Galois Capital, a prominent advisory firm and Crypto Twitter presence, was fined $225,000 by the SEC for failing to comply with requirements related to the safeguarding of client assets. Certain assets were not held with a qualified custodian. Over half of the fund's assets were lost in the FTX collapse in 2022.

FTX co-founder Sam Bankman-Fried has been sentenced to 25 years in prison on seven fraud and conspiracy charges related to the collapse of the FTX exchange. He was also fined $11 billion, around the same amount that was lost by the exchange and the Alameda trading firm. The judge recommended he serve his sentence in a medium or low-security federal prison near the Bay Area to facilitate family visitation.

Caroline Ellison, former head of FTX's sister investment firm Alameda Research, has been sentenced to two years in prison for her role in one of the largest financial frauds in history. She pleaded guilty to seven fraud and money-laundering offices related to FTX's collapse but helped testify against her former boyfriend and boss, Sam Bankman-Fried, putting him in prison for 25 years.

In a recent interview with CNBC's Squawk Box, SEC Chair Gary Gensler emphasized the urgent need for investor protections within the cryptocurrency industry. He warned that without these safeguards, the sector is unlikely to endure. Gensler pointed to the significant turmoil experienced in the crypto market over the past few years, highlighting the collapse of major firms such as FTX, Three Arrows Capital, and Celsius. He noted that many prominent figures in the industry have faced legal consequences, including FTX's Sam Bankman-Fried, who was sentenced to nearly 25 years in prison for fraud. Gensler's comments reflect a broader concern about the lack of trust and accountability in the crypto space, which has seen tens of billions of dollars lost due to bankruptcies and mismanagement. He stated, "What innovative field in America survives without having building trust in that field and protecting investors or consumers?" This underscores his belief that investor protection is essential for the sustainability and growth of the industry. While Gensler has classified most cryptocurrencies as securities, he reiterated that Bitcoin is an exception. He encouraged the registration of crypto platforms with the SEC to ensure compliance and transparency. Gensler also mentioned that investors can now express their views on Bitcoin through exchange-traded products, which provide a regulated avenue for investment. The discussion also touched on the political landscape, with Gensler being asked about the differing views on cryptocurrency from presidential candidates Vice President Kamala Harris and Donald Trump. Harris has expressed a commitment to fostering innovation in digital assets while ensuring consumer protection, whereas Trump has criticized regulatory actions against crypto and proposed his own crypto initiative. Gensler refrained from commenting on the political implications but maintained that investor protection is crucial for fostering innovation across all sectors. Overall, Gensler's remarks highlight the SEC's ongoing efforts to regulate the cryptocurrency market and the importance of establishing a framework that protects investors while allowing for innovation.

The SEC has warned FTX that it may oppose the bankrupt exchange's plan to repay creditors using stablecoins or other digital assets. The agency also objects to provisions that would limit future legal liabilities for FTX's estate, aligning with the U.S. Trustee's concerns over discharge provisions that protect the debtors from further claims.

DCG and its CEO Barry Silbert have sought to dismiss a lawsuit from New York's Attorney General, Letitia James. The legal action alleges DCG and its subsidiary Genesis Global Capital defrauded investors connected to Gemini's Earn product and Genesis following the collapse of crypto entities Three Arrows Capital and FTX. The move follows DCG's opposition to a proposed settlement deal from Genesis with the NYAG last month.

Caroline Ellison, the former CEO of Alameda Research, has been sentenced to two years in a minimum-security prison for her involvement in the collapse of FTX.

Six months into a 25-year sentence, FTX founder Sam Bankman-Fried is appealing his fraud conviction and requesting a new trial. He claims that the former judge was biased against him after he was convicted of seven counts of fraud because of the collapse of the FTX exchange. Bankman-Fried claims that the exchange was never insolvent, as evidenced by the over-100% customer fund recovery.

The SEC is seeking over $5 billion from Do Kwon and Terraform Labs for penalties and disgorgement after a guilty verdict for defrauding investors. The enforcement action also involves barring Kwon from executive roles in any securities issue.

FTX has announced a significant decision regarding the allocation of proceeds from government forfeiture actions, setting aside up to $230 million specifically for certain shareholders rather than creditors. This move has sparked controversy, particularly among creditors who traditionally expect to be reimbursed before shareholders in bankruptcy proceedings. The agreement was finalized after the deadline for creditors to vote on the reorganization plan, and its revelation came as a surprise, leading to frustration and feelings of betrayal among creditors. The FTX estate, which is managing the bankruptcy process, argues that this reimbursement strategy is intended to prevent costly litigation and delays associated with the forfeiture proceeds. The plan stipulates that 18% of all proceeds from government forfeiture actions will be allocated to a special fund for the exclusive benefit of preferred shareholders, with the total amount capped at $230 million. This decision was made official on August 28, but creditors were not informed until September 27, which was the last day allowed for filing amendments to the plan. Critics, including representatives from creditor groups, have expressed their discontent, claiming that ordinary creditors had no opportunity to voice their opinions on this provision. Many creditors feel that they have been scammed again, as they had voted overwhelmingly in favor of the plan without knowledge of this new agreement. The FTX estate's filing suggests that both the debtors and preferred shareholders have a mutual interest in avoiding the costs and delays that could arise from litigation over the forfeiture proceeds. The FTX estate has estimated the total value of the forfeiture proceeds to be around $1.19 billion, which includes various assets such as cash, digital assets, and even private planes. The allocation of 18% of these proceeds aligns closely with the $230 million set aside for shareholders. Additionally, the plan allows for each shareholder to receive up to $250,000 for legal fees from the segregated fund. Despite the bankruptcy plan receiving preliminary support from creditors, there are concerns about the actual recovery amounts. Creditors are expected to receive at least 118% of their claim value in cash, but some representatives argue that the real recovery will be significantly lower when considering the value of cryptocurrencies at the time of bankruptcy compared to their current market value. The confirmation hearing for the FTX reorganization plan is scheduled for October 7, where a judge will decide on its approval. The estate is required to report the results of the creditor vote by September 30, which is also the deadline for filing any responses to objections regarding the plan. This situation highlights the complexities and tensions inherent in bankruptcy proceedings, particularly in the volatile cryptocurrency sector.

The FTX bankruptcy case highlights the issues with "dollarization" in crypto bankruptcies.

A US district judge has rejected the requests of crypto exchange Gemini and crypto lender Genesis to dismiss a case initiated by the SEC concerning the Gemini Earn program. Judge Edgardo Ramos found that the SEC "plausibly alleged" that both parties offered and sold unregistered securities. Genesis and Gemini were first charged by the SEC in January 2023.

A hacker exploited an admin account to mint 5 billion GALA tokens, quickly selling off a portion for $21.8 million in Ethereum, despite Gala Games' efforts to contain the breach using its blocklist feature. This incident adds to Gala Games' troubled history, which includes previous massive token thefts and legal issues, casting further doubt on the company's security measures and internal integrity.

UniSwap was fined $175K by CFTC for providing access to illegal crypto derivatives trading.

The SEC has charged Rari Capital, a DeFi platform, and its founders with misleading investors and engaging in unregistered broker activity, alleging that the platform falsely promoted features of its crypto investment products and conducted unregistered securities offerings. Rari Capital and its successors settled the charges, agreeing to penalties and legal restrictions without admitting or denying the allegations.

Following a settlement with the SEC, eToro US will cease nearly all crypto trading except for Bitcoin, Bitcoin Cash, and Ether. It will allow customers to sell other crypto assets within 180 days. The platform agreed to pay a $1.5 million fine after being charged with operating as an unregistered brokerage and clearing agency in the U.S.

Former crypto exchange FTX has proposed a plan to see 98% of creditors receive 118% of their claims. Other non-governmental creditors would get 100% of claims plus up to 9% interest if the bankruptcy court approves the plan. The money was accrued by selling various FTX assets, like its stake in AI company Anthropic. FTX's lack of BTC and ETH holdings at the time of bankruptcy prevented it from seeing asset appreciation due to recently rising prices.

A lawsuit was filed against Coinbase by a few individuals in California and Florida alleging that Coinbase violated state securities laws with its digital asset sales. The lawsuit claims that SOL, MATIC, NEAR, MANA, ALGO, UNI, XTZ, and XLM as securities. Coinbase has previously argued that secondary crypto asset sales are not securities transactions.

The SEC is seeking $2 billion in penalties from Ripple Labs. This is part of an ongoing conflict where the SEC accused Ripple of selling an unregistered security by raising $1.3 billion from the sale of XRP. Ripple's CEO critiqued the SEC's unjust behavior, citing court decisions in favor of Ripple.

Mango DAO and Mango Markets have reached a settlement with the U.S. Securities and Exchange Commission (SEC) regarding charges related to the unregistered sale of MNGO tokens. The settlement involves a total payment of $700,000 in penalties, which will be shared among Mango DAO, Mango Labs, and Blockworks Foundation. The SEC's charges highlighted that these entities engaged in the unregistered offer and sale of governance tokens on the Mango Markets platform, which is considered a violation of securities laws. In addition to the penalties, the involved parties have agreed to destroy their MNGO tokens. The SEC emphasized that the designation of a project as a "DAO" does not exempt it from regulatory scrutiny. Jorge G. Tenreiro, the acting chief of the Crypto Assets and Cyber Unit, stated that the underlying activities and the individuals behind the project remain subject to registration requirements, regardless of the use of automated or open-source software. The SEC's complaint also identified SOL, a cryptocurrency sold on Mango Markets, as a security. This classification aligns with previous assertions made by the SEC in a separate lawsuit against the crypto exchange Binance, where SOL and other cryptocurrencies were similarly categorized. This settlement comes in the wake of significant issues faced by Mango Markets, including a major exploit that resulted in a loss of approximately $116 million, attributed to Avraham Eisenberg, who has since been convicted for his actions. The resolution of these charges marks a critical moment for Mango DAO and its associated entities as they navigate the complex regulatory landscape surrounding cryptocurrencies and digital assets.

The narrative surrounding Silvergate Bank's downfall paints a complex picture of regulatory pressure, political maneuvering, and the broader implications for the cryptocurrency industry in the United States. Silvergate, once a leading bank in the crypto sector, faced significant challenges that culminated in its voluntary liquidation in March 2023. This decision followed a series of events that many believe were influenced by the Biden administration's regulatory stance against cryptocurrency. Initially, Silvergate had positioned itself as a vital player in the crypto banking space, with its Silvergate Exchange Network (SEN) facilitating seamless transactions for major crypto firms. However, as the cryptocurrency market began to falter, particularly after the collapse of high-profile entities like FTX, Silvergate experienced a dramatic decline in deposits. This situation was exacerbated by allegations from prominent figures, including Senator Elizabeth Warren, who accused the bank of complicity in FTX's alleged crimes. Warren's public statements created an "atmosphere of concern" that may have contributed to a bank run, leading to significant withdrawals. Regulatory bodies, including the Federal Reserve and the FDIC, issued warnings about the risks associated with banks serving the crypto sector. Reports suggest that Silvergate was subjected to an informal cap on crypto deposits, limiting them to 15 percent, which severely hampered its ability to operate effectively. This regulatory pressure, combined with the bank's financial struggles, ultimately forced Silvergate to announce its liquidation. The narrative suggests that Silvergate's demise was not merely a consequence of market forces but rather a result of targeted regulatory actions aimed at curtailing the crypto industry. Critics argue that the Biden administration's approach mirrors past efforts to marginalize politically disfavored industries, likening it to "Operation Choke Point." This initiative allegedly sought to undermine the crypto sector by leveraging regulatory authority to restrict banking access for crypto firms. In the aftermath of Silvergate's collapse, the broader banking crisis of 2023 unfolded, impacting other institutions like Signature Bank and Silicon Valley Bank. The interconnectedness of these events raises questions about the role of regulatory actions in precipitating a wider financial crisis. Despite the settlements Silvergate reached with regulators, which included fines for alleged compliance failures, there remains a belief among some insiders that the bank was unfairly targeted. They argue that the regulatory environment created insurmountable challenges, leading to its downfall rather than inherent mismanagement or criminal activity. The situation highlights the tension between regulatory oversight and the need for innovation in the financial sector, particularly regarding emerging technologies like cryptocurrency. As the narrative unfolds, it underscores the importance of transparency and accountability in regulatory practices, especially when their actions can have far-reaching consequences for entire industries.

Coinbase is suing the SEC and FDIC, using the Freedom of Information Act to demand the release of documents concerning past crypto investigations and regulatory actions. It claims these agencies have systematically hindered the crypto industry, which can be seen in the ongoing disputes over regulation and access to banking services for crypto firms.

Avi Eisenberg, a crypto trader who manipulated Solana's Mango Markets in October 2022, was convicted of commodities fraud and manipulation by a U.S. federal jury. Eisenberg manipulated the DEX using collateral pumping to borrow $110 million from Mango without repaying it. His legal team argued that his actions were completely legal by the rules of the smart contracts, but the prosecution successfully asserted that he acted with fraudulent intentions.

Despite mainstream media headlines suggesting FTX creditors will recover over 100% of their funds, the actual value users will receive is significantly less than what the assets could/would have been worth. Creditors will receive ~118% of their funds fixed to the fiat value of their assets on FTX's bankruptcy filing date. Many of the lost currencies (e.g., BTC, SOL, and ETH) have appreciated significantly since then.

The SEC has delayed a decision on the Invesco Galaxy Ethereum ETF until July 5, 2024.

The FTX Token (FTT), associated with the now-bankrupt cryptocurrency exchange FTX, experienced a significant surge of over 70% on September 29, 2024, reaching a price of approximately $2.70, the highest it had been since March 2024. This spike in value came amid speculation on social media regarding potential bankruptcy distributions to creditors and customers, which were rumored to begin on September 30. However, the official bankruptcy plan had not yet been approved, with a court hearing set for October 7 to discuss the plan's approval. Following the initial surge, the price of FTT fell back to around $2.10 by September 30, still reflecting a 30% increase over the previous 24 hours. If the bankruptcy plan is approved, it is expected that the FTX trustee will start making distributions to creditors with claims under $50,000 by the end of 2024, while those with larger claims may have to wait until early 2025 for any reimbursements. FTT was launched in 2019 alongside the FTX platform and provided various benefits to users, such as trading fee discounts and the ability to use the token as collateral for futures positions. The token reached an all-time high of nearly $80 in September 2021 but saw a dramatic decline following the collapse of FTX in November 2022, dropping from around $25 to below $2. This decline was exacerbated by Binance's decision to sell its entire holdings of FTT as a risk management measure. As of late September 2024, there are approximately 30,600 holders of FTT, with a market capitalization of around $330 million. A previous recommendation in July 2024 suggested removing FTT claims from the bankruptcy proceedings due to its equity-like characteristics, indicating the complexities surrounding the token's status in the ongoing bankruptcy process.

The CFTC’s complaint against KuCoin for illegal commodity transactions and failing to register refers to both Bitcoin and Ethereum as commodities.

The SEC and ShapeShift have settled charges for operating an unregistered exchange and listing cryptocurrencies the SEC deemed securities.

SEC Chair Gary Gensler has criticized the Financial Innovation and Technology for the 21st Century Act (FIT21), arguing that it would create regulatory gaps and reduce the oversight of crypto assets as securities, thus jeopardizing investor protection.

The SEC has criticized Coinbase for excessively subpoenaing documents, including emails from Gary Gensler, labeling the demand as unnecessary and irrelevant to the case. It claims that it has already provided over 240,000 documents and that meeting Coinbase's request for millions more would involve an impractical review of potentially privileged communications, far exceeding the actual case requirements.