NEW YORK, Dec 14 (Reuters) – The charges brought by U.S. prosecutors on Tuesday against Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, were among the most high-profile charges against a crypto gamer. It was the latest in a string of cases involving digital assets that U.S. regulators and prosecutors have looked into.
Here is a summary of some of these civil and criminal cases, and their outcomes:
BITFINEX HACK
In February, the US Department of Justice charged a husband and wife team with conspiracy to launder 119,754 stolen bitcoins after a hacker broke into digital currency exchange Bitfinex in 2016 and initiated more 2,000 unauthorized transactions. The couple are in talks with prosecutors about a possible plea, according to court records.
BITMEX EMPLOYEES
BitMEX employees, including the cryptocurrency exchange’s founders, pleaded guilty this year to willfully failing to establish, implement and maintain money laundering prevention programs. The company’s co-founders pleaded guilty in New York federal court and each agreed to pay a $10 million criminal fine.
Another company employee also pleaded guilty and accepted a $150,000 fine.
Federal prosecutors originally brought the criminal charges in 2020.
In 2021, the exchange agreed to pay a civil penalty to settle separate charges from the US Commodity Futures Trading Commission and the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) unit.
A spokesperson for BitMEX this week declined to comment on the charges against its former employees.
As the case was settled with the CFTC and FinCEN, the company’s chief executive highlighted its strong compliance and anti-money laundering capabilities.
BLOCKFI LENDING LLC
A subsidiary of crypto firm BlockFi Inc has agreed to pay a record $100 million fine to the SEC and state regulators to settle civil lawsuits related to an interest-bearing loan product it offered to nearly 600 000 investors.
BlockFi, which filed for bankruptcy Nov. 29, still owes $30 million of the $50 million civil penalty it agreed to pay to the SEC, according to a court filing.
A company spokesperson did not respond to request for comment this week, but in a statement at the time, the resolution of the case is an example of the company’s “pioneering efforts to ensure the regulatory clarity for the entire industry and our customers”.
FORMER COINBASE MANAGER
The Manhattan U.S. Attorney’s Office and the SEC in July indicted a former chief product officer of crypto exchange Coinbase, his brother and friend in an alleged insider trading scheme. These cases marked the first-ever insider trading charges involving cryptocurrencies.
The former Coinbase employee has pleaded not guilty to the charges. Her brother changed an earlier guilty plea to a deal with prosecutors. A third defendant has been charged but remains at large.
Coinbase slammed the SEC’s accusations, saying in a blog post at the time that the exchange doesn’t list securities and that the agency was pursuing “regulation by enforcement.”
ONECOIN LTD
In 2019, US authorities indicted the alleged leaders of a multi-billion dollar pyramid scheme involving a fraudulent cryptocurrency called OneCoin. One of the leaders is still at large and the other has pleaded not guilty.
FORMER OPENSEA EMPLOYEE
In June, federal prosecutors in Manhattan charged a former chief product officer at OpenSea, an online non-fungible token marketplace, with insider trading. The prosecution marked the first such case involving digital assets.
Prosecutors said the former chief product officer secretly purchased NFTs based on confidential information that the tokens, or others from the same creator, would soon be featured on OpenSea’s homepage.
OpenSea this week highlighted its previous statement regarding accusations that it opened an investigation and asked the employee to leave the company.
RIPPLE LABORATORIES INC
In December 2020, the SEC sued blockchain payments company Ripple and two executives, alleging they conducted a $1.3 billion unregistered securities offering.
The San Francisco-based company, which founded the XRP cryptocurrency in 2012, has been embroiled in a years-long legal battle with the regulator.
Ripple has asked a judge to deem XRP not to be a security, and therefore not subject to SEC oversight. The case has broad potential legal implications for the industry, which occupies a regulatory gray area in the United States.
A Ripple spokesperson did not provide an updated comment this week.
TELEGRAM GROUP
In October 2019, the SEC halted a $1.7 billion unregistered digital token offering by messaging service Telegram Group and its subsidiary TON Issuer. After a six-month court battle, Telegram agreed to pay an $18.5 million civil penalty and return $1.2 billion to investors.
The company, which neither admitted nor denied the SEC’s findings, did not respond to request for comment.
Reporting by Chris Prentice and Luc Cohen, editing by Deepa Babington
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