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Film producer pleads guilty in fraud investment scams | Associated Press

ATLANTA (AP) — A movie producer has pleaded guilty to several counts of fraud and money laundering arising from his fraudulent promotion of two cryptocurrency investment schemes, federal prosecutors said.

Ryan Felton, 48, entered the plea on the fourth day of his jury trial in his hometown of Atlanta on Thursday.

“The defendant used 21st century technology to perpetrate an age-old fraud: lying to investors to steal their money and fund his own lavish lifestyle,” U.S. Attorney Ryan K. Buchanan said in a news release. “Felton’s conviction should serve as a warning to anyone who seeks to capitalize on emerging technology to victimize others.”

Investigators said Felton, in 2017, promoted an initial coin offering, or ICO, for an entertainment streaming platform promising to surpass Netflix. Prosecutors said he falsely promoted that Atlanta rapper T.I. was co-owner of the FLiK platform, the U.S. military had agreed to distribute the platform to service members, and FLiK was finalizing licensing deals with major film and television studios.

Instead of using investor funds to develop the platform, Felton used around $2.4 million from investors to fund an extravagant lifestyle. He bought a $1.5 million home, a Ferrari, a Chevy Tahoe, and about $30,000 in diamond jewelry, the U.S. Attorney’s Office for the Northern District of Georgia said.

Felton promoted a second ICO for a new company in 2018. Investigators say he raised more than $200,000 for CoinSpark and again diverted money to his personal bank account.

“The technology has advanced, but the crime remains the same, and those who invest in cryptocurrency must be wary of opportunities that appear too good to be true,” said Keri Farley, Special Agent in Charge of FBI Atlanta. “The FBI is committed to protecting investors from sophisticated cryptocurrency scammers that seek to capitalize on the novelty of digital currency.”

Felton pleaded guilty to 12 counts of wire fraud, 10 counts of money laundering, and two counts of securities fraud.

Sentencing will be scheduled at a later date before U.S. District Judge J.P. Boulee.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.


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Film producer pleads guilty in fraud investment scams | National

ATLANTA (AP) — Federal prosecutors say a movie producer has pleaded guilty to several counts of fraud and money laundering arising from his fraudulent promotion of two cryptocurrency investment schemes. Ryan Felton entered the plea on the fourth day of his jury trial in Atlanta on Thursday. Prosecutors say the defendant used 21st century technology to perpetrate an age-old fraud: lying to investors to steal their money and fund his own lavish lifestyle. Investigators said Felton promoted an initial coin offering in 2017 for an entertainment streaming platform called FLiK, and diverted about $2.4 million from investors. They say he also raised more than $200,000 in 2018 while promoting a second company.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.


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Why is bitcoin going down?Here’s how values for crypto changed in May 2022

Cryptocurrencies like bitcoin
BTCUSD,
-4.94%

 and ether
ETHUSD,
-6.69%

 have exploded in popularity in recent years, and are now traded by both individual investors and large companies like Tesla
TSLA,
-1.70%

and Citibank .

The total market cap for all crypto nearly hit $3 trillion during parts of 2021 and companies like Robinhood
HOOD,
-7.21%
,
Coinbase
COIN,
-11.98%

and Crypto.com capitalized on higher volume of crypto trading.

As the interest in crypto continues to rise, so does the interest in crypto prices.

Here’s how crypto prices changed in May 2022:

Bitcoin

Prices for bitcoin dropped 20.08% lower during May, continuing a soft 2022 for the crypto.

Despite bitcoin’s lower prices, not many investors are trying to “buy the dip,” according to a note on Tuesday by Glassnode

“The recent sell-off, and lower prices has not yet inspired an influx of new users to the space, and only the HODLers remain,” the analysts wrote. HODLers is slang for people who buy crypto with no intention of selling.

One bitcoin forecaster recently told MarketWatch that he sees a potential eclipse-like event in the next few years for bitcoin that could lead to the crypto’s price moving over $100,000 by 2024.

But during an interview with CNBC, former chairman of the Federal Reserve Ben Bernake said he doesn’t think bitcoin will take over “as an alternative form of money.”  

See also: Here’s how much money you would’ve lost if you bought crypto during Matt Damon’s ‘Fortune Favors the Brave’ commercial

Bitcoin is down 15.75% over the past 12 months at the time of this writing.

Ethereum

Prices for ether decreased 33.07% during the month of May, continuing a downward trend for the crypto in 2022.

Paul Brody, global blockchain head at Ernst & Young Global, said he believes Ethereum will eventually “take over everything,” despite increased blockchain competition from Cardano
ADAUSD,
-7.53%

and Solana
SOLUSD,
-10.54%
.

“We’re very selective at EY about which ecosystem to work in. We audit across many ecosystems, but we only do development in the Ethereum ecosystem,” Brody continued.

See also: Here’s how sports-betting stocks like DraftKings and Caesars performed in May 2022

Ether is down 28.97% over the past 12 months at the time of this writing.

Other cryptocurrency news

Billionaire entrepreneur Mark Cuban wrote in a viral tweet that he thinks crypto is on the same downward trend that tech and internet companies hit in the early 2000s.

Crypto is going through the lull that the internet went through,” Cuban wrote in a Twitter
TWTR,
-0.02%

thread.

Brian Armstrong, CEO of crypto exchange Coinbase, admitted in May that some Coinbase users’ crypto assets may lack certain bankruptcy protections — Armstrong also stated that bankruptcy is not likely for his company.

See also: Crypto gets political: How cryptocurrency impacted some primary elections

House candidate for Oregon’s 6th Congressional district Carrick Flynn lost his Democratic primary in May despite nearly $11 million in donations from FTX CEO Sam Bankman-Fried. Bankman-Fried donated to Flynn because of Flynn’s interest in pandemic preparedness, he told the New York Times — Flynn says he studied pandemics and disaster prevention at the University of Oxford.




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First bankers, now lawyers: cryptocurrency industry’s latest hiring frenzy

The cryptocurrency industry is ramping up efforts to recruit more legal talent as it faces increased regulatory pressure while looking to be accepted by and become part of mainstream finance.

Crypto exchanges and companies are poaching attorneys left and right, from both law firms and other crypto companies, bringing them in-house to help navigate an evolving regulatory landscape while helping to curb outside legal expenses, industry participants said. Law firms, which are sometimes losing their partners to in-house positions, are also building up their crypto practices to maintain that valuable expertise.

The increased demand for lawyers also marks a turning point for crypto, whose early supporters often expressed scepticism of regulation. The industry has been expanding rapidly with hopes of attracting more mainstream investment opportunities and many are embracing the stance that they want regulatory clarity.

“In [the crypto] space, the consensus is you need to have someone in-house early,” said John Wolf Konstant, a senior consultant at technology-focused legal recruiting firm Whistler Partners. “Especially since investors are going to require that, you need to have someone there to help chaperone the process and to make sure everything is buttoned up from the start.”

READ Meet six former bankers who quit for crypto: ‘My phone rings off the hook’

Competition is also driving up salaries in the crypto space at a faster rate than in the larger in-house legal market, particularly for senior-level positions, Konstant said. Total annual packages, including tokens and equity, can run into seven figures at the very top of the market, he added.

Marco Santori, chief legal officer of Kraken, tweeted in February that the San Francisco-based crypto exchange was looking to hire 30 lawyers in the next three months. He added that he would like to hire 60, “but honestly I don’t know how to get it done”.

“Kraken legal is fully on track with its hiring goals since my comments in February,” Santori said last week in an email. “We are attracting the best lawyers from both traditional finance and white-shoe firms. The brain drain is real and we couldn’t be happier with it.”

Lawyer Jorge Pesok recently joined crypto-based nonprofit HBAR Foundation, which gives out grants to projects, as its chief legal officer after about 10 months as general counsel and chief compliance officer at crypto exchange Tacen. Before Tacen, he was at law firm Crowell & Moring.

“The market is hot,” Pesok said, adding that he received four job offers before he chose HBAR, primarily because of its commitment to sustainability, and he wasn’t even looking for a new position. “Everybody is looking for talent,” he said, adding that for HBAR, even the simple grants it makes require help, given the nuances of cryptocurrency and the regulatory scrutiny around the industry.

Recruiter Whistler Partners said about 10% to 15% of all recent placements have been in the crypto or financial technology sectors, with firms hiring for both in-house counsel and law firm positions, according to Konstant, who himself was a lawyer before moving to the recruiting field. He said the firm was working on six to 10 in-house legal jobs in the blockchain or fintech space over the past year at any given time.

Konstant said there is a great deal of competition for all legal talent across sectors, where candidates for in-house roles may receive multiple offers. But “for the crypto space, it’s more pronounced,” he said, adding that there is a huge demand for those with specialised knowledge in crypto and previous experience working at law firms that specialised in crypto or having built in-house crypto-focused teams.

As with most other jobs, firms operating in the crypto sector would prefer to hire someone with some relevant direct experience, but most expect to train new legal staff on the job as they learn about the specific projects each firm does.

Gregory Lisa, who most recently was a partner at law firm Hogan Lovells in Washington DC, joined decentralised financed-focused company Element Finance as its first chief legal officer in December. Lisa, who previously worked as a regulator at the Financial Crimes Enforcement Network, said his new position at the 25-person startup, which builds open-source protocol for fixed- and variable-yield tokens, offers him the chance to focus on the growth of one company, versus a portfolio of clients as an external counsel. His responsibilities now include engaging with regulators and law enforcement and managing internal legal issues.

READ Why crypto firms are hunting for exec talent at Washington’s revolving door

“You really get a chance to write the script and to engage with companies at an early stage,” Lisa said, adding that he has also stayed on as a special adviser for Hogan Lovells to help with the transition.

Cathy Yoon joined crypto technology company MPCH at the end of March as its chief legal officer after less than a year as general counsel of crypto exchange INX. She said she had no intention of moving jobs, but was interested in helping build blockchain infrastructure that could more easily support and onboard additional blockchain assets, which isn’t possible currently. So far, her day-to-day work includes managing internal corporate matters, such as the structuring of legal entities and intellectual property issues, and facilitating meetings with potential investors and customers.

The increasingly competitive job market also demands more lawyers who are “very commercial,” Yoon said, since crypto companies want to bring in attorneys early on to brainstorm with tech teams on what problems their products are meant to solve. “There has been a shift from lawyers being seen as ‘keeping us out of trouble,’ to becoming important members of the management team,” she said.

READ Fintech Files: Meet the disrupters, how to make $1m in crypto, and a new arms race

Law firms, some already struggling with a shortage of talent, are beefing up their crypto services as well, sometimes looking to acquire a whole team from other firms.

Orrick Herrington & Sutcliffe is looking to build “a complete offering” of services for blockchain firms, from helping with entity formation to advising on regulatory issues, according to Daniel Forester, a partner at the firm and leader of its fintech practice. The law firm, with roots in the traditional technology sector, currently has about 20 partners leading its crypto-related work and is looking to lure current regulators and candidates or teams from other law firms or in-house positions, he said.

Facing increasing competition for legal talent, Forester said Orrick continues to focus on retaining employees, including those at the associate level. “There are more positions than people,” he said of the legal industry as a whole. “The key to long-term success is retention.

Write to Mengqi Sun at mengqi.sun@wsj.com

This article was published by The Wall Street Journal, part of Dow Jones


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Crypto Stocks Perform Worse Than Cryptocurrencies

The picks and shovels of the cryptocurrency world have been a worse bet lately than cryptocurrencies themselves.

The cryptocurrency market has been in selloff mode recently even as hundreds of millions of people now trade bitcoin, ether and other digital assets. Bitcoin is down 12% this year. Ether is down 19%. The entire crypto market has fallen about 19%, though prices are off their year lows, according to data from CoinMarketCap. 


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Washington Debates Cryptocurrency Rules, With Sights Set on Stablecoins

WASHINGTON—As Washington attempts to get its arms around the rapidly growing cryptocurrency industry, policy makers in the Biden administration and on Capitol Hill have identified stablecoins as an initial target for tighter regulation.

Often billed as one-to-one representations of a currency like the dollar, stablecoins have recently exploded in popularity as investors use them for trading other cryptocurrencies. There are dozens of stablecoins, though a handful pegged to the dollar account for most of the market value, which grew roughly 500% in the 12 months ending in October, according to a report from the Biden administration.


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Man convicted of drug charges must forfeit cryptocurrency | News

BOSTON (AP) — A man convicted of drug charges in federal court in Boston has been ordered by a judge to forfeit about $2 million worth of Bitcoin, the first judicial forfeiture of cryptocurrency in the federal District of Massachusetts, prosecutors said.

Binh Thanh Le, 25, of Brockton, described by prosecutors as the leader and organizer of a sophisticated drug trafficking operation that did its business on the dark web, was also sentenced last week to eight years in prison, according to a statement from the U.S. attorney’s office in Boston.

Le was indicted in June 2019. According to court records, he received large quantities of drugs in the mail from international sources, including ecstasy, Ketamine and Xanax. The drugs were sold on the dark web and shipped to customers throughout the U.S., prosecutors said.

Le was arrested in March 2019 when he met with undercover agents at a Norwood hotel to exchange $200,000 worth of Bitcoin for cash. More than 19 kilograms (42 pounds) of ecstasy, almost 7 kilograms (15.5 pounds) of Ketamine, nearly a kilogram (2 pounds) of cocaine and more than 10,000 counterfeit Xanax pills were seized during the investigation. He pleaded guilty in September.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.




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Bitcoin Price Surges on Biden’s Crypto Executive Order

WASHINGTON—Bitcoin’s price rose after President Biden announced an executive order to study digital currencies, a move the industry welcomed and skeptics decried as delaying needed regulation.

The order, titled “Ensuring Responsible Development of Digital Assets,” directed agencies across the federal government to produce reports on digital currencies and consider new regulations. It outlined the risks cryptocurrencies pose to the economy, national security and climate, while also noting their possible benefits.

It also asked agencies to review the possibility of issuing a digital version of the dollar, tasking the Justice Department with assessing whether it would require new legislation and possibly preparing such legislation. Some central banks around the world have experimented with the concept to keep pace with private-sector payments innovations, and the Federal Reserve has already started to evaluate the possibility.

As details from the executive order leaked overnight, the price of

bitcoin,

the largest cryptocurrency, rose almost 9%. Bitcoin’s price was $41,910 Wednesday evening, according to CoinDesk.

While financial regulators have long taken a cautious view toward cryptocurrency, the executive order marked the first time the White House had weighed in formally.

Crypto advocates welcomed the absence of any imminent federal action in the order and its acknowledgment of the positive elements of the industry, such as fostering innovation and financial inclusion.

“We applaud the White House for recognizing this as a defining moment for U.S. innovation on the world stage,” said

Faryar Shirzad,

chief policy officer at the largest U.S. crypto exchange,

Coinbase Global Inc.,

in a series of tweets.

“We look forward to continuing our work with regulators and lawmakers,” he said.

The chief executive of Valkyrie Funds,

Leah Wald,

said she expects the order will lead to regulations that will further help the industry grow. “Clarity spurs adoption, and adoption leads to growth,” she said. Her firm sells crypto-focused exchange-traded funds.

The crypto industry has waged an intense lobbying campaign over the past year to stave off more-aggressive regulation of digital assets. A report this week by Public Citizen, a progressive advocacy group, said the number of cryptocurrency lobbyists nearly tripled in recent years, from 115 in 2018 to 320 in 2021. The sector’s lobbying expenditures rose to $9 million from $2.2 million.

Crypto skeptics see the executive order as a step back.

Lee Reiners,

executive director of Duke University School of Law’s Global Financial Markets Center, said it appears likely to delay any consequential policy decisions until after the midterm elections in November. In most cases, the White House is giving agencies at least 180 days to produce their reports.

“Leading up to this executive order, the narrative that had been circulating was that the administration was set to crack down on crypto,” Mr. Reiners said.

“This executive order is a complete 180 from that,” he said. “This is as close to an embrace of crypto as you could have hoped for from this Biden administration, if you’re pro-crypto.”

President Biden’s cryptocurrency executive order may have produced more questions than it has answered: What’s a central bank digital currency? How is it different from crypto? And why hasn’t the Fed introduced a digital dollar? WSJ’s Dion Rabouin explains. Photo composite: David Fang

Financial regulators have already been studying cryptocurrencies for years. The Treasury Department’s Financial Crimes Enforcement Network issued guidance in 2014 around cryptocurrency-payment systems. The Securities and Exchange Commission has taken scores of enforcement actions against individuals and entities in the sector, while the Commodity Futures Trading Commission set up an initiative to study cryptocurrency and other technological innovations in 2017.

A senior administration official noted that the White House held a number of “Crypto Sunday” events to gather feedback from stakeholders as it prepared the executive order. A White House spokeswoman didn’t immediately respond to questions about the events, such as how many were held or who participated.

SEC Chair

Gary Gensler

has said that many cryptocurrencies should be regulated as securities such as stocks and bonds, something that would involve strict disclosure requirements from issuers. Crypto firms have pushed for CFTC oversight, believing it would be easier to comply with.

Matt Kluchenek,

a partner at law firm Mayer Brown LLP, said Mr. Biden’s executive order appears unlikely to resolve such questions.

“Rather than provide direction with respect to who regulates what, the order calls for research, assessment and coordination within specified deadlines,” Mr. Kluchenek said. “Many market participants were hoping for more concrete direction.”

Industry lobbyists say that heavy-handed regulation would risk pushing more of the cryptocurrency market overseas. Some law-enforcement and national-security officials are reluctant to discourage use of cryptocurrencies such as bitcoin, saying they allow transactions to be traced more easily than cash.

“Ensuring that the U.S. remains the leader in global financial infrastructure for generations to come has never been more paramount for economic and national security interests,” said

Sigal Mandelker,

a former Treasury official in the Trump administration who is now a general partner at

Ribbit Capital,

a venture-capital firm invested in crypto. “The president’s recognition of that is an essential step in that direction.”

But investor advocates worry that the executive order will give an opportunity to dilute existing regulations.

“Silicon Valley and their army of new lobbyists may have feared the worst, and instead the White House is rolling out the welcome mat,” said

Tyler Gellasch,

executive director of the Healthy Markets Association, an investor trade group. “Politicians and lobbyists are likely to use this as an opening line to try to rewrite the securities, commodities and banking laws under the guise of better regulating crypto.”

Bitcoin, Dogecoin, Tether: Cryptocurrency Markets

Write to Paul Kiernan at paul.kiernan@wsj.com and Andrew Duehren at andrew.duehren@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


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Can Russia use cryptocurrencies to evade Western sanctions? Likely, to some extent, but it’s ‘very hard to do at scale,’ says one analyst

As the U.S. and its allies aim to cripple Russia through sanctions for invading Ukraine, there has been some speculation around whether Moscow could gain leeway through cryptocurrencies, which are typically based on decentralized networks and don’t rely on any central authorities to maintain.

The sanctions target Russia’s central bank, some state-owned companies and elite families, and include measures that remove some Russian banks from SWIFT, a payments-related messaging service based in Belgium that helps banks world-wide execute financial transactions. 

Such restrictions aim to limit Russia’s access to financial markets, as SWIFT plays a dominant role in financing international trade, covering more than 11,000 institutions in over 200 countries around the world. It will be more difficult for Russian individuals to import, export or invest abroad.

Read more: ‘Selected’ Russian banks to be removed from SWIFT global banking network, as sanctions against Moscow grow

The ability to move cash through crypto would “definitely be some level of buffering,” Rance Mashek, president and founder of trading platform iVest+ told MarketWatch in an interview. 

“Unless the Russian companies are on the sanctions list, we can’t see anything that would keep a US-based company from paying a Russian company through crypto to just transact,” Mashek said.

Ari Redbord, head of legal and government affairs at blockchain intelligence firm TRM Labs, echoed the point, saying that “there is no question in my mind that Russia will attempt to use cryptocurrency to launder funds and evade sanctions.” 

However, “it’s very, very hard to do at scale,” said Redbord, who once worked as a senior adviser to the undersecretary for U.S. terrorism and financial intelligence. “The liquidity is just not there,” Redbord said. The war is likely to “require billions of dollars and it is very hard to off ramp billions of dollars of crypto.”

“They will find ways to do it. It just can’t be in the huge amounts that would come anywhere near replacing or getting close to replacing what they’re essentially losing with the sanctions that have been imposed,” Redbord said.

Russia exported $332.2 billion worth of merchandise in 2020, and imported $240.4 billion worth of goods, according to data by the World Trade Organization. Russia’s central bank holds $630 billion reserves made up by deposits and assets in the world’s major currencies. 

Bitcoin’s total market capitalization stands at $790 billion on Monday, while the whole crypto market capitalization is $1.85 trillion, according to CoinMarketCap.

“What Russia will likely do is to attempt to use cryptocurrency in much smaller amounts to evade sanctions. And they will need on-ramps and off-ramps from traditional currencies to traditional currencies, and they will need exchanges to do that,” Redbord said. 

“The larger cryptocurrency businesses where most of the liquidity exists, have compliance controls in place,” Redbord said. 

Exchange’s role 

The Biden administration is reportedly asking crypto exchanges to ensure that Russian individuals and businesses aren’t using cryptocurrencies to avoid U.S. sanctions, according to Bloomberg, citing people with direct knowledge of the matter.

Binance, the world’s largest crypto exchange, is reportedly blocking the accounts of any Russian clients targeted by sanctions, Reuters reported. 

Sam Bankman-Fried, chief executive at crypto exchange FTX, wrote on Twitter that “we are already complying with international sanctions to prevent evasion, and will do so whether or not it’s mandated.”

Still, Russia may turn to decentralized exchanges and some exchanges without ties to the West, Redbord noted. Russia has over 340 total virtual asset service providers such as crypto exchanges and over-the-counter brokers, according to TRM’s research. 

A wake-up call for regulation? 

The European Union should move quickly to pass crypto regulation that prevents Russia from evading sanctions, European Central Bank President Christine Lagarde said on Friday.

Though new regulation might take time to pass and become effective, the Russia-Ukraine war could be “a wake up call for governments globally, to get a better grip on what’s going on with crypto on the regulatory front,” Mashek said. 

Bitcoin
BTCUSD,
+3.24%

rallied 16% during the past 24 hours to around $43,729. The S&P
SPX,
-0.24%

500 closed down by 0.2% on Monday.


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