More SEC Uncertainty, First-Ever Crypto Wash Trading Charges, Binance Exec Denied Bail, Dubai Cracks Down on Unlicensed Firms, New Rules From Thailand

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1. Cumberland DRW Latest Firm to be Charged by SEC

The U.S. SEC sued Cumberland DRW, alleging that the firm has been involved in unregistered crypto dealer activities. 

According to the SEC’s complaint, since at least March 2018 through the present, Cumberland has acted as an unregistered dealer by buying and selling crypto assets offered and sold as securities for its own accounts as part of its regular business. 

This is another sad example of the SEC doing regulation by enforcement. As Cumberland DRW states in its very well written letter below, even if they wanted to register, it would not be possible in practice. 

What is the practical impact here? Nothing short-term. Except that some securities lawyers will make good fees. And the regulatory uncertainty will continue in the U.S.  

2. First-Ever Criminal Charges for Market Manipulation and Wash Trading in Crypto

The U.S. SEC charged four crypto market makers and eighteen associated individuals with widespread fraud and market manipulation. 

This is a positive development, as combatting wash trading and market manipulation is essential for the future growth of the crypto industry. 

Until now, much of the focus was on more licensing, registration or AML topics, and having authorities go after market manipulation is the logical next step. 

Over $25 million in cryptocurrency was seized, and multiple trading bots responsible for millions of dollars worth of wash trades for approximately 60 different crypto-assets were deactivated.

What is the practical impact? 

Expect crypto firms to pay more attention to this topic. 

Wash trading will not go away (in the same way it still exists in traditional finance), but at least bad actors know there is enforcement.

[NEWSLETTER CONTINUES BELOW]

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3. Binance Executive Denied Bail in Nigeria

A Nigerian court rejected a bail application by jailed Binance executive Tigran Gambaryan, despite several serious health issues. 

This has become completely ridiculous. 

Shame on Nigeria for keeping an innocent person hostage. 

Tigran is being denied urgent medical care. 

Shame also on the U.S. for not putting pressure to get one of its former special agents out. 

Anyone working for any crypto firm, including Binance, could have been in his shoes.

I have personally delivered dozens of such trainings at the request of governments or regulators globally in the past decade, including many in Africa.

Here, Tigran Gambaryan did the right thing, and now he has been jailed for over six months. 

Time to #bringtigranhome.

4. Dubai’s Crypto Regulator Cracks Down on Unlicensed Firms

Dubai’s crypto regulator - VARA - issued cease and desist orders with accompanying fines against seven crypto firms in Dubai for operating without the required license. 

This is a positive development for Duba, showing that whilst it continues to license crypto firms, it will also supervise and enforce as needed. 

5. Thailand Proposes New Rules for Crypto Investments

The Thai Securities and Exchange Commission proposed new regulations that would allow mutual and private funds to invest in digital assets to align with international developments and address growing interest from institutional investors.

A draft proposal, published on October 9, is now seeking public feedback on revisions to the criteria for funds investing in digital assets.

The regulator is pushing the prospect of allowing securities companies and asset management firms to offer services to large investors interested in diversifying into crypto-related products, such as ETFs.

Will this affect the global crypto ecosystem? No. 

But is this a good example of how a regulator should adapt? Yes. 

Let’s not forget that Thailand has relatively progressive crypto regulations and is also an active player in the global CBDC scene. 

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*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with. This newsletter is for educational purposes only, and none of its content should be construed as investment or financial advice of any kind. 

Who is Henri?

Henri Arslanian is the co-founder and managing partner of Nine Blocks Capital Management, an institutional-grade hedge fund focused exclusively on digital assets, with a market-neutral crypto fund focused on generating alpha from inefficiencies in crypto markets using relative value, arbitrage, and quantitative strategies. 

Henri was previously a partner and global crypto leader at PwC. In that role, he advised many of the world’s leading crypto exchanges, investors, financial institutions, and tech firms on their crypto initiatives and numerous governments, regulators, and central banks on crypto regulatory and policy matters.

With over 500,000 LinkedIn followers, Henri is a TEDx and global keynote speaker, a best-selling published author, and is regularly featured in global media, including Bloomberg, CNBC, CNN, BBC, The Wall Street Journal, The Economist, and the Financial Times. 

Henri was named by LinkedIn as one of the 2022 global Top Voices in Finance and is the host of the CryptoCapsules™ social media video series as well as The Future of Money podcast and newsletter.