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US Treasury Report Warns of Defi’s Threat to National Security, Authors Conclude Fiat Is Used in Illicit Finance More Than Crypto
The U.S. Treasury has released a 42-page report assessing the risks of decentralized finance (defi). The report states that specific nation-state adversaries, cybercriminals, ransomware attackers, thieves, and scammers are using defi to “transfer and launder their illicit proceeds.” The Treasury’s report warns that defi could threaten national security and calls for policymakers to increase oversight.
U.S. Treasury Report Assesses Risks Associated With Decentralized Finance
The U.S. Treasury released a report on April 6, 2023, that assesses the purported risks of defi. “The risk assessment explores how illicit actors abuse defi services and vulnerabilities unique to defi services to inform efforts to identify and address potential gaps in the United States’ AML/CFT regulatory, supervisory, and enforcement regimes,” said the national treasury and finance department. The report was written by Treasury officials, including Brian Nelson, the Treasury’s undersecretary for terrorism and financial intelligence.
“Defi services at present often do not implement AML/CFT controls or other processes to identify customers, allowing layering of proceeds to take place instantaneously and pseudonymously, using long strings of alphanumeric characters rather than names or other personally identifying information,” the report adds. It also acknowledges that some firms are providing AML/CFT controls and that onchain surveillance companies exist. However, Nelson and the report’s authors maintain that these controls and monitoring practices “do not adequately address the identified vulnerabilities on their own.”
The defi report also discusses how the Treasury intends to strengthen federal oversight and regulatory policies. The authors emphasize that “centralized virtual asset service providers (VASPs) and industry solutions can partially mitigate some of these vulnerabilities.” The Treasury Department stated that regulations that cover traditional finance should also apply to decentralized finance, and regulators must close specific gaps that cybercriminals, money launderers, and scammers currently exploit. Interestingly, despite the report’s 42-page length, the Treasury report authors conclude by stating that illicit finance “remains a minor portion of the overall virtual asset ecosystem.”
On page 36 of the report, which covers the conclusion, recommended actions, and posed questions, the researchers emphasize that most nation-state adversaries and cybercriminals do not typically use crypto assets or defi for illicit financing. “Moreover, money laundering, proliferation financing, and terrorist financing most commonly occur using fiat currency or other traditional assets rather than virtual assets,” the report’s authors conclude.
What do you think about the U.S. Treasury report that assesses the purported risks associated with defi? Share your thoughts about this subject in the comments section below.
SEC and CFTC Lawsuits Against Former FTX CEO Paused Until Criminal Proceedings Conclude
Two civil lawsuits, stemming from the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), against former FTX CEO Sam Bankman-Fried will be paused until his criminal proceedings are complete.
US Attorney Requests Pause on SEC and CFTC Lawsuits to Prevent ‘Judicial Overlap’
According to the latest decision by a New York judge presiding over the criminal case of Sam Bankman-Fried, the co-founder of FTX, the two lawsuits filed by the top two financial regulators in the U.S. will be put on hold. Bankman-Fried was indicted by a federal grand jury in New York after his arrest, and the SEC and CFTC also filed charges against the former FTX CEO. The SEC complaint alleges that “Bankman-Fried orchestrated a years-long fraud” dating back to the creation of FTX.
The CFTC alleges that customer deposits at FTX, including both fiat currencies and cryptocurrencies, were “appropriated by Alameda for its own use” throughout the relevant period. This week, Damian Williams, the U.S. attorney for the Southern District of New York, filed a motion to stay and asked the government entities to pause the lawsuits until the criminal case is settled. Williams argued that pausing the two cases would prevent “judicial overlap” and that the criminal case in Manhattan would have a “significant impact” on both lawsuits.
The New York judge deferred the SEC and CFTC cases until the trial in Manhattan concludes. Bankman-Fried’s trial in Manhattan is scheduled to begin on Oct. 3, 2023. The FTX co-founder is charged with eight financial crimes, including conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.
What do you think the outcome will be for Sam Bankman-Fried and FTX? Let us know what you think about this subject in the comments section below.
Grand Finale: Bitcoin Price Closes Record High Weekly, Could Conclude Cycle
Bitcoin price is currently flirting with prices above ,000, as the momentum of the ongoing bull market slowly begins to push the asset above the key resistance level.
The start of a breakout through resistance might have began with last night’s historic weekly close – the highest ever recorded. However, despite what could be a clean bullish breakout, there’s a bearish factor lingering that could make this the last weekly close the high for some time.
Bitcoin Price Closes Record High Weekly Candle Above ,000
Bitcoin price has poked above ,000 dozens of times now, yet has been unable to hold strong above the clearly strong resistance level. The leading cryptocurrency by market cap, however, has also yet to tumble any further than a mere 10-20% for most of the last 12 months.
Related Reading | Crypto CEO “Convinced” Of Bitcoin Cycle Top, Warns Of Sell Side Intensity
The first signs that new highs could be near, is the first ever historic weekly candle close above ,000. Last night’s weekly candle is also only the second daily candle to close above the crucial rounded number.
You have to zoom in to see it, but Bitcoin did close above ,000 on Binance | Source: BTCUSDT on TradingView.com
The battle between bulls and bears came down to the very last seconds before the close, resulting in some disparity across exchanges. Bitcoin price made the achievement on Binance specifically and others, but failed to make a similar milestone on platforms like Bitfinex and Coinbase.
The slight discount on Coinbase could be a sign that buy pressure is finally waning and the sell side is intensifying.
Why The Record Could Precede A Short-Term Reversal
The cryptocurrency market has been on fire and its been mostly due to the rush to buy Bitcoin before other corporations and hedge funds buy it all.
But as mentioned, the FOMO could finally be running out of steam. Making matters worse, an ultra rare signal has appeared that has only in the past reared its head when the crypto cycle was finally complete.
A rare crypto cycle top indicator has issued its signal. Is the rally over? | Source: BTCUSD on TradingView.com
The Pi Cycle Top Indicator has now issued the fourth ever top signal with last night’s weekly candle close and subsequent daily candle open.
That could mean that a long term top could be in. A 2013-like scenario with two peaks in the same year would be bulls last hope for things to continue, albeit after a correction.
Related Reading | Analyst Expects “Escape Velocity” When Bitcoin Price Breaks K. Here’s Why
Back then the signal arrived early, Bitcoin price spiked much higher, then corrected 82% within just four days. After settling down, before the year was over Bitcoin price climbed another three to four times in value before the true top of that cycle was in.
What will it be this time around?
Featured image from Deposit Photos, Charts from TradingView.com