The Next Crypto Market Bull Run Has Hit Another Roadblock As The US Securities And Exchange Commission And Treasury Department Target Two Pillars Of The Crypto Ecosystem, Bored Bow Yacht Club and Bittrex.
The SEC is reportedly investigating Yuga Labs, the company behind BAYCfor potential violations of investor disclosure rules in connection with sales of their non-expendable tokens, while the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) fined crypto exchange Bittrex for violating sanctions.
Yuga Labs has not been sued by the SEC (yet)
The SEC is still in the early stages of its investigation into Yuga Labs. This company launched the successful Bored Ape Yacht Club NFT collection and its associated metaverse items. According to a person familiar with the matter, the issue with the SEC investigation is whether certain NFTs resemble stocks and therefore should follow similar disclosure rules. The federal agency is also investigating the distribution of ApeCoin, a crypto asset launched by Yuga Labs in March 2022, designed to be a spendable asset in the company’s Web3 ecosystem.
“It is well known that legislators and regulators have sought to learn more about the new world of web3. We look forward to partnering with the rest of the industry and regulators to define and shape the burgeoning ecosystem. As a leader in the space, Yuga is committed to fully cooperating with any queries along the way,” said Yuga Labs. Bloomberg.
The SEC investigation cannot lead to a lawsuit.
The Bored Ape Yacht Club is a collection of 10,000 NFTs of algorithmically generated profile images of apes living in the Ethereal blockchain and grants owners membership to an exclusive club. It was released in April 2021 and features celebrity owners like Justin Bieber, Jimmy Fallon, Gwyneth Paltrow and snoop-dog.
Meanwhile, OFAC and FinCEN have issued two separate enforcement actions against crypto exchange, Bittrex. According to a press release from the US Department of the Treasury, Bittrex onboarded clients from US-sanctioned countries through lax customer screening during the registration process. The sanctioned entities then transacted more than $250 million in digital assets between March 2014 and December 2017. Bittrex agreed to pay approximately $24 million to settle civil liability.
Bittrex agreed to pay around $29 million for violating Bank Secrecy Act principles related to money laundering. According to FinCEN, the exchange failed in its responsibility to provide adequate transaction monitoring and failed to address the risks posed by privacy-focused cryptocurrencies traded on its platform. It also did not file any suspicious activity reports between February 2014 and May 2017. FinCEN will credit the $24 million paid to OFAC, which means Bittrex will only pay about $29 million.
Founded in 2013 by three cybersecurity engineers, Bellevue-based Bittrex has never experienced an attack, with the exception of users whose account security had been compromised.
“Since its inception, Bittrex has endeavored to comply with all government requirements diligently and in good faith. [Bittrex] is pleased to have fully resolved this matter,” the company saying the New York Times.
Crackdown by US Treasury and Department of Justice
Even as companies forge new alliances and redeploy capital to survive the crypto bear market, recent enforcement actions may dampen hopes of a market recovery.
In May, the US Department of Justice opened a criminal case against a US citizen for sending $10 million in cryptocurrency to an entity in an OFAC-sanctioned country.
In August 2022, the US Department of the Treasury. forbidden Americans to use Tornado Cash, a cryptocurrency mixer that obscures the Link between the deposited crypto and its source. The move sparked outrage from privacy advocates.
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