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Sam Bankman-Fried Arrested In Bahamas After US Filed Charges
Monday night, Sam Bankman-Fried was arrested by the Royal Bahamas Police Force after the US government announced that it had filed a criminal indictment.
In a press statement explaining the arrest, Bahamas Attorney General Ryan Pinder stated,
“As a result of the notification received and the material provided therewith, it was deemed appropriate for the Attorney General to seek SBF’s arrest and hold him in custody pursuant to our nation’s Extradition Act. At such time as a formal request for extradition is made, The Bahamas intends to process it promptly, pursuant to Bahamian law and its treaty obligations with the United States.”
US prosecutors in Manhattan revealed eight criminal counts against SBF and federal regulators said he committed a range of securities and derivatives law violations. Bankman-Fried, who had been living in a sprawling penthouse in the Bahamas, was arrested there Monday evening.
The US indictment detailing the charges follows weeks of speculation over the 30-year-old’s fate after his company – once one of the biggest cryptocurrency exchanges in the world – plunged into bankruptcy last month.
He was arraigned in the Bahamas on Tuesday and faces extradition to the US.
“Mr. Bankman-Fried is reviewing the charges with his legal team and considering all of his legal options,” Mark Cohen, his attorney, said in a statement.
The US Securities and Exchange Commission on Tuesday alleged that FTX raised more than $1.8 billion, including $1.1 billion from about 90 US-based investors, in an “orchestrated scheme to defraud equity investors,” who bought in based on the belief that FTX had appropriate controls.
Separately, the Commodity Futures Trading Commission alleged that Bankman-Fried took hundreds of millions of dollars in loans from Alameda Research, which he also founded, which were then used to buy real estate and make donations to politicians.
According to the SEC, Bankman-Fried misled investors, telling them that FTX had sophisticated risk controls and that their assets were secure.
Instead, the regulator alleged in its complaint, he was using their money as a “virtually unlimited line of credit” for trading firm Alameda while concealed risks and obscuring FTX s relationship with the trading firm.
So far, SBF is being charged with securities fraud, securities fraud conspiracy, wire fraud, wire fraud conspiracy, and money laundering.
Wire fraud and money laundering alone could possibly give him a life sentence.
Many people on “crypto Twitter” pointed out the timing of SBF’s arrest on Monday December 12th was very suspicious however:
It was the day before he was supposed to be testifying at the committee in front of Congress – which he now is unable to do.
Some speculated that maybe they arrested him before this testimony because he could have possibly incriminated Gary Gensler, the Chair of the US Securities and Exchange Commission. Furthermore, Gary Gensler was SBF’s girlfriend’s father’s teacher at MIT, and some people believe he gave Bankman-Fried special treatment.
The speculations on Twitter were that they wanted to kick that can down the road so there will be a lot of red tape before he has to give any testimony.
The investigation now has to happen to accumulate evidence against SBF – which could take years.
Still, the SEC is also charging SBF with securities fraud and securities fraud conspiracy. But that hasn’t stopped many people from suggesting there was something they didn’t want to be made public just yet so they could control it.
Binance Withdrawals Hit $1.9 Billion In 24 Hours As The Exchange Halts All USDC Withdrawals
Binance has registered $1.9 billion of withdrawals in the past 24 hours, blockchain data firm Nansen said on Tuesday, as the world’s biggest crypto exchange said it had “temporarily paused” withdrawals of the USDC stablecoin.
How crypto exchanges such as Binance and its now-bankrupt former rival FTX handled customer deposits is under close scrutiny from users and regulators.
Binance, whose dominance of crypto was cemented by the fall of FTX, last week tweeted a proof-of-reserves report by audit firm Mazars. The report showed its holdings of bitcoin exceeded customer deposits on a single day in November.
The $1.9 billion of withdrawals of tokens based on the Ethereum blockchain mark the largest daily outflow over a 24-hour period since June 13, the Nansen data showed, and accounted for the majority of the funds being pulled in the last seven days.
“Binance’s withdrawals are increasing due to the growing uncertainty about its reserves report,” a Nansen spokesperson said.
The withdrawals were “business as usual,” Binance CEO Changpeng ‘CZ’ Zhao tweeted. “We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits.”
A Binance spokesperson earlier said it always had “more than enough funds” to meet withdrawal requests. “User assets at Binance are all backed 1:1 and Binance’s capital structure is debt free,” the person said.
Asked whether Binance had enough USDC to meet USDC withdrawal requests, the person added it may need to move funds to online “hot” digital wallets from offline wallets, convert stablecoins from one another or carry out network upgrades, sometimes causing delays.
Binance said in a tweet that USDC withdrawals had resumed.
Crypto news outlet CoinDesk reported earlier that Binance saw outflows of $902 million on Monday.
Binance is already under pressure from authorities. Splits between U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation focused on Binance’s compliance with U.S. anti-money laundering laws and sanctions, Reuters reported on Monday.
The report sparked a drop of almost 4% in Binance’s BNB token.
Coinbase Report Shows Dramatic Increase In Law Enforcement Inquiries Worldwide
In its latest transparency report, Coinbase revealed that the exchange received 12,320 law enforcement requests for the year through Sept. 30, which is a 66% increase from last year. Most of the requests were tied to criminal investigations and can be in the form of subpoenas, court orders, search warrants or other formal legal processes.
As per the report, the United States, United Kingdom, Germany and Spain accounted for 80% of the requests.
Paul Grewal, Chief Legal Officer of Coinbase stated,
“Since last year’s report, these requests have more than doubled, which we attribute to a combination of our own expansion and an overall increase in law enforcement and regulatory interest in the crypto industry.”
According to the report, which was attributed to chief legal officer Paul Grewal, Coinbase may challenge or ask agencies to narrow their requests, as decided by their team of lawyers. The exchange does not provide law enforcement with direct access to information, but:
“Coinbase may produce certain customer information, such as name, recent login/logout IP address, and payment information; this type of information may be subject to requests by government and law enforcement agencies when a customer uses one of our applications or our website, as described in our privacy policy.”
“We also aim to provide anonymized or aggregated data that aids law enforcement and government agencies with their work, where it is possible to do so,” the report added.
Coinbase CEO Brian Armstrong said in an interview earlier in December that the exchange’s trading revenue fell by about half over the past year.
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