{"id":152612,"date":"2021-01-12T17:13:01","date_gmt":"2021-01-12T14:13:01","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/"},"modified":"2021-01-12T17:13:01","modified_gmt":"2021-01-12T14:13:01","slug":"seven-times-that-us-regulators-stepped-into-crypto-in-2020","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/","title":{"rendered":"# Seven times that US regulators stepped into crypto in 2020"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a28c8b9bb430\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a28c8b9bb430\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/#SEC_vs_Telegram\" >SEC vs. Telegram<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/#OCC_crypto_custody_authorization\" >OCC crypto custody authorization<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/#DoJs_billion-dollar_BTC_seizure\" >DoJ\u2019s billion-dollar BTC seizure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/#DoJ_CFTC_vs_BitMEX\" >DoJ &amp; CFTC vs. BitMEX<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/#FinCEN_v_self-hosted_wallets\" >FinCEN v. self-hosted wallets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/#SEC_vs_XRP\" >SEC vs. XRP<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/seven-times-that-us-regulators-stepped-into-crypto-in-2020\/#Treasury_vs_BitGo\" >Treasury vs. BitGo<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Seven times that US regulators stepped into crypto in 2020 <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDEvNTc4ZDUzMzEtZjkzMC00MzdiLTk4ZjQtMjNjNWE0Mzk4MDFkLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>As digital assets made strides toward mainstream status in 2020, the guardians of the incumbent financial system have been working hard to minimize disruption caused by their integration. In the U.S., regulatory and law enforcement interventions throughout the year have left some projects out of business, empowered traditional players to take a closer look at crypto, and sent some unequivocal messages to cryptocurrency service providers globally. Naturally, the steady legitimization and expansion of the crypto space led regulators to get more involved than ever before. Below are the biggest cases of U.S. watchdog and law enforcement agencies\u2019 involvement that have arguably been the most consequential in shaping the relationship between the crypto industry and state power in 2020.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"SEC_vs_Telegram\"><\/span>SEC vs. Telegram<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>While the Securities and Exchange Commission first squared off with Telegram over its token sale in October 2019, it wasn\u2019t until the summer of 2020 that the landmark case was settled. The Telegram Open Network was initially set to draw hundreds of millions of Telegram\u2019s messenger users into a global blockhain-based financial ecosystem.<\/p>\n<p>Throughout 2018, TON raised some $1.7 billion by selling contracts associated with Gram, the system\u2019s native token, to qualified investors. Mindful of the potential collision with the U.S securities regulator, Telegram bosses followed a framework known as the Simple Agreement for Future Tokens (SAFT). The first stage of the process entailed the sale of contractual rights to buy tokens if and when the network goes live. While those legal rights are sold as securities \u2014 in this case, under exemption Reg. D \u2014 the resultant tokens are, theoretically, not.<\/p>\n<p>In the case of Telegram, the SEC disagreed. The commission\u2019s response was to initiate an emergency action against Telegram and the Telegram Open Network in federal court. The watchdog argued that the two-stage token distribution plan still constituted the sale of unregistered securities, a position that the court ultimately upheld. The resulting settlement included an $18.5-million penalty, as well as an obligation to return more than $1.2 billion to investors. TON never ended up going live, while its struggle with the SEC went down is history as maybe the final act of the ICO era.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"OCC_crypto_custody_authorization\"><\/span>OCC crypto custody authorization<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Office of the Comptroller of the Currency is an independent bureau within the United States Department of the Treasury. The OCC\u2019s job is to charter and supervise national banks and savings associations. U.S. financial institutions that seek to operate nationwide must undergo an extensive review process with the OCC.<\/p>\n<p>On Jul. 22, 2020, the OCC published an<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.occ.gov\/news-issuances\/news-releases\/2020\/nr-occ-2020-98.html\"> interpretive letter<\/a> authorizing federally chartered banks to provide cryptocurrency custody services. The agency has never prohibited organizations operating within its purview to hold digital assets on behalf of their clients, but the sheer lack of guidance and legal clarity held back the expansion of many credit organizations\u2019 services into the digital asset space. To clients interested in their banks providing custody services, those banks could say \u2018it\u2019s just too risky right now.\u2019<\/p>\n<p>The letter equated encryption key escrow service with physical safekeeping of assets.<\/p>\n<p>The regulator\u2019s forward-thinking <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roach to digital currencies could be related to the fact that Brian P. Brooks, Acting Comptroller of the Currency, spent two years as the chief legal officer of Coinbase prior to the present appointment.<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/p>\n<h3><span class=\"ez-toc-section\" id=\"DoJs_billion-dollar_BTC_seizure\"><\/span>DoJ\u2019s billion-dollar BTC seizure<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Armed with a new set of guidelines coming from the office of the Attorney <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">General<\/a>, the U.S. Department of Justice spent much of the fall ramping up enforcement action against crypto-related players. The process culminated in a complaint of forfeiture against a billion dollars worth of Bitcoin and BTC forks in early November. The funds were believed to have been in possession of an unnamed hacker who had previously stolen them from now-defunct online black market Silk Road. In tracking the record-breaking pot of digital wealth, government investigators relied heavily on blockchain analytics firm Chainalysis\u2019 assistance.<\/p>\n<p>As the price of Bitcoin is soaring, in 2021 law enforcement will likely be motivated to invest even more energy and resources in pursuing crypto stolen in previous high-profile heists. Blockchain intelligence firms will surely be there to help.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"DoJ_CFTC_vs_BitMEX\"><\/span>DoJ &amp; CFTC vs. BitMEX<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The fate of crypto derivatives platform BitMEX illustrates what can happen to those who wear out the patience of several U.S. regulators. Incorporated in the Seychelles, BitMEX has long been under suspicion of serving U.S.-based customers, rendering the exchange subject to U.S. anti-money laundering and derivatives trading regulations.<\/p>\n<p>The two-pronged payoff came in early October 2020, when the DoJ brought<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.justice.gov\/usao-sdny\/pr\/founders-and-executives-shore-cryptocurrency-derivatives-exchange-charged-violation\"> criminal charges<\/a> against the platform\u2019s founders for \u201cwillfully failing to establish, implement, and maintain an adequate anti-money laundering (\u201cAML\u201d) program,\u201d while the Commodity Futures Trading Commission filed a civil case, charging the firm with facilitating unregistered trading for United States residents. BitMEX was forced to implement emergency changes to its c-suite and bring in a chief compliance officer.<\/p>\n<p>Perhaps the key takeaway from this story was aptly articulated by the SEC Commissioner Hester Pierce, who called the BitMEX case a clear message to the global crypto industry. She said \u201cwhen there are U.S. users of a product or a service, there\u2019s going to be enforcement of U.S. laws.\u201d<\/p>\n<h3><span class=\"ez-toc-section\" id=\"FinCEN_v_self-hosted_wallets\"><\/span>FinCEN v. self-hosted wallets<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A week before Christmas, the Treasury&#8217;s Financial Crimes Enforcement Network (FinCEN) released a proposal for a long-dreaded<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/public-inspection.federalregister.gov\/2020-28437.pdf\"> regulation<\/a> designed to increase the transparency of transactions in which digital funds <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/trip-and-travel\/\" data-internallinksmanager029f6b8e52c=\"10\" title=\"Trip &amp; Travel\" target=\"_blank\" rel=\"noopener\">travel<\/a> from centralized exchanges to private wallets. If adopted unaltered, the rule will require exchanges to collect personal information about the wallet\u2019s owner from the sender, if the amount transferred exceeds $10,000 in one day, or $3000 in a single transaction.<\/p>\n<p>In addition to promising a lot of extra work for crypto exchanges, the proposed rule can deal yet another blow to the very concept of private, peer-to-peer cryptocurrency transactions. However, some observers<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/ercwl\/status\/1340059610493972496\"> argued<\/a> that it would be enough for those wishing to get back to the territory of pseudonymous transactions to simply transfer the holdings from the wallet on record with FinCEN to a new one.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"SEC_vs_XRP\"><\/span>SEC vs. XRP<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Unlike the Telegram Open Network, which the Securities and Exchange Commission shot down before it could ever take off, Ripple\u2019s XRP token has been traded for almost 7 years and on the day the SEC knocked on the door, was ranked #3 cryptocurrency by market capitalization.<\/p>\n<p>While the constant #1 and #2 of the market cap ranking, Bitcoin and Ether, were consistently absolved in the Commission representatives\u2019 statements on the grounds of these assets\u2019 decentralized nature, there has always been some suspense around the question of whether XRP is a currency or security. A considerable portion of the XRP supply is consolidated at the hands of a single firm, Ripple Labs.<\/p>\n<p>In late December 2020, the SEC struck with a lawsuit claiming that XRP is a security and that the token\u2019s distribution amounts to offering investment contracts. The <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> sent XRP price into a tailspin and prompted a chain of delistings from major exchanges. Although it will take months before the case even reaches trial, it is clear that the SEC\u2019s move will profoundly shift the balance of power in the crypto space.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Treasury_vs_BitGo\"><\/span>Treasury vs. BitGo<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In the final days of 2020, another arm of the Treasury \u2014 the Office of Foreign Asset Controls \u2014 reminded crypto businesses with ties to the U.S. about one more source of regulatory scrutiny: compliance with various sanctions programs. The crypto custodian and the watchdog reached a $98,000 settlement over BitGo\u2019s 183 apparent violations of the Treasury\u2019s sanctions between 2015 and 2019. The firm\u2019s transgression entailed failing to block users residing in sanctioned jurisdictions such as Crimea, Cuba, Iran, Sudan and Syria from using BitGo online wallets.<\/p>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. 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In the U.S., regulatory and law enforcement interventions throughout the year have left some projects&#8230;<\/p>\n","protected":false},"author":1,"featured_media":152613,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2021-01\/578d5331-f930-437b-98f4-23c5a439801d.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74898,75269,71391,55229,70934,67874],"class_list":["post-152612","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-sec","tag-us-government","tag-department-of-justice","tag-law","tag-regulation","tag-united-states"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/152612","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=152612"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/152612\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/152613"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=152612"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=152612"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=152612"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}