Cryptocurrency News Now!: Jed McCaleb's incredible riches / Customers sue Coinbase / FinCEN's private wallet rule / BitGo's sanctions violations

Wednesday, January 6, 2021

Jed McCaleb's incredible riches / Customers sue Coinbase / FinCEN's private wallet rule / BitGo's sanctions violations

Inside.com

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January 06, 2021

Bitcoin	$34,418	7 day: +22%
Ethereum	$1,139	7 day: +54%
All crypto	$940B	7 day: +26%
Bitcoin dominance	68%	7 day: -2.1%

Prices as of 10 a.m. EST

Jed McCaleb

Jed McCaleb, who co-founded Mt. Gox (whose CEO is embroiled in fraud charges), as well as Ripple's XRP (an illegal securities offering, according to the SEC), was at times the world's 40th richest person by some estimates due to his founder's allocation of XRP. Unscathed, McCaleb also founded Stellar (XLM), which earned him tens of millions of dollars worth of additional net worth this week alone. On Jan. 4, Ukraine's government and his Stellar Development Foundation signed a Memorandum of Understanding (MoU) to collaborate on a central bank digital currency (CBDC). Stellar rallied over 50% since that announcement, a market cap increase of $2B for XLM ⏤ and a paper profit of tens of millions of dollars for McCaleb personally. (He does not disclose his exact holdings of XLM.)

One of the world's 100 richest people:

Stellar's founder, Jed McCaleb, was a co-founder of Ripple (XRP), which the SEC has accused of conducting a $1.3B illegal securities offering.
The SEC named Chris Larsen and Brad Garlinghouse personally in that lawsuit, but did not name McCaleb personally.
The world's 40th richest person by some estimates, McCaleb owned billions of XRP and was aggressively liquidating his XRP ahead of the SEC's announcement.
Researchers found him selling up to 29.5M XRP within 24 hours, worth millions of U.S. dollars in post-tax profit, just a few days prior to the SEC lawsuit.
McCaleb often sold up to 1% of XRP's trading volume per day.
For years, McCaleb has been generating millions in profit from his XRP sales while ostensibly focused on XLM.

Back to Ukraine:

On Jan. 4, 2020, Ukraine's Ministry of Digital Transformation signed an MoU with Stellar Development Foundation (SDF).
According to the announcement shared on Stellar's (XLM) website, Ukraine's government and SDF will collaborate on virtual asset strategies, including a platform to facilitate CBDCs.
The Deputy Minister of Digital Transformation for IT Development, Oleksandr Bornyakov, said that the cooperation indicates that the government is working on legalizing the development of virtual assets.
Ukraine subsequently downplayed the importance of XLM's role, saying that the token will play "no part" in the CBDC.

Leonidas Hadjiloizou

Customers sue Coinbase for facilitating XRP (XRP) sales, claiming Coinbase should have suspected the token was a security. They want their commissions back, plus penalties.

On Dec. 30, Bloomberg reported that a group of former customers sued the Brian Armstrong-led cryptocurrency exchange Coinbase over its facilitation of XRP (XRP) sales.
In the proposed class-action lawsuit, plaintiffs Thomas Sandoval and others challenge the commissions collected by the San Francisco-based exchange and seek compensation.
Plaintiffs filed in the U.S. District Court for the Northern District of California.
Two days before the suit, Coinbase's Chief Legal Officer scheduled the suspension of all XRP token trading activities as of Jan. 19.

Bloomberg

U.S. Treasury Secretary Steven Mnuchin

The U.S. Treasury is weighing whether or not to delay FinCEN's overhaul of cryptocurrency wallet reporting regulations.

FinCEN is proposing an amendment to the current Report of Foreign Bank and Financial Accounts (FBAR) regulations, interpreting the Bank Secrecy Act as requiring any account holder possessing over $10,000 in virtual currencies as reportable, as well as requiring KYC checks on self-hosted wallets.
FinCEN's Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets would subject self-hosted and non-U.S. wallets to U.S. know your customer (KYC) and anti-money laundering (AML) reporting requirements for any transaction worth more than $3,000 involving a U.S. person. It would also prohibit breaking larger transactions into smaller transactions to avoid the $3,000 threshold.
Congressman Tom Emmer, seven other Congress members, and Sen. Tom Cotton penned a letter to Steven Mnuchin, U.S. Secretary of the Treasury, on Dec. 31, 2020, requiring a comment period extension.
In the letter, Congress members suggested that the typical public comment period of 15 days is insufficient, asking Mnuchin to delay implementing such a "highly complex" rule involving digital assets by six months.
Writer's note: One of the most important developments to start 2021, I will dedicate most of tomorrow's edition to this momentous regulation.

Law360

BitGo settled charges with the U.S. Treasury Department for providing custody in violation of U.S. sanctions against Ukraine, Cuba, Iran, and Syria.

Cryptocurrency wallet maker and custodian BitGo recently settled charges with the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) by paying $93,830 as civil penalty for allowing customers located in sanctioned jurisdictions to open accounts and utilize its "hot wallets" (i.e. wallets controlled by BitGo)
According to the enforcement release dated Dec. 30, the company violated U.S. sanction programs between Mar. 10, 2015 through Dec. 11, 2019, by processing almost 183 digital currency transactions.

The Block Crypto

QUICK HITS:

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Coindesk announced Tuesday that it purchased TradeBlock, a crypto index provider.
An analyst at JPMorgan Chase issued a $146,000 price target for bitcoin.
Tetragon, a multi-billion asset manager that led Ripple's $200M fundraise in Dec. 2019, is suing Ripple.
Blockchain.com is shutting off XRP.
Grayscale is also abandoning XRP.
Bitstamp is also delisting XRP.
Bitwise 10 Crypto Index Fund (BITW) liquidated about 3.8% of its total fund (in XRP), worth $9.3M, due to the SEC's Ripple lawsuit.
More than 500,000 investors have opened accounts with this fintech platform to automate money management with ease.*

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