Sebastian Sinclair

Binance and its CEO, Changpeng Zhao, have been slapped with a class-action lawsuit, accusing them of unfair competition and violations of Security Exchange Commission (SEC) laws.&nbsp;



The complaint, led by plaintiff Nir Lahav, alleges Binance&#8217;s actions were aimed at monopolizing the crypto market by intentionally harming competing trading platforms operated by FTX entities.



Filed in the US Northern District Court of California, the <a href="https://storage.courtlistener.com/recap/gov.uscourts.cand.418891/gov.uscourts.cand.418891.1.0.pdf">lawsuit</a> pinpoints a series of actions that began with a social media post from Zhao on Nov. 6, last year. 



At the time, Zhao announced the liquidation of Binance&#8217;s remaining holdings of FTX Token (FTT), a utility token used for reducing trading fees across the FTX exchange.



The move came a day after Binance had already allegedly sold approximately $530 million worth of FTT, triggering a 14% decline in the token&#8217;s price over 24 hours.



A spokesperson for Binance told Blockworks &#8220;the case is without merit and we will vigorously defend ourselves.” The SEC declined to comment.



Then, days after the liquidation, Zhao <a href="https://x.com/cz_binance/status/1590013613586411520?s=20">revealed via X</a>, formerly Twitter, Binance had signed a non-binding letter of intent to fully acquire FTX.com, only to retract the statement shortly afterward.&nbsp;



According to the complaint, these actions led to the swift collapse and bankruptcy of FTX entities, resulting in financial losses extending into the billions for its customers. Lahav claims to have incurred losses as a result of transactions made on the FTX trading platforms prior to their collapse.&nbsp;



The CEO of FTX, Sam Bankman-Fried, had publicly advocated for regulatory efforts in the crypto sector, an approach the lawsuit suggests Binance found unfavorable.&nbsp;



Both Binance and FTX entities have been under <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">SEC investigation</a> for alleged violations of federal securities laws.&nbsp;



Bankman-Fried is staring down a lifelong sentence for fraud and money laundering charges, with his trial expected to commence on Tuesday. Zhao has <a href="https://www.forbes.com/sites/digital-assets/2023/03/06/binance-claims-innocence-while-not-rebutting-us-senators-concerns/?sh=2dce4af74691">publicly maintained</a> his innocence, claiming regulators in the US are taking a heavy-handed approach in policing the budding sector.



Originally established in Shanghai in 2017, Binance subsequently relocated to Tokyo and later to Malta following a country-wide crackdown in China that made it untenable for the exchange to operate.



Although its holding company is situated in the Cayman Islands, <a href="https://www.reuters.com/technology/binance-worlds-top-crypto-exchange-center-us-investigations-2023-03-27/">Binance maintains</a> that it lacks a formal headquarters and has refrained from disclosing the primary location of its Binance.com exchange.



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Binance hit with class-action lawsuit over alleged market manipulation

Katherine Ross

A class action complaint against Uniswap was tossed on Tuesday, Aug. 29 after the judge found that some of the claims were “devoid of factual support.”



Judge Katherine Polk Failla oversaw the case — she is also overseeing the US Securities and Exchange Commission’s case against Coinbase — and issued the ruling on the dismissal. 



“Due to the Protocol’s decentralized nature, the identities of the Scam Token issuers are basically unknown and unknowable, leaving Plaintiffs with an identifiable injury but no identifiable defendant,” the judge wrote. 



Read more: <a href="http://blockworks.co/news/sec-sues-coinbase">SEC sues Coinbase for alleged securities violations</a>



She added that the plaintiffs launched the suit “hoping that this Court might overlook the fact that the current state of cryptocurrency regulation leaves them without recourse.” But that does not allow them to blame <a href="https://blockworks.co/tag/uniswap">Uniswap</a> for their injury.&nbsp;



The <a href="https://blockworks.co/news/crypto-exchange-uniswap-hit-with-class-action-lawsuit-alleging-wrongdoing">original complaint filed last year</a> alleged that Uniswap, founder Hayden Adams, <a href="https://blockworks.co/tag/andreessen-horowitz">Andreessen Horowitz</a>, and <a href="https://blockworks.co/tag/paradigm">Paradigm</a> were responsible for “rampant fraud” on the exchange, and also pushed for Uniswap to register with the Financial Industry Regulatory Authority.&nbsp;



Furthermore, plaintiffs also alleged that Uniswap “offered and sold unregistered securities.”



Failla said that due to the regulatory landscape and the unknowns that currently exist — meaning, despite the SEC’s various lawsuits and claims that certain crypto assets are securities — there has yet to be a “definitive determination” on whether certain crypto assets are commodities, securities, etc.&nbsp;



The Court “concludes that Plaintiffs’ concerns” around federal securities laws “are better addressed to Congress than to this Court.”



Despite claims that Uniswap is “run as a for-profit business,” Failla said that there is no centralized ownership structure.



“The Court finds that the smart contracts here were themselves able to be carried out lawfully, as with the exchange of crypto commodities ETH and Bitcoin,” the ruling said.&nbsp;



The defendants, in a move to dismiss the suit, compared the plaintiff’s claims to holding a “developer of self-driving cars liable for a third-party’s use of the car to commit a traffic violation or rob a bank.” The Court noted that the argument held merit, saying that the individual who committed the crime was in the wrong, not the car company.



Uniswap’s chief legal officer Marvin Ammori took to X, formerly Twitter, to praise the win, saying that the Court found that the “Uniswap protocol has primarily lawful use &amp; protocol devs aren’t liable when others misuse it. The trend in courts is obvious.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Another huge victory for the crypto world &amp; software devs. SDNY court tossed out a class action against us, deciding that the “self-driving” Uniswap protocol has primarily *lawful* use &amp; protocol devs aren’t liable when others misuse it. The trend in courts is obvious. <a href="https://t.co/nrUyJlFhdB">pic.twitter.com/nrUyJlFhdB</a>&mdash; Marvin Ammori (@ammori) <a href="https://twitter.com/ammori/status/1696906597962776869?ref_src=twsrc%5Etfw">August 30, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Failla goes on to compare the suit to one “attempting to hold an application like Venmo or Zelle liable for a drug deal that used the platform to facilitate a fund transfer.” The platform is not at fault, but rather whoever was responsible for the “Scam Token.”



While the <a href="https://blockworks.co/tag/sec">SEC</a> is still early in its approach to DeFi, the court notes, the complaints alleged by the plaintiffs are not applicable until there’s a framework for liability. It dismissed not only the federal claims, but the state claims as well.



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Court sides with Uniswap over class action suit

A federal court in New York has allowed a class action lawsuit to proceed against crypto mining firm Stronghold Digital, over allegations the company misled investors in its initial public offering (IPO).



Lead plaintiff Mark Winter alleges Stronghold&#8217;s registration statement and prospectus contained materially false and misleading information about the company&#8217;s mining operations. That included its ability to generate revenue, according to a court order filed Thursday.



The lawsuit claims Stronghold misled investors about a certain supplier&#8217;s contract failure and the performance of their bitcoin miners, violating sections of the US Securities Act.



Specifically, Winter alleges Stronghold overstated its hash rate, which is a measure of the computing power of its mining equipment, while also understating its costs of production.



As a result of the alleged misrepresentations, plaintiffs argue they suffered damages when they purchased Stronghold stock at an artificially inflated price.&nbsp;



Stronghold first <a href="https://blockworks.co/news/bitcoin-focused-stronghold-digital-mining-files-for-100m-ipo">filed its IPO</a> with the SEC in July 2021 before going public via the Nasdaq stock exchange three months later. Stronghold was initially listed at $26.50 per share under the ticker $SDIG, marking a <a href="https://blockworks.co/news/stronghold-digital-mining-ipo-opens-55-8-above-expected-stock-price">55% increase</a> over the expected range of $16 to $18 per share.&nbsp;



SDIG was up more than 10% on the day to $8.08. The stock is up more than 87% year-to-date alongside most other competitors, though remains down more than 98% from its 2021 peak of $357, exchange data shows.



<h2 class="wp-block-heading">Stronghold’s defense</h2>



The bitcoin miner, along with its key executives, filed a motion to dismiss the lawsuit in December of last year.&nbsp;



“This entire case is premised on the illogical notion that a supplier’s failure to fulfill a contract with a company — subsequent to that company disclosing the risk of that very issue —&nbsp; somehow renders those disclosures materially false and misleading,” the company said in its December motion.



Stronghold acknowledged on Nov. 8, 2021, that it wouldn&#8217;t be able to obtain supplier MinerVa miners in line with the delivery schedule. This was followed by an earnings call on Nov. 30, where the company disclosed it had only 240 MV7 miners on hand but expressed it would receive all 15,000 miners within the first quarter of the following year.&nbsp;



The severity of the delivery problems and the discrepancy in numbers wasn&#8217;t fully revealed until March 2022, according to the filing Thursday.



“Because plaintiffs have identified at least one actionable misstatement or omission in the offering materials, the complaint survives the motion to dismiss,” Judge Ronnie Abrams wrote in the document.



Stronghold did not immediately return a request for comment.



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Stronghold Digital class action to proceed following court approval

Shalini Nagarajan

“Shark Tank” investor <a href="https://blockworks.co/tag/mark-cuban">Mark Cuban</a> filed a motion arguing the Voyager class-action lawsuit in which he was accused of promoting a “Ponzi scheme” should be moved from Florida to Texas.



The transfer of venue declarations were made by Sigmund Wissner-Gross, a partner at Brown Rudnick and counsel to Cuban and his team, along with Mavericks employee Ryan Mackey.



A <a href="https://storage.courtlistener.com/recap/gov.uscourts.flsd.618110/gov.uscourts.flsd.618110.89.0.pdf" target="_blank" rel="noreferrer noopener">court filing</a> released Tuesday doesn’t include the full details regarding their intent to move the case, as Cuban and the Mavericks have asked the court to file their motion under seal, a procedure allowing the defendants to keep contents hidden so that the information in them doesn’t become public record.



Confidential information, such as the plaintiffs’ Voyager account information, their addresses and the last four digits of their social security numbers, were redacted in the filings.



Wissner-Gross’ declaration also included excerpts from Voyager’s agreement with Dallas Basketball, which they want to be kept private because of a confidentiality clause that prohibits its public distribution.



Voyager investors put forward <a href="https://blockworks.co/news/lawsuit-likens-voyager-to-ponzi-sues-mark-cuban-for-promotion">allegations against Cuban</a> and CEO Steve Ehrlich last year, saying they personally reached out to potential customers to convince them into putting money into the “deceptive platform.” His NBA team, the Dallas Mavericks, was also named as a defendant in the suit. 



They “went to great lengths to use their experience as investors to dupe millions of Americans into investing,” the complaint said.



Cuban has now said that the investor plaintiffs engaged in “transparent forum shopping and gamesmanship,” according to <a href="https://www.law360.com/cybersecurity-privacy/articles/1571285" target="_blank" rel="noreferrer noopener">Law360</a>.



Blockworks has reached out to Cuban and attorney Wissner-Gross for comment.



Cuban is scheduled to be deposed as part of the lawsuit on Feb. 2 in Dallas, Texas. Mackey and Kyle Tapply, team executives for corporate partnerships at the Mavericks, are also set to be deposed before Feb. 23.



Voyager <a href="https://blockworks.co/news/voyager-files-for-bankruptcy-days-after-freezing-withdrawals">filed for bankruptcy</a> in July after suffering massive losses from its exposure to crypto hedge fund Three Arrows Capital, with Sam Bankman-Fried’s Alameda Research listed as its biggest creditor.



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Mark Cuban Accuses Plaintiffs Suing Him of ‘Forum Shopping and Gamesmanship’

Ornella Hernandez

More and more details of the now-insolvent crypto exchange FTX surface every day, and the spillover effects are ever more unfortunate.&nbsp;



The timeline below tracks major events <a href="https://blockworks.co/news/ftx-bankrupt-hacked-investigated-a-timeline-of-events" target="_blank" rel="noreferrer noopener">since</a> the Bahamian police began investigating FTX on Nov. 13 up to the revelations from the latest bankruptcy filings that Sam Bankman-Fried and other executives received personal loans totaling $1.5 billion.



<h3 class="wp-block-heading">Nov. 14 — Monday: Time out</h3>



The sports partnerships continued falling. The Golden State Warriors, the San Francisco-based NBA team, <a href="https://blockworks.co/news/golden-state-warriors-and-miami-heat-axe-ftx-deals" target="_blank" rel="noreferrer noopener">paused all FTX-related promotional deals</a>. Warriors point guard Stephen Curry was a global ambassador for FTX, and FTX US and its NFT marketplace were the Warriors’ official cryptocurrency platform. All these deals ceased to exist.&nbsp;



This move followed the Miami Heat NBA team ending its naming rights deal with FTX for its home stadium — FTX Arena. Additional partnerships with Major League Baseball to place the FTX logo on the uniforms of umpires and with the Mercedes-AMG Petronas F1 Team to add the FTX logo to the cars and uniforms of drivers were terminated.



<h3 class="wp-block-heading">Nov. 15 — Tuesday: Another FTX casualty&nbsp;</h3>



Bankman-Fried <a href="https://twitter.com/SBF_FTX/status/1592710177152995328?s=20&amp;t=afXyF7_qOhKdnJNbGdcKLA" target="_blank" rel="noreferrer noopener">tweeted</a> on this day that he was going to try “raise liquidity, make customers whole, and restart” as part of a days-long thread. Despite FTX’s Chapter 11 bankruptcy filing, he was reportedly in talks with <a href="https://blockworks.co/news/sbf-attempts-to-find-ftx-investors" target="_blank" rel="noreferrer noopener">investors who might help fund the $8 billion</a> that the company owes its traders and institutional clients — but the writing was on the wall.&nbsp;



Cryptocurrency lender, <a href="https://blockworks.co/news/blockfi-eyes-bankruptcy-as-ftx-fallout-continues-report" target="_blank" rel="noreferrer noopener">BlockFi announced it was likely to file for bankruptcy</a> on this day. The firm had earlier begun preventing withdrawals and it disclosed &#8220;significant exposure&#8221; to FTX the previous day. At one point in July, FTX had planned to acquire BlockFi outright for up to $240 million.



<h3 class="wp-block-heading">Nov. 16 — Wednesday: Class action lawsuit filed against SBF</h3>



The first <a href="https://blockworks.co/news/what-do-tom-brady-steph-curry-and-naomi-osaka-have-in-common-an-ftx-lawsuit" target="_blank" rel="noreferrer noopener">class action lawsuit against Bankman-Fried</a> was filed on this day, claiming that the insolvent crypto exchange violated Florida law and demanding $11 billion in damages on behalf of its customers. A number of its high-profile backers were named in the lawsuit, including Tom Brady, Gisele Bundchen, Stephen Curry, Shaquille O’Neal, David Ortiz, Naomi Osaka, Larry David and Kevin O’Leary, among others.



Using “the largest and most well-known marketers and celebrities was the only way that this massive fraud could have been successful,” one of the lawyers behind the case told Blockworks.



Also on Nov. 16, crypto lender Genesis, a subsidiary of Digital Currency Group, <a href="https://blockworks.co/news/genesis-halts-lending" target="_blank" rel="noreferrer noopener">halted withdrawals</a> to customer redemptions and new loan originations. This move caused the exchange, Gemini, to cease processing redemptions for clients using the Gemini Earn program in partnership with Genesis. Gemini said regular crypto withdrawals, however, are unaffected.



Additionally, Vox published an interview with Bankman-Fried, in which he blamed an ex-employee for malware on a device owned by an ex-employee for the hacking. He also <a href="https://blockworks.co/news/as-sbf-disses-regulators-ftx-disowns-sbf" target="_blank" rel="noreferrer noopener">criticized regulators and expressed regrets</a> about filing for bankruptcy.



FTX’s new CEO John J. Ray, III tweeted in response that, “Mr. Bankman-Fried has no ongoing role at [FTX], FTX US, or Alameda Research Ltd. and does not speak on their behalf.”&nbsp;



<h3 class="wp-block-heading">Nov. 17 — Thursday: ‘A complete failure of corporate controls’</h3>



Ray, who was brought in as a liquidator, stated in a sworn declaration submitted in bankruptcy court that according to FTX&#8217;s records, its subsidiary Alameda Research had made personal loans totaling $1 billion to Bankman-Fried and more than $500 million to FTX co-founder Nishad Singh.&nbsp;



Ray <a href="https://blockworks.co/news/worse-than-enron-sbfs-ftx-has-a-complete-absence-of-trustworthy-information" target="_blank" rel="noreferrer noopener">added</a> some harsh words. Despite having been involved in the bankruptcies of Enron: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”



Additional insight into the case confirmed that <a href="https://blockworks.co/news/5-highlights-ftx-bankruptcy" target="_blank" rel="noreferrer noopener">FTX did not comply with security controls</a> with respect to digital assets, misused customer funds, had unaudited financials and almost nonexistent employee management.&nbsp;&nbsp;



FTX’s local Bahamas arm, <a href="https://blockworks.co/news/ftx-bahamas-unit-filed-bankruptcy" target="_blank" rel="noreferrer noopener">FTX Digital Markets, filed for bankruptcy</a> protection in New York on this day. It opted for Chapter 15 bankruptcy, while FTX and 134 affiliate companies opted for Chapter 11 protection.&nbsp;



Another Digital Currency Group subsidiary, Grayscale, saw the value of its publicly traded <a href="https://blockworks.co/news/sec-grayscale-exploring-bitcoin-trust-options" target="_blank" rel="noreferrer noopener">Grayscale Bitcoin Trust (GBTC) decline by 20%</a> on Nov. 17.&nbsp; (GBTC) has persistently traded at a wide discount to the price of the spot bitcoins it holds, with its net asset value (NAV) hovering around 40% below the value of its Bitcoin.



<h3 class="wp-block-heading">Nov. 18 — Friday: Bahamas regulators custody FTX assets</h3>



Securities regulators in the Bahamas confirmed that they’re holding some of FTX’s assets in a press statement released on Nov. 18. They acknowledged transferring assets from of FTX Digital Markets into their custody after an emergency filing from FTX’s U.S. attorneys accused them of having directed former CEO Sam Bankman-Fried to do so. They added that they did not believe that FTX’s Bahamas subsidiary was subject to the US’ Chapter 11 bankruptcy proceedings.



The value of the assets was not confirmed, and it was unclear just how much of the cryptoasset movements could be attributed to actions by Bahamian regulators.



<h3 class="wp-block-heading">Nov. 19, 20 — Saturday and Sunday: Following the hacking trail</h3>



Over this weekend, on-chain analysts observed the FTX hacker, dubbed “FTX Accounts Drainer,” dumping ether for bitcoin. This caused the price of the ether to start dipping.&nbsp;



The <a href="https://twitter.com/kamikaz_ETH/status/1594293500451106816?s=20&amp;t=katw78Z4qb1jshgVJT0DmQ" target="_blank" rel="noreferrer noopener">hacker moved ether in different lots</a> — $186 million were moved into crypto cold storage, while $477 million was transferred to ether and stablecoin DAI.&nbsp;



On Nov. 20, the attacker transferred 50,000 ETH to a separate wallet and then converted it to BTC via renBTC — the Ren protocol bridge.



As the crypto community was monitoring hacked FTX funds, FTX <a href="https://twitter.com/FTX_Official/status/1594354846370758657?s=20&amp;t=ESxOHHGQRNgWxkiZ8fbvwA" target="_blank" rel="noreferrer noopener">urged</a> exchanges to cooperate by halting funds and returning them to “the bankruptcy estate.”



<h3 class="wp-block-heading">Nov. 21 — Monday: Pls-help</h3>



Etherscan data showed that the attacker moved a total of 180,000 Ether ($199.3 million) on Nov. 21 across 12 wallets. Each newly created wallet received 15,000 ETH.&nbsp;



By subdividing the total amount into smaller amounts, a process known as “peel chaining,” it not only confuses investigators but suggests the attacker could use a mixing service at some point.



Meanwhile, one user registered as ftx-rekt200k-pls-help.eth, sent an encoded message via ether to the hacker, claiming to have lost money from the FTX collapse and asking for a reimbursement. They even <a href="https://etherscan.io/address/0xb937eb52cfed2edc08d9d26bd7d40b4aea9b61b4" target="_blank" rel="noreferrer noopener">sent</a> 20 transactions of 0.000001 ETH to the hacker’s address.



<h3 class="wp-block-heading">Nov. 22 — Tuesday: SBF apologizes again, court hears from bankruptcy lawyers</h3>



A letter that Bankman-Fried <a href="https://twitter.com/lizrhoffman/status/1595183732989779970?s=20&amp;t=afXyF7_qOhKdnJNbGdcKLA" target="_blank" rel="noreferrer noopener">shared</a> with FTX employees was made public on Nov. 22. His opening line states that he feels “deeply sorry about what happened.” Finance journalist Liz Hoffman <a href="https://twitter.com/lizrhoffman/status/1595183732989779970?s=20&amp;t=afXyF7_qOhKdnJNbGdcKLA" target="_blank" rel="noreferrer noopener">tweeted</a> screenshots of the letter.



Along with the apologies and a list of collateral and liabilities under the FTX, Bankman-Fried said that “maybe there still is a chance to save the company.”



He did not, however, address allegations that FTX diverted customer and corporate funds to Alameda Research or that he and other executives took personal loans.



“None of this changes the fact that this all sucks for you guys,” added Bankman-Fried. In <a href="https://blockworks.co/news/ftx-run-by-inexperienced-unsophisticated-traders-court-hears" target="_blank" rel="noreferrer noopener">the first bankruptcy hearing</a> for FTX and its affiliated entities, lawyers told the court that a “substantial amount of assets” held by FTX cannot be accounted for. FTX now has a cash balance of $1.24 billion in total, they said.



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The Last 10 Days in the FTX Saga: A Timeline

<div id="highlights-block_62ec95f019719" class="highlights">
 <ul>
 <li>The class action alleges Coinbase knew it listed digital assets which should have been registered with the SEC</li>
 <li>Lawyers also argue Coinbase held users&#8217; digital assets knowing they could end up as property of a bankruptcy estate</li>
 </ul>
 
</div>



Beleaguered US cryptocurrency exchange Coinbase is staring down yet another class action lawsuit.



Law firm Bragar Eagel &amp; Squire filed the suit on Thursday in the US District Court of New Jersey, alleging Coinbase made false or misleading claims about its business activities and compliance policies for more than a year, according to a <a href="https://www.bespc.com/cases/coin" target="_blank" rel="noreferrer noopener">statement</a>.



Specifically, the multi-faceted claim asserts Coinbase held customer&#8217;s digital assets knowing they could end up as the property of a bankruptcy estate, potentially forcing customers to be treated as the exchange&#8217;s &#8220;general unsecured creditors.&#8221;



Coinbase is alleged to have allowed US customers to trade digital assets which the exchange &#8220;knew or recklessly disregarded&#8221; which should have been registered with the Securities and Exchange Commission (SEC).



The New York law firm is acting on behalf of &#8220;all persons and entities&#8221; who bought &#8220;Coinbase securities&#8221; between April 14, 2021 and July 26, 2022. A Coinbase spokesperson did not immediately return a request for comment.



&#8220;The foregoing conduct subjected [Coinbase] to a heightened risk of regulatory and governmental scrutiny and enforcement action,&#8221; the law firm said in its statement.



But while it&#8217;s still early days for the suit, the allegations echo the SEC&#8217;s claims of Coinbase masquerading as an unregistered securities exchange. 



<h3 class="wp-block-heading">Coinbase also facing class action lawsuit over Terra listing</h3>



Last month, the watchdog charged Coinbase&#8217;s former product manager, Ishan Wahi, with insider trading of at least 25 digital assets.



The SEC says <a href="https://cms.blockworks.co/security-token-provider-inx-cannot-relate-to-coinbases-sec-woes/" target="_blank" rel="noreferrer noopener">nine</a> of the 25 assets flagged are unregistered securities. Securities are tradable financial instruments whose definitions vary from jurisdiction to jurisdiction. 



Shortly after Wahi&#8217;s charges were made public, Bloomberg <a href="https://www.bloomberg.com/news/articles/2022-07-26/coinbase-faces-sec-investigation-over-cryptocurrency-listings#xj4y7vzkg" target="_blank" rel="noreferrer noopener">indicated</a> the SEC had initiated a probe into Coinbase which pre-dated the insider trading case.



In the US, a security is <a href="https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets">defined</a> by the Howey Test, a decades-old US Supreme Court case determining whether an asset is an investment contract and should therefore fall under the SEC&#8217;s jurisdiction.



<a href="https://cms.blockworks.co/coinbase-defends-listing-process-despite-sec-pressure/" target="_blank" rel="noreferrer noopener">Preston Byrne</a>, partner at New York law firm Anderson Kill, told Blockworks last week there’s a very strong possibility &#8220;that a lot of the things on Coinbase are investment contracts.&#8221;



News of Coinbase&#8217;s dealings with the SEC negatively impacted its share price (COIN), Bragar Eagel &amp; Squire alleges, which slumped more than 21% on the day of Bloomberg&#8217;s report.



COIN shares have since recovered and then some, <a href="https://cms.blockworks.co/coinbase-stock-has-ballooned-nearly-60-in-5-days/" target="_blank" rel="noreferrer noopener">surging</a> nearly 60% in five days, most recently buoyed by news of BlackRock deal to expand its institutional trading services.



A separate class action lawsuit, filed in June, <a href="https://cointelegraph.com/news/coinbase-is-facing-class-action-suits-over-unstable-stablecoins-gyen-terrausd" target="_blank" rel="noreferrer noopener">reportedly</a> alleges Coinbase failed in its duty of care by listing the revamped Terra Classic token on its platform, and neglected to disclose an alleged financial connection to Terraform Labs.



Also in June, lawyers representing Coinbase customers filed another class action lawsuit in the federal court in northern California over allegations the exchange promoted stablecoin GYEN that was termed, at the time, &#8220;<a href="https://www.bloomberg.com/news/articles/2022-05-13/coinbase-customers-sue-over-stablecoin-that-was-anything-but" target="_blank" rel="noreferrer noopener">anything but</a>&#8221; stable.



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Coinbase Hit With Another Class Action Lawsuit Following SEC Allegations

<div id="highlights-block_62ac3ee796bd9" class="highlights">
 <ul>
 <li>The Tesla CEO reiterated his determination to get rid of farm trolls and bots on Twitter</li>
 <li>“If one can use [Twitter] to make convenient payments, that’s an increase in usefulness,” he said</li>
 </ul>
 
</div>



After securing a <a href="https://cms.blockworks.co/elon-musk-secures-44b-deal-for-social-media-platform-twitter/" target="_blank" rel="noreferrer noopener">$44 billion deal</a> to acquire Twitter in April, billionaire Elon Musk spoke to employees of the social media platform in a virtual meeting on June 16, his first Twitter all-hands meeting.



Musk discussed his plans for the company, including the integration of digital payments and the elimination of cryptocurrency-related scams.



The Tesla chief executive said it would be logical to incorporate digital payments on the network to facilitate direct transfers within Twitter.



“I think it would make sense to integrate payments into Twitter so that it’s easy to send money back and forth, and if you have currency as well as crypto,” he said, according to a <a href="https://www.vox.com/recode/23171541/leaked-transcript-inside-elon-musks-first-meeting-with-twitter-employees" target="_blank" rel="noreferrer noopener">transcript</a> of the meeting posted by Recode.



<blockquote class="wp-block-quote">“My goal would be to maximize the usefulness of the service — the more useful it is, the better,” he said. “And if one can use it to make convenient payments, that’s an increase in usefulness.”</blockquote>



He highlighted three areas critical to Twitter’s purpose — news, entertainment and payments. He also wants to address spam accounts on the platform.



“There’s quite a lot of crypto scams on Twitter,” he said. “It’s gotten better, but there’s still a fair bit of that.”&nbsp;



Earlier this month, Musk threatened to abandon his deal with Twitter unless the company provides him with evidence that fake accounts make up less than 5% of its users. Twitter’s <a href="https://www.reuters.com/technology/twitter-estimates-spam-fake-accounts-represent-less-than-5-users-filing-2022-05-02/" target="_blank" rel="noreferrer noopener">own estimate</a> is that fake or bot accounts count for less than 5% of its active users.&nbsp;



&#8220;My offer was based on Twitter&#8217;s SEC filings being accurate,&#8221; Musk <a href="https://twitter.com/elonmusk/status/1526465624326782976" target="_blank" rel="noreferrer noopener">tweeted</a>.



Twitter <a href="https://www.washingtonpost.com/technology/2022/06/08/elon-musk-twitter-bot-data/" target="_blank" rel="noreferrer noopener">agreed</a> to comply with Musk’s demands for internal data, according to the Washington Post.



Separately at the all-hands meeting, Musk said he prefers in-person work at Tesla, where cars cannot be assembled remotely. While he didn’t shoot down the possibility of remote work for Twitter employees, he suggested they periodically drop into the office.



“Even if somebody’s working remotely, they gotta show up at the office occasionally so that they recognize their colleagues and don’t walk down the street and pass your colleagues, and you don’t recognize them,” he said. “That would not be good.”



<h3 class="wp-block-heading">Elon Musk the target of dogecoin pyramid scheme allegations</h3>



The tech mogul has previously proposed building digital payments into Twitter. After acquiring a 9.2% stake in the company, he pitched dogecoin as a payment option for users with a <a href="https://blog.twitter.com/en_us/topics/company/2021/introducing-twitter-blue" target="_blank" rel="noreferrer noopener">Twitter Blue</a> subscription in April.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Maybe even an option to pay in Doge?&mdash; Elon Musk (@elonmusk) <a href="https://twitter.com/elonmusk/status/1512954808394731521?ref_src=twsrc%5Etfw">April 10, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Musk has often been criticized for making comments that may have influenced the price of dogecoin. On Thursday, one investor launched a $258 billion <a href="https://www.pacermonitor.com/public/case/44928222/Johnson_v_Musk_et_al" target="_blank" rel="noreferrer noopener">class action lawsuit</a> against Musk and his companies SpaceX and Tesla, alleging a scheme to illegally inflate the price of the meme coin.



“Defendants falsely and deceptively claim that dogecoin is a legitimate investment when it has no value at all,” the plaintiff wrote in a federal court filing.



Twitter already has a <a href="https://cms.blockworks.co/twitter-users-can-now-get-paid-in-bitcoin/" target="_blank" rel="noreferrer noopener">bitcoin tipping</a> feature available on its platform for users in El Salvador and the US, which uses the Lightning Network, a bitcoin scaling solution.



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Elon Musk Teases Crypto Integration at His First Twitter All-hands

Ben Strack

<div id="highlights-block_626c46338f403" class="highlights">
 <ul>
 <li>Class action attorney Adam Moskowitz says he hopes the court resolves Voyager’s “continued attempts to simply walk away from our case”</li>
 <li>Original complaint filed in December alleged that the firm charged hidden fees and made false promises</li>
 </ul>
 
</div>



Attorneys have made fresh allegations in a class action lawsuit against Voyager Digital, claiming the cryptocurrency company sold unregistered securities in the form of interest-earning crypto accounts.



The complaint, filed Thursday in a Miami federal court by lawyers Adam Moskowitz and Stuart Grossman, includes a report detailing why the <a href="https://www.investvoyager.com/earn/" target="_blank" rel="noreferrer noopener">Voyager Earn Program</a> — allowing users to earn rewards on bitcoin, ether, USDC and other cryptoassets — should have been registered with the SEC.



The document also refutes Voyager’s claims that the Florida court does not have jurisdiction over the company, as the defendants of the class action complaint are vying for a jury trial.&nbsp;



Additionally, the document spotlights related actions taken by the SEC and state officials in the months after the original complaint <a href="https://cms.blockworks.co/voyager-estimated-quarterly-revenue-doubles-despite-lawsuit/" target="_blank" rel="noreferrer noopener">was filed</a> Dec. 24 on behalf of Florida resident Mark Cassidy.



Voyager competitor BlockFi said in February <a href="https://cms.blockworks.co/crypto-lender-blockfi-to-pay-100m-in-fines-to-us-regulators/" target="_blank" rel="noreferrer noopener">it would pay $100 million in fines</a> to the SEC and state regulators over allegations it illegally offered a high-interest yield product. 



Voyager CEO Stephen Ehrlich said during an earnings call that month that there are differences between <a href="https://www.investvoyager.com/vlp/" target="_blank" rel="noreferrer noopener">Voyager’s Loyalty Program</a>, which offers Voyager token holders rewards, and BlockFi interest accounts. 



The company <a href="https://www.investvoyager.com/pressreleases/voyager-news-release" target="_blank" rel="noreferrer noopener">said in a March 30 statement</a> it had received cease and desist orders from the state securities divisions of Indiana, Kentucky, New Jersey and Oklahoma relating to Voyager accounts that permit customers to earn rewards on their crypto balances.



“Voyager is in ongoing communications with these state regulators to better understand the terms in their respective regulatory orders and to clarify certain statements in the orders that Voyager believes are inaccurate,” the company said.&nbsp;



The original December complaint focused on allegations that Voyager charged hidden fees and made false promises to platform users. It claims that the firm’s bid-ask spread — the difference between the highest bid a buyer is willing to offer and the lowest bid a seller is willing to accept — “is kept intentionally wide.”



Cassidy’s lawyers said in January that litigation could result in more than $1 billion in compensation for Voyager users.



“This action is absolutely spurious and without any merit, whatsoever,” a Voyager spokesperson said in an email at the time. “We look forward to dealing with this matter through the appropriate legal channels.”



According to the amended complaint, Voyager previously claimed that the Florida court does not have jurisdiction over the company. But Voyager, listed on the Toronto Stock Exchange, sells its stock over-the-counter in the United States, including Florida, the document states. Thousands of the interest-earning crypto accounts are based in Florida, it adds.



Voyager also claimed they should not have to respond to the original complaint because Cassidy signed an “arbitration agreement,” Moskowitz told Blockworks.



The complaint notes that Janice Barrilleaux, Voyager’s chief administrative officer, called the January 2021 version of the company’s user agreement — the one Cassidy had agreed to — “grossly outdated.” David Brosgol, Voyager’s general counsel, later suggested “a significant overhaul” of the agreement, the document notes.



“We hope that after the court resolves Voyager’s continued attempts to simply walk away from our case, we can quickly seek certification for all of Voyager’s customers that all have the same rewards accounts, and finally require Voyager to comply with the state and federal rules,” Moskowitz said.



A Voyager spokesperson did not return a request for comment.



<a href="https://www.prnewswire.com/news-releases/voyager-digital-kicks-off-its-new-crypto-for-all-campaign-and-announces-key-business-milestones-301531596.html" target="_blank" rel="noreferrer noopener">The company reported</a> completing roughly 36 million consumer crypto transactions and reaching $5.5 billion in net new retail deposits since inception, as of March 31. Voyager’s next earnings call is slated for May 16.



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