Molly White
@molly0xfff@hachyderm.io replied  ·  activity timestamp 4 days ago

A jury convicted Tornado Cash developer Roman Storm on the least severe of three charges, and was unable to reach a verdict on the other two. Storm plans to appeal, and it remains to be seen whether prosecutors will attempt to retry the other two charges.

It’s uncertain if prosecutors will attempt to retry the remaining two charges. They may not, given that this case has been politically unpopular among more ideological segments of Trump’s crypto base. However, the recent White House cryptocurrency working group report recommending expanding the Patriot Act to digital asset transactions may suggest that the administration intends to continue — or increase — crackdowns on crypto mixers and other privacy software.2 Recommendation • Congress should, consistent with how it has approached Fentanyl and Russian illicit finance, add a sixth special measure to Section 311 authorizing FinCEN to prohibit, or impose conditions upon, certain “transmittals of funds” that are not tied to a correspondent banking relationship. This would enable Treasury to target foreign digital asset exchanges or digital asset transactions involving criminal or state actors—without regard to the nature of their illicit activity “Section 311” refers to section 311 of the Patriot Act (Working Group report, p. 117) Though this may be controversial among the ideologues, it’s not necessarily unpopular among Trump’s wealthiest crypto backers. Andreessen Horowitz endorsed extending the Patriot Act to digital assets in July.3
It’s uncertain if prosecutors will attempt to retry the remaining two charges. They may not, given that this case has been politically unpopular among more ideological segments of Trump’s crypto base. However, the recent White House cryptocurrency working group report recommending expanding the Patriot Act to digital asset transactions may suggest that the administration intends to continue — or increase — crackdowns on crypto mixers and other privacy software.2 Recommendation • Congress should, consistent with how it has approached Fentanyl and Russian illicit finance, add a sixth special measure to Section 311 authorizing FinCEN to prohibit, or impose conditions upon, certain “transmittals of funds” that are not tied to a correspondent banking relationship. This would enable Treasury to target foreign digital asset exchanges or digital asset transactions involving criminal or state actors—without regard to the nature of their illicit activity “Section 311” refers to section 311 of the Patriot Act (Working Group report, p. 117) Though this may be controversial among the ideologues, it’s not necessarily unpopular among Trump’s wealthiest crypto backers. Andreessen Horowitz endorsed extending the Patriot Act to digital assets in July.3
It’s uncertain if prosecutors will attempt to retry the remaining two charges. They may not, given that this case has been politically unpopular among more ideological segments of Trump’s crypto base. However, the recent White House cryptocurrency working group report recommending expanding the Patriot Act to digital asset transactions may suggest that the administration intends to continue — or increase — crackdowns on crypto mixers and other privacy software.2 Recommendation • Congress should, consistent with how it has approached Fentanyl and Russian illicit finance, add a sixth special measure to Section 311 authorizing FinCEN to prohibit, or impose conditions upon, certain “transmittals of funds” that are not tied to a correspondent banking relationship. This would enable Treasury to target foreign digital asset exchanges or digital asset transactions involving criminal or state actors—without regard to the nature of their illicit activity “Section 311” refers to section 311 of the Patriot Act (Working Group report, p. 117) Though this may be controversial among the ideologues, it’s not necessarily unpopular among Trump’s wealthiest crypto backers. Andreessen Horowitz endorsed extending the Patriot Act to digital assets in July.3
In the courts A jury found Tornado Cash developer Roman Storm guilty on one of the three charges against him. Though the jury deadlocked on the other two charges — money laundering conspiracy and conspiracy to evade sanctions — they found him guilty of conspiracy to operate an unlicensed money transmitting business. This charge was the one I recently wrote “twisted the Tornado Cash prosecutors into a pretzel” after they followed guidance from Deputy Attorney General Todd Blanche to drop a portion of the charge: Now they’re left trying to argue that Tornado Cash should have been doing a whole bunch of compliance activities, while simultaneously acknowledging that they can’t prosecute Storm for failing to register as a business that would require such compliance. The good news for Storm is that this charge carries a comparatively light maximum sentence of up to five years in prison; the other two charges have maximum sentences of twenty years. Storm’s attorney said he plans to appeal his conviction, telling reporters it has “serious legal issues”. I certainly don’t disagree, and I’ll be watching the appeal closely.1
In the courts A jury found Tornado Cash developer Roman Storm guilty on one of the three charges against him. Though the jury deadlocked on the other two charges — money laundering conspiracy and conspiracy to evade sanctions — they found him guilty of conspiracy to operate an unlicensed money transmitting business. This charge was the one I recently wrote “twisted the Tornado Cash prosecutors into a pretzel” after they followed guidance from Deputy Attorney General Todd Blanche to drop a portion of the charge: Now they’re left trying to argue that Tornado Cash should have been doing a whole bunch of compliance activities, while simultaneously acknowledging that they can’t prosecute Storm for failing to register as a business that would require such compliance. The good news for Storm is that this charge carries a comparatively light maximum sentence of up to five years in prison; the other two charges have maximum sentences of twenty years. Storm’s attorney said he plans to appeal his conviction, telling reporters it has “serious legal issues”. I certainly don’t disagree, and I’ll be watching the appeal closely.1
In the courts A jury found Tornado Cash developer Roman Storm guilty on one of the three charges against him. Though the jury deadlocked on the other two charges — money laundering conspiracy and conspiracy to evade sanctions — they found him guilty of conspiracy to operate an unlicensed money transmitting business. This charge was the one I recently wrote “twisted the Tornado Cash prosecutors into a pretzel” after they followed guidance from Deputy Attorney General Todd Blanche to drop a portion of the charge: Now they’re left trying to argue that Tornado Cash should have been doing a whole bunch of compliance activities, while simultaneously acknowledging that they can’t prosecute Storm for failing to register as a business that would require such compliance. The good news for Storm is that this charge carries a comparatively light maximum sentence of up to five years in prison; the other two charges have maximum sentences of twenty years. Storm’s attorney said he plans to appeal his conviction, telling reporters it has “serious legal issues”. I certainly don’t disagree, and I’ll be watching the appeal closely.1
Molly White
@molly0xfff@hachyderm.io replied  ·  activity timestamp 4 days ago

Do Kwon, founder of the Terra/Luna stablecoin ecosystem that underwent a $40 billion collapse in 2022, has reached a plea deal that will give him a maximum of 25 years in prison (rather than life). Prosecutors will recommend no more than 12.

Terra/Luna founder Do Kwon has also reached a plea deal, pleading to two of nine original charges in connection to the $40 billiona collapse of his stablecoin scheme in 2022 [I73]. He faces a maximum sentence of five years on a wire fraud charge and up to twenty years on a fraud conspiracy charge, which could run consecutively. If Kwon accepts responsibility and doesn’t commit new crimes, the government will push for no more than a twelve year sentence (though the judge isn’t required to accept the government’s suggestion). Kwon has also agreed to forfeit some properties and up to $19 million, and pay restitution.6 He also still faces charges in South Korea.
Terra/Luna founder Do Kwon has also reached a plea deal, pleading to two of nine original charges in connection to the $40 billiona collapse of his stablecoin scheme in 2022 [I73]. He faces a maximum sentence of five years on a wire fraud charge and up to twenty years on a fraud conspiracy charge, which could run consecutively. If Kwon accepts responsibility and doesn’t commit new crimes, the government will push for no more than a twelve year sentence (though the judge isn’t required to accept the government’s suggestion). Kwon has also agreed to forfeit some properties and up to $19 million, and pay restitution.6 He also still faces charges in South Korea.
Terra/Luna founder Do Kwon has also reached a plea deal, pleading to two of nine original charges in connection to the $40 billiona collapse of his stablecoin scheme in 2022 [I73]. He faces a maximum sentence of five years on a wire fraud charge and up to twenty years on a fraud conspiracy charge, which could run consecutively. If Kwon accepts responsibility and doesn’t commit new crimes, the government will push for no more than a twelve year sentence (though the judge isn’t required to accept the government’s suggestion). Kwon has also agreed to forfeit some properties and up to $19 million, and pay restitution.6 He also still faces charges in South Korea.
Molly White
@molly0xfff@hachyderm.io replied  ·  activity timestamp 4 days ago

Some in crypto are anxious about the prospects of a market structure bill (like the Clarity Act) becoming law before the midterms. “It’s so wonderful to have a pro-crypto administration, but that is something that could be overturned with the new administration.”

In Congress The high is wearing off from the passage of the GENIUS stablecoin bill, and the cryptocurrency industry is anxious about the prospects of a market structure bill becoming law before midterm campaigns capture Congressmembers’ attention, possibly threatening Republicans’ trifecta in 2026. Blockchain Association CEO Summer Mersinger (a former CFTC Commissioner under Biden) told Semafor, “It’s so wonderful to have a pro-crypto administration, but that is something that could be overturned with the new administration. What we want is a permanent framework.” Banking regulation professor Todd Phillips explained, “They have to get a bill across the finish line soon, or it’s not going to happen. And since Senate Banking and Senate Ag don’t seem to be talking right now, Senate Banking and House Financial Services are on different pages, and the 2026 election is right around the corner, my money is on it not happening.”11
In Congress The high is wearing off from the passage of the GENIUS stablecoin bill, and the cryptocurrency industry is anxious about the prospects of a market structure bill becoming law before midterm campaigns capture Congressmembers’ attention, possibly threatening Republicans’ trifecta in 2026. Blockchain Association CEO Summer Mersinger (a former CFTC Commissioner under Biden) told Semafor, “It’s so wonderful to have a pro-crypto administration, but that is something that could be overturned with the new administration. What we want is a permanent framework.” Banking regulation professor Todd Phillips explained, “They have to get a bill across the finish line soon, or it’s not going to happen. And since Senate Banking and Senate Ag don’t seem to be talking right now, Senate Banking and House Financial Services are on different pages, and the 2026 election is right around the corner, my money is on it not happening.”11
In Congress The high is wearing off from the passage of the GENIUS stablecoin bill, and the cryptocurrency industry is anxious about the prospects of a market structure bill becoming law before midterm campaigns capture Congressmembers’ attention, possibly threatening Republicans’ trifecta in 2026. Blockchain Association CEO Summer Mersinger (a former CFTC Commissioner under Biden) told Semafor, “It’s so wonderful to have a pro-crypto administration, but that is something that could be overturned with the new administration. What we want is a permanent framework.” Banking regulation professor Todd Phillips explained, “They have to get a bill across the finish line soon, or it’s not going to happen. And since Senate Banking and Senate Ag don’t seem to be talking right now, Senate Banking and House Financial Services are on different pages, and the 2026 election is right around the corner, my money is on it not happening.”11
Molly White
@molly0xfff@hachyderm.io replied  ·  activity timestamp 4 days ago

The Paxos stablecoin issuer paid $48.5 million to settle with New York state financial regulators over insufficient anti-money laundering and due diligence. Days later, they applied for a national trust bank charter to become more enmeshed with the banking system.

Only days after the settlement, Paxos joined Ripple, Circle, and other cryptocurrency companies in applying for a national trust bank charter, which would put the firm under federal OCC supervision and more closely integrate it into the traditional financial system.13 Crypto-friendly regulators are being installed at various federal agencies, including former blockchain executive and newly confirmed Comptroller of the Currency John Gould [I88]. Paxos and other crypto firms, in seeking these charters, may be hoping to reduce their exposure to state regulators — particularly in places like New York — that have continued to police crypto company abuses, and instead operate primarily under more permissive federal oversight.
Only days after the settlement, Paxos joined Ripple, Circle, and other cryptocurrency companies in applying for a national trust bank charter, which would put the firm under federal OCC supervision and more closely integrate it into the traditional financial system.13 Crypto-friendly regulators are being installed at various federal agencies, including former blockchain executive and newly confirmed Comptroller of the Currency John Gould [I88]. Paxos and other crypto firms, in seeking these charters, may be hoping to reduce their exposure to state regulators — particularly in places like New York — that have continued to police crypto company abuses, and instead operate primarily under more permissive federal oversight.
Only days after the settlement, Paxos joined Ripple, Circle, and other cryptocurrency companies in applying for a national trust bank charter, which would put the firm under federal OCC supervision and more closely integrate it into the traditional financial system.13 Crypto-friendly regulators are being installed at various federal agencies, including former blockchain executive and newly confirmed Comptroller of the Currency John Gould [I88]. Paxos and other crypto firms, in seeking these charters, may be hoping to reduce their exposure to state regulators — particularly in places like New York — that have continued to police crypto company abuses, and instead operate primarily under more permissive federal oversight.
In regulators The New York State Department of Financial Services and stablecoin issuer Paxos have agreed to a $48.5 million settlement after the regulator accused Paxos of insufficient anti-money laundering controls and due diligence failures in its former partnership with Binance to issue the BUSD stablecoin. The NYDFS alleged that Paxos didn’t have a sufficient monitoring program to detect “significant illicit activity occurring at or through Binance”, including transactions from US customers accessing the exchange despite prohibitions, and transactions with sanctioned entities. The NYDFS also claimed that, outside of the Binance partnership, Paxos’ insufficient compliance programs allowed customers to open multiple accounts and engage in potentially illicit coordinated activity, failed to detect “obvious patterns of money laundering”, and poorly defined when to open investigations based on law enforcement requests. $26.5 million of the settlement is a penalty paid to the state, and the remaining $22 million will go to compliance improvements.12
In regulators The New York State Department of Financial Services and stablecoin issuer Paxos have agreed to a $48.5 million settlement after the regulator accused Paxos of insufficient anti-money laundering controls and due diligence failures in its former partnership with Binance to issue the BUSD stablecoin. The NYDFS alleged that Paxos didn’t have a sufficient monitoring program to detect “significant illicit activity occurring at or through Binance”, including transactions from US customers accessing the exchange despite prohibitions, and transactions with sanctioned entities. The NYDFS also claimed that, outside of the Binance partnership, Paxos’ insufficient compliance programs allowed customers to open multiple accounts and engage in potentially illicit coordinated activity, failed to detect “obvious patterns of money laundering”, and poorly defined when to open investigations based on law enforcement requests. $26.5 million of the settlement is a penalty paid to the state, and the remaining $22 million will go to compliance improvements.12
In regulators The New York State Department of Financial Services and stablecoin issuer Paxos have agreed to a $48.5 million settlement after the regulator accused Paxos of insufficient anti-money laundering controls and due diligence failures in its former partnership with Binance to issue the BUSD stablecoin. The NYDFS alleged that Paxos didn’t have a sufficient monitoring program to detect “significant illicit activity occurring at or through Binance”, including transactions from US customers accessing the exchange despite prohibitions, and transactions with sanctioned entities. The NYDFS also claimed that, outside of the Binance partnership, Paxos’ insufficient compliance programs allowed customers to open multiple accounts and engage in potentially illicit coordinated activity, failed to detect “obvious patterns of money laundering”, and poorly defined when to open investigations based on law enforcement requests. $26.5 million of the settlement is a penalty paid to the state, and the remaining $22 million will go to compliance improvements.12
Molly White
@molly0xfff@hachyderm.io replied  ·  activity timestamp 4 days ago

Trump’s nominee for CFTC Chair, Andreessen Horowitz’s Brian Quintenz, is facing scrutiny for emails seeking confidential information from the agency that could present a conflict of interest as a shareholder and board member of the Kalshi prediction market platform.

Crypto’s Winklevoss twins have also been privately pressuring Trump to rescind the nomination, after deciding Quintenz is insufficiently Trump-aligned. They also dislike that he suggested the CFTC should receive more funding if its mandate is expanded to oversee the crypto industry.
Molly White
@molly0xfff@hachyderm.io replied  ·  activity timestamp 4 days ago

Crypto Council director Bo Hines has abruptly resigned, to be replaced by Patrick Witt. Like Hines, Witt’s qualifications seem to mostly involve playing college football and losing elections. Witt has also claimed in the past that he was passed over by the NFL because of a sexual assault accusation.

n 2012, Witt was the subject of a New York Times story after he claimed to have skipped a Rhodes scholarship interview to play in a football game against Harvard, drawing obsequious nationwide profiles for his “apparent choice of team fealty over individual honor”. According to the Times, he chose this story rather than admitting that the Rhodes Trust had rescinded his scholarship candidacy after learning he had been accused by an ex-girlfriend of sexual assault.29 In 2014, he penned an op-ed for the Boston Globe opposing a new sexual harassment policy at Harvard, where he was in his first year of law school. In the op-ed, he claimed the NFL passed him over because of the accusation, adding that he both did not know what the accusation was and that he was innocent of it.c Witt’s Globe op-ed was titled “A sexual harassment policy that nearly ruined my life”.30 I guess he couldn’t have known then that, a decade later, such an accusation would be practically a resume requirement for the Trump administration. c. Witt also claimed in the Globe op-ed that the Times had retracted their story; I could find no evidence of a retraction, and the story remains online. The Times’ public editor, Arthur S. Brisbane, did publish a secondary article questioning the use of anonymous sources in the original story, but wrote, “I’m not in a position to dispute The Times’s finding, although I think the story was handicapped by not having Mr. Witt’s version of the timeline.” (Brisbane also noted t
n 2012, Witt was the subject of a New York Times story after he claimed to have skipped a Rhodes scholarship interview to play in a football game against Harvard, drawing obsequious nationwide profiles for his “apparent choice of team fealty over individual honor”. According to the Times, he chose this story rather than admitting that the Rhodes Trust had rescinded his scholarship candidacy after learning he had been accused by an ex-girlfriend of sexual assault.29 In 2014, he penned an op-ed for the Boston Globe opposing a new sexual harassment policy at Harvard, where he was in his first year of law school. In the op-ed, he claimed the NFL passed him over because of the accusation, adding that he both did not know what the accusation was and that he was innocent of it.c Witt’s Globe op-ed was titled “A sexual harassment policy that nearly ruined my life”.30 I guess he couldn’t have known then that, a decade later, such an accusation would be practically a resume requirement for the Trump administration. c. Witt also claimed in the Globe op-ed that the Times had retracted their story; I could find no evidence of a retraction, and the story remains online. The Times’ public editor, Arthur S. Brisbane, did publish a secondary article questioning the use of anonymous sources in the original story, but wrote, “I’m not in a position to dispute The Times’s finding, although I think the story was handicapped by not having Mr. Witt’s version of the timeline.” (Brisbane also noted t
n 2012, Witt was the subject of a New York Times story after he claimed to have skipped a Rhodes scholarship interview to play in a football game against Harvard, drawing obsequious nationwide profiles for his “apparent choice of team fealty over individual honor”. According to the Times, he chose this story rather than admitting that the Rhodes Trust had rescinded his scholarship candidacy after learning he had been accused by an ex-girlfriend of sexual assault.29 In 2014, he penned an op-ed for the Boston Globe opposing a new sexual harassment policy at Harvard, where he was in his first year of law school. In the op-ed, he claimed the NFL passed him over because of the accusation, adding that he both did not know what the accusation was and that he was innocent of it.c Witt’s Globe op-ed was titled “A sexual harassment policy that nearly ruined my life”.30 I guess he couldn’t have known then that, a decade later, such an accusation would be practically a resume requirement for the Trump administration. c. Witt also claimed in the Globe op-ed that the Times had retracted their story; I could find no evidence of a retraction, and the story remains online. The Times’ public editor, Arthur S. Brisbane, did publish a secondary article questioning the use of anonymous sources in the original story, but wrote, “I’m not in a position to dispute The Times’s finding, although I think the story was handicapped by not having Mr. Witt’s version of the timeline.” (Brisbane also noted t
Bo Hines, former director of the President’s Council of Advisers on Digital Assets, abruptly announced his departure to return to the private sector. He will be replaced by his deputy, Patrick Witt. Like Hines, Witt’s qualifications also seem to involve playing college football and failing to be elected to Congress [I72] — though Witt spent time during the first Trump administration at the Office of Personnel Management, and then on Trump’s legal team fighting to overturn the results of the 2020 election.2728 Witt ran for office in 2022, with an aborted bid for the Republican nomination for Georgia’s 10th Congressional district and then an unsuccessful campaign to become the state’s Insurance and Safety Fire Commissioner. He lost the Republican primary for the latter, despite a Trump endorsement and promises to “keep your insurance from going woke”.27
Bo Hines, former director of the President’s Council of Advisers on Digital Assets, abruptly announced his departure to return to the private sector. He will be replaced by his deputy, Patrick Witt. Like Hines, Witt’s qualifications also seem to involve playing college football and failing to be elected to Congress [I72] — though Witt spent time during the first Trump administration at the Office of Personnel Management, and then on Trump’s legal team fighting to overturn the results of the 2020 election.2728 Witt ran for office in 2022, with an aborted bid for the Republican nomination for Georgia’s 10th Congressional district and then an unsuccessful campaign to become the state’s Insurance and Safety Fire Commissioner. He lost the Republican primary for the latter, despite a Trump endorsement and promises to “keep your insurance from going woke”.27
Bo Hines, former director of the President’s Council of Advisers on Digital Assets, abruptly announced his departure to return to the private sector. He will be replaced by his deputy, Patrick Witt. Like Hines, Witt’s qualifications also seem to involve playing college football and failing to be elected to Congress [I72] — though Witt spent time during the first Trump administration at the Office of Personnel Management, and then on Trump’s legal team fighting to overturn the results of the 2020 election.2728 Witt ran for office in 2022, with an aborted bid for the Republican nomination for Georgia’s 10th Congressional district and then an unsuccessful campaign to become the state’s Insurance and Safety Fire Commissioner. He lost the Republican primary for the latter, despite a Trump endorsement and promises to “keep your insurance from going woke”.27
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