Crypto News – 2023 was a very challenging year for cryptocurrencies. Unable to escape the focus of regulators, crypto has been subjected to heavy sanctions as well as harsh criticism.
2023 Crypto Wars: A Whole Year of Tough Challenges for Crypto
Of course, good things happened for crypto during this period. However, the negatives outweighed all the good throughout the year. In particular, the SEC’s constant crackdown has been bad for many exchanges and cryptocurrencies. Thus, 2023 has turned into a battleground for crypto. In the rest of the article, you can find a small summary of what happened in the crypto world month by month.
Genesis had a Difficult January
In the first month of 2023, the Securities and Exchange Commission (SEC) acted swiftly. First, it charged digital asset exchange Gemini and cryptocurrency lender Genesis for allegedly obtaining billions of dollars of cryptocurrency from hundreds of thousands of investors through an unregistered securities offering.
Genesis, a subsidiary of Digital Currency Group (DCG), later that month filed for bankruptcy, revealing exposure to collapsed crypto venture fund Three Arrows Capital. The lender had been a provider to Gemini for its Earn program, but it froze withdrawals following the collapse of FTX in 2022.
Kraken and Paxos Targeted by SEC in February
The giant American cryptocurrency exchange was accused by the SEC on February 9 of breaking securities laws by not registering the offer and sale of its staking-as-a-service program for crypto assets. Kraken did not acknowledge or refute the accusations made in the SEC’s lawsuit. Instead, it paid a $30 million fine.
In addition, the SEC sent a Wells notice to Paxos, a financial startup, in the same month, alerting them to the possibility of legal action against the New York company for its role in minting the Binance USD (BUSD) stablecoin. In order to get ready for the litigation, Paxos then announced that it would end its partnership with Binance and stop minting the coin.
A Lawsuit Filed Against Binance for the First Time in March
The largest digital asset exchange, Binance, was sued by the CFTC, the first American agency to do so. It claimed in a federal court that by permitting Americans to buy cryptocurrency options since at least July 2019, its CEO, Changpeng Zhao, and his business broke laws about trading and derivatives. Federal criminal charges against Binance and its founder would subsequently follow, making the CFTC action a turning point in the regulatory campaign against the largest players in the cryptocurrency space.
Bittrex Started Crashing in April
The SEC sued Bittrex in April. The crypto exchange allegedly failed to register as a broker-dealer, exchange, and clearing agency and generated more than $1.3 billion in illicit revenue between 2017 and 2022. Following the lawsuit, Bittrex said it had previously asked the SEC to report which coins and tokens were securities, but to no avail. However, Bittrex’s American operations were halted in March, and the exchange closed globally in November.
Binance and Coinbase were the SEC’s New Targets in June
In June, the SEC retaliated by aiming at Binance and Coinbase, the two largest cryptocurrency firms. Despite the fact that the claims made in each action varied, the regulator charged fraud against Binance but not Coinbase. In the Binance lawsuit, CZ was named as the principal defendant as well. But in Coinbase’s lawsuit, the CEO, Brian Armstrong, was only referenced once.
Trying to put Coinbase and Binance in the same bucket—and they’re not in the same bucket,
Cathie Wood
The main reason why Woods made such a comment and why the lawsuits were filed at the same time but did not contain the same charges is that Binance has been under scrutiny for a long time. This was evidenced by the SEC’s heavy-handed accusations. Accordingly, Binance was charged with crimes such as fraud, while Coinbase was charged with lighter charges.
Ripple’s Legal Victory in July Became a Headline
One year after the bankruptcy of crypto lender Celsius, nearly all regulators targeted the company in July. Alex Mashinsky, its disgraced former CEO, was taken into custody and then freed on $40 million bail. Lawsuits from the DOJ, SEC, Federal Trade Commission, and CTFC were directed towards Mashinksy. To put it briefly, lawsuits claim that Mashinksy deceived investors about the success of his cryptocurrency business while also enriching himself.
On the other hand, for the first time, the SEC’s attempts to govern through enforcement experienced a major setback in July. July 13 saw a big victory for Ripple over the SEC. A judge sided with the fintech company in the wake of a major $1.3 billion lawsuit filed in 2020, which claimed the company had misled investors and marketed unregistered securities in the form of XRP.
SEC Suffers Second Defeat in August
The manager of a cryptocurrency fund applied to the SEC to convert its Bitcoin Trust into an exchange-traded fund (ETF), but their application was turned down. In 2022, Grayscale filed a lawsuit against the SEC. In a startling turn of events following a protracted legal struggle with the SEC, Grayscale emerged victorious.
When a U.S. Court of Appeals judge for the D.C. Circuit reversed the SEC’s decision to thwart Grayscale’s plans to launch an ETF in late August, the court sided with Grayscale. Since the regulator had previously approved crypto futures exchange-traded funds (ETFs), the judge ruled that Grayscale’s petition was denied in an “arbitrary and capricious” manner.
Binance Filed a Lawsuit Against the SEC in September
Binance and its CEO, CZ, sued the SEC in September, requesting the dismissal of June’s complaint. In summary, Binance’s attorneys contended that the SEC was beyond its regulatory jurisdiction because it never provided precise standards for the cryptocurrency industry.
The exchange further maintained that the regulator has attempted to expand its authority worldwide. According to the SEC’s lawsuit, US users of Binance’s international service were doing so against their legal rights.
The Agenda Was Slightly Less Complicated in October
October was a bit quieter than other months. The only notable event was the prosecution of Genesis Global Capital, Gemini Trust, and Digital Currency Group by the New York Attorney General’s Office. In a lawsuit alleging that they lied to investors and tried to conceal more than $1 billion in losses, Attorney General Letitia James argued that the three companies, which allegedly defrauded 232,000 customers of more than $1 billion, harmed middle-class investors.
Bankman-Fried and Zhao Convicted in November
Bankman-Fried was found guilty on all seven counts of conspiracy and fraud by a jury on November 3. Although Bankman-Fried’s attorneys have promised to appeal the decision and keep pursuing the allegations, this marked the end of the criminal case related to the catastrophic collapse of FTX.
After years of inquiry, Binance CEO Zhao then agreed, in a settlement with the US Department of Justice, to resign from his position at his cryptocurrency business a few weeks later. Pledging guilty to accusations of money laundering, he agreed to pay $4.3 billion in fines.
Zhao Warned Not to Leave the Country in December Due to Flight Risk
Following a challenging year for the now-former CEO of Binance, Zhao, a U.S. judge prohibited the embittered cryptocurrency tycoon from leaving the nation, citing his substantial overseas fortune and real estate as reasons for the excessive danger of his escape.
The FTX verdict and the conclusion of the DOJ’s case against Binance should clear some of the air in Washington. 2024 will be a turnaround year for the industry,
Kristin Smith, Blockchain Association CEO
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