Edition No. 27
Instagram Influencer pleads guilty; Do Kwon still running; NFTs Over-Seas; Amicus Briefs in abundance; Regs for Stables; and more. Here's what happened from 10/31/2022 to 11/7/2022.
Welcome to another edition of Around the Blockchain, the weekly letter dedicated to keeping readers like you up to date on the fast-paced world of Crypto & Law by airdropping current stories directly to your browser.
Table of Contents:
1. On the Docket (Top Stories of the Week)
2. Podcasts, Videos, & Blogs (The faces, voices, and pens of Web3’s brightest contributors)
3. Bird Watching (Tweet, tweet!)
4. The Public Ledger (Highlights from our weekly library of sources, built by our Feedly AI)
5. Closing Statements (NEW PARTNERSHIPS TO ANNOUNCE THIS WEEK!)
On the Docket
Five things you might have missed last week:
1. Instagram Influencer Jay Mazini Pleads Guilty for Stealing $2.5M in Bitcoin
DOJ Gets Guilty Plea Against IG Schemer (Felt cute, might delete later)
New York-based Instagram influencer Jebara Igbara, aka “Jay Mazini,” pled guilty in Brooklyn federal court to a three count indictment charging him with wire fraud, conspiracy to commit wire fraud, and money laundering.
Up until March 2021, Igbara controlled an influential Instagram account under the handle “Jay Mazini,” where he posted videos depicting, among other things, gifting large sums of money to various individuals. In truth–however–, Igbara was engaging in concurrent fraud schemes, scamming victims out of at least $8 million according to the DOJ.
As part of the scheme, Igbara reportedly posted on Instagram he was willing to pay above-market prices to his followers for bitcoin–usually around 3.5% to 5% over market value. He would then forge fake wire transfer receipts to victims as supposed proof of payment. The scam was to the tune of $2.5 million in bitcoin according to court filings.
Igbara faces up to 20 years imprisonment. The Business & Securities Fraud Section of the U.S. Attorney’s Office of the Eastern District of New York is handling the government's case–assistant U.S. Attorney Lauren Howard Elbert is overseeing the prosecution.
By: Evan Santos
2. Do Kwon Renews Interest in Terra While Korean Prosecutors Gather New Evidence
Catch me if you can?
Korean prosecutors say they have obtained chat logs where Terra Founder Do Kwon ordered an employee to manipulate the price of Terra, according to Laura Shin’s Unchained.
Kwon, seemingly unphased by the news, tweeted he would hold a meet up/conference to uncover the mystery of his whereabouts with,
“Cops from world over welcome to attend.”.
Recent weeks have seen many allegations Kwon fled to Europe due to South Korean authorities seeking his arrest.
According to Unchained, Kwon is also expressing interest in Terra. Recently, he said it would be better to do nothing than proceed with the community’s four-year ecosystem revival plan, instead providing his own suggestions for the protocol’s future.
His statement came in response to a proposal made on Oct. 18 by the Terra community aiming to revive the failed ecosystem by distributing 95 million LUNA tokens from the community pool to developers, liquidity miners, and users bridging assets to the blockchain.
In a Nov. 3 post on Terra’s governance forum Kwon suggested using the community pool to enhance inter-chain security, then subsidize Luna Staking Derivatives yields to make them more attractive than other staking assets.
“Over time, the goal should be to have Luna be one of the most widely used assets for interchain security across the cosmos,”
Stated Kwon’s, who apparently still has big plans for Terra's future–and his role in it.
Whatever this uncertain future may be, Kwon’s “meetup/conference” with international law enforcement will certainly be one not to miss.
By: Evan Santos
3. UK PARLIAMENT LAUNCHES INQUIRY INTO BENEFITS AND RISKS OF NFTs
NFTs on the European Front
The Digital, Culture, Media and Sport (DCMS) Committee is beginning an inquiry into “the operation, risks, and benefits of Non-Fungible Tokens (NFTs).” The DCMS Committee is made up of Members of Parliament (MPs) responsible for examining government policies, expenditures, and other topics in detail before publishing policy recommendations.
While the Government isn’t obligated to adopt the Committee’s suggestions, it must publicly respond to the report , usually within a couple of months.
The DCMS Committee is concerned by the “non-existent” regulation of NFTs and the threat this poses to vulnerable consumers. Nonetheless, it is equally motivated to examine the benefits NFTs and the underlying blockchain technology can bring to the UK economy.
As part of its inquiry, the Committee is inviting written evidence from anyone interested in the topic. Before compiling its report, it seeks to evaluate the opinions of not just experts in the field, but also citizens who may be particularly bearish or bullish on the technology and its potential value.
These actions represent another positive step by UK regulators to implement crypto legislation. In July of this year, the Law Commission of England & Wales published a consultation paper seeking to create a new type of legal property to bring digital assets within domestic law.
The Commission recognized emerging technologies possess unique features archaic property laws are simply unfit to regulate. Additionally, last week, the UK Parliament had its second reading of the Financial Services and Markets Act Bill which seeks to bring crypto assets and stablecoins within the purview of financial regulators.
It shouldn’t be too long before the UK has its own comprehensive crypto legislation on the books.
By: Surya Dawar
See also:
4. Numerous Amici Briefs Are Being Filed in the Ripple and SEC Dispute
I get by (with a little help from my friends)
FinTech companies and the Web3 community are providing legal support for Ripple during its protracted battle with the SEC (Securities Exchange Commission).
The SEC filed a claim against Ripple Labs in December 2020 alleging it sold unregistered securities in violation of U.S. securities law. According to Ripple Labs general counsel, Stuart Alderoty, twelve amici curiae have been filed in favor of his company. He says these briefs show how “dangerously wrong the SEC is.”
Parties having so far filed supporting briefs include Coinbase, the Chamber of Digital Commerce, the Crypto Council for Innovation, the Blockchain Association, Valhil Capital, I-Remit, Spend the Bits, Tapjets, the Investor Choice Advocates Network (ICAN), Cryptillian Payment Systems, and John Deaton.
In response to the unprecedented amount of amici briefs filed, the SEC requested Judge Analisa Torres order additional briefs be filed by November 11.
By: Nick Corso
5. Next US Congress to Legislate on Stablecoin Regulation
The REG-coats are coming!! The REG-coats are coming!!
Following the November 8 mid-term elections, the United States Congress will soon have a new makeup and will need to pass legislation on a number of issues pertaining to the crypto industry. One of these is the regulation of stablecoins, a subject for which a number of bills are awaiting consideration and passage.
Legislators on Capitol Hill have been concentrating on cryptocurrency legislation in the wake of the President's Task Force on Financial Markets' Report on Stablecoins, which was published in November of last year, and the disaster that followed the collapse of algorithmic stablecoin Terra USD.
The Senate and the House of Representatives have since received a number of measures for debate. Josh Gottheimer, a congressman from New Jersey, introduced the Stablecoin Innovation and Protection Bill of 2022 in February of this year.
According to the bill's language, a bank or a non-bank issuer may issue eligible stablecoins. Stablecoins are also defined as cryptocurrencies that may be exchanged for US dollars.
The Office of the Comptroller of the Currency would be in charge of providing the primary oversight over stablecoin issuers (OCC). Additionally, the legislation mandates that the FDIC create an Insurance Fund of Rated Stablecoins to handle redemption payments from non-bank issuers.
The Stablecoin Transparency Bill was introduced by Tennessee Senator Bill Hagerty and Indiana Congressman Trey Hollingsworth in March.
Regardless which party wins the majority of votes on November 8th, stablecoins will undoubtedly be regulated by the US Congress the following year.
By: Kyler Wandler
Podcasts, Videos, and Blogs
The brightest voices & sharpest pens:
ATTENTION AROUND THE BLOCKCHAIN READERS:
There's nothing better than doing what you love and getting paid for it. CryptoJobs.Law has your next opportunity to work on the legal side of web 3.
With hundreds of open roles and new positions added daily, CryptoJobs.Law is the only website dedicated solely to finding top legal minds jobs in web 3. Join the revolution today.
Bird Watching
Tweet, Tweet, Tweet!
The Public Ledger
Highlights from the hundreds of sources gathered each week by our research AI. Always DYOR - but in case you don’t have time, here’s some of ours:
General News and Opinion
Crypto Accounting Plan Faces Decision on How to Record Swings
Growing Crypto Crime Could Privatize Law Enforcement Efforts
The Metaverse: Decentralized Autonomous Organizations (DAOs)
ForUsAll Joins Fidelity in Offering Cryptocurrency 401(k) Plans
U.S. - Federal
Davis Polk Discusses FSOC Report on Financial Stability Risks of Digital Assets
'Crypto' law enforcement: A crossroads for digital asset enforcement and US regulators
Crypto Law Experts Suggest SEC Likely To Lose Key Case And Discredit Howey Test
Ex-OpenSea Employee's NFT Handling Runs into DOJ's 'Stradivarius'
Justice Department revives probe into Tether over bank fraud
MSU to host SEC Commissioner, former Consumer Financial Protection Bureau head for crypto discussion
U.S. - State Law
New York Fed completes experiment using on-chain digital dollar
US Crypto Report: Which states in the US are most ready for crypto adoption?
Promoting Blockchain & Web3 Innovation: Introducing the Florida DAO Bill
Florida Woman Indicted in Cryptocurrency Money Laundering Scheme
International
Brazilian Securities Regulator CVM Might Create a Supervision Unit to Deal With Crypto Markets
Swiss Financial Watchdog Releases Revised AML Ordinance, Clarifies Crypto Requirements
New ‘crypto token regime’ instituted at the Dubai International Financial Centre
El Salvador's Bitcoin Experiment: A Stroke of Genius or Pure Madness?
Hong Kong government policy announcement on virtual asset exchanges
UBS launches digital bond that straddles blockchain and traditional exchanges
Closing Statements
We want to hear from you:
If you enjoyed what you read today, subscribe to receive the weekly publication and give the authors a follow on Twitter for updates on what’s next for the newsletter!
If you didn’t enjoy it, let us know why! We value the opinion of our readers above all else. After all, this letter is for you. - Kyler, Chris, and the Around the Blockchain News team.
LexDAO x Around the Blockchain Partnership:
We’re extremely proud to announce our partnering with LexDAO and the LexClinic! To kick things off, we will be helping LexDAO to design an onboarding curriculum for new contributors (students and attorneys alike) using our Blockchain 101 segment.
Law of Code Podcast x Around the Blockchain Partnership:
ATBC is excited to partner with one of our favorite crypto-attorneys, the talented Jacob Robinson of the Law of Code podcast. Stay tuned for updates re: WEN PODCAST??
Cod3x x Around the Blockchain Partnership:
The Cod3x, a crypto law treatise, is the first free, open source, collaborative treatise written by lawyers for everyone. Updated continuously, it provides access to the latest developments in crypto law and policy, organizing and taking you to the primary sources of the law. Contact @lawtoshi if interested in contributing.
ATTENTION AROUND THE BLOCKCHAIN READERS:
There's nothing better than doing what you love. And getting paid for it. CryptoJobs.Law has your next opportunity to work on the legal side of web 3.
With hundreds of open roles and new positions added daily, CryptoJobs.Law is the only website dedicated solely to finding top legal minds jobs in web 3. Join the revolution today.
Quote of the Week:
“The basis for sustainable progress is legal protections grounded in an awareness of how identity has been used to deny opportunity.” - Stacey Abrams
Ok, all done! You can go ahead and check your P/L now (Coin Market Cap)
This newsletter is written, curated, annotated, and edited by Christopher Foreman (@CryptlessInSEA), Kyler Wandler (@KylerW56), Nicole Prada (@octopape); Nick Corso (@nick_corso2); Evan Santos (@evansantos4); and Kleb (@kleb_33); with consultation and input from Jacob Robinson of the Law of Code Podcast; editing courtesy of TΞxas ₿l◎ckchain LawyΞr ; in collaboration with Ann Sofie Cloots; and support from the Blockchain Barristers Law Student Collective.
The articles and opinions in this newsletter are not legal or financial advice. For legal and financial guidance, please consult a qualified attorney or financial advisor.
Special thanks / image credits:
Law / Scale Image; Twitter Image; Blockchain Image; Podcast Image; P / L Image; Tea GIF; Stable JPEG; Law JPEG; Hacker GIF; Folder GIF; Angry GIF; Celsius GIF; Rose PNG; Rocket GIF; No GIF; Speech GIF; Mask Png; Pyramid GIF; Wrestling JPEG; Book GIF; Sword JPEG; Olive Branch JPEG; Chef JPEG; Tax JPEG;
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