Weekly Roundup

SEC Whistleblowers: Nicole Creola Kelly, chief of the SEC’s Office of the Whistleblower, is facing criticism from numerous industry observers regarding several impartiality and effectiveness issues. Specifically, a number of different sector stakeholders claim that her division favors individuals with connections to the regulator. While the program has disbursed over $1 billion to credible whistleblowers and many experts in the space speak highly of the division’s work, the rise in tip submissions and the claims that whistleblowers are more likely to receive an award if they hire a law firm with a connection to Ms. Kelly’s division have garnered these questions surrounding the office’s impartiality and effectiveness.

ESG Disclosures: The SEC enforcement division has issued subpoenas and other document requests to multiple asset managers regarding their ESG investment marketing operations. The agency’s inquiry is focused on numerous areas, including conventional funds being repurposed as ESG funds and potential discrepancies in information sharing between funds offered in the US and Europe. Numerous industry observers predict that additional enforcement actions may be launched as these initial investigations take shape.

Binance Files Protective Order: Binance filed for a protective court order on Monday against the SEC, claiming that the agency’s information requests into their operations are too “broad” and “burdensome.” Specifically, the petition aims to limit the SEC’s activities to only conducting four depositions of BAM employees and to exclude the depositions of BAM’s CEO and CFO. While the SEC has previously sued Binance and its CEO, Binance’s filing states that the SEC has not provided evidence of customer assets being misused that would justify these investigations. The SEC has rejected all of BAM’s attempts to limit its requests and opposes this most recent motion.

Celsius Bankruptcy Plan: Celsius Network has been granted approval by a U.S. bankruptcy judge to seek creditor consent for its bankruptcy plan. The crypto lender aims to emerge from Chapter 11 as a new entity owned by creditors and to return all digital asset deposits to retail customers, with their remaining business lines, such as their bitcoin mining and staking operations, to be managed by the Fahrenheit Group. Customers may potentially receive a 67% recovery payment, including liquid crypto assets, equity shares, and litigation proceeds against company founder Alex Mashinsky. The organized company will also litigate against Mashinsky, who is already facing a number of federal charges.

Coinbase Crypto Futures: Coinbase Global has received approval from the National Futures Association (NFA) to offer eligible U.S. customers access to cryptocurrency futures trading. The decision comes after Coinbase applied to register as a futures commission merchant with the NFA in September 2021 and allows Coinbase to act as a brokerage for investors to trade futures contracts on its platform. Numerous industry observers have noted that this move will have to navigate numerous challenges, including potential regulatory risks and a possible quarter-over-quarter continuation of lower trading volumes.

In the Mix: This Week’s Top FinTech Thought Leader

  • Kristin Johnson, CFTC Commissioner, is speaking on a panel at the 2023 Defi Retreat US.

  • Colin Luce, CEO of Basin Theory, published a piece in Forbes regarding the potential new avenues that AI technology could provide bad actors to commit fraud throughout the fintech industry. Specifically, Luce highlighted the vulnerabilities surrounding payment protection and the potential steps stakeholders throughout the sector, such as banking institutions and credit card companies, could take to help bolster cybersecurity efforts. “The answer simply cannot be further regulation – and it must include a defensive AI strategy with comprehensive participation from all of the relevant platforms fighting the fraudsters on the frontlines,” Luce said.

  • Dan Raju, CEO of Tradier, spoke with Traders Magazine about the launch of the Tradier Hub, an online, free-of-charge platform that  aims to serve as a space for traders to share strategies, provide live market education, and access a free-flowing exchange of ideas. “We are focused on creating a trading community with people who are committed to passing along their knowledge in real-time to everyone,” Raju said.