Crypto News Headlines (23-Sep-2022)

The U.K. introduced a bill to make it easier for law enforcement agencies to seize, freeze and recover crypto assets when used for criminal activities such as money laundering, drugs and cybercrime, the government said Thursday.

The 250-page Economic Crime and Corporate Transparency bill, first promised in May, was introduced by the Home Office, Department for Business, Energy & Industrial Strategy, Serious Fraud Office and Treasury and covers more than just crypto. It had its first reading in the House of Commons on Thursday, with the second reading scheduled for Oct. 13.

“Domestic and international criminals have for years laundered the proceeds of their crime and corruption by abusing U.K. company structures, and are increasingly using cryptocurrencies,” Graeme Biggar, director general of the National Crime Agency, said in the statement. “These reforms – long awaited and much welcomed – will help us crack down on both.”

According to Chandler Guo, the self-appointed organizer of the recent Ethereum hard fork, Ether (ETH) and the recently airdropped, proof-of-work ETHW will have the same USD value in ten years. Guo argued that the new token, which currently trades at just a fraction of its September 15 high, still has the potential to grow by 100x.

In an interview with News, Guo claimed that the current price of the forked coin is “very cheap,” hence the scope for it to grow by 100x exists. Guo, a former bitcoin and ethereum miner, nonetheless concedes that the forked blockchain has a lot of catching up to do before this hundred-fold growth is achieved. He explained:

Currently, ETH price is high because there are many developers and over 200 different projects running on top of the Ethereum PoS [proof-of-stake] blockchain. On the other hand, there are less than 10 projects on the ETHW.

The U.S. Internal Revenue Service (IRS) has been granted the authority to issue a ‘John Doe’ summons to M.Y. Safra Bank, a court in New York ruled on Thursday. The summons will oblige the bank to produce information about customers who may have failed to report and pay taxes on crypto transactions through prime dealer SFOX.

In its petition in support of the summons, the IRS pointed to “significant tax compliance deficiencies” related to cryptocurrency transactions made through the SFOX platform.

“Taxpayers who transact with cryptocurrency should understand that income and gains from cryptocurrency transactions are taxable,” U.S. Attorney Damian Williams said in a statement, adding that the information sought by the summons “will help to ensure that cryptocurrency owners are following the tax laws.”

The bankruptcy case of beleaguered crypto lending platform Celsius has a new interested party: the Washington State Department of Financial Institutions.

In a motion filed Thursday evening, the state’s Assistant Attorney General Stephen Manning asked Judge Martin Glenn, who is overseeing the case, to admit him on behalf of Washington’s financial regulator.

Securities regulators in Washington, Alabama, Kentucky, New Jersey and Texas began an investigation into Celsius after the company suspended customer redemptions in June.

While the U.S. Securities and Exchange Commission (SEC) has been working with its counterparts to regulate crypto via Washington, D.C., states such as Washington have taken a more active approach in regulation as there’s a growing belief that the Feds are moving too slowly.

The Vermont Department of Financial Regulation perhaps had the strongest words regarding Celsius when it suggested in September that the company’s structure resembled a Ponzi scheme.

“This shows a high level of financial mismanagement and also suggests that, at least at some points in time, yields to existing investors were probably being paid with the assets of new investors,” the filing from Vermont said.

Israeli-based crypto exchange Bits of Gold became the first crypto firm in the country to receive a license from the Capital Markets Authority, according to social media posts from the company on Sunday.

As a result of attaining the license, Bits of Gold will be able to store digital currencies through secured custody in a “Bits of Gold Wallet” they have been working on for some time. It will also start providing a service that enables banks and other financial institutions to connect to its digital asset services.

In a public statement, Bits of Gold said that the license is the next step in its mission to make the world of digital currencies more accessible to the Israeli public “in a simple and secure manner.”

Bankrupt crypto lender Celsius Network appears to be considering a plan to turn its debt into crypto “IOU” (“I Owe You”) tokens.

Celsius filed for Chapter 11 bankruptcy protection in July, a month after halting withdrawals because of a liquidity crisis it blamed on “extreme market conditions.” Subsequent bankruptcy proceedings in the Southern District of New York have revealed the depths of Celsius’ financial troubles: The lender owes 500,000 creditors nearly $5 billion.

Even if Celsius sold all of its assets – including its mysterious, half-finished mining subsidiary, Celsius Mining that Celsius’ executives and bankruptcy lawyers have pinned their hopes on to get out of debt – it would still be left with a $1.2 billion hole in its balance sheet.

On September 22, The Federal Police of Brazil, with the help of the Brazilian tax authority, launched the final stage of Operation Colossus, an investigation with more than four years of history. The organizations executed more than 100 court orders directed at six cryptocurrency exchanges, four forex operators, and arbitrage agents suspected of aiding in money laundering operations.

It is estimated that 130 federal policemen participated in Operation Colossus, delivering two arrest warrants, and 37 search and seizure orders in four states of the country, including Rio de Janeiro, Bahia, Sao Paolo, and Santa Catarina. 28 officers of the Brazilian tax authority were also involved in the effort.

The criminals allegedly used cryptocurrency assets to launder money via a remittance system. According to the press release issued by the Federal Police, close to $391 million were moved during suspicious exchange operations. The Federal Police stated:

Such resources entered and circulated through the official financial system, through shell companies, without economic and financial capacity, and passed through transit accounts until their conversion into cryptoassets that could be used abroad.

The five-day Cardano Vasil hard fork process begins today, which the Cardano Foundation says will improve network performance.

Cardano co-founder Charles Hoskinson has described it as the hardest update the developers have done since the project launched in 2017. 

A hard fork occurs when a network’s code fundamentally changes and requires the creation of a new and separate version of a blockchain. They can be, but aren’t always, contentious.

For example, a hard fork occurred on the Ethereum network after the merge last week. It was an effort to preserve a proof-of-work version of Ethereum, which relies on miners to verify transactions.

GitHub has lifted its ban on the popular crypto mixer, Tornado Cash, after the US Treasury stated last week that its sanctions do not apply to the mixer’s code but its wallet addresses. Therefore, GitHub has restored the Tornado Cash code to the platform.

Tornado Cash Returns To GitHub 

Tornado Cash, a popular crypto mixer, is now back on GitHub, a software development platform. This is coming after GitHub initially banned the crypto mixer following US sanctions.

On Thursday, Preston Van Loon, an Ethereum developer, tweeted that GitHub has partially unbanned Tornado Cash on its platform. Van Loon added that the crypto mixer’s code repositories are back on the platform but in read-only mode.

This means that the software development website has not fully restored functionality for Tornado Cash. However, he noted that this is dome progress following the outright ban by the platform.

A subsidiary of DeFi Technologies, Valour, will debut its new Carbon Neutral Bitcoin Exchange Traded Product (ETP) on the Frankfurt Stock Exchange. Trading of the ETP begins on Sept. 23. 

The company positions its ETP as a “sustainable and climate-friendly” exposure to Bitcoin with a management fee of 1.49%. The alignment with global environmental goals and Environmental, Social and Corporate Governance (ESG) is reportedly achieved through funding certified carbon removal and offset initiatives to neutralize the associated BTC carbon footprint.

To structure the ETP, Valour partnered with Patch — a platform that provides climate action infrastructure and has previously worked with Andreessen Horowitz and other notable institutional investors. The announcement states:

“All carbon emissions linked to the investment will be automatically targeted to achieve carbon neutral output using Patch’s API-based solution, which takes into account various inputs, such as the efficiency of mining equipment, distribution of hash power, and nation level carbon emission data, to estimate the amount of carbon emissions the Valour portfolio has.”