Max Return: On April 27, the Commodity Futures Trading Commission announced that the U.S. District Court for the Western District of Texas entered an order of default judgment and permanent injunction against Cornelius Johannes Steynberg of Stellenbosch, Western Cape, Republic of South Africa. The order requires Steynberg to pay $1,733,838,372 in restitution to defrauded victims and a $1,733,838,372 civil monetary penalty, which is the highest civil monetary penalty ordered in any CFTC case. The CFTC complaint alleged Steynberg, individually and as the CEO of Mirror Trading International Proprietary Limited (MTI), engaged in an international fraudulent multilevel marketing scheme to solicit Bitcoin from members of the public for participation in an unregistered commodity pool MTI operated. It will be interesting to see how much of the $3.5 billion will be actually recovered. https://www.cftc.gov/PressRoom/PressReleases/8696-23
Leaving Las Vegas: On May 2, Coinbase announced the launch of its international derivatives exchange, Coinbase International Exchange, listing Bitcoin and Ether perpetual futures after receiving a license from the Bermuda Monetary Authority. It is not accessible to anyone in the U.S. https://www.coinbase.com/blog/introducing-coinbase-international-exchange
We Are Not Singling You Out, Really: On May 2, the Biden administration formally introduced a proposal for the Digital Asset Mining Energy or DAME excise tax in a blog post on the White House website. Claiming that cryptocurrency mining firms “do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate,” the administration proposes a 30% tax on electricity used in mining. Should Congress amend the Internal Revenue Code, the new tax would be phased in over three years, adding a 10% tax in year 1, 20% tax in year 2 and 30% in year 3 onwards. https://www.whitehouse.gov/cea/written-materials/2023/05/02/cost-of-cryptomining-dame-tax/
Will It Be a “Must Read”?: On May 4, Paul Grewal, Chief Legal Officer of Coinbase announced that the Third Circuit entered a minute order in Coinbase’s petition for a writ of mandamus against U.S. Securities and Exchange Commission (SEC) to provide clear rules directing the SEC to file a response to Coinbase’s petition within 10 days. Stay tuned – this one might get interesting. https://twitter.com/iampaulgrewal/status/1653898889311948800
Includes Everything But the “Y”: On May 5, New York Attorney General Letitia James proposed a bill called The Crypto Regulation, Protection, Transparency, and Oversight Act, or CRPTO Act. Calling her bill the “the strongest and most comprehensive set of regulations on cryptocurrency in the nation,” James seeks to stop conflicts of interest by, among other means, preventing common ownership of crypto issuers, marketplaces, brokers, and investment advisers and requiring independent public audits of crypto exchanges. The proposal also requires crypto platforms to reimburse victims of fraud and boost the power of the New York State Department of Financial Services. The bill will be submitted to the State Senate and Assembly during the 2023 legislative session. https://ag.ny.gov/press-release/2023/attorney-general-james-proposes-nation-leading-regulations-cryptocurrency