Judge finds Ripple Labs liable for $125M penalty in SEC case: Law Decoded

Ripple faces a $125 million civil penalty after a federal judge rules in favor of the SEC, rejecting the agencys $2 billion claim.

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'Unworkable' bill to ban blockchain immutability is introduced in Illinois

Florida-based lawyer Drew Hinkes described the bill as “the most unworkable state law” related to blockchain and cryptocurrency that he has ever seen.

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Binance Talks about Compliance Gaps and Expects to Pay Penalties

<p>Binance, one of the world's largest crypto exchanges, has faced some <a href="https://www.financemagnates.com/terms/c/compliance/" class="terms__main-term" id="569f58ee-534c-44f0-a7cd-f55b0f9a2b2a" target="_blank">compliance</a> "gaps" in the past and expects to pay fines to settle with US regulators, Patrick Hillmann, the company's Chief Strategy Officer (CSO), admitted in a recent interview.</p><p>Binance Awaits Penalties for Past Regulatory Sins</p><p>According to Hillmann, Binance rose rapidly in a decentralized cryptocurrency environment and was developed by software engineers who were far from familiar with the intricate regulatory rules related to anti-money laundering and terrorist financing. He talked about small compliance "gaps" that might occur over the years. However, they have either already been patched or are currently being fixed. Despite this, it expects US regulators to impose financial penalties on the company for past actions.</p><p>Binance is currently working closely with regulators, including the Department of Justice (<a href="https://www.financemagnates.com/tag/doj/" target="_blank" rel="follow">DoJ</a>) and the Commodity Futures Trading Commission (<a href="https://www.financemagnates.com/tag/cftc/" target="_blank" rel="follow">CFTC</a>), to determine the immediate remedies to be taken first. The DoJ is investigating Binance for potential violations of US money laundering laws. Meanwhile, the CFTC is conducting a separate investigation into Binance's offering of crypto derivatives to customers in the US without obtaining the necessary licenses.</p><p>Binance's CSO does not know how high the potential fines could be but admits that talks with regulators are moving in the right direction. However, he makes no secret that the current time for the cryptocurrency industry is complicated, with participants trying to understand how the US wants to approach the regulation of digital assets.</p><p>Watch the recent FMLS22 panel titled: "Regulation Roundup: Everything You Need to Know for 2023"</p><p>SEC Looks at Kraken, Paxos and Binance</p><p>The Securities and Exchange Commission (SEC) has stepped up its scrutiny of the digital asset industry over the past week. As reported by Finance Magnates, one of the largest US exchanges, Kraken, <a href="https://www.financemagnates.com/cryptocurrency/kraken-shuts-staking-as-a-service-in-us-amid-30m-sec-settlement/" target="_blank" rel="follow">has paid a $30 million fine</a> as part of a <a href="https://www.financemagnates.com/terms/s/settlement/" class="terms__secondary-term" id="2dc6d2c7-1626-4ecf-811e-4c1aabbdb280" target="_blank">settlement</a> over its staking program. </p><p>In turn, Paxos, which works closely with Binance, <a href="https://www.financemagnates.com/cryptocurrency/paxos-stops-busd-mint-after-sec-action-binances-cz-calms-funds-are-safe/" target="_blank" rel="follow">halted the mint of the new Binance USD (BUSD) stablecoins</a> after news that the SEC was going to launch an investigation into the issuance of securities without proper authorizations. According to the regulator, BUSD bears the hallmarks of a security.</p><p>News of the suspension of the BUSD mint has caused turmoil in the industry, but <a href=" https://www.financemagnates.com/cryptocurrency/paxos-stops-busd-mint-after-sec-action-binances-cz-calms-funds-are-safe/" target="_blank" rel="follow">Binance's Chief Executive, Changpeng 'CZ' Zhao, calmed clients by saying that funds are safe.</a> However, he acknowledged that if the SEC intervenes in the stablecoin market, it could cause a move towards non-dollar tokens. </p> This article was written by Damian Chmiel at www.financemagnates.com.

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Sparkster Agrees to Pay $35 Million to Harmed Investor Fund

<p>The US Securities and Exchange Commission (SEC) <a href="https://www.sec.gov/news/press-release/2022-167" target="_blank">confirmed</a> yesterday that Sparkster and Sajjad Daya, the company’s CEO, have agreed to pay a total of $35 million into a fund for distribution to harmed investors. The commission issued a cease-and-desist order against the company and its Chief Executive Officer for the unregistered selling of crypto tokens between April 2018 and July 2018.</p><p>The SEC noted that it has charged Ian Balina, a prominent crypto influencer, for failing to disclose the compensation he received from the company for the promotion of its crypto token. In total, Sparkster and Daya received $30 million from 4,000 investors in the US and abroad by selling SPRK tokens during the mentioned period.</p><p>“The resolution with Sparkster and Daya allows the SEC to return a significant amount of money to investors and requires additional measures to protect investors, including the disabling of tokens to prevent their future sale,” said Carolyn M. Welshhans, the Associate Director of the SEC’s Division of Enforcement. “The SEC’s action against Balina further protects investors by seeking to hold accountable an alleged crypto asset promoter for failures to follow the federal securities laws.”</p><p>The SEC’s Strict Measures</p><p>Amid growing interest in emerging assets like cryptocurrencies, the SEC has increased its efforts in the past few years to counter illegal <a href="https://www.financemagnates.com/cryptocurrency/" target="_blank">crypto</a> investment schemes. </p><p>In an interview with CNBC last year, Gary Gensler, the SEC’s Chairman, <a href="https://www.financemagnates.com/cryptocurrency/news/bitcoin-and-other-cryptocurrencies-are-speculative-assets-says-sec-chair/" target="_blank">called</a> BTC and other digital currencies “speculative assets.”</p><p>While providing details of the latest Sparkster case, the commission noted: “The SEC’s order finds that Sparkster and Daya violated the offering registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. Without admitting or denying the SEC’s findings, Sparkster agreed to destroy its remaining tokens. The SEC orders Sparkster to pay $30 million in disgorgement, $4,624,754 in prejudgment interest, and a $500,000 civil penalty. The SEC’s order imposes a $250,000 civil penalty against Daya.”</p> This article was written by Bilal Jafar at www.financemagnates.com.

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Robinhood Crypto to Pay $30 Million Penalty for AML and Consumer Protection Violations

<p>Robinhood’s crypto division has been fined by the New York State Department of Financial Services (<a href="https://www.financemagnates.com/tag/nydfs/" target="_blank">NYDFS</a>). The authority confirmed on Tuesday that it has imposed a penalty worth <a href="https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202208021" target="_blank">$30 million</a> on Robinhood Crypto for ‘significant’ violations related to anti-money laundering, cybersecurity and consumer protection.</p><p>The details shared by the authority show that significant shortcomings were identified in Robinhood Crypto’s compliance programs. The crypto division of the financial services provider also violated certain reporting requirements.</p><p>“As its business grew, Robinhood Crypto failed to invest [in] the proper resources and attention to develop and maintain a culture of compliance, a failure that resulted in significant violations of the Department’s anti-money laundering and cybersecurity regulations,” said Superintendent Harris.</p><p>“All virtual currency companies licensed in New York State are subject to the same anti-money laundering, consumer protection and cybersecurity regulations as traditional financial services companies. DFS will continue to investigate and take action when any licensee violates the law or the Department’s regulations, which are critical to protecting consumers and ensuring the safety and soundness of the institutions,” Harris added.</p><p>In the last 12 months, Robinhood has expanded its presence in the crypto ecosystem significantly. In April 2022, the company signed an <a href="https://www.financemagnates.com/cryptocurrency/robinhood-signs-deal-to-acquire-uk-crypto-app-ziglu/" target="_blank">agreement to acquire Ziglu</a>.</p><p>Violations</p><p>NYDFS highlighted that the company failed to allocate appropriate resources to its compliance program. The authority noted that some weaknesses were found in Robinhood Crypto’s transaction monitoring and cybersecurity programs.</p><p>“The Department found, following a supervisory examination and a subsequent enforcement investigation, that RHC’s BSA/AML compliance program, including its transaction monitoring system, had significant deficiencies. Among other things, RHC’s BSA/AML program was inadequately staffed; failed to timely transition from a manual transaction monitoring system that was inadequate for RHC’s size, customer profiles and transaction volumes; and did not devote sufficient resources to adequately address risks specific to RHC,” NYDFS added.</p> This article was written by Bilal Jafar at www.financemagnates.com.

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Alert for Indian Crypto Owners: Beware of 70% Tax Penalty for Unreported Gains

Indian cryptocurrency investors are now facing a hefty 70% tax penalty for undisclosed gains, according to recent reports. The Indian government’s crackdown on cryptocurrency transactions has left many investors worried about their financial standing. Authorities are now targeting individuals who have not reported their gains from virtual currency trading, imposing a significant penalty on top [...]

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SEC Reduces LBRY’s Fine From $22 Million To $111,000 After Revision of Punishment

The US Securities and Exchange Commission (SEC) has revised the initial punishment against a blockchain-based content provider, LBRY.  It has significantly reduced the penalty from the previous $22 million to a revised amount of approximately $111,000. SEC Revises Initial Penalty On LBRY The decentralized content-sharing platform that utilizes blockchain technology found itself in legal trouble [...]

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