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This week, FTX kicked off a creditor resolution initiative, as regulatory efforts received significant attention. Meanwhile, Stake fell victim to a multimillion-dollar exploit.
FTX moves to pay off creditor debts
As part of a calculated goal to address its sizable debt that exceeds $8 billion, FTX began streamlining its digital asset portfolio this week.
Their approach includes reconnecting crypto assets to appropriate blockchain networks, alongside schemes to relocate Solana (SOL) and other assets to BitGo.
This shift occurred after the court selected BitGo as the court-appointed custodian, which was triggered by FTX’s bankruptcy declaration in November 2022.
Reports emerging this week suggest that FTX is embarking on a mission to recover large sums of money previously distributed to celebrity endorsers. Among these figures are tennis sensation Naomi Osaka and NBA star Shaquille O’Neal.
FTX’s financial advisors are currently exploring ways to recoup the large sums of money allocated to endorsement deals with these prominent sports figures.
Meanwhile, in court this week, Sam Bankman-Fried’s legal team argued that their client’s capacity to obtain important legal documents via laptop faced significant limitations.
They pointed to the alleged inadequate conditions existing at the Metropolitan Detention Center (MDC), and asserted that these conditions hampered Bankman-Fried’s ability to prepare for her trial scheduled for October.
Regulatory drama
Seemingly a weekly tradition, regulation in the US saw another round of drama this week.
The US Securities and Exchange Commission (SEC) reached a resolution with Linus Financial, a Nashville-based company, regarding the non-registration of their Linus Interest Account, a crypto lending product.
The regulatory body acknowledged Linus Financial’s cooperation and prompt corrective action, leading them to decide not to impose a penalty.
Linus Financial introduced this account in March 2020, but the SEC identified it as an unregistered security. In response, the company voluntarily stopped offering these accounts in March 2022 and returned all investor funds.
This week, the SEC revealed the reasons behind its intention to challenge recent court decisions favoring Ripple and XRP. The agency cited “complex legal issues.”
The SEC is adamant in challenging the court ruling, which determined that XRP qualifies as a security when marketed to institutional investors but not when sold to retail investors.
Congressional Republicans aim to clip the SEC’s wings
On September 8, Republican Congressman Tom Emmer via X (formerly Twitter) revealed his plans to introduce an amendment aimed at limiting the US SEC’s access to crypto regulatory budgets.
Emmer expressed concerns regarding what he views as an abuse of authority by SEC Chairman Gary Gensler and attempted to impose restrictions on fund allocations to enforce digital asset regulations.
CFTC targets DeFi protocols
The US CFTC also attracted attention this week when it initiated proceedings against three decentralized finance (DeFi) protocols for non-registration of derivatives trading products.
Opyn, ZeroEx, and Deridex, the companies involved, were individually ordered to pay fines of $250,000, $200,000, and $100,000, respectively.
The charges filed by the CFTC stem from violations of consumer regulations, provisions of the Bank Secrecy Act, and prohibited provisions of crypto-focused retail commodity transactions.
Taiwan will limit overseas exchanges
In addition to the drama in the US, regulatory issues are still prevalent around the world. News that emerged on September 7 revealed that the Taiwan Financial Supervisory Commission is ready to impose restrictions on unregistered overseas exchanges doing business in its territory.
The regulatory body has developed ten guidelines for local cryptocurrency supervision regarding virtual asset service providers.
The agency will officially announce these guidelines in late September. This will include listing and delisting criteria, separation of platform and customer assets, and implementation of anti-money laundering (AML) protocols.
The need for integrated global regulations
This week, the leaders of the G20 countries gave their approval to the Financial Stability Board (FSB) proposal to supervise the cryptocurrency sector.
This important development occurred at the New Delhi Leaders’ Summit on September 9, where the G20 countries reaffirmed their dedication to overseeing the ever-changing digital financial arena.
The support from such a leading global forum highlights the growing recognition of the need for coordinated and effective crypto regulation on an international scale.
Meanwhile, Nirmala Sitharaman, India’s Finance Minister, this week called on countries to cooperate on cryptocurrency regulation worldwide in her speech at this year’s Global Fintech Fest.
Sitharaman underscored the need for a harmonized regulatory structure to address global cryptocurrency issues. His call further underscores the growing awareness of the need for a unified global effort in crypto regulation.
The stakes were targeted in a recent hack
Amid growing calls for broad regulatory efforts, this week saw a rash of hacks and scams. On September 4, Beosin, a leading on-chain monitoring system, detected suspicious activity on crypto-based betting platform Stake.
Beosin revealed that the cumulative amount involved in this violation reached $41.35 million. The initial warning about this incident came from Cyvers Alerts, which flagged several questionable transactions worth $16 million related to Stake.
As the investigation progressed, speculation emerged among some experts that the transactions may be related to a potential security breach in Stake’s wallet infrastructure.
Later reports confirmed that, of the stolen funds, a total of $7.8 million in Polygon (MATIC) was missing. Days later, on-chain data revealed that hackers had moved $1.5 million worth of MATIC to Avalanche.
The FBI considers the exploit to have been carried out by North Korean hackers, and estimates that $41 million was stolen. On September 8, Ed Craven, co-founder of Stake, assured users that the hack did not involve compromising users’ personal data.
Whale lost $24 million in phishing attack
Stake wasn’t the only victim of a security attack this week. Blockchain surveillance platform Peck Shield revealed on September 7 that an unidentified crypto whale fell victim to a phishing attack, losing up to $24.24 million in crypto assets.
According to Peck Shield disclosures, these funds include 4,851 Rocket Pool ETH (rETH) worth $8.5 million as well as 9,579 Lido staking ETH (stETH) worth $15.6 million. Data shows that the attack occurred on two transactions.
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