Ralph Norman (R-SC), Barry Loudermilk (R-GA), Byron Donalds (R-FL), and Mark Alford (R-MO) Blaine Luetkemeyer have co-signed a letter calling on Attorney General Merrick Garland and the Securities and Exchange Commission (SEC) Chair Gary Gensler to investigate Prometheum, Inc. amid allegations of false testimony to Congress and potential violations of U.S. securities laws.
In a letter dated July 10, 2023, Tuberville and Luetkemeyer expressed concerns about discrepancies in statements made by Prometheum, a digital asset company, in testimony before Congress and in its SEC filings. They highlighted that Aaron Kaplan, Co-CEO and founder of Prometheum, testified before Congress that the firm commenced independent development of its technology platform, separate from its China-based partners, in December 2019. This claim, the legislators argue, contradicts indications in Prometheum’s financial statements and SEC filings.
According to the letter, Prometheum continued to rely on its partnership with Shanghai Wanxiang Blockchain, Inc. (Wanxiang) and its subsidiary HashKey Digital Asset Group, Ltd. — both China-based entities with ties to the Chinese Communist Party — long after Kaplan said the company had started independent operations.
The lawmakers wrote:
“Prometheum’s audited financial statements and SEC filings during 2020 and 2021, which were relied upon by investors, indicate that Prometheum continued to rely on its partnership with Wanxiang and HashKey long after December 2019.”
The representatives underscored that Prometheum emphasized its relationship with Wanxiang in its SEC filings and public appearances, potentially misleading investors into believing the relationship was ongoing and advantageous. They argue that Kaplan’s testimony to Congress appears to conflict with these filings.
“Making false statements to Congress is a crime. Submitting false or misleading statements in SEC filings constitutes securities fraud,” the lawmakers emphasized, urging a thorough review of Prometheum’s statements, its continued membership in the Financial Industry Regulatory Authority (FINRA), and its registration with the SEC.
Prometheum, a New York-based company, has recently become the first crypto-focused company to register with the U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) as a special-purpose broker-dealer. This is a significant development in the crypto industry as it indicates possible paths to regulatory approval for other crypto companies looking to engage with digital assets.
However, Prometheum has attracted speculation and criticism since Kaplan’s congressional testimony; as a relatively unknown player at the beginning of the year, its ability to gain SEC approval where others have failed has raised questions and concerns.
The post US lawmakers call on DOJ, SEC to investigate Prometheum, citing suspicions of “false testimony” and securities law violations appeared first on CryptoSlate.
On June 20, a bipartisan group of United States lawmakers introduced a bill to establish a commission to study the country’s approach toward artificial intelligence (AI).
The bill’s primary objective revolves around establishing regulations in the AI industry. The act comes hot on the heels of consumer protection groups in the European Union (EU) urging regulators to conduct investigations on AI models behind popular chatbots.
The bipartisan National AI Commission Act was introduced by Representatives Ted Lieu, Ken Buck and Anna Eshoo. The bill proposes the creation of a national body to formulate a comprehensive framework for regulating AI.
The act aims to address the potential risks associated with AI technology, with Lieu emphasizing the importance of preventing harm that can arise from unregulated AI. The commission will bring together experts, government officials, industry representatives and labor stakeholders to achieve this. Their collective efforts will focus on providing recommendations for effective AI regulation, according to the lawmakers.
Merve Hickok, president of the Center for AI and Digital Policy, voiced support for the National AI Commission. She said the proposal is timely and crucial, as it would establish essential regulations for AI and facilitate public involvement in shaping the nation’s AI strategy. The center has previously cautioned about the U.S.’s unpreparedness to address future AI challenges.
Hickok considers the proposal to form a commission a positive move forward and commended the lawmakers on the initiative.
Related: Biden to discuss dangers of AI in San Francisco meeting with experts
This development comes after persistent calls from numerous influential figures in the tech industry, such as billionaire Elon Musk and others, who have emphasized the necessity of implementing measures to moderate the pace of AI advancement. Notably, Sam Altman, CEO of OpenAI creator ChatGPT, has recently expressed his concerns regarding the urgent need to regulate the AI industry effectively.
Magazine: Is AI a nuke-level threat? Why AI fields all advance at once, dumb pic puns
Davidson was joined by another crypto-friendly congressman Tom Emmer in creating the legislation.
Crypto-friendly congressman Warren Davidson has filed a new bill called the “SEC Stabilization Act”. According to Davidson, the bill seeks to reform the SEC and rid it of its “tyrannical Chairman” Gary Gensler. His Twitter announcement reads:
“Today I filed the SEC Stabilization Act to restructure the SEC and fire Gary Gensler.”
In another statement, Davidson disclosed that the bill ultimately aims to protect the US capital markets. However, he also submitted that this aim can only be achieved by fixing the ongoing abuse of power in the agency.
Meanwhile, it is worth mentioning that Davidson was joined by another crypto-friendly congressman Tom Emmer in creating the legislation. Emmer, who is the House Majority Whip has been quite openly critical of Gensler. He has said repeatedly that Gensler is incapable of governing the crypto market and that his methods suppress innovation.
About the new bill, however, Emmer said that the Stabilization Act will only help the SEC to get its priorities right. He explained further, saying that the agency’s priority should be on investor protection and not to fan the ego of its Chair.
For what it’s worth, grievances expressed by Emmer and Davidson in the new bill appear to be a popular opinion. The crypto industry, for instance, has said similar things.
Recall that Coinbase recently said that SEC does not care about creating clear rules for digital assets. The exchange said that SEC was only interested in carrying out enforcement actions. Similarly, Binance.US accused the Gensler-led agency on Thursday, of using fear tactics to war on the American digital asset industry.
Perhaps the most interesting Gensler criticism came from within his agency. SEC Commissioner Hester Peirce also disagrees with the commission’s attempt to regulate crypto using existing financial industry rules.
According to Fox News, Davidson and Emmer are seeking to remove Gensler from office. But also, their bill will seek to restructure the agency by redistributing power between the SEC chair and commissioners. Also, it would add a sixth commissioner to the agency, and ensure that no party holds a majority on the commission. Lastly, the bill will also create an executive director position.
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Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this.
He’s a reader, a researcher, an astute speaker, and also a budding entrepreneur.
Away from crypto however, Mayowa’s fancied distractions include soccer or discussing world politics.