🌎 Crypto Industry Faces Regulation, Fraud, and VC Surge in Weekly Recap

Today’s edition of the weekly recap: Industry leaders discuss crypto and U.S. regulations at Consensus 2024; Binance founder Changpeng Zhao begins his jail term; fraud schemes and rug pulls rock the industry; plus: a slew of venture capital activity.

Consensus 2024

Cathie Wood suggested that Bitcoin (BTC) is irreplaceable at this year’s Consensus, placing it above all other crypto assets. This contrasts with Cardano founder Charles Hoskinson’s view that Bitcoin could be replaced by “another digital gold.”

Tom Emmer, Majority Whip of the U.S. House of Representatives, criticized the U.S. SEC Chair Gary Gensler for his regulatory approach. Emmer emphasized that recent efforts to provide clear regulatory measures confirm that crypto is nonpartisan and here to stay.

Chris Dixon, founder and managing partner of a16z Crypto, announced that the venture capital firm contributed $25 million to Fairshake, a super PAC dedicated to advocating for regulations that promote the U.S. crypto industry.

Industry commentators such as BNY Mellon’s Caroline Butler, BlackRock’s Joseph Chalom, and Bloomberg’s James Seyffart also discussed the progress of the crypto industry, the Bitcoin and Ethereum ETFs, and the need for clearer regulations.

Ripple CEO Brad Garlinghouse highlighted the influence crypto currently has on U.S. politics. He further emphasized his belief that the stablecoin market will grow exponentially, with Ripple’s upcoming stablecoin poised to take a significant share.

Robert Kennedy Jr., an independent candidate for the forthcoming U.S. presidential elections, urged the government to craft a clear crypto regulatory framework at Consensus 2024.

President of the NYSE Lynn Martin stated that Bitcoin ETFs introduced ample liquidity to the Bitcoin market, expressing optimism about their future performance. Bitcoiner Anthony Pompliano noted that Bitcoin has broader societal acceptance now and has transformed the finance scene.

Solana co-founder Raj Gokal mentioned that meme coins play a role in driving crypto adoption, citing the recent wave of celebrity meme coin projects launched on Solana.

Binance Founder Begins Sentencing

Reports this week confirmed that Binance founder and former CEO Changpeng Zhao had begun his four-month jail term at a low-security prison in California.

Meanwhile, Ryan Salame, one of the former executives at FTX and Sam Bankman-Fried’s associate, received a seven-and-a-half-year prison sentence. Salame is the next to receive a sentencing after Sam Bankman-Fried. Recall that Salame pleaded guilty.

At the same time, Terraform Labs and the U.S. SEC reached a settlement deal on the legal case around the collapse of TerraUSD. However, details of the settlement remain scant at the reporting time.

Crypto’s Political Impact Grows

As part of his efforts toward supporting the cryptocurrency industry, Republican presidential candidate Donald Trump expressed his readiness to aid Silk Road founder Ross Ulbricht, who currently serves a life sentence for his role in the launch of the black marketplace.

Trump’s cryptocurrency portfolio, consisting of several crypto assets, saw a spike to $10 million, primarily due to a price increase in MAGA (TRUMP), a meme coin created as a parody of the newly convicted felon’s mantra.

After the House of Representatives approved the FIT21 bill in what seemed like a political move to appease the crypto industry, Chair of the U.S. House Financial Services Committee Patrick McHenry urged the Senate to ensure that they also vote in favor of the bill.

Despite the recent shift in stance, the Biden administration vetoed a bill looking to limit the SEC’s oversight of the crypto industry by repealing SAB 121. The U.S. Senate and House of Representatives had voted to pass the bill.

A Surge in Fraud Schemes

Data provided by Hong Kong police confirmed that crypto financial crimes saw a massive 46% increase from 2,336 in 2022 to 3,415 in 2023. The report noted that these cases in 2023 involved HK$4.3 billion, with more than 90% of them related to fraud.

China and the United Arab Emirates have pledged to enhance their cooperation in combating cybercrime associated with cryptocurrency.

Reality show star Caitlyn Jenner fell victim to a social engineering scheme, with her social media pages used to promote the meme coin JENNER. Despite the token crashing, Jenner confirmed that she was in full control of her pages and promoted the token of her own volition.

Nigerian musician and Grammy nominee David “Davido” Adeleke promoted a meme coin in a similar manner. The token, named DAVIDO, also saw an over 90% price crash shortly after launch. Both JENNER and DAVIDO were launched on pump.fun.

Authorities apprehended a police officer in India for stealing $200,000 in Bitcoin. The tokens were connected to an ongoing investigation into a cryptocurrency scam.

The Ministry of Justice in South Korea introduced a task force last week to address a growing prevalence of market manipulation, scams, and fraud surrounding cryptocurrencies in the country.

VC Activity

USDT issuer Tether invested $150 million into mining company Bitdeer.

Venture capital firm Paradigm led a funding round for Babylon, a Bitcoin staking platform, securing $70 million for the protocol.

Félix Pago, a remittance services firm in Latin America, raised $15.5 million in a funding round championed by Castle Island Ventures. Fortunafi, an RWA tokenization protocol, also raised $9.5 million in funding. Switchboard, a blockchain-based oracle platform, secured $7.5 million in a series A funding round.

GaiaNet, a decentralized AI protocol, secured $10 million in funding for the development of its blockchain.