Schlagwort: crypto regulation

• SEC says hacker that compromised its X account used a “SIM swap” attack.
• The unauthorised access had seen the hacker publish a fake spot Bitcoin ETFs approval announcement.
• Investigations into the breach are ongoing, but SEC says its 2FA feature had been disabled at the time of the compromise.

The US Securities and Exchange Commission (SEC) has confirmed that the hack on the agency’s X account, and the resulting “fake approval” of spot Bitcoin ETFs, happened after an apparent “SIM swap.”

According to the SEC, the attacker used a cell phone number linked to the agency’s X account. The unauthorised entity accessed the phone number via a telecom carrier the SEC uses, and not from the regulator’s system.

However, the SEC notes that at the time of the hack, two factor authentication (2FA) for the social media account was disabled. In a press release, the SEC said 2FA for its X account had been disabled since July 2023.

“While multi-factor authentication (MFA) had previously been enabled on the @SECGov X account, it was disabled by X Support, at the staff’s request, in July 2023 due to issues accessing the account. Once access was reestablished, MFA remained disabled until staff reenabled it after the account was compromised on January 9. MFA currently is enabled for all SEC social media accounts that offer it,” the SEC said in an update published on Monday.

Multi-agency investigation ongoing

The unauthorised access to SEC’s X account on January 9, 2024 drew widespread criticism and condemnation, with calls for investigation as observers pointed to potential market manipulation. The false approval saw Bitcoin’s price swing sharply – rising to highs of $49k before paring all gains within minutes.

While the SEC officially approved the spot Bitcoin ETFs on January 10 and trading commenced on January 11, an investigation involving various regulatory and law enforcement agencies is ongoing.

In its latest press update on the incident, the SEC and its staff continue to cooperate with the FBI, Homeland Security’s Cybersecurity and Infrastructure Security Agency, the Commodity Futures Trading Commission (CFTC), the Department of Justice (DoJ), and the SEC’s own Division of Enforcement.

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• Will South Korea allow spot Bitcoin ETFs? The Financia Services Commission had warned brokerage firms against offering recently listed US spot Bitcoin ETFs.
• President’s office urges FSC to reconsider stance, noting possibility if incorporating foreign-listed products.

The South Korean president’s office has urged the Financial Services Commission (FSC) to reassess its stance on the trading of the recently approved spot Bitcoin ETFs.

Earlier this month, the Securities and Exchange Commission (SEC) approved eleven spot Bitcoin ETFs – the nod coming a decade after the first application. But only a day after the ETFs hit the market, the FSC released a statement warning local firms against providing access to the foreign-listed products.

An official of the FSC had also noted that South Korea wasn’t looking to follow the US in allowing spot ETFs.

Government urges FSC to review stance

On Thursday, details in a local media outlet revealed that South Korea’s Office of the President is urging the country’s financial regulator to revisit the matter.

Sung Tae-yoon, chief of staff for policy in the president’s office, said during a briefing on Thursday that the government had told the FSC “not to have a specific direction of ‘yes or no’” stance. The view is that there’s need to find how best to incorporate the new ETFs and other markets into the local financial ecosystem, Tae-yoon added, noting the government was considering this direction.

On January 12, the FSC said in a press release that local securities firms looking to broker Bitcoin spot ETFs listed overseas may violate the government’s current stance on virtual assets. Providing access may also be in violation of the Capital Markets Act, it added.

The outlook contrasts with that of Hong Kong, where regulators are open to spot ETFs.

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• The new bill seeks to introduce a crypto regulatory framework that aligns with the EU’s MiCA.
• Poland’s Financial Supervision Authority (KNF) will supervise cryptocurrencies and impose penalties where applicable.

Poland’s financial markets regulator plans to have a crypto regulatory framework in place by the end of the year, the Finance Magnates has reported.

According to the publication, which has cited details published in local media outlets, the Polish government is looking to introduce a crypto regulation bill that will facilitate this in Q2.

The move will see the Polish Financial Supervision Authority (KNF) empowered to surpervise the digital assets market in the country in line with European crypto regulatory guidelines. The EU adopte its Markets in Crypto Assets (MiCA) law in 2023 and is set to come into effect this year.

Poland’s pursuit of new crypto-related legislation is therefore down to the need to align local laws with the new EU rules. The new crypto bill is eyeing more clarity for KNF and the broader cryptocurrency industry, as well as proper investor protection.

If the new bill’s adopted into law, the Polish markets’ watchdog will have the authority to impose financial penalties against crypto companies.

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• The New York Department of Financial Services (NYDFS) says Genesis Global Trading will pay an $8 million fine and surrender its BitLicense.
• NYDFS said in a press release that investigations found the crypto platform had significant failings in its anti-money laundering and cybersecurity programs. 
• Genesis Global Trading is a subsidiary of Digital Currency Group and received its BitLicense in 2018.

The New York Department of Financial Services (NYDFS) has announced an $8 million penalty against Genesis Global Trading, a subsidiary of crypto company Digital Currency Group.

Superintendent Adrienne A. Harris also announced that Genesis will surrender its BitLicense as part of a settlement following the New York regulator’s investigation. According to the NYDFS, investigations into the crypto platform’s activities revealed significant failings in its anti-money laundering and cybersecurity programs.

“Genesis Global Trading’s failure to maintain a functional compliance program demonstrated a disregard for the Department’s regulatory requirements and exposed the company and its customers to potential threats,” Superintendent Harris said.

The regulator found that the trading platform, the only Genesis entity that held the BitLicense, failed to meet the required Bank Secrecy Act and Anti-Money Laundering compliance standards. This also applied to transaction monitoring, Suspicious Activity Report (SAR) filings and Office of Foreign Assets Control (OFAC) screening, Harris added in the press release.

Genesis Global Trading, different from the Genesis Global Capital that filed for bankruptcy in 2023, received the NYDFS’ virtual currency business license in 2018. 

Read more: Genesis Global Trading closes its OTC trading platform

In its announcement today, the state regulator said the DCG subsidiary “was not involved in the Gemini Earn program.”

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• Turkey’s crypto regulation seeks to align the country’s anti-money laundering laws with the scope of the Financial Action Task Force (FATF) as it looks to get off the “grey list”.
• Minister of Treasury and Finance Mehmet Simsek says the crypto asset regulation framework has reached the technical stage.

Turkey has advanced the legal framework for crypto regulation to the final stage, Mehmet Simsek, the country’s Minister of Treasury and Finance, said on Wednesday.

A report by local media outlet Anadolu Agency states that once finalised, the legislation will see Turkish authorities and regulators apply the clarity the law gives to promote blockchain development and to protect crypto users.

Crypto legislation to align with international practices

According to Simsek, interest in crypto assets has grown significantly across the Turkish population, particularly with regard to buying and selling of crypto assets on cryptocurrency exchanges and trading platforms. 

This, however, has come with various risks, including fraud on some exchanges. The government official also highlighted the potential for manipulation and risks of wild price movements.

The regulatory framework reaching the technical stage means the country is a step closer to aligning its crypto regulatory landscape with international practices.

The legislation will also see Turkey’s crypto regulation align with the international requirements as captured by the Financial Action Task Force (FATF).

Among regulatory requirements to be rolled out with the final implementation will be the obligation for cryptocurrency trading platforms to register for and obtain licences. Simsek also noted that Turkey was looking to align its regulatory rules with international law as applied to founders, and managers. The legal obligations will also extend to capital management.

As CoinJournal highlighted in November last year, Turkey’s crypto asset law is part of the country’s effort to persuade FATF to remove it from the “grey list”.

Added to the list in 2021, Turkey’s appearance means it’s one of the countries currently having an insufficient crackdown on anti-money laundering (AML) and terrorism financing.

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