Welcome to Barmy’s Daily Crypto News – August 24st, 2022
1. Celsius countersues KeyFi, claiming that negligence and dishonesty caused tens of millions of dollars’ worth of losses.
On Tuesday, insolvent cryptocurrency lender Celsius countersued decentralized finance (DeFi) protocol KeyFi and its CEO Jason Stone in the United States Bankruptcy Court, claiming Stone had falsely represented himself as an authority on the subject and that Stone and KeyFi had misappropriated Celsius coins. A few weeks prior, KeyFi had filed a lawsuit against Celsius alleging that the latter had broken a profit-sharing agreement.
KeyFi offered Celsius DeFi strategy and staking services. The defendants are accused in the Celsius lawsuit of stealing millions of dollars’ worth of coins from Celsius wallets. The defendants allegedly purchased nonfungible tokens (NFTs) with Celsius currencies without the company’s consent, transferred them to their personal wallets, and later sold some of them for “seven figure returns (which they pocketed).” Additionally, the defendants are accused of using Celsius coins to invest in other cryptocurrency businesses while concealing their activities by using Tornado Cash, a crypto privacy protocol that was recently outlawed by the US Treasury Department.
On July 7, KeyFi filed a lawsuit against Celsius, stating that Celsius had broken a “handshake agreement” to split earnings following KeyFi’s staking and DeFi’s planning activities. KeyFi stated that Celsius ran a Ponzi scheme and the agreement was worth millions of dollars. When KeyFi sued Celsius, it was purportedly bankrupt and had already stopped accepting withdrawals as of June 13. A week later, Celsius filed for bankruptcy.
2. 64% of US parents who are familiar with blockchains want to teach cryptocurrency in schools
According to a recently released survey by the online learning platform Study.com, 64% of parents and 67% of college graduates agreed that cryptocurrency should be covered in school curricula.
However, there was a difference in opinion between the two groups regarding the blockchain, the Metaverse, and non-fungible tokens (NFTs), with only about 40% of respondents agreeing that these topics should be covered in the curriculum.
According to the survey, parents and college graduates who have invested in cryptocurrencies are likely to make financial contributions to their children’s education. Over three-quarters of parents who hodl cryptocurrencies make an average contribution of $766, while over three-quarters of graduates who have invested in cryptocurrencies spend an average of $1,086 on education.
3. Rep. Emmer requests Sec. Yellen’s explanation of OFAC’s Tornado Cash punishment.
Congressman Tom Emmer of the United States wrote to Janet Yellen, the secretary of the Treasury, on Tuesday in regards to the Treasury Department’s approval of cryptocurrency mixer Tornado Cash on August 8.
Putting Tornado Cash on its Specially Designated Nationals and Blocked Persons List (SDN) in accordance with Executive Order 13694, OFAC, according to Emmer, has for the first time expanded the definition of “person” or “individual” in the EO to include code. He acknowledged that OFAC is not subject to FinCEN laws but cited the distinction made by the Treasury’s Financial Crimes Enforcement Network (FinCEN) between anonymizing services and anonymizing software to explain the problem he found in OFAC’s move.
Emmer continued by inquiring about the whereabouts of money used by law-abiding Tornado Cash users, how those users might get their money back, and how smart contracts “with no agency, corporate or personal” can challenge the OFAC ruling.
4. Cryptocurrencies Should Be Handled the Same as Other Capital Markets, SEC Chairman Says.
Gary Gensler, the head of the U.S. Securities and Exchange Commission (SEC), said that just because cryptocurrencies employ a new technology doesn’t mean they should be treated any differently from other financial markets.
Recent market developments, according to Gensler, demonstrate why it is crucial that crypto businesses abide by the securities laws. Some cryptocurrency lending businesses have recently experienced the freezing of investor accounts or gone out of business. These investors must wait in line at the court when filing for bankruptcy.
No matter the type of financial product—whether it’s an app, loan platform, cryptocurrency exchange, or decentralized finance (defi) platform—the SEC chairman emphasized that it must be safe.
Gensler has addressed what might be anticipated in terms of cryptocurrency regulation from the SEC. He has received harsh criticism for trying to regulate the cryptocurrency market primarily through enforcement. The head of the SEC added that while bitcoin is a commodity, the majority of crypto tokens had features of securities and foresaw a large number of them failing.
5. Account lockouts and cryptocurrency as a security are problems raised by the plaintiff in the Coinbase lawsuit.
On behalf of account and wallet users “who have had their accounts compromised and experienced losses deriving from the illicit transfer of funds,” one user has launched a class-action lawsuit against cryptocurrency exchange Coinbase.
George Kattula, the plaintiff, asked for a jury trial against Coinbase in a filing on August 15 in the U.S. district court for the Northern District of Georgia. He claimed the cryptocurrency exchange did not use procedures intended to keep users’ accounts secure and had “improperly and unreasonably” locked customers out of their accounts during times of peak volatility in the crypto market. Additionally, Kattula claimed that Coinbase need to be listed as a broker or dealer in the US since it facilitates the transfer of assets, in this case, digital currency.
During times of high market volatility, Coinbase has frequently gone offline, which has led some consumers to file lawsuits. A class action lawsuit asserted that the cryptocurrency exchange was operating as an unregistered securities exchange in March 2022 and listed 79 different cryptocurrencies as securities subject to the Securities and Exchange Commission’s regulatory control. The lawsuit was filed in the Southern District Court of New York.
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