FreeCryptoCurrency.Me

The Securities and Exchange Commission takes the lead in defining what a security is, not necessarily legislation, the regulator’s Chair Gary Gensler said. 

After a House Appropriations Committee hearing on Wednesday, Gensler told reporters that existing securities laws “cover most of the activity that’s happening in the crypto markets.” 

“If Congress were to act, though I don’t think we need these authorities, not to undermine inadvertently through definitions of what’s in or out, or in essence allowing for conflicts that we don’t allow,” Gensler said. 

“I think there is one agency — the Securities and Exchange Commission, overseen by two committees — the House Financial Services and Senate Banking, and the courts that define what a security is and not individual crypto exchanges selecting that,” Gensler later said. 

Lawmakers have introduced legislation over the years to regulate crypto. Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., have plans to reintroduce legislation next month that would, in part, assert that the Commodity Futures Trading Commission has control over digital asset commodities, such as bitcoin.  

“I think many of the legislative vehicles would, if adopted, would undermine the securities remit,” Gensler added. 

Silence on Binance

The hearing came days after the CFTC sued the world’s largest crypto exchange, Binance, for unregistered trading activity and highlighted some major revelations in its 74-page complaint. Some of those include Binance possibly knowing that it helped facilitate illegal transactions. 

Gensler declined to answer whether the agency planned to bring its own actions against Binance, while noting that the agency has brought actions against other exchanges. 

Rules already exist

During the House hearing, Gensler also told lawmakers that regulations already exist to govern crypto. “They’re called the securities regulation,” he said. 

Gensler reiterated that most cryptocurrencies are securities and said entities overseas that sell to U.S. investors need to come under the securities law. 

“If you’re touching U.S. investors, selling these tokens to U.S. investors then you come under either the securities laws”  or the laws under the CFTC, Gensler said. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance is by far the largest crypto exchange by volume, and the impact of a lawsuit filed earlier this week by the Commodity Futures Trading Commission against it will surely spread far and wide across the industry for the foreseeable future. While it still may be premature to ponder a world without Binance, analysts have been quick to point out just who’s in line to benefit from the behemoth’s legal predicament. 

U.S.-based exchange Kraken, which has had its own share of legal concerns, could see an immediate upside from Binance’s woes, according to Jeannette Spaulding, a crypto consultant and co-founder of Tokenwise. 

“At the end of the day, a lot of the crypto industry will find a way to transact,” she said in an interview in Miami. “For a lot of people, Binance is their on-ramp because that’s the easiest solution for them, and it’s the cheapest way for them to access the markets. If they no longer have access to Binance, there are a lot of other centralized exchanges, and a lot of other decentralized exchanges, and it just depends on what are people willing to pay to get access to the market.”

The CFTC suit accused Binance and its CEO Changpeng Zhao of unregistered commodities trading in the U.S., but it also alleged the company facilitated transactions by organized crime and terrorist organizations in a move that led many to assume a broader crackdown against the company could be in the works. Binance has called the suit “unexpected and disappointing,” refuting much of it in a statement on its website. 

Binance troubles

Although the sudden exit of a major exchange like Binance may seem unimaginable, it wouldn’t exactly be without precedent — it’s only been several months since former heavyweight FTX collapsed in a matter of days, albeit for completely different reasons. In that case, the industry moved on quickly, despite initial fears, and the price of bitcoin has even surged more than 30% from levels seen before FTX’s troubles first emerged in November. 

“If crypto is one thing, it’s resilient, and there are a lot of platforms that are waiting in the wings and that are competitors right now to Binance that are going to be able to step up and take on the demand,” Spaulding said, noting that Binance’s troubles could have an immediate impact on trading volume and the derivatives market that the exchange currently supports. 

If Binance was forced to scale back, Dubai-based Bybit would benefit the most as the next largest perpetual exchange, according to The Block research director Steven Zheng. Kraken and fellow U.S. exchange Coinbase would be in a position to pick up any remaining scraps, Zheng added, noting that Kraken’s futures product could see some increased volume flow into it.

Kraken didn’t immediately respond to request for comment on its capacity to handle any increased demand in the wake of the Binance lawsuit.

While alterative sources of liquidity could emerge in the event of a disruption to Binance’s operations, Fireblocks Chief Legal and Compliance Officer Jason Allegrante pointed out that “every significant market maker in the world executes trades and sources liquidity” on the exchange. In the long run, he said that new entrants including traditional financial market participants such as Nasdaq could step in to pick up the slack. 

More volatility

“Major exchanges such as Binance provide important on-ramps, price discovery, and liquidity, but we do not believe that the existence of any single exchange is critical to crypto’s long-term success, which will be determined by the utility of truly decentralized technologies and the entrepreneurs who build them,” said North Island Ventures co-founder and managing partner Travis Scher.

Jack McDonald, CEO of custody, trading and administration infrastructure startup PolySign, said that the sudden exit of a larger player from certain jurisdictions would likely create more volatility in the asset class. Opportunities exist, however, for smaller players providing service in spot, futures and derivatives markets. 

“We also expect to see increased opportunities for permissioned DEXs or DeFi platforms, given that many of the systemic failures affecting crypto tend to be centralized players and not platforms managed by code,” he said. 

Hirander Misra, chairman and CEO of GMEX Group, said the current disruptions in the market will lead to a “flight to quality,” pushing investors to seek out offerings with the right governance, control, security and risk management.

“There will be much more decoupling of functions as exchanges should be exchanges and not have market making, brokering and other such functions coupled within them,” he said.

U.S. risk

The CFTC suit, and broader regulatory uncertainty in the U.S., do present risks to companies operating in the country, even those positioned to expand operations if some actors are pushed out of the market.

“It is certainly true that rogue corrupt actors need to be penalized and that American customers need protections,” Avivah Litan, a Gartner web3 analyst, said in an emailed response to questions, adding that the move could stifle blockchain and crypto innovation in the U.S. if clearer and cohesive rules aren’t put in place by lawmakers and regulators. “This latest action continues to validate the fact that the Biden Administration is concertedly trying to squash the cryptocurrency industry in the United States.”

It’s a sentiment that was echoed by Spaulding, who said that jurisdictions including Singapore, the UAE and even some European countries could emerge as the true winners.

“The world is already not waiting for the U.S., which is sad to say, and I don’t want to be saying that, but there are already companies that I’ve had a lot of conversations with, platforms that are saying ‘you know, we’d love to be in the U.S. but it’s not feasible right now,'” she said. “Regulations aren’t inherently bad, but there is a way to enforce them that still can foster innovation. And what we’re doing right now is enforcing them in a way that stifles innovation.”

With additional reporting from Christiana Loureiro, RT Watson and Jeremy Nation.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

“Multiple other current and former directors, officers and employees are facing government inquiries and other claims covered by the D&O Policies. All are looking to the same, limited insurance,” the FTX debtors said. “If the court is inclined to lift the automatic stay … the court should enter relief broad enough to allow the insurers to pay any or all insureds, pursuant to the terms and conditions of the policies, and not just Mr. Bankman-Fried.”

The former CEO made the request in the U.S. Bankruptcy Court for the District of Delaware earlier this month. The FTX debtors are not legally allowed to oppose Bankman-Fried’s request to lift a stay on the insurance policy.

‘One less dollar’

In a separate filing, the Official Committee of Unsecured Creditors, a group of FTX or FTX-affiliated company customers, asked the judge to deny Sam Bankman-Fried’s request to use the insurance policy to reimburse his legal bills.

“Directors and officers insurance policies exist to protect the company and its directors and officers in situations where they make honest decisions in the ordinary course of the business. This is not that case,” the committee said in a court filing on Wednesday. “This court should decline Mr. Bankman-Fried’s request.”

Bankman-Fried and the FTX debtors, which includes the entity West Realm Shires, “share entitlement” to the $10 million in coverage under the insurance plan, according to the committee, which noted that every dollar that essentially goes to Bankman-Fried’s legal costs reduces the amount of money that can be used to repay creditors. 

“For every dollar extended by the insurance carrier to Mr. Bankman-Fried’s defense costs, there is one less dollar to pay the WRS debtors’ covered losses,” the committee said. 

FTX’s statement and the creditors committee’s objection come after reports that Bankman-Fried is funding his criminal legal defense with a gift that Alameda Research, his bankrupt crypto trading firm, made to his father. Bankman-Fried is accused of mishandling FTX customer funds and using the money to prop up Alameda Research and make illegal political donations, among other crimes.

Bankman-Fried pleaded not guilty in the U.S. District Court for the Southern District of New York and is awaiting an October trial. 

The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Revelations that Aiden Pleterski, Canada’s apparently self-coronated 23-year-old ‘Crypto King,’ was allegedly kidnapped and tortured over the course of three days last year made headlines all around the world.

The story of the sordid ordeal appears to be solely based on what the ‘Crypto King’ told his father, Dragan Pleterski, and supposed “mentor” and landlord, real estate entrepreneur Sandeep Gupta, and in turn what they told bankruptcy officials who are trying to uncover what happened to the CAD $41.5 million (USD $30.5 million) investors gave the young crypto trader. What they told those officials only became public knowledge a few days ago.

Media reports were quick to latch onto some of the more stunning details emerging from the 700 plus pages of court documents; colorful specifics like kidnappers allegedy tortured Pleterski and demanded $3 million before releasing him without receiving any money, or that Pleterski funded his lavish lifestyle by spending nearly 40% of the money he raised — a total of $15.9 million — on private jet travel, luxury vacations and a stable of exotic cars including Lamborghinis and McLarens. He also invested less than 2% of the capital he took from investors, the documents said.

But a closer look at the documents, which cover months of examinations and court proceedings, reveals details that raise several questions with regard to the kidnapping claims, the curious nature of his relationship with Gupta and the role his parents played in his alleged operation.

The following details come from court documents filed by the trustee in Pleterski’s bankruptcy proceedings, a process that began months before the alleged kidnapping. 

The kidnapping

To this point it appears the only evidence that exists corroborating Pleterski’s assertion that he was kidnapped in early December is what he told the police and calls he made to Gupta. Pleterski once rented property from Gupta, including a multi-million dollar mansion for $45,000 a month, according to local news reports.  

Gupta said he contacted Toronto police after he began receiving calls from Pleterski asking for help, saying he’d been kidnapped and needed money. Gupta told the bankruptcy examiner he proceeded to speak with Pleterski several times over the course of his alleged kidnapping – with officers present at his house and on the line after the initial phone call – but only once did he remember hearing another voice in the background. The rest of the time when Pleterski called it appeared he was alone, Gupta said.
 
Police have been tight lipped about the alleged crime. Last week, Canadian TV reported that a “spokesperson for Toronto police … could not confirm any information that would identify a victim or witness in relation to the investigation.” The Toronto police declined to comment for this story on multiple occasions. 

In his interview for the bankruptcy proceedings, Gupta also tried to explain why Pleterski called him. “I’m the only person who has the background with financial strength … [I was] trying to help him so that he wouldn’t be harmed or killed,” Gupta said. 
 
Gupta said Pleterski also told him: “I’m kidnapped. I’m with some bad people right now. They need $3 million. I have nobody else to call. My parents don’t have that type of money, and you’re the only person who can help me.” 

Buying time

Although Gupta alerted the police of the kidnapping, he admitted to the bankruptcy officials he never intended to help Pleterski. He said he cooperated with police – at one point they discussed setting up “a little sting meeting” – and tried to buy time by telling Pleterski it would take a while to arrange any money.  

“Obviously, in the back of my head, I’m not paying out any money, but I was trying to — we were trying to play to try to help him so that he doesn’t get harmed,” Gupta said. 
 
Both Gupta and Dragan Pleterski said Aiden Pleterski spoke to the police after being released from his captors, the documents said. The court documents state that police talked to the bankruptcy trustee about the alleged kidnapping, but the department “was unable to share any information.” 
 
Pleterski’s relationship with Gupta is multifaceted. Besides the “mentor” relationship Aiden Pleterski described, and the rental of property, as of last month, Pleterski was still living in one of Gupta’s properties despite not paying rent for nearly eight months. Last year, Pleterski gave his McLaren Senna — a car worth nearly $1 million —  to Gupta’s company as collateral for rental payments. Later, in June, Pleterski transferred ownership of the car to Gupta’s company. 

McLaren Senna supercar SOURCE: McLaren’s website.

Finally, according to court documents, around the time that Pleterski’s bankruptcy proceedings began last year Gupta not only had the McLaren, but was also “in possession of several of Pleterski’s vehicles including … a Lamborghini Huracan Performante, an Audi R8 Spyder, a Ferrari 488 Pista … a Lamborghini Aventador SVJ, and a BMW i8.”

Before Gupta discussed the alleged kidnapping with bankruptcy officials, in December, Pleterski’s father Dragan Pleterski offered his own limited account of what happened.  Unlike Gupta, who said the kidnapping lasted several days, Dragan said his son told him he was held captive “approximately two to three days.”
 
Examiner: Have you spoken with Aiden about the kidnapping? 
 
Dragan Pleterski: Yes. 

Examiner: What did he tell you? 

DP:  He got kidnapped. 

Examiner: Did he tell you anything else? 
 
DP: Do you want me to get into a three and a half hour story? 
 
Dragan explained what his son had told him about the alleged ordeal, which wasn’t much. He said his son told him that he had been held for about three days, during which he was driven around “Southern Ontario” while being tortured. No details of the alleged torture appear in the court documents. Dragan Pleterski said when his son was finally let go he was told “he needed to come up with some money fast, and if he had went to the police, that there would be a lot more trouble.”

‘Call the police’

Later in his examination, when pressed for more details regarding the kidnapping, Dragan did his best to close the door on the subject once and for all.  

“If you really want to know anything about the kidnapping thing, call the police,” he said. “I’m sorry. But that’s a little bit of a touchy subject for me, and that has nothing to do with [the bankruptcy] as far as I’m concerned, so please move on.” 
 
Lawyers for Aiden Pleterski, his parents Dragan and Kathy Pleterski and Sandeep Gupta did not immediately respond to requests for comment. 

Besides the seemingly gruff posture Dragan Pleterski took with bankruptcy officials during his December examination, transcripts from the court documents reveal other curious details.  

The Pleterskis gave their twenty-something son tens of thousands of dollars to invest. Aiden Pleterski deposited more than $3 million in cash into their account and bought them luxury cars, including a Bentley for his father. And, at least according to the bankruptcy documents, the parents never seemed to question their son’s success. 
 
According to Pleterski’s mother, Kathy, her son began trading during the pandemic in 2020, when Pleterski was likely 21 years old. About a year and a half later Pleterski bought his father the Bentley, worth more than $200,000. 

$50,000 and an E-Tron

When Kathy was asked in December if she realized her son had been accepting millions of dollars from potential investors, she said she “did not realize it was in that high of an amount.” The court documents suggest Kathy was not deeply involved in her son’s business. She did, however, accept $50,000 in cash and an Audi E-tron, according to the documents. An Audi E-tron costs about $70,000. 

“She was driving a … Honda minivan that was on the brink of breaking down, so she was in need of a new vehicle,” Aiden Pleterski said during his examination last November, before the alleged kidnapping. 

It appears, Pleterski’s parents were supportive of their son’s endeavors and desire to invest. In total they gave him $58,000 dollars, which was repaid. 

The lines between business and family, however, appear to be blurred. Prior to his alleged exploits, Pleterski’s parents had set up a student account for their son, an account they had access to. It appears Pleterski sometimes used that account for his business dealings and would direct money to other people through it, with his father’s help. 

Examiner: So you said that there were some transfers that were from the student account to one of your accounts for the purpose of directing the funds elsewhere? 

Dragan Pleterski: Yes. 

Examiner: And was that for the purpose of sending that money to investors? 

DP: I don’t know. 

Examiner: What’s your understanding of what that purpose was? 

DP: There was times when he would be, for whatever reason, said he could not get to the bank, and needed to send money somewhere, and asked if I could do it for him, “him” being my son, and believe understanding or thinking I know exactly that the business he was in, I agreed to it. 

Examiner: So you didn’t know who the money was for, you just were following Aiden’s instructions? 

DP: Yes. There were times when the money was to an individual name, which I have no idea who they were; there were times when the money was sent to a company. So it would vary. 

Examiner: And Aiden would tell you essentially what to do? 

DP: Yes. 

Dragan — a retired small business owner who appears to have spent decades installing new kitchens — also said during his interview he couldn’t recall whether he had ever taken money given to his son by investors to then deposit in Pleterksi’s student account. In his examination, however, Pleterski said sometimes he would arrange to have bank drafts from investors delivered to his father, who would then deposit into the student account. 

While Dragan didn’t back up his son’s claims, he does recall receiving money from the student account he then used to buy a new home in Indiana. 

Screenshot of post from Pleterski’s Instagram when in the Bahamas.

Pending legal issues

For now it appears there is no criminal investigation into Pleterski’s alleged “Ponzi” scheme. When Toronto’s police department declined to comment for this story they didn’t confirm or deny whether there is an ongoing criminal investigation of any nature related to Pleterski. 

On the criminal front, Tanya Walker, one of the lawyers who sued Pleterski for misusing more than $4.5 million of her client Sacha Singh’s money, said perhaps those allegedly burned by the “Crypto King” aren’t eager to press charges. 

“If you put yourself in the investors’ shoes I think your main concern is, can you give me my money back?” she said in an interview. “I can also see that if someone hasn’t paid you your money back, that person being imprisoned might not help you get your money back any quicker.” Walker’s lawsuit is paused, she said, while the bankruptcy proceeds. 

Walker also said that, while as a commercial litigator criminal law is not within her purview, news reports declaring Pleterski had been kidnapped didn’t strike her as odd.  

“Given the amount of investors that invested funds with [Pleterski],” she said. “I’m not surprised that there is the belief that someone could have taken matters into their own hands and kidnapped him.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.