{"id":24873,"date":"2023-02-18T23:19:13","date_gmt":"2023-02-18T23:19:13","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=24873"},"modified":"2023-03-18T22:51:14","modified_gmt":"2023-03-18T22:51:14","slug":"crypto-collapse-sec-tightening-crypto-custody-rules-why-you-cant-cash-out-your-busd-binance-and-catherine-coley-sec-charges-terra-luna","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/18\/crypto-collapse-sec-tightening-crypto-custody-rules-why-you-cant-cash-out-your-busd-binance-and-catherine-coley-sec-charges-terra-luna\/","title":{"rendered":"Crypto collapse: SEC tightening crypto custody rules, why you can\u2019t cash out your BUSD, Binance and Catherine Coley, SEC charges Terra-Luna"},"content":{"rendered":"<p><i>By <\/i><b><i>Amy Castor<\/i><\/b><i> and <\/i><b><i>David Gerard<\/i><\/b><\/p>\n<ul>\n<li aria-level=\"1\">Put your fiat currency into our Patreons in confidence \u2014 here\u2019s<a href=\"https:\/\/www.patreon.com\/amycastor\"> Amy\u2019s<\/a>, and here\u2019s<a href=\"https:\/\/www.patreon.com\/davidgerard\/\"> David\u2019s<\/a>.<\/li>\n<li aria-level=\"1\">Our patrons can also get a couple of <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/05\/bitcoin-it-cant-be-that-stupid.png\">\u201cBitcoin: It Can\u2019t Be That Stupid<\/a>\u201d stickers just by messaging one of us and asking.<\/li>\n<li aria-level=\"1\">David has<a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2020\/11\/26\/get-signed-copies-of-libra-shrugged-and-attack-of-the-50-foot-blockchain\/\"> signed author copies of his books<\/a> for sale \u2014 freshly restocked. International posting from the UK is still slightly delayed after the Royal Mail got ransomwared. [<a href=\"https:\/\/www.bbc.co.uk\/news\/business-64324000\"><i>BBC<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.royalmail.com\/international-incident-bulletin\"><i>Royal Mail<\/i><\/a>]<\/li>\n<li aria-level=\"1\">Sign up on<a href=\"https:\/\/amycastor.com\/\"> Amy\u2019s blog<\/a> to see every new post she makes as it goes up, and<a href=\"https:\/\/davidgerard.co.uk\/blockchain\/#byemail\"> click here and enter your email address<\/a> for every new post on David\u2019s blog as it goes up.<\/li>\n<\/ul>\n<p>We\u2019ve been saying for a while now how everyone in crypto is in everyone else\u2019s pockets \u2014 and how that makes the 2022 crypto collapse very like the 2008 financial crisis. In an article lamenting the problem, CoinDesk has provided a helpful diagram! [<a href=\"https:\/\/www.coindesk.com\/policy\/2023\/02\/17\/crypto-has-an-incest-problem\/\"><i>CoinDesk<\/i><\/a>]<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/18\/crypto-collapse-sec-tightening-crypto-custody-rules-why-you-cant-cash-out-your-busd-binance-and-catherine-coley-sec-charges-terra-luna\/coindesk-crypto-hapsburg-family-tree\/\" rel=\"attachment wp-att-24874\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-24874\" src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/coindesk-crypto-hapsburg-family-tree.jpg\" alt=\"\" width=\"1920\" height=\"1080\" srcset=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/coindesk-crypto-hapsburg-family-tree.jpg 1920w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/coindesk-crypto-hapsburg-family-tree-300x169.jpg 300w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/coindesk-crypto-hapsburg-family-tree-1024x576.jpg 1024w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/coindesk-crypto-hapsburg-family-tree-768x432.jpg 768w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/coindesk-crypto-hapsburg-family-tree-1536x864.jpg 1536w\" sizes=\"auto, (max-width: 1920px) 100vw, 1920px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<h3>The SEC wants to change crypto custody rules<\/h3>\n<p>The SEC wants crypto to get with the grownups and operate like real finance. Specifically, the SEC wants to update the \u201c2009 Custody Rule\u201d such that almost any assets that an adviser might hold in a client\u2019s name \u2014 including cryptocurrencies \u2014\u00a0must meet the qualified custodian requirements. [<a href=\"https:\/\/www.sec.gov\/news\/press-release\/2023-30\"><i>Press release<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.sec.gov\/files\/ia-6240-fact-sheet.pdf\"><i>fact sheet<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.sec.gov\/rules\/proposed\/2023\/ia-6240.pdf\"><i>proposed rule<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.ft.com\/content\/72a9f784-5144-4ff0-8914-f52620a81a41\"><i>FT<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.is\/4aCB6\"><i>archive<\/i><\/a>; <a href=\"https:\/\/www.wsj.com\/amp\/articles\/sec-considers-rules-that-could-threaten-crypto-custody-services-89ba4cd5\"><i>WSJ<\/i><\/a>]<\/p>\n<p>If you give your bitcoin to someone else for safekeeping \u2014 or even for trading on your behalf \u2014 they&#8217;ll need to meet the standards to be a \u201cqualified\u201d custodian.<\/p>\n<p>A qualified custodian is a federal or state-chartered bank or savings association, a trust company, a registered broker-dealer, a registered futures commission merchant, or a foreign financial institution. The definition is in 17 CFR \u00a7 275.206(4)-2. [<a href=\"https:\/\/www.law.cornell.edu\/cfr\/text\/17\/275.206(4)-2\"><i>LII<\/i><\/a>]<\/p>\n<p>Qualified custodians need to keep all assets in custody properly segregated into individual accounts per customer. Advisors and qualified custodians need to enter into written agreements. Custodians also need to undergo annual audits, provide account statements, and provide records upon request.<\/p>\n<p>These rules apply even when the assets themselves aren\u2019t securities \u2014 because the rules are about investment funds, which are firmly under SEC jurisdiction.<\/p>\n<p>National banks have been able to custody crypto <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2020\/07\/27\/news-bitcoin-ad-regulation-in-the-uk-coinsquare-settles-with-osc-institutional-investors-fail-to-show-up-nobody-uses-bitcoin\/\">since the OCC allowed it in July 2020.<\/a> This allowed existing custody giants like Fidelity into the crypto custody market. But <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/12\/crypto-collapse-unbanking-crypto-genesis-offers-dcg-shares-to-creditors-binance-suspends-us-dollar-transactions-sec-goes-after-staking\/\">banks are now being actively dissuaded<\/a> from touching crypto in any form.<\/p>\n<p>The new rule uses legal powers granted to the SEC under Dodd-Frank in the wake of the Madoff Ponzi scheme collapsing.<\/p>\n<p>The SEC proposal talks about \u201crecent events in crypto assets markets\u201d \u2014 the failures of Voyager, Celsius, FTX, and others, where customers thought they owned their crypto, but it turns out they did not, and their funds ended up as part of the bankruptcy estate.<\/p>\n<p>Another reason is that crypto is extremely brittle, so it\u2019s hard to custody. When you have a crypto asset, what you have is the cryptographic key to an address on a given blockchain \u2014 that key <i>is<\/i> the crypto. The proposal notes that keys are very hard to custody safely. Transactions are irreversible \u2014 one error or hack and your cryptos are gone. You need to be careful with backups because every backup is also the keys. And every hot wallet is an attack surface.<\/p>\n<p>Custody is big business in crypto. It\u2019s also how crypto has managed to lure in billions in institutional money. As of January 2022, the top five US crypto custody firms were Coinbase ($100 billion in assets in custody), BitGo ($40 billion), Gemini ($30 billion), Kingdom Trust ($12 billion), and NYDIG ($7 billion). Other US firms are on the list but don\u2019t disclose assets in custody. [<a href=\"https:\/\/fintechnews.ch\/blockchain_bitcoin\/top-crypto-custodians\/50950\/\"><i>FintechNewsCH<\/i><\/a>]<\/p>\n<p>Coinbase insists that its Coinbase Custody Trust Company is already a qualified custodian. Though this doesn\u2019t square with cryptos in custody possibly being part of the estate <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/08\/11\/crypto-collapse-coinbases-billion-dollar-bloodbath-hodlnaut-goes-down-celsius-voyager-3ac\/\">if Coinbase went bankrupt<\/a>. But we\u2019re sure that Coinbase Custody will get itself into order as absolutely quickly as possible. [<a href=\"https:\/\/www.coindesk.com\/policy\/2023\/02\/15\/coinbase-anchorage-say-theyll-be-ok-under-sec-custody-proposal-but-risks-may-lurk-for-others\/\"><i>CoinDesk<\/i><\/a>]<\/p>\n<p>The tricky question is what happens with crypto sitting on an exchange for trading, such as at Coinbase, Gemini, or Kraken. Does the exchange have to be a qualified custodian? If it&#8217;s trading assets on behalf of the customer, then it almost certainly would. The <a href=\"https:\/\/amycastor.com\/2022\/12\/18\/crypto-collapse-binance-is-not-so-fine-ftx-delaware-vs-ftx-bahamas-celsius-voyager-gemini-tether\/\">new Canadian rules in the wake of FTX<\/a> require all exchanges to keep customer cryptos segregated in individual accounts at a custodian.<\/p>\n<p>We suspect crypto custody will reach the stage where you deposit cryptos with a custodian and what you trade on an exchange are claims on the crypto in that account, similar to how stock trading works.<\/p>\n<p>In stock trading, all the stocks are owned by the Depository Trust and Clearing Corporation.\u00a0 Your broker owns a claim on that stock from DTCC, and you own a claim on that stock from your broker. This arrangement was put into place precisely so that stockbrokers didn\u2019t have to send around paper certificates all the time just to trade \u2014 which is where crypto is presently stuck at.<\/p>\n<p>You might wonder why you would bother with the blockchain bit. The blockchain was sold as bypassing all these middlemen by trading these bearer assets directly. But it turns out that\u2019s a bad idea, and the middlemen do useful things.<\/p>\n<p>Gary Gensler wrote up the changes to the 2009 Custody Rule and posted a video! It\u2019s a great explainer if you don\u2019t mind the dad jokes. [<a href=\"https:\/\/www.sec.gov\/news\/statement\/gensler-statement-custody-021523\"><i>SEC<\/i><\/a><i>; <\/i><a href=\"https:\/\/twitter.com\/GaryGensler\/status\/1625899563167916032\"><i>Twitter<\/i><\/a>]<\/p>\n<p>SEC Commissioner Mark T. Uyeda writes that this is a blanket ban on crypto as an investment \u2014 \u201cThe proposing release takes great pains to paint a \u2018no-win\u2019 scenario for crypto assets. In other words, an adviser may custody crypto assets at a bank, but banks are cautioned by their regulators not to custody crypto assets.\u201d But he supports the move anyway. [<a href=\"https:\/\/www.sec.gov\/news\/statement\/uyeda-statement-custody-021523\"><i>SEC statement<\/i><\/a>]<\/p>\n<p>Commissioner Hester Peirce doesn\u2019t like a new rule about crypto, of course, and has handwaved various objections. Of the five commissioners, Peirce is the only one who voted against the changes. [<a href=\"https:\/\/www.sec.gov\/news\/statement\/peirce-statement-custody-021523\"><i>Statement<\/i><\/a>]<\/p>\n<p>The new rule won&#8217;t be in place any time soon. The proposal will be published in the Federal Register, there will be a 60-day comment period, and then SEC staff will work on the final version of the rule.<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/18\/crypto-collapse-sec-tightening-crypto-custody-rules-why-you-cant-cash-out-your-busd-binance-and-catherine-coley-sec-charges-terra-luna\/groundskeeper-willie-gensler\/\" rel=\"attachment wp-att-24875\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-24875\" src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/groundskeeper-willie-gensler.jpg\" alt=\"\" width=\"510\" height=\"315\" srcset=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/groundskeeper-willie-gensler.jpg 680w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/groundskeeper-willie-gensler-300x185.jpg 300w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/groundskeeper-willie-gensler-348x215.jpg 348w\" sizes=\"auto, (max-width: 510px) 100vw, 510px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<h3>Binance \u2014 the mystery of Catherine Coley<\/h3>\n<p>After former Binance US CEO <a href=\"https:\/\/amycastor.com\/2021\/07\/13\/binance-fiat-off-ramps-keep-closing-reports-of-frozen-funds-what-happened-to-catherine-coley\/\">Catherine Coley was abruptly replaced in May<\/a> by former Comptroller of the Currency Brian Brooks in April 2021, she vanished. Coley was not heard from in public after her last tweet on April 19, 2021. As recently as last month, crypto outlets were still asking: whatever happened to Catherine? [<a href=\"https:\/\/cointelegraph.com\/news\/former-binance-us-ceo-catherine-coley-is-still-missing-and-no-one-seems-to-be-talking\"><i>Cointelegraph<\/i><\/a>]<\/p>\n<p>Now some clues have surfaced. In the months before her sudden disappearance, Coley had been asking questions about large transfers of money out of Binance US to CZ\u2019s other companies. [<a href=\"https:\/\/www.reuters.com\/technology\/crypto-giant-binance-moved-400-million-us-partner-firm-managed-by-ceo-zhao-2023-02-16\/\"><i>Reuters<\/i><\/a>,<a href=\"https:\/\/archive.is\/llijk\"><i> archive<\/i><\/a>]<\/p>\n<p>Binance has claimed that Binance US is separate from Binance international. This is not the case. CZ drained $400 million from Binance US and sent the funds to his market-making firm Merit Peak via Signature Bank. The money started moving in late 2020. The SEC is also looking into these transactions. [<a href=\"https:\/\/www.wsj.com\/articles\/crypto-giant-binance-expects-to-pay-penalties-to-resolve-u-s-investigations-f1e3c9d2\"><i>WSJ<\/i><\/a><i>, paywall<\/i>]<\/p>\n<p>Nobody is quite sure what that money was for \u2014 but Coley knew something was wrong. She wrote to a Binance finance executive in late 2020 asking for an explanation, calling the transfers &#8220;unexpected&#8221; and saying &#8220;no one mentioned them,&#8221; and asked, &#8220;Where are those funds coming from?&#8221;<\/p>\n<p>We assume Coley just got the hell out of crypto and sees no benefit in talking to the press. We also assume she <i>is<\/i> talking to the authorities.<\/p>\n<h3>BUSD \u2014\u00a0why you can\u2019t cash out<\/h3>\n<p>Paxos is <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/15\/crypto-collapse-binance-usd-shut-down-celsius-insiders-sued-paxos-voyager-ftx\/\">shutting down BUSD.<\/a> Now it has to allow for orderly redemptions of its <s>$16 billion<\/s> $13.3 billion stablecoin. This is creating fresh problems.<\/p>\n<p>Paxos will only redeem the official Ethereum BUSD token. If you have a wrapped BUSD issued by Binance, those are not redeemable.<\/p>\n<p>If you do have Paxos-issued BUSD and can\u2019t pass know-your-customer checks, you can\u2019t redeem them either.<\/p>\n<p>Customers who can\u2019t redeem their Binance BUSD are using them to buy bitcoins or tethers, or whatever liquid coin they can get their hands on. This is why bitcoin is pumping again and is now bouncing around the $24,000 range.<\/p>\n<p>Paxos keeps its backing reserve cash with Silvergate, Signature, State Street, and BMO Harris. All of these banks are feeling the pain of BUSD redemptions. Silvergate already got hit with $8 billion in withdrawals in the panic that followed the FTX implosion and <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/12\/crypto-collapse-unbanking-crypto-genesis-offers-dcg-shares-to-creditors-binance-suspends-us-dollar-transactions-sec-goes-after-staking\/\">had to get bailed out<\/a> to meet withdrawals.<\/p>\n<p>Paxos BUSD\u2019s backing is not fully insured, according to Paxos. \u201cNot all deposits are covered by the FDIC or private insurance, and Paxos may still incur losses in the event of a bank insolvency.\u201d [<a href=\"https:\/\/paxos.com\/2022\/08\/09\/fdic-pass-through-insurance-disclosures\/\"><i>Paxos<\/i><\/a><i>, <a href=\"https:\/\/archive.is\/rW9rl\">archive<\/a><\/i>]<\/p>\n<h3>SEC charges Terraform Labs<\/h3>\n<p>The SEC is finally charging Terraform Labs and Do Kwon with securities fraud. [<a href=\"https:\/\/www.sec.gov\/news\/press-release\/2023-32\"><i>SEC press release<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.sec.gov\/litigation\/complaints\/2023\/comp-pr2023-32.pdf\"><i>complaint<\/i><\/a>]<\/p>\n<p>The SEC alleges that Terraform and Kwon marketed a range of unregistered \u201ccrypto asset securities\u201d as investments to retail customers in the US, lied knowingly and repeatedly in the promotion, lost everyone\u2019s money, and stole the reserve bitcoins at the end.<\/p>\n<p>Luna fits all prongs of the Howey test, so it\u2019s a security. Wrapped luna is a receipt for a security, so it\u2019s also a security. Luna\u2019s 2018 ICO and 2019 bulk sales of luna were obvious offerings of securities. And Kwon pumped luna to retail <i>hard<\/i>.<\/p>\n<p>Terraform\u2019s Mirror Protocol \u201cmAsset\u201d tokenized stocks were security-based swaps, hence under SEC jurisdiction. MIR tokens were promoted by Terraform as the best way to invest in the Mirror Protocol.<\/p>\n<p>UST was a dollar stablecoin \u2014 but from September 2020, Kwon and Terraform heavily promoted it as a \u201cyield-bearing\u201d stablecoin, the ticket to an investment opportunity in the Anchor Protocol, paying 18-20%. About 74% of all UST was in Anchor.<\/p>\n<p>According to the complaint: \u201cMany domestic retail investors purchased UST for the sole purpose of earning a return on the Anchor Protocol developed and maintained by Defendants.\u201d<\/p>\n<p>UST could also be freely converted at any time to or from luna, making it a security in turn.<\/p>\n<p>But Terraform didn\u2019t just break SEC registration rules. Kwon and Terraform knowingly and actively misled investors.<\/p>\n<p>UST\u2019s $1 peg was maintained only with great effort. In May 2021, Terraform got a third-party trading firm \u2014 apparently US-based Jump Capital [<a href=\"https:\/\/www.theblock.co\/post\/212772\/jump-terraform-prop-up-terrausd\"><i>The Block<\/i><\/a>] \u2014 to secretly buy a pile of UST to pump the price. Jump was paid with luna tokens at $0.40 when the market price was over $90, and apparently made $1.28 billion on the deal. Terraform said this showed how UST\/luna would \u201cautomatically self-heal.\u201d<\/p>\n<p>When Anchor couldn\u2019t make its interest payments, it was topped up from the Luna Foundation Guard, the \u201cdecentralized\u201d non-profit behind the collapsed Terra &#8220;ecosystem&#8221; \u2014 run by Kwon.<\/p>\n<p>Terraform falsely claimed that Korean mobile payment app Chai used the Terraform blockchain. Terraform then used this false claim of backing Chai to promote its crypto assets in the US.<\/p>\n<p>In fact, Terraform had access to a server with Chai\u2019s transaction stream, and replicated Chai payments from that stream onto the Terraform blockchain! Until early 2020, Kwon had been on the board of Chai, and Terraform and Chai shared office space.<\/p>\n<p>When all Terraform&#8217;s cryptos crashed in May 2022, Kwon and Terraform took over 10,000 BTC out of Luna Foundation Guard. They&#8217;ve been depositing bitcoins from this pile into a Swiss bank account ever since, and have withdrawn more than $100 million from this account since June 2022.<\/p>\n<p>Many retail investors lost everything. Institutional investors lost billions \u2014 and that marked the end of the 2021 crypto bubble and started the great crypto collapse.<\/p>\n<h3>Voyager \u2014 up in smoke, almost<\/h3>\n<p>Is the Voyager purchase by Binance US going through? <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/15\/crypto-collapse-bitcoin-goes-up-nexo-charged-gbtc-still-wants-to-be-an-etf-crypto-exchanges-struggle-ftx-voyager\/\">The numbers just didn\u2019t add up<\/a>. And CZ said on Twitter that Binance has \u201cpulled back on some potential investments, or bids on bankrupt companies in the US for now\u201d. [<a href=\"https:\/\/twitter.com\/cz_binance\/status\/1626620534963175442\"><i>Twitter<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.is\/0mtyi\"><i>archive<\/i><\/a>]<\/p>\n<p>A spokesperson for Binance US insists the Voyager deal has not been abandoned: \u201cWe want to be clear that Binance.com was not involved in the bidding process, and the Binance US-Voyager deal continues to move forward with all the necessary review processes.\u201d [<a href=\"https:\/\/www.ft.com\/content\/0aa9bee6-559a-46bc-8e72-2a8afe1fe0e4\"><i>FT<\/i><\/a><i>, archive<\/i>]<\/p>\n<h3>FTX \u2014 SBF back in court<\/h3>\n<p>Nishad Singh, former head of engineering at FTX, is nearing a plea deal with prosecutors, \u201caccording to people familiar with the matter.\u201d No other detail as yet. He\u2019ll be the third FTX insider to turn against Sam. [<a href=\"https:\/\/www.ft.com\/content\/a538befe-ef29-4e48-9373-06573e04e336\"><i>FT<\/i><\/a>]<\/p>\n<p>Judge Lewis Kaplan has had to review Sam Bankman-Fried\u2019s bail restrictions for a second time in two weeks, and he\u2019s running out of patience. The judge doesn\u2019t buy that Sam <a href=\"https:\/\/amycastor.com\/2023\/02\/15\/crypto-collapse-binance-usd-shut-down-celsius-insiders-sued-paxos-voyager-ftx\/\">needs a VPN to watch football,<\/a> and we don\u2019t either. He wants the lawyers to work out tighter bail restrictions \u2014 tighter even than the US government has asked for. [<a href=\"https:\/\/edition.cnn.com\/2023\/02\/16\/business\/ftx-bankman-fried-bail-hearing\/index.html\"><i>CNN<\/i><\/a>]<\/p>\n<p>Nicholas Weaver has submitted an amicus letter to Judge Kaplan explaining VPNs. [<a href=\"https:\/\/amyhcastor.files.wordpress.com\/2023\/02\/amicus-letter-in-us-v-sbf-1.pdf\"><i>Amy Castor,<\/i><\/a><i> PDF<\/i>]<\/p>\n<p>The lives of Gary Wang and Sam Bankman-Fried, high school math whizzes. Brotherhood and betrayal! [<a href=\"https:\/\/www.bloomberg.com\/news\/features\/2023-02-16\/sam-bankman-fried-s-old-friend-co-founder-gary-wang-is-key-to-case-against-ftx\"><i>Bloomberg<\/i><\/a>]<\/p>\n<h3>Other good news for bitcoin<\/h3>\n<p>Blockchain.com has a $270 million hole in its accounts from the collapse of Three Arrows Capital and is scrambling to sell off assets to fill the hole, according to multiple sources. Blockchain.com denies everything, and says it\u2019s \u201can asset buyer, not a seller.\u201d [<a href=\"https:\/\/decrypt.co\/121627\/blockchain-com-shopping-assets-to-fill-270m-hole-from-three-arrows-capital-sources\"><i>Decrypt<\/i><\/a>]<\/p>\n<p>Coinbase is about to file yet more detailed numbers with the SEC on how utterly crashed the crypto market is. Coinbase\u2019s 2022 revenue will be less than half of its 2021 revenue. [<a href=\"https:\/\/www.coindesk.com\/business\/2023\/02\/17\/coinbase-investors-prepare-for-another-likely-disappointing-quarter\/\"><i>CoinDesk<\/i><\/a>]<\/p>\n<p>Caitlin Long\u2019s Custodia Bank is suing the Kansas Federal Reserve to get a Fed account, claiming that the Fed does not have discretion about whether or not it grants banks Fed access. [<i><a href=\"https:\/\/www.coindesk.com\/policy\/2023\/02\/17\/custodia-bank-renews-push-for-fed-master-account-after-rejection\/\">CoinDesk<\/a>; <a href=\"https:\/\/www.americanbanker.com\/news\/custodia-amends-fed-lawsuit-alleges-coordinated-effort-to-deny-master-account\">American Banker<\/a><\/i>]<\/p>\n<p>Long tweeted about notifying unspecified authorities last year about unspecified malfeasance on the part of an unspecified collapsed crypto company. <i>Therefore,<\/i> regulators should give Custodia Bank everything it asks for, or they\u2019re <i>shooting the messenger<\/i>. It\u2019s not as if there were a pile of people who were saying this was all trash that was going to explode, but who weren\u2019t also starting a dodgy crypto bank. [<i>Twitter, <\/i><a href=\"https:\/\/archive.is\/rggU5\"><i>archive<\/i><\/a><i>; <\/i><a href=\"https:\/\/caitlin-long.com\/shame-on-washington-dc-for-shooting-a-messenger-who-warned-of-crypto-debacle\/\"><i>blog post<\/i><\/a><i>, <\/i><a href=\"https:\/\/web.archive.org\/web\/20230218183305\/https:\/\/caitlin-long.com\/shame-on-washington-dc-for-shooting-a-messenger-who-warned-of-crypto-debacle\/\"><i>archive<\/i><\/a>]<\/p>\n<p>The FDIC is annoyed at the CEX.io crypto exchange claiming that customers\u2019 deposits are FDIC-insured. This is, of course, not the case. [<a href=\"https:\/\/www.fdic.gov\/news\/press-releases\/2023\/pr23009.html\"><i>FDIC<\/i><\/a>]<\/p>\n<p>The SEC has charged and settled with basketballer Paul Pierce for his part in pumping Ethereum Max, similar to the case last year against <a href=\"https:\/\/amycastor.com\/2022\/10\/05\/the-sec-busts-kim-kardashian-over-ethereummax-pour-encourager-les-autres\/\">Kim Kardashian<\/a>. Pierce is paying a disgorgement of $244,116, prejudgment interest of $15,449, and civil money penalty of $1,150,000. [<a href=\"https:\/\/www.sec.gov\/news\/press-release\/2023-34\"><i>press release<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.sec.gov\/litigation\/admin\/2023\/33-11157.pdf\"><i>complaint<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>New article by Martin Walker: &#8220;Decentralisation is simply a technological veneer over the for-profit organisations that exist in the industry and exercise a high degree of control.&#8221; [<a href=\"https:\/\/regintel-content.thomsonreuters.com\/document\/IB25263B0A6EC11EDA757AEA1C26A23E6\"><i>Thomson-Reuters<\/i><\/a>]<\/p>\n<br><br><div align=\"center\"><p><a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\"><img src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/10\/become_a_patron_button.svg\" alt=\"Become a Patron!\" title=\"Become a Patron!\" width=217 height=51><\/a><br><p style=\"align:center;\" class=\"patreon-badge\"><i>Your subscriptions keep this site going. <a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\">Sign up today!<\/a><\/i><\/p><\/div>","protected":false},"excerpt":{"rendered":"<p>No, no, not Groundskeeper Willie.<\/p>\n","protected":false},"author":1,"featured_media":24875,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[568,3389,3012,1993,2372,3439,3443,288,3440,2949,3438,3136,1515,2060,3345,1652,2872,3441,3444,206,2746,459,3346,3437,1903,2491,33,2946,2697],"class_list":["post-24873","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorised","tag-binance","tag-blockchain-com","tag-busd","tag-caitlin-long","tag-catherine-coley","tag-cex-io","tag-chai","tag-coinbase","tag-custodia","tag-do-kwon","tag-ethereum-max","tag-fdic","tag-federal-reserve","tag-gary-gensler","tag-gary-wang","tag-hester-peirce","tag-jump","tag-lewis-kaplan","tag-mark-t-udeya","tag-martin-walker","tag-merit-peak","tag-nicholas-weaver","tag-nishad-singh","tag-paul-pierce","tag-paxos","tag-sam-bankman-fried","tag-sec","tag-terra","tag-voyager-digital"],"jetpack_featured_media_url":"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/02\/groundskeeper-willie-gensler.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/comments?post=24873"}],"version-history":[{"count":40,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24873\/revisions"}],"predecessor-version":[{"id":24913,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/24873\/revisions\/24913"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media\/24875"}],"wp:attachment":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media?parent=24873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/categories?post=24873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/tags?post=24873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}