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The California Public Utilities Commission fined Uber $ 750,000 for failing to follow a “zero tolerance” policy on investigating and suspending drivers in response to customer complaints that they were driving while intoxicated.
The fine is the result of a settlement between the commission and Rasier-CA,…
The U.S. Securities and Exchange Commission has published details of a cease and desist order it has taken against Zachary Coburn, the operator of Etherdelta. The decentralized ER20 token exchange was the leading Ethereum DEX during its peak, executing more than 3.6 million orders. According to the SEC, many of those orders were for unregistered security tokens.
Zachary Coburn Settles With SEC
Zachary Coburn is almost $ 400,000 out of pocket after settling with the SEC for having operated Etherdelta as an unlicensed exchange where security tokens were traded. In total, Coburn has been ordered to pay $ 300,000 in disgorgement with an additional $ 88,000 in penalties on top. While the news, published in an SEC document today, has come as a surprise, it has been evident for some time that DEXs operating within the U.S. are going to have to change their business model. IDEX, which has replaced Etherdelta and its Forkdelta spin-off as the most popular platform of its kind, announced earlier this week that it would introduce KYC. It’s also barred residents of New York and a handful of other states from accessing the site.
In a 12-page ruling, the SEC lays bare the facts of the case, citing its report into the collapse of the DAO in which “the Commission advised that a platform that offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, must register with the Commission as a national securities exchange or be exempt from registration.” The document also explains how Coburn operated Etherdelta from July 2016 until November 2017, when he sold it to “foreign buyers.” The report chastises:
Coburn founded Etherdelta, wrote and deployed the Etherdelta smart contract to the Ethereum blockchain, and exercised complete and sole control over Etherdelta’s operations, including over the operations constituting the violations described above. Coburn should have known that his actions would contribute to Etherdelta’s violations.
A Hefty Fine But No Further Action Taken
Despite the severity of the fine Coburn was forced to pay, the founder could have fared worse. The SEC appears to have gone relatively easy on him due to his cooperation and willingness to pay any penalties levied. “The Commission considered remedial acts promptly undertaken by Respondent and cooperation afforded the Commission staff,” acknowledges the report. “Coburn’s efforts facilitated the staff’s investigation involving an emerging technology.”
While Etherdelta was a small exchange in the cryptocurrency landscape even at its peak, the ramifications of the SEC’s actions are sure to resonate far and wide. Exchanges, both centralized and decentralized, will be carefully examining their KYC and token listing policies in light of today’s report to ensure they aren’t next in the line of fire.
What are your thoughts on the SEC’s ruling? Let us know in the comments section below.
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A federal judge in St. Louis has ordered two companies to pay a combined $ 7 million for shipping ingredients containing poultry feathers and other misbranded items to pet food manufacturers. Wilbur-Ellis Feed pleaded guilty in April. Diversified Ingredients Inc. pleaded guilty in July. Both were sentenced Thursday. Federal authorities say…
Dana White says the Nevada State Athletic Commission is talking about keeping Khabib Nurmagomedov’s entire fight purse from UFC 229 — $ 2 MILLION — over the post-fight brawl. “They took his whole purse right now and they’re talking about…
Chinese actress Fan Bingbing has been fined for tax evasion, state media reported Wednesday, the first public pronouncement about the star since she mysteriously disappeared from public view in June.
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This week Dutch authorities revealed to the public that the Netherlands’ largest financial services provider, ING, had violated numerous money laundering laws because they didn’t scrutinize unusual transactions and certain accounts.
Netherlands’ Largest Bank Admits: “ING Clients Used Their Bank Accounts for Money Laundering Practices for Years”
Over the last few weeks, many large financial institutions have been investigated and charged with helping facilitate money laundering. Financial crime prosecutors from the Netherlands have charged the Dutch bank ING with violations, and a $ 900 million dollar fine because the financial institution unwittingly helped facilitate money laundering. The Dutch police explain its “impossible” to really estimate how much money was actually laundered through sketchy accounts and unusually large transactions. However, Margreet Frohberg the lead prosecutor of the case explained in an interview that “hundreds of millions of euros” were illegally transferred.
Moreover, Frohberg explains the money laundering and financing terrorism has been taking place “for years,” and ING did not properly inspect these transfers or examined the accounts to the best of their ability. According to other reports, the money laundering transgressions took place between 2010 and 2016 and some large “unusual” payments stemmed from a firm called Veon (formerly Vimpelcom). Veon is also paying a separate fine of around $ 795 million to the US for money laundering charges as well. ING has admitted to the financial infractions in response this week, stating:
“The shortcomings identified resulted in clients having been able to use their bank accounts for money laundering practices for years”, ING explained.
Too Big to Jail & Too Big to Fail: No Evidence of Individual ING Banks Knowingly Aiding the Money Laundering
The news also follows the recent $ 150 billion dollar money laundering probe aimed at Danske bank, Denmark’s largest financial institution. According to reports, the probe also implicated Deutsche Bank and Citigroup over “allegations of massive money laundering flows from Russia and former Soviet states.”
ING has detailed it will pay the $ 900 million but has explained that no individual ING banking institution was aware of the violations taking place. Dutch prosecutors have also confirmed that they had “found no evidence” of ING staff knowingly aiding the money launderers. However, ING’s Chief Executive Ralph Hamers said ten employees were either dismissed or saw their bonuses taken away.
“We have made unacceptable mistakes,” Hamers explained to the press this week. “This calls for drastic measures, which we have taken,” he added.
2018 is becoming eerily similar to the years following the economic collapse of 2008, where the world saw the banks pay hundreds of billions in fines, but no bankers were jailed. That year the US Department of Justice and Eric Holder promised bankers would be jailed for the economic crisis that plagued the world. Of course, the globe found out later that the bankers and the political nobility were ‘too big to jail.’ Many people believe the current Danske probe that also involves quite a few more financial giants, and this week’s ING money laundering fines clearly show the economic elite have no problems with paying petty fines, because to this very day the banking giants are still ‘too big to fail.’
After responding to the $ 900 million in fines for money laundering charges, the Dutch bank ING also detailed that it does not expect to be charged with fines by the Securities and Exchange Commission (SEC) in the US.
What do you think about ING paying $ 900 million in fines for the money laundering charges? Let us know what you think about this subject in the comment section below.
Images via Pixabay, Shutterstock, and ING bank.
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U.S. Attorney’s Office District of Connecticut has announced Homero Joshua Garza (Josh Garza) has been sentenced to “21 months of imprisonment, followed by three years of supervised release, the first six months of which [Mr. Garza] must spend in home confinement, for his role in his companies’ purported generation and sale of virtual currency.” The so-called stablecoin founder was also ordered to pay restitution of more than $ 9 million. After sentencing, he was released on bond, having been also ordered to report for incarceration at the start of next year.
Josh Garza Is Finally Sentenced, 21 Months in Prison, $ 9 Million Fine
Slightly more than four years ago, nearly a lifetime in the crypto space, Mr. Garza, 33, is alleged, over an eight-month period, to have “through GAW, GAW Miners, Zen Miner, and Zen Cloud, companies he founded and operated, defrauded victims out of money in connection with the procurement of virtual currency on their behalf,” according to a press release from the US Attorney from Connecticut.
Mr. Garza and cohorts were involved in selling miners, access to them, and an alternative cryptocurrency called Paycoin, described as one of the first stablecoins, along with what were known as hashlets. According to the complaint, subsequent indictment, and eventual conviction, a hashlet “entitled an investor to a share of the profits that GAW Miners or Zen Miner would purportedly earn by mining virtual currencies using the computers that were maintained in their data centers. In other words, hashlet customers, or investors, were buying the rights to profit from a slice of the computing power owned by GAW Miners and Zen Miner.”
He was also alleged to have made false promises to potential and real investors, including “that GAW Miners’ parent company purchased a controlling stake in Zen Miner for $ 8 million and that Zen Miner became a division of GAW Miners,” prosecutors maintain. He pushed hashlets, a kind of early cloud mining, which the government claims was fraudulent. His “companies sold more hashlets than was supported by the computing power maintained in their data centers.”
An Early Crypto Ponzi
Then there were the alleged pump and dump schemes. According to authorities, he “also stated that the market value of a single Pay Coin would not fall below $ 20 per unit because [his businesses] had a reserve of $ 100 million that the companies would use to purchase Paycoins to drive up its price. In fact, no such reserve existed.”
All of it turned out to a be a classic Ponzi, whereby Mr. Garza is alleged to have taken money from one company to prop up another, essentially borrowing from newer investors while trying to keep older ones from getting too concerned. “The payments were money that the companies owed the older investors based on the purported mining GAW Miners and Zen Miner had done on the investors’ behalf. Through this scheme,” the government charges, he “defrauded hundreds of individuals around the world of a total of $ 9,182,000. Judge Chatigny ordered [Mr. Garza] to pay restitution in the equivalent amount.”
It was one of the very first US crypto crime cases, involving multiple law enforcement and regulatory agencies from the Federal Bureau of Investigation to the Securities and Exchange Commission (SEC), and the US Department of Justice. Summer of last year, Mr. Garza struck a plea deal with authorities over criminal matters. A suit by the SEC remains ongoing, however, and could very well dampen things for Mr. Garza even further.
Was justice served in the Garza case? Let us know in the comments section below.
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The US Tennis Association fined Serena Williams $ 17,000 Sunday for her outburst in the US Open final as tennis legend Billie Jean King and the National Organization for Women rallied to her defense, the Washington Post reports. The tournament referee’s office said the 23-time Grand Slam champion was being…
Serena Williams was fined $ 17,000 for three code violations during Saturday’s U.S. Open final.
In today’s edition of Bitcoin in Brief we cover a number of stories related to crime from around the cryptosphere: an exchange operator pleads guilty to securities fraud, a scammer is fined over $ 1.9 million for bitcoin and binary options fraud, police get a crypto course and a new type of ransomware attack is discovered.
Exchange Operator Pleads Guilty
Jon E. Montroll, a 37-year-old from Texas which was arrested by the FBI for trying to cover up massive client losses after his exchange was hacked, pleaded guilty to one count of securities fraud and one count of obstruction of justice on Monday. Each charge carries a maximum penalty of 20 years in prison. Montroll operated two bitcoin services, Weexchange which functioned as a bitcoin depository and currency exchange service, and Bitfunder which facilitated the purchase and trading of shares of businesses that listed on the platform. During the summer of 2013, hackers stole approximately 6,000 bitcoins from Weexchange, and, as a result, the two ventures lacked the bitcoin necessary to cover what was owed to users, which he tried to hide.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Montroll deceived his investors and then attempted to deceive the SEC. He repeatedly lied during sworn testimony and misled SEC staff to avoid taking responsibility for the loss of thousands of his customers’ bitcoins.”
Scammer Fined Over $ 1.9 Million
A federal court has ordered Dillon Michael Dean of Colorado, and his UK-registered company The Entrepreneurs Headquarters Limited (TEH), to pay over $ 1.9 million in civil monetary penalties and restitution. A judge found that Dean engaged in a fraudulent scheme to solicit bitcoin from the public, lied that customers’ funds would be invested in products including binary options, and misappropriated clients’ funds. He also failed to register with the CFTC as a Commodity Pool Operator.
According to the findings, from approximately April 2017 to January 18, 2018, Dean solicited at least $ 499,264.04 worth of bitcoin from at least 127 members of the public. He promised to convert this into fiat and invest it on customers’ behalf in a pooled investment, including trading binary options on an online exchange. He lured victims by false claims of trading expertise and promises of high returns in Youtube videos and Facebook posts. But he never actually engaged in trading on behalf of customers, and his purported trading profits were fictitious.
The Israeli police has announced that its cyber investigators have identified a new type of ransom attack targeting online porn viewers. The warning to the public explained that in recent weeks there have been a number of complaints about ransom demands via e-mail. The messages said that the recipient’s computer had malware installed, which activated the camera to film when vising a site displaying sexual content. In order to avoid the distribution of the allegedly filmed videos to all his contacts, the recipient was required to pay a ransom in bitcoin. The message included the recipient’s e-mail and password to give it credibility. However, the investigators found out that the threats were not really backed up by videos and that the e-mail addresses and passwords were taken from old sites that contained hacked e-mail addresses.
London Police’s Crypto Course
A City of London Police spokeswoman has confirmed the launch of a new cryptocurrency course at their Economic Crime Academy. “It is designed to provide delegates with the skills and knowledge required to recognise and manage cryptocurrencies in an investigation. On successful completion of this course, participants will understand how to detect, seize and investigate the use of cryptocurrencies in an investigative context. It will be the first of its kind and has been developed in response to feedback from police officers nationally who felt there wasn’t enough training available in this area.” She also added that a pilot of the course was already conducted, and another is planned for August.
What do you think about today’s news tidbits? Share your thoughts in the comments section below.
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