{"id":25750,"date":"2023-07-15T23:50:58","date_gmt":"2023-07-15T23:50:58","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=25750"},"modified":"2023-07-31T08:46:06","modified_gmt":"2023-07-31T08:46:06","slug":"crypto-collapse-alex-mashinsky-of-celsius-arrested-ripples-bizarre-xrp-win-gemini-sues-genesis-gisele-bundchen-knew-nothing","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2023\/07\/15\/crypto-collapse-alex-mashinsky-of-celsius-arrested-ripples-bizarre-xrp-win-gemini-sues-genesis-gisele-bundchen-knew-nothing\/","title":{"rendered":"Crypto collapse: Alex Mashinsky of Celsius arrested, Ripple\u2019s bizarre XRP win, Gemini sues Genesis, Gisele B\u00fcndchen knew nothing!"},"content":{"rendered":"<p><em>By <b>Amy Castor<\/b> and <b>David Gerard<\/b><\/em><\/p>\n<ul>\n<li aria-level=\"1\">We need your support to keep these posts coming. <b><i>Send us money!<\/i><\/b> Here\u2019s<a href=\"https:\/\/www.patreon.com\/amycastor\"> Amy\u2019s<\/a> Patreon, and here\u2019s <a href=\"https:\/\/www.patreon.com\/davidgerard\/\">David\u2019s<\/a>. Sign up today!<\/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.<\/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<blockquote><p>\u201cMost of you guys weren\u2019t around for Occupy Wall Street. I was. I was there marching. And so I know exactly what those people I marched with wanted: access to decentralized and permissionless perpetual futures with up to 100x leverage. We carry their legacy.\u201d<\/p><\/blockquote>\n<p style=\"text-align: right;\">\u2014 <a href=\"https:\/\/twitter.com\/GwartyGwart\/status\/1677084682213629953\">Gwart<\/a><\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/07\/15\/crypto-collapse-alex-mashinsky-of-celsius-arrested-ripples-bizarre-xrp-win-gemini-sues-genesis-gisele-bundchen-knew-nothing\/mashinsky-outside-court\/\" rel=\"attachment wp-att-25751\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-25751\" src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/07\/mashinsky-outside-court.jpg\" alt=\"\" width=\"510\" height=\"315\" srcset=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/07\/mashinsky-outside-court.jpg 680w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/07\/mashinsky-outside-court-300x185.jpg 300w, https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/07\/mashinsky-outside-court-348x215.jpg 348w\" sizes=\"auto, (max-width: 510px) 100vw, 510px\" \/><\/a><\/p>\n<p style=\"text-align: center;\"><small><i>Alex Mashinsky photographed outside court on Thursday, July 13<\/i><\/small><\/p>\n<p>&nbsp;<\/p>\n<h3>The Mashinsky Method: mycrimes.epub<\/h3>\n<p>Alex Mashinsky, the former CEO of bankrupt crypto investment company Celsius Network, was arrested at 7 a.m. on Thursday, July 13, in his New York home \u2014 one year to the day after <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/07\/15\/crypto-collapse-celsius-real-liabilities-and-fake-assets-voyager-still-bankrupt-3ac-owns-cryptodickbutt-1462\/\">Celsius filed for bankruptcy<\/a>.<\/p>\n<p>US prosecutors charged Mashinsky with seven counts, including securities fraud and manipulating the market for the CEL token. Roni Cohen-Pavon, Celsius\u2019s former chief revenue officer and an Israeli citizen, was also charged \u2014 but avoided arrest by remaining abroad. [<a href=\"https:\/\/www.justice.gov\/usao-sdny\/pr\/celsius-founder-and-former-chief-revenue-officer-charged-connection-multibillion\"><i>DOJ press release<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.justice.gov\/media\/1305436\/dl?inline\"><i>Statement of facts<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.justice.gov\/media\/1305431\/dl?inline\"><i>Indictment<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.justice.gov\/media\/1305426\/dl?inline\"><i>Non-prosecution agreement<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>At his arraignment in a Manhattan courtroom later on Thursday afternoon, Mashinsky pleaded not guilty to all charges. He was set free on a $40 million bond secured by his Manhattan home and a brokerage account at First Republic. [<a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.601957\/gov.uscourts.nysd.601957.5.0.pdf\"><i>Doc 5<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>The SEC and the CFTC filed civil suits against Mashinsky and Celsius, and the FTC filed against former Celsius executives Daniel Leon and Nuke Goldstein as well. [<a href=\"https:\/\/www.sec.gov\/news\/press-release\/2023-133\"><i>SEC press release<\/i><\/a>; <a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.602046\/gov.uscourts.nysd.602046.1.0_7.pdf\"><i>SEC complaint<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.courtlistener.com\/docket\/67604348\/securities-and-exchange-commission-v-celsius-network-limited\/\"><i>SEC case docket<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.cftc.gov\/PressRoom\/PressReleases\/8749-23\"><i>CFTC press release<\/i><\/a><i>, <\/i><a href=\"https:\/\/www.cftc.gov\/media\/8956\/enfcelsiuscomplaint071323\/download\"><i>CFTC complaint<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.courtlistener.com\/docket\/67604360\/commodity-futures-trading-commission-v-celsius-network-llc\/\"><i>CFTC case docket<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.ftc.gov\/news-events\/news\/press-releases\/2023\/07\/ftc-reaches-settlement-crypto-platform-celsius-network-charges-former-executives-duping-consumers\"><i>FTC press release<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.ftc.gov\/legal-library\/browse\/cases-proceedings\/222-3137-celsius-network-inc-et-al-ftc-v\"><i>FTC case summary<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.ftc.gov\/system\/files\/ftc_gov\/pdf\/2223137celsiusnetworkcomplaint.pdf\"><i>FTC complaint<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.ftc.gov\/system\/files\/ftc_gov\/pdf\/2223137celsiusnetworkorder.pdf\"><i>FTC monetary judgment<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/www.courtlistener.com\/docket\/67604364\/federal-trade-commission-v-celsius-network-inc\/\"><i>FTC case docket<\/i><\/a>]<\/p>\n<p>Celsius settled with all three agencies by promising not to do the bad things again. Celsius has also agreed with the FTC to pay back $4.72 billion in customer funds. (This may just become another unsecured claim in the bankruptcy.)<\/p>\n<p>The November 2022 <a href=\"https:\/\/amycastor.com\/2022\/11\/21\/crypto-collapse-celsiuss-interim-examiner-report\/\">interim report<\/a> and the January 2023 <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/02\/01\/celsius-network-final-report-from-the-examiner-lies-incompetence-and-ponzi-schemes\/\">final report<\/a> of the bankruptcy examiner, Shoba Pillay, set out Celsius and Mashinsky\u2019s lies, incompetence, and Ponzi schemes in detail. Those reports were the raw material for the indictment and the complaints.<\/p>\n<p>The current filings don\u2019t supply any new information that wasn\u2019t in the examiner\u2019s reports \u2014 but if you don\u2019t want to read the several hundred pages of the reports, these documents are a quick pr\u00e9cis of the greatest problems.<\/p>\n<p>All four documents present the same basic facts. If the DOJ and the agencies can\u2019t get Mashinsky for crimes of fraud, they\u2019ll get him for commodities law violations, securities law violations, or consumer deception.<\/p>\n<p>Mashinsky is alleged to have repeatedly lied about <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/12\/08\/celsius-hearing-december-7-custody-and-withhold-accounts-and-a-partial-ruling\/\">Celsius Earn<\/a> and the CEL token, about Celsius\u2019s loans to other companies, about the risks Celsius was taking with its investment strategies (such as DeFi and directional trading), and about the company\u2019s financial health.<\/p>\n<p>Mashinsky\u2019s false statements were much to the consternation of Celsius\u2019 own staff. One executive said to another: \u201cI need your help in making sure he doesn\u2019t continue saying wrong things. This has gotten us into trouble time and time again and it\u2019s not healthy.\u201d<\/p>\n<p>Celsius Earn rewards, which promised yields up to 17% per year, were paid out from incoming customer funds over and above investment earnings \u2014 a Ponzi scheme. Earn was \u201cbasically using user balances to pay user rewards,\u201d as one executive described it.<\/p>\n<p>Celsius pumped the CEL token to increase the dollar value of its treasury, which was full of CEL tokens. This let Celsius claim sufficient assets in reserve to get loans it wouldn\u2019t have been able to otherwise.<\/p>\n<p>Mashinsky also did well selling his personal CEL. He made $42 million by dumping his pumped CEL holdings on retail investors. Cohen-Pavon made $3.6 million doing the same.<\/p>\n<p>Multiple state securities regulators were literally <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/09\/22\/nasaa-nashville-protecting-investors-and-consumers-in-the-age-of-digital-assets\/\">telling us without prompting<\/a> last September that they wanted Mashinsky&#8217;s backside in jail. So we\u2019re slightly surprised none of the states joined in today \u2014 though New York is <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/06\/crypto-collapse-gemini-vs-dcg-new-york-charges-mashinsky-in-celsius-voyager-sale-troubles-silvergate-troubles-wintermute\/\">already suing Mashinsky.<\/a> But we\u2019re guessing that the three agencies and the DOJ simultaneously filing charges is sufficient overkill.<\/p>\n<p>In one chat forum we\u2019re in, small Celsius creditors were delighted to learn of Mashinsky&#8217;s arrest \u2014 hoping it would lead to him coughing up more of their money.<\/p>\n<p>Alex had planned to share his genius investment secrets with the world in his magnum opus, <i>The Mashinsky Method<\/i> \u2014 but after Celsius imploded, Wiley pulled the book before it hit the shelves. Boooo! There must exist text for this book somewhere \u2014 at least an outline and sample chapters. We so want a copy.<\/p>\n<h3>Good, if bizarre, news for XRP<\/h3>\n<p>In January 2013, Ripple launched its XRP token. In December 2020, <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2020\/12\/22\/sec-sues-ripple-labs-claiming-xrp-is-a-security\/\">the SEC sued Ripple<\/a> and its executives Brad Garlinghouse and Christian Larsen, claiming XRP was a security. Ripple, Garlinghouse, and Larsen have been battling this out in court since.<\/p>\n<p>XRP was ostensibly created for cross-border payments. Ripple had many remittance partnerships \u2014 every one of which it <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2020\/02\/29\/news-london-football-exchange-and-perth-glory-ripple-pays-moneygram-to-be-its-friend-libra-not-dead-iota-still-halted-swedens-not-a-cbdc\/\">paid the other companies<\/a> to engage in. But mostly, XRP was traded in the hopes that <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2019\/05\/27\/the-origin-of-number-go-up-in-bitcoin-culture\/\">number go up<\/a>.<\/p>\n<p>Ripple sold a lot of XRP to institutional investors \u2014 hedge funds and venture capitalists \u2014 and the money went right back into Ripple&#8217;s business. Ripple also sold XRP by programmatic sales onto exchanges and paid its employees in XRP.<\/p>\n<p>After three and a half years of legal wrangling, both parties asked the court to just rule on the merits.<\/p>\n<p>On Thursday, Judge Analisa Torres ruled that XRP was an unregistered offering of securities when Ripple sold it to the sophisticated investors \u2014 but that it was <i>not<\/i> a securities offering when Ripple anonymously dumped it directly on exchanges with no disclosure. [<a href=\"https:\/\/amyhcastor.files.wordpress.com\/2023\/07\/sec-v.-ripple-ruling-on-motions-for-summary-judgment.pdf\"><i>Ruling<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>The definition of \u201csecurity\u201d includes a broad range of investments. An \u201cinvestment contract\u201d is a security, and to determine if something is an investment contract, you apply the <a href=\"https:\/\/en.wikipedia.org\/wiki\/SEC_v._W._J._Howey_Co.\">Howey test<\/a>: whether it&#8217;s &#8220;a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.&#8221;<\/p>\n<p>Ripple argued that XRP is not a security under the Howey test because it doesn\u2019t have an actual contract attached to it \u2014 they maintained that this was one of the \u201cessential ingredients.\u201d<\/p>\n<p>Judge Torres disagreed with that claim. She said that an investment contract does not, in fact, require an actual contract. However, she also ruled that in the absence of a contract, XRP did <i>not<\/i> qualify as an investment contract when Ripple programmatically sold it on exchanges.<\/p>\n<p>The judge\u2019s reasoning was that Ripple\u2019s institutional investors received information on the investment. But retail buyers who bought in Ripple\u2019s programmatic sales of XRP did not. So how could Ripple have represented XRP to these buyers as a security? They must not have been buying it in the hope of making money from Ripple\u2019s efforts in particular.<\/p>\n<p>XRP fans threw their hats in the air at the ruling. The price of XRP went up 75% on the news. Coinbase, Kraken, Crypto.com and Bitstamp are re-listing XRP in the US. [<a href=\"https:\/\/fortune.com\/crypto\/2023\/07\/13\/coinbase-kraken-bitstamp-gemini-xrp-relisting-ripple-decision\/\"><i>Fortune<\/i><\/a>]<\/p>\n<p>This is despite the judge not ruling at all on secondary market sales of XRP \u2014 when a non-Ripple XRP holder sells the XRP to someone else, such as on an exchange.<\/p>\n<p>Matt Levine from Bloomberg thinks the ruling is nuts. He makes an analogy with stock in Meta. When you buy Meta stock on an exchange, you are not buying it from Meta, and Meta does not get the money. But it\u2019s still a security!<\/p>\n<p>Levine notes that the judge\u2019s ruling means that <i>institutional<\/i> investors have protection \u2014 but <i>retail<\/i> investors do not. This is completely backwards from the intent of the Securities Act and a century of precedent. [<a href=\"https:\/\/www.bloomberg.com\/opinion\/articles\/2023-07-14\/ripple-is-a-security-and-it-isn-t\"><i>Bloomberg<\/i><\/a>]<\/p>\n<p>Ann Lipton, a law professor at Tulane University, says \u201cthe holding makes no sense.\u201d Lipton goes through everything that\u2019s weird about the decision and notes that it contradicts other tests of whether assets are securities. [<a href=\"https:\/\/lawprofessors.typepad.com\/business_law\/2023\/07\/so-ripple.html\"><i>Typepad<\/i><\/a>]<\/p>\n<p>Preston Byrne thinks the finding will be reversed on appeal \u2014 but in the meantime, this is good for the crypto business. Byrne hopes Congress will come up with special rules for tokens. [<a href=\"https:\/\/prestonbyrne.com\/2023\/07\/13\/ripple-labs-ruling-throws-u-s-crypto-token-regulation-into-disarray\/\"><i>Preston Byrne<\/i><\/a>]<\/p>\n<p>Stephen Palley warns crypto fans: \u201cdon&#8217;t yolo into anything based on that decision.\u201d [<a href=\"https:\/\/twitter.com\/stephendpalley\/status\/1679562623564632069\"><i>Twitter<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.is\/eaR1K\"><i>archive<\/i><\/a>]<\/p>\n<p>Gabriel Shapiro thinks the opinion may be legally controversial, but that it&#8217;s arguably reasonable as a ruling. [<a href=\"https:\/\/twitter.com\/lex_node\/status\/1679839483708014595\"><i>Twitter<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.is\/ycRTZ#selection-559.109-559.113\"><i>archive<\/i><\/a>]<\/p>\n<p>John Reed Stark says: &#8220;IMHO, the decision resides on shaky ground, is likely (and ripe) for appeal, will likely result in reversal and is not necessarily a cause for celebration.&#8221; [<em><a href=\"https:\/\/www.linkedin.com\/pulse\/ripple-decision-cause-crypto-celebration-momentarily-best-stark\/\">LinkedIn<\/a>, <a href=\"https:\/\/web.archive.org\/web\/20230714174110\/https:\/\/www.linkedin.com\/pulse\/ripple-decision-cause-crypto-celebration-momentarily-best-stark\/\">archive<\/a><\/em>]<\/p>\n<p>This is a summary judgment from a district court judge. It isn\u2019t a firm precedent for very many other courts \u2014 but other judges may choose to take it as indicative.<\/p>\n<p>The SEC is going to appeal this for sure. Even Ripple may appeal the bit that went against them.<\/p>\n<p>A trial will still be happening on Brad Garlinghouse and Chris Larsen\u2019s XRP sales and promotions.<\/p>\n<h3>We&#8217;re all trying to find the guys who did this<\/h3>\n<p>After making repeated public accusations on Twitter, Gemini has finally sued Digital Currency Group, and its CEO Barry Silbert personally, for fraud over their failure to return money to customers of the Gemini Earn program. [<a href=\"https:\/\/www.thedailybeast.com\/cameron-and-tyler-winklevoss-sue-barry-silbert-and-genesis-owner-over-crypto-disaster\"><i>Daily Beast<\/i><\/a><i>; <\/i><a href=\"https:\/\/iapps.courts.state.ny.us\/nyscef\/ViewDocument?docIndex=rP3\/gsMsHk4MuvQdcuTcmA==\"><i>complaint<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>Gemini offered a yield product to retail customers called Gemini Earn. This was functionally a feeder fund for Genesis, a subsidiary of DCG. Genesis put a lot of its money into Three Arrows Capital.<\/p>\n<p>When 3AC blew up after <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/05\/10\/terras-stablecoin-does-a-2008-crisis-ust-crashes-and-takes-bitcoin-with-it\/\">Terra-Luna crashed<\/a>, Genesis <a href=\"https:\/\/amycastor.com\/2023\/01\/21\/crypto-collapse-genesis-bankrupt-coindesk-for-sale-bankman-fried-attacks-ftx-lawyers\/\">filed for bankruptcy<\/a> \u2014 and Gemini Earn customers couldn\u2019t withdraw their money, because it was gone.<\/p>\n<p>The story gets even more complicated. In January, <a href=\"https:\/\/amycastor.com\/2023\/01\/13\/sec-sues-genesis-and-gemini-genesis-owes-3-billion-to-creditors\/\">the SEC sued both companies together<\/a> over Gemini Earn, for issuing unregistered securities to retail customers.<\/p>\n<p>In its lawsuit, Gemini claims that Silbert knew that Genesis was utterly insolvent, but kept taking depositors&#8217; money anyway, including funds from Gemini Earn. The suit points to the $1.1 billion IOU DCG issued Genesis to fill the gaping void left by 3AC in 2022.<\/p>\n<p>Data Finnovation says that Genesis seems from the complaint to have sent doctored spreadsheets to Gemini: \u201cThat document looks to be a fraud on its face before we even dig in to context or accounting.\u201d He notes that Genesis may also have admitted insolvency in July 2022. [<a href=\"https:\/\/medium.com\/chainargos\/did-genesis-admit-it-was-insolvent-in-july-2022-716a2be36499\"><i>Medium<\/i><\/a>]<\/p>\n<p>We wrote previously how Gemini should have just <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/01\/25\/crypto-collapse-us-banks-leave-crypto-how-genesis-kept-gemini-hanging-on-ftx-binance-nexo\/\">shut down Gemini Earn immediately after 3AC imploded<\/a>. The Winklevoss twins knew that that was where Genesis was putting their customers\u2019 money. But they turned a blind eye and suffered greater losses as a result.<\/p>\n<h3>Even Binance hates Binance<\/h3>\n<p>Yet more layoffs at Binance as it continues to take on water. The company let go of more than 1,000 more employees in recent weeks. Customer service was heavily affected. We\u2019re guessing that\u2019s because there are far fewer customers. [<a href=\"https:\/\/www.wsj.com\/amp\/articles\/binance-lays-off-over-1-000-employees-d59ff6ad\"><i>WSJ<\/i><\/a>]<\/p>\n<p>The Australian Securities and Investments Commission (ASIC) has raided several Binance Australia locations. This action was reportedly part of an investigation into the local operation\u2019s now-defunct local derivatives business. [<a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-07-05\/binance-australia-offices-searched-by-regulator-as-part-of-derivatives-probe\"><i>Bloomberg<\/i><\/a>]<\/p>\n<p>The wash trading bots have abandoned Binance.US \u2014 Tether has been slipping to $0.70 per USDT. Volume on the exchange is also through the floor. You\u2019d think Binance didn\u2019t care any more. [<a href=\"https:\/\/twitter.com\/ParrotCapital\/status\/1679954784080543746\"><i>Twitter<\/i><\/a><i>, <\/i><a href=\"https:\/\/archive.is\/qxDgJ\"><i>archive<\/i><\/a>]<\/p>\n<h3>Coinbase, the battle continues<\/h3>\n<p><a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/06\/07\/the-sec-sues-coinbase-its-on\/\">The SEC sued Coinbase<\/a> in June. Coinbase <a href=\"https:\/\/amycastor.com\/2023\/07\/06\/crypto-collapse-venture-capital-goes-home-coinbase-tether-backing-ftx-sues-hollywood-vcs-3ac-on-the-beach\/\">responded<\/a> with 177 pages of handwaving and chaff. Now the SEC has responded to some of Coinbase\u2019s arguments, particularly where Coinbase claims the SEC does not have jurisdiction. [<a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.599908\/gov.uscourts.nysd.599908.26.0.pdf\"><i>Doc 26<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>Coinbase also claims that the Howey test doesn\u2019t apply to tokens, using much the same arguments that Ripple did for XRP \u2014 we suspect lawyers for both firms were coordinating.<\/p>\n<p>Coinbase has halted its staking services in California, South Carolina, New Jersey, and Wisconsin after the states sued simultaneously with the SEC. [<em><a href=\"https:\/\/www.coindesk.com\/business\/2023\/07\/14\/coinbase-to-pause-staking-in-california-new-jersey-south-carolina-and-wisconsin\/\">CoinDesk<\/a>; <a href=\"https:\/\/www.coinbase.com\/blog\/why-we-stand-by-staking\">Coinbase<\/a>, <a href=\"https:\/\/archive.is\/D48ix\">archive<\/a><\/em>]<\/p>\n<h3>A spot of regulatory clarity<\/h3>\n<p>The White House has released its 2023 National Cybersecurity Strategy Implementation Plan. The plan includes action to \u201ccarry out disruption operations against the ransomware ecosystem\u201d and to push other countries to adopt the <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2021\/11\/24\/regulatory-clarity-extreme-edition-anti-money-laundering-and-crypto-fatf-ofac-fincen\/\">FATF recommendations<\/a> on cryptocurrency. [<a href=\"https:\/\/www.whitehouse.gov\/wp-content\/uploads\/2023\/07\/National-Cybersecurity-Strategy-Implementation-Plan-WH.gov_.pdf\"><i>White House<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>In the UK, the FCA has told crypto firms to get in line with the rules on crypto promotions by October 8. [<a href=\"https:\/\/www.fca.org.uk\/publication\/correspondence\/letter-to-cryptoasset-firms-financial-promotions-regime.pdf\"><i>FCA<\/i><\/a>]<\/p>\n<p>Singapore has banned crypto lending and staking for retail investors \u2014\u00a0and customer assets will need to be moved into a trust to prevent FTX-style commingling. [<a href=\"https:\/\/www.mas.gov.sg\/news\/media-releases\/2023\/mas-publishes-investor-protection-measures-for-digital-payment-token-services\"><i>MAS<\/i><\/a>]<\/p>\n<p>Dubai has cracked down on BitOasis, one of the most popular crypto exchanges in the middle east, by suspending its conditional license. [<a href=\"https:\/\/www.vara.ae\/en\/regulations\/regulatory-notices\/market-alert-2-bitoasis-technologies-fze-bitoasis\/\"><i>VARA<\/i><\/a><i>, <\/i><a href=\"https:\/\/www.coindesk.com\/policy\/2023\/07\/11\/dubai-regulator-suspends-crypto-exchange-bitoasis-conditional-license\/\"><i>CoinDesk<\/i><\/a>]<\/p>\n<h3>Gisele B\u00fcndchen: Crypto? What\u2019s a crypto?<\/h3>\n<p>The New York Times has run an extended puff piece on how very hard it was for Tom Brady and his ex-wife, model Gisele B\u00fcndchen, to have been so unlucky as to promote the stupendously fraudulent crypto exchange FTX and invest in the company. [<a href=\"https:\/\/www.nytimes.com\/2023\/07\/06\/technology\/tom-brady-crypto-ftx.html\"><i>NYT<\/i><\/a>]<\/p>\n<p>Brady and B\u00fcndchen\u2019s partnership with FTX began in June 2021. Brady was paid $30 million and B\u00fcndchen $18 million, both in FTX equity. B\u00fcndchen assumed the title of \u201chead of environmental and social initiatives\u201d for FTX. [<a href=\"https:\/\/wwd.com\/sustainability\/environment\/gisele-bundchen-stars-in-ftx-tradings-print-campaign-1235165545\/\"><i>WWD<\/i><\/a><i>, 2022<\/i>]<\/p>\n<p>B\u00fcndchen pumped FTX hard in Vogue in April 2022. The article touted her as a \u201cquick study\u201d on the subject of cryptocurrency. \u201cThere\u2019s always that period of disruption, but then the new technologies that seemed so foreign become a part of your life \u2026 There is a real potential for good, a chance to foster positive change and create a level playing field,\u201d\u00a0 B\u00fcndchen said. \u201cOur current system hasn\u2019t worked out great for everyone.\u201d [<a href=\"https:\/\/www.vogue.com\/article\/gisele-bundchen-ftx-cyrpto-philanthropy-campaign-interview\"><i>Vogue<\/i><\/a><i>, 2022<\/i>]<\/p>\n<p>Speaking to Vanity Fair in April 2023, a year later, B\u00fcndchen suddenly knew nothing about crypto. \u201cI was blindsided. I\u2019m no different than everyone else that trusted the hype.\u201d She blames her advisors.<\/p>\n<p>\u201cIt\u2019s just &#8230; terrible,\u201d she said. \u201cI\u2019m so sorry for all of us that this happened, and I just pray that justice gets made.\u201d [<a href=\"https:\/\/www.vanityfair.com\/style\/2023\/03\/gisele-bundchen-cover-story\"><i>Vanity Fair<\/i><\/a><i>, 2023<\/i>]<\/p>\n<p>B\u00fcndchen is named in the ongoing class action against the celebrities who promoted FTX. We wish her a very pleasant justice-getting-made.<\/p>\n<h3>Reggie Fowler: The artful dodger strikes again<\/h3>\n<p>In the <a href=\"https:\/\/amycastor.com\/2023\/06\/05\/reggie-fowler-bitfinex-tether-money-mule-sentenced-to-6-years-in-prison\/\">Reggie Fowler case,<\/a> prosecutors are claiming every asset they can from Fowler to make up the $740 million forfeiture amount, which at this point seems to be a purely aspirational number. The US \u201chas not been able to locate, obtain or collect any assets traceable to the proceeds of the Defendant\u2019s offenses, despite the exercise of due diligence in investigating the assets of the Defendant.&#8221; [<a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.513750\/gov.uscourts.nysd.513750.146.0.pdf\"><i>Doc 146<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.513750\/gov.uscourts.nysd.513750.149.0.pdf\"><i>Doc 149<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.513750\/gov.uscourts.nysd.513750.149.1.pdf\"><i>Doc 149.1<\/i><\/a><i>, PDF; <\/i><a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.513750\/gov.uscourts.nysd.513750.150.0.pdf\"><i>Doc 150<\/i><\/a><i>, PDF<\/i>]<\/p>\n<p>Fowler&#8217;s diabetes is playing up. He was supposed to surrender to custody on July 30 to begin his 75-month sentence, but the judge extended that to August 18, due to his health issues.<\/p>\n<p>Prosecutors are now asking the judge to recall Fowler&#8217;s bail immediately, because he can\u2019t stop doing financial crimes. Reggie asked a tenant to pay July rent on a Texas property he sold in June. [<a href=\"https:\/\/storage.courtlistener.com\/recap\/gov.uscourts.nysd.513750\/gov.uscourts.nysd.513750.147.0.pdf\"><i>Doc 147<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.courtlistener.com\/docket\/15026648\/151\/united-states-v-fowler\/?redirect_to_download=True\"><i>Doc 151<\/i><\/a><i>, PDF<\/i>]<\/p>\n<h3>More good news<\/h3>\n<p>Now that the crypto bubble has popped, there\u2019s no work. Crypto job listings have dropped by up to 80% in big cities, and crypto startups are near-dead. Both job listings and startup launches have closely tracked bitcoin\u2019s price and trading activity. Venture capitalists have <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2023\/06\/03\/crypto-collapse-get-in-loser-were-pivoting-to-ai\/\">pivoted to AI<\/a>. [<a href=\"https:\/\/www.brookings.edu\/articles\/crypto-crashes-and-job-slashes-lessons-for-local-leaders-on-building-an-innovation-ecosystem\/\"><i>Brookings<\/i><\/a>]<\/p>\n<p>Circle is laying people off to \u201cmaintain a strong balance sheet.\u201d The issuance of USDC has fallen by nearly 50% in the last year. [<a href=\"https:\/\/www.coindesk.com\/business\/2023\/07\/12\/circle-cuts-workforce-ends-certain-non-core-activities-will-continue-hiring-globally\/\"><i>CoinDesk<\/i><\/a>]<\/p>\n<p>In the Three Arrows Capital (3AC) bankruptcy, liquidators Teneo want to claw back $1.2 billion from DCG and BlockFi. These transactions occurred <i>between<\/i> the <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2022\/05\/10\/terras-stablecoin-does-a-2008-crisis-ust-crashes-and-takes-bitcoin-with-it\/\">collapse of Terra-Luna<\/a> in May 2022 and 3AC being liquidated in June 2022. [<a href=\"https:\/\/www.coindesk.com\/business\/2023\/07\/07\/three-arrows-capital-liquidator-may-try-to-claw-back-about-12b-from-dcg-blockfi\/\"><i>CoinDesk<\/i><\/a>]<\/p>\n<p>Terraform Labs co-founder Daniel Shin and seven other former Terraform employees had their first hearing in South Korea on their role in the Terra-Luna collapse. Shin wasn\u2019t present at the hearing and his lawyers are asking for more time to prepare. [<a href=\"https:\/\/www.theblock.co\/post\/238561\/seoul-court-holds-first-hearing-for-terra-co-founder-daniel-shin\"><i>The Block<\/i><\/a>]<\/p>\n<p>The US arrested Shakeeb Ahmed for allegedly stealing $9 million from a decentralized exchange. The exchange wasn\u2019t named, but it seems to have been Crema Finance, a DEX on Solana. [<a href=\"https:\/\/www.coindesk.com\/policy\/2023\/07\/11\/us-department-of-justice-arrests-engineer-over-9m-crypto-theft\/\"><i>CoinDesk<\/i><\/a><i>; <\/i><a href=\"https:\/\/www.justice.gov\/usao-sdny\/pr\/former-security-engineer-international-technology-company-arrested-defrauding\"><i>Justice Department press release<\/i><\/a><em>; <a href=\"https:\/\/www.justice.gov\/media\/1304886\/dl?inline\">indictment<\/a>, PDF<\/em>]<\/p>\n<p>Singapore\u2019s Temasek sovereign wealth fund is not into crypto any more. LOL, we bet it isn&#8217;t. Temasek lost $275 million investing in FTX. [<a href=\"https:\/\/www.cnbc.com\/2023\/07\/11\/temasek-says-its-not-looking-to-invest-in-crypto-firms-right-now.html\"><i>CNBC<\/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>The Mashinsky Method: mycrimes.epub<\/p>\n","protected":false},"author":1,"featured_media":25751,"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":[3016,2493,3560,961,138,3561,1481,568,3562,1284,1795,1957,478,916,167,2108,650,288,3566,1853,3274,3564,2031,5,166,2409,1798,652,2890,3563,674,391,1887,128,1370,3421,1269,338,3559,33,3565,3266,117,3263,119,1772,3061,2946,2711,457,745,328,3535,339],"class_list":["post-25750","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorised","tag-3ac","tag-alex-mashinsky","tag-analisa-torres","tag-asic","tag-australia","tag-bac","tag-barry-silbert","tag-binance","tag-bitoasis","tag-bitstamp","tag-blockfi","tag-brad-garlinghouse","tag-california","tag-celsius","tag-cftc","tag-christian-larsen","tag-circle","tag-coinbase","tag-crema-finance","tag-crypto-com","tag-daniel-leon","tag-daniel-shin","tag-dcg","tag-dubai","tag-fca","tag-ftc","tag-ftx","tag-gemini","tag-genesis","tag-gisele-bundchen","tag-justice-department","tag-kraken","tag-mas","tag-matt-levine","tag-new-jersey","tag-nuke-goldstein","tag-reggie-fowler","tag-ripple","tag-roni-cohen-pavon","tag-sec","tag-shakeeb-ahmed","tag-shoba-pillay","tag-singapore","tag-south-carolina","tag-south-korea","tag-temasek","tag-teneo","tag-terra","tag-tom-brady","tag-united-kingdom","tag-united-states","tag-winklevoss-twins","tag-wisconsin","tag-xrp"],"jetpack_featured_media_url":"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2023\/07\/mashinsky-outside-court.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/25750","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=25750"}],"version-history":[{"count":31,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/25750\/revisions"}],"predecessor-version":[{"id":25833,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/25750\/revisions\/25833"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media\/25751"}],"wp:attachment":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media?parent=25750"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/categories?post=25750"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/tags?post=25750"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}