Category: Cryptocurrency

Sam Bankman-Fried faces multiple lawsuits: A look at crypto exchange FTX founder’s mounting trouble

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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There seems no end to the legal troubles of Sam Bankman-Fried, the founder of the bankrupt crypto exchange FTX. Amid the trial in high-profile multi-million dollar fraud cases against Bankman-Fried, in a fresh lawsuit, FTX has alleged that he was planning to purchase the small Pacific island nation of Nauru in case the world came to an end, according to reports.

The lawsuit was filed on Thursday, July 20, by FTX against Bankman-Fried and three other former top executives of the bankrupt crypto exchange to recover $1 billion dollar, according to a Guardian report. The lawsuit filed in a Delaware bankruptcy court in the United States, also included a memo which carried a detailed plan to buy Nauru by Bankman-Fried’s brother Gabriel.

Come the great fire or flood, he would move himself and his colleagues in the effective altruism movement into a bunker there, to wait out the apocalypse, according to the latest allegations, Quartz reported.

FTX alleged that Bankman-Fried and other executives named in the lawsuit misappropriated funds for their pet projects. The transfers happened between February 2020 and November 2022 when FTX filed for bankruptcy.

In previous charges against him, FTX had earlier alleged that Bankman-Fried and other former executives of the cryptocurrency exchange used customers’ funds to pay for their luxury apartments, political contributions, and personal projects, reported Reuters.

FTX has alleged that Bankman-Fried and his former executives’ collective fraud caused the company to collapse. FTX accused Bankman-Fried and his team members of using $546 million in May last year to buy shares of Robinhood Markets Inc., while Ellison paid herself a bonus of $28.8 million, the company claimed.

Denying all the allegations, Bankman-Fried in March pleaded not guilty in court and claimed that FTX had inadequate risk management, which is why the company failed. In May 2023, he asked US District Judge Lewis Kaplan to dismiss 11 out of 13 fraud and conspiracy charges against him, but his plea was rejected by the US court.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

FTX sues Sam Bankman-Fried, others to recoup more than $1 billion

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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FTX Trading on Thursday sued founder Sam Bankman-Fried and other former executives of the cryptocurrency exchange, seeking to recoup more than $1 billion they allegedly misappropriated before FTX went bankrupt.

The complaint filed in Delaware bankruptcy court also names as defendants Caroline Ellison, who led Bankman-Fried’s Alameda Research hedge fund; former FTX technology chief Zixiao “Gary” Wang; and former FTX engineering director Nishad Singh.

FTX said the defendants continually misappropriated funds to finance luxury condominiums, political contributions, speculative investments and other “pet projects,” while committing “one of the largest financial frauds in history.”

The alleged fraudulent transfers occurred between February 2020 and November 2022 when FTX filed for Chapter 11 protection, and can be undone — or “avoided” — under the US bankruptcy code or Delaware law, FTX said.

A spokesman for Bankman-Fried declined to comment. Lawyers for the other defendants did not immediately respond to requests for comment.

FTX is now led by John Ray, who helped manage Enron after the energy trader’s 2001 bankruptcy.

US prosecutors have called Bankman-Fried the mastermind of a fraud that led to FTX’s collapse, and included the misappropriation of billions of dollars of customer funds.

Bankman-Fried has pleaded not guilty to several criminal charges. Ellison, Wang and Singh have pleaded guilty and agreed to cooperate with prosecutors.

According to Thursday’s complaint, the fraudulent transfers included more than $725 million of equity that FTX and West Realm Shires, an entity that Bankman-Fried controlled, awarded “without receiving any value in exchange.”

FTX said Bankman-Fried and Wang also misappropriated $546 million to buy shares of Robinhood Markets, while Ellison used $28.8 million to pay herself bonuses.

It also said some of Bankman-Fried’s criminal defense is being funded from a $10 million “gift” he gave his father.

“The transfers were made when (FTX-related entities) were insolvent, and defendants knew it,” FTX said.

Federal law lets bankruptcy trustees avoid transfers of property made in the two years before Chapter 11 filings, if the transfers are made for less than their value and with an intent to defraud a bankruptcy estate.

The case is FTX Trading Ltd et al v Bankman-Fried et al, U.S. Bankruptcy Court, District of Delaware, No. 23-ap-50448. The main bankruptcy case is In re FTX Trading Ltd et al in the same court, No. 22-bk-11068.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Economic Affairs Secretary: Follow a ‘minimum level of regulation’ on crypto assets with ‘more stringent norms’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India in its Presidency note on Crypto assets in the Gandhinagar round of the G20 Finance Ministers & Central Bank Governors meet has pushed for a minimal standard of regulation, Economic Affairs Secretary Ajay Seth told CNBC-TV18.

In an exclusive interaction, Seth said, “The building blocks of a good policy are getting into place; we need to follow a minimum level of regulation on cryptos. If countries want more stringent norms they can do so.” 

On being asked if this would address the RBI’s concerns on the macroeconomic risks arising out of crypto assets and if they can be banned by individual countries, Seth said, “Every country should have a base level of policies and regulations and protect its financial sector from crypto assets. Countries, especially emerging economies, if they want to be more stringent, can do so.”

RBI has been unequivocal in pushing for an outright ban on cryptocurrencies. “RBI’s position is very clear, all cryptos should be banned. However, the technology of blockchain needs to be supported as it has so many other applications,” RBI Governor Shaktikanta Das has been quoted on several occasions as saying. 

Highlighting India’s proactive role in cryptocurrencies on the global stage, Seth said, “India has facilitated very significant work on cryptocurrency. It was India that asked the IMF to come up with a macroeconomic approach to cryptos … There has been a good discussion on how to deal with crypto assets. India also said the synthesis paper of the G20 due in September should focus on a roadmap and the way forward. So, India has given major inputs on this issue.” 

Ajay Seth added the Organisation for Economic Cooperation and Development (OECD) has made recommendations on the taxation of crypto assets and the sharing of information. And the Financial Stability Board has given recommendations on backed and unbacked crypto assets as well. 

“There is consensus on money laundering, terror financing using crypto assets. A policy and regulation approach to cryptos is being considered,” Seth told CNBC-TV18. 

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI Governor says FSB’s proposed crypto framework backs individual jurisdictions’ ban choice

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Financial Stability Board finalises global regulatory framework for crypto assets

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Financial Stability Board (FSB) has finalised a comprehensive global regulatory framework for crypto asset activities. The framework, which is based on the principle of “same activity, same risk, same regulation”, aims to address the fast-evolving nature of crypto-asset markets and mitigate potential risks to global financial stability.

The release of this regulatory framework by the FSB coincides with the ongoing discussions within the G20 regarding the establishment of a global regulatory framework for cryptocurrencies. The FSB’s report is expected to provide valuable insights and recommendations to guide these discussions and pave the way for effective international cooperation in regulating crypto assets.

Recognising the rapid growth and increasing prominence of crypto assets, the FSB has emphasised the need for crypto-asset service providers to operate under an enforceable legal basis. This requirement aims to ensure that providers adhere to regulations that are equivalent to those in traditional financial markets, preventing any potential circumvention.

Moreover, the framework underscores the importance of countries having the capability to take corrective actions if crypto issuers fail to comply with the established rules. This provision intends to maintain accountability and uphold the integrity of the crypto asset market.

Also read; A guide to secure your accounts on crypto exchanges

In a bid to enhance transparency and foster international cooperation, countries with large crypto exchanges are urged to share information with other nations. This measure is expected to improve the overall supervision of crypto asset activities and facilitate the identification of potential risks on a global scale.

One of the significant aspects of the framework pertains to the accountability and risk management of crypto asset issuers. Clear and direct lines of accountability are essential to ensure that these issuers can effectively manage and mitigate potential risks associated with their activities.

The framework also places specific emphasis on stablecoin arrangements. Stablecoins, which are crypto assets pegged to a specific fiat currency or basket of assets, must adhere to strict disclosure and redemption norms. These requirements aim to safeguard the stability and integrity of stablecoin arrangements, which have gained significant popularity in recent years.

By finalising this global regulatory framework, the FSB aims to enhance the overall stability and resilience of the financial system in the face of the evolving crypto-asset landscape. The framework’s focus on accountability, risk management, transparency, and international cooperation sets a strong foundation for regulating crypto asset activities in a manner that aligns with traditional financial markets.

Also read: Crypto ransomware attacks rise in first half of 2023, report says

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Need strict accountability, disclosure & redemption norms for crypto assets & stablecoins, says Financial Stability Board

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Crypto-asset markets are fast evolving and could reach a point where they represent a threat to global financial stability, said the Financial Stability Board (FSB) in its latest report on the global regulatory framework for crypto assets. The report says the financial stability risks related to cryptocurrencies could rapidly escalate and therefore there is a need for timely and pre-emptive evaluation of policy responses.

“The recommendations establish a global regulatory baseline, and some jurisdictions may also decide to take more restrictive regulatory measures. Their aim is to promote a regulatory, supervisory and oversight framework that is technology-neutral and focuses on underlying activities and risks”, said the report.

The FSB has said that authorities in countries must have the power and capability to regulate and supervise crypto asset activity, including evasion of regulations by crypto asset issuers by operating in foreign jurisdictions. Countries may consider restricting access of their domestic users to foreign crypto asset service providers, said the report.

The report says that authorities should target regulatory outcomes in the crypto-asset market equivalent to those in the traditional financial market. This is to prevent circumvention of regulation. The board has said that, if countries host crypto asset issuers with a global reach, then they must coordinate effectively with other jurisdictions to share information.

Crypto asset issuers must have a comprehensive governance framework with clear and direct lines of accountability for their functions and have an effective risk management framework.

“Authorities should, as appropriate, consider applying both prudential and market conduct regulatory tools,” said the report, adding that the crypto asset issuers must communicate all risks and mitigation measures to users in a transparent manner.

The report has also come out with recommendations on global stablecoin arrangements. Authorities should require that stablecoin arrangements have appropriate recovery and resolution plans. “To maintain a stable value at all times and mitigate the risks of runs, authorities should require stablecoin arrangements to have an effective stabilisation mechanism, clear redemption rights and meet prudential requirements,” said the report.

The report comes up at a time when the G20 Finance Ministers and Central Bank Governors are discussing the possibility of having a common cryptocurrency framework.

Also Read:Exclusive | G20 Summit in Gandhinagar: India aims for consensus on regulating cryptocurrency industry

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ITR filing: Key things to know when considering gains from crypto investments

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Crypto exchanges have been working towards simplifying the income tax return (ITR) filing process, signifying a sharp focus on compliance and transparency. The new ITR forms for the FY 2022-23 now also have a dedicated section called Schedule – Virtual Digital Assets (VDA) for reporting gains from crypto/non-fungible tokens (NFTs) and other VDAs.

This requires details such as the acquisition date, transfer date, category of income for taxation, acquisition cost in case of a gift, and consideration received.

“When filing income tax return on gains from crypto investments, it’s important to maintain accurate records of transactions, determine the classification of crypto assets into appropriate heads of income under the income tax regulations (such as business income, capital gain, etc.), and calculate and report tax impact accordingly under the dedicated section in the ITR,” Pranav Pagaria, VP – Finance and Tax, CoinDCX told CNBC-TV18.com.

This is because TDS deducted and deposited on behalf of every user is already available with the income tax department and non-reporting or incorrect reporting of crypto transactions could invite income tax scrutiny.

“We, thus, encourage all our users to diligently report their crypto transactions while filing income tax return for FY 2022-23,” Pagaria added.

When considering gains from crypto investments, there are a few key things to remember:

Firstly, the introduction of Section 115BBH in the 2022 budget imposes a 30 percent tax on profits earned from trading cryptocurrencies starting from April 01, 2022.

“Additionally, under Section 194S, a 1 percent Tax at Source is levied on the transfer of crypto assets if the transactions exceed Rs 50,000 (or even Rs 10,000 in some cases) in the same financial year, effective from July 01, 2022. It’s crucial to see that these tax rates apply to investors and full-time traders,” Punit Agarwal, Founder of KoinX, a crypto taxation platform said while talking to CNBC-TV18.com.

The tax rate of 30 percent and the 1 percent TDS remains the same regardless of the nature of income; that is to say, whether the income is classified as capital gains or business income, the tax rate would still be 30 percent.

Another thing to keep in mind for crypto investors filing their income tax returns is the correct ITR forms.

“ITR-2 and ITR-3 forms are the applicable ITR forms. ITR-2 is for individuals with capital gains from investing in VDAs and not having any business income. Most crypto investors will be opting for ITR-2. ITR-3 is for individuals with business/professional income (either from VDAs or any other business). This form will be suitable for crypto investors engaged in trading or other business-related activities,” Agarwal said.

Crypto investors will also be eligible to take credit for the TDS deducted during the FY 2022-23. The TDS Credit can be viewed in both AIS and Form 26AS, available on the income tax portal. If an Investor has a loss from trading in VDAs during the year, he/she can claim a refund of the TDS by filing ITR (assuming there is no taxable income).

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Exclusive | G20 Summit in Gandhinagar: India aims for consensus on regulating cryptocurrency industry

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The G20 Finance Ministers and Central Bank Governors will engage in discussions centered around cryptocurrencies during their meeting in Gandhinagar – which began on July 16th and ends on July 18th. One key objective of this meeting, held under India’s presidency, is to determine whether a unified regulatory framework for cryptocurrencies and crypto assets can be established.

Finance Ministers and Central Bank Governor will brainstorm on a common road map for regulating the cryptocurrency sector. The roadmap would focus on safeguarding national and macroeconomic security, investor protection and encouraging innovation.

G20 leaders will review the reports prepared by the Financial Stability Board, OECD, IMF and Bank for International Settlements, which had been asked to make recommendations on regulating cryptocurrencies and crypto assets earlier this year.

Among the objectives being discussed, is that the policy framework must take into account concerns of emerging and developing economies and non G20 members. CNBC-TV18 has learnt that the members will discuss capacity building measures to strengthen enforcement power of regulators, starting with countries with higher adoption of crypto assets, internationally active exchanges and where large stablecoin issuers are located.

The IMF is also working on a risk assessment and mitigation framework for countries to take corrective action. The FSB and IMF will work together on developing common terminologies, bridging data gaps and recommending guidelines for cross border sharing of information, said a source.

The Financial Action Task Force or the FATF is likely to recommend a greater coverage of anti money laundering laws across countries, especially in high risk jurisdictions.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow