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Robinhood Receives Investigative Subpoena from SEC Over Crypto Business

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Robinhood Markets, the popular brokerage known for its commission-free trading, has recently disclosed that it received an investigative subpoena from the United States Securities Exchange Commission (SEC) in December 2022. The subpoena was related to its cryptocurrency listings, custody services, and platform operations. This came after several major cryptocurrency trading venues and lending platforms filed for bankruptcy earlier in the year, including FTX, Three Arrows Capital, Voyager Digital Holdings, and Celsius Network. The SEC’s inquiry into Robinhood’s crypto business is aimed at obtaining information necessary to decide whether to pursue legal action against the company.

This is not the first time Robinhood has been under scrutiny for its crypto business. In April 2021, the California Attorney General’s Office issued subpoenas seeking information about Robinhood’s crypto trading platform, business and operations, custody of customer assets, and coin listings. In August 2021, the New York District of Financial Services fined Robinhood’s crypto division $30 million for failing to invest the proper resources and attention to develop and maintain a culture of compliance. Additionally, the Massachusetts Securities Division scrutinized Robinhood in August 2021 for allegedly targeting inexperienced investors.

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The investigative subpoena from the SEC highlights the regulatory challenges faced by the crypto industry, as regulators seek to clamp down on fraud and protect investors. The SEC has been increasingly active in pursuing companies that violate securities laws in the crypto industry. For example, in December 2021, the SEC filed a lawsuit against Ripple Labs, alleging that its XRP token was an unregistered security.

Robinhood’s crypto business has been growing rapidly, and the company has added several new cryptocurrencies to its platform in recent years. However, the regulatory scrutiny and fines imposed on the company have raised concerns about the company’s compliance culture and its ability to navigate the regulatory landscape. The company has stated that it is committed to complying with all applicable laws and regulations and is working to improve its compliance infrastructure.

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In conclusion, the recent investigative subpoena from the SEC is a reminder of the challenges faced by the crypto industry and the importance of compliance in the sector. Robinhood’s crypto business is under scrutiny, and the company must continue to invest in compliance infrastructure to ensure that it is meeting regulatory requirements. As the crypto industry continues to evolve, regulatory scrutiny is likely to increase, and companies must be prepared to navigate this complex landscape.



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Binance Crypto Withdrawals Spike Before CFTC Accusations

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On March 27th, the United States Commodity Futures Trading Commission (CFTC) filed a suit against Binance, accusing the crypto exchange of regulatory violations. The accusation, however, did not come without warning. Shortly before the indictment was made public, almost a billion dollars worth of cryptocurrency was reportedly withdrawn from Binance’s wallets. According to data from Thanefield Capital, the withdrawals were substantial and occurred within hours of the announcement.

In the 12 hours leading up to the indictment, a total of almost $1.5 billion was withdrawn from platforms such as Binance, Kraken, Coinbase, and Bitfinex. Of that amount, more than half, or $850 million, was withdrawn from Binance alone. One hour after the announcement, Binance saw an additional $240 million withdrawn. According to data from Nansen, in the past 24 hours, more than $400 million in Ethereum-based funds were withdrawn.

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Despite the withdrawals, Binance still holds an impressive $63.36 billion worth of cryptocurrency assets. These assets include over $2 billion worth of Tether (USDT), $17 billion worth of Bitcoin (BTC), and $8.1 billion worth of Ether (ETH).

The CFTC’s accusations against Binance and its CEO Changpeng Zhao include failing to meet regulatory obligations by not properly registering with the derivatives regulator. The CFTC alleges that Binance conducted transactions in Bitcoin, Ether, and Litecoin for U.S. citizens since at least 2019. This investigation by the CFTC is not the only regulatory scrutiny that Binance has faced in recent times.

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Binance has also been investigated by the Internal Revenue Service and federal prosecutors over its adherence to Anti-Money Laundering rules. Additionally, the Securities and Exchange Commission conducted its own inquiry into whether Binance allowed U.S. traders to access unregistered securities.

In response to the CFTC’s allegations, Binance’s CEO, Changpeng Zhao, has denied any wrongdoing. He argues that Binance “does not trade for profit or ‘manipulate’ the market under any circumstances.” Despite the denial, the regulatory scrutiny and the recent withdrawals may lead to a tumultuous time ahead for Binance and the wider cryptocurrency market.



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Binance faces investor backlash and Bitcoin withdrawals following CFTC lawsuit

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The United States Commodity Futures Trading Commission (CFTC) recently filed a lawsuit against Binance, one of the world’s largest cryptocurrency exchanges, and its CEO, Changpeng “CZ” Zhao, for alleged regulatory violations. In response to the allegations, CZ denied any market manipulation by Binance, but investors were quick to respond with a significant move of assets away from the exchange.

Within 24 hours of the lawsuit announcement, investors withdrew over 3,400 BTC from Binance, anticipating market fluctuations and seeking to lessen the potential impact of a Binance shutdown. The move by investors led to a reduction in Binance’s total Bitcoin balance, which was reduced by over 3,900 BTC in the past week. In contrast, competing exchanges such as Coinbase, Bitfinex, and Gemini saw an increase in BTC reserves during the same 24-hour timeframe.

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While CZ maintains that Binance does not trade for profit or manipulate the market, recent episodes involving other crypto entrepreneurs, such as FTX’s Sam Bankman-Fried and Terraform Labs’ Do Kwon, have shaken investor confidence in the cryptocurrency ecosystem.

It is also worth noting that Bitcoin balances on major crypto exchanges have declined since March 20, with nearly 27,000 BTC leaving these exchanges over the past week. The reasons behind this trend are not entirely clear, but it may be due to a combination of factors, including increasing regulatory scrutiny and concerns about the overall cryptocurrency market.

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Alongside the CFTC’s lawsuit against Binance and CZ, a federal judge temporarily halted a proposed deal between Voyager and Binance.US. This move indicates that regulators are taking a closer look at the cryptocurrency industry and may be ramping up their efforts to enforce existing regulations and prevent fraudulent activities.

Overall, the recent events surrounding Binance and the wider cryptocurrency market have raised concerns among investors and regulators alike. While the long-term impact of these developments remains to be seen, it is clear that the cryptocurrency industry is facing increased scrutiny and may need to adapt to evolving regulatory requirements to continue its growth and development.



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THORChain Pauses Network Amid Reports of Vulnerability

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THORChain is a decentralized cross-chain liquidity protocol that enables users to swap assets between different blockchain networks without needing centralized exchanges. The platform, founded in 2018, currently offers swaps between eight different chains, including Bitcoin, Ethereum, and Litecoin.

On March 28, THORChain announced that it had temporarily paused all trading due to reports of a potential vulnerability with a THORChain dependency that could impact the network. The decision was made as a precautionary measure while the reports were verified, according to THORChain. Social media reports had indicated that THORChain’s liquidity platform, Nine Realms, and its dedicated security team, THORSec, had received “credible reports” of a possible vulnerability affecting THORChain. As a result, the THORChain network was halted globally.

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“Network preemptively paused by NO’s to investigate the report; updates will follow,” Nine Realms tweeted.

THORChain’s native token, Rune (RUNE), has dropped about 5% in value following the news, according to CoinGecko data. As of this writing, the token is trading at $1.32, down 18% over the past 30 days.

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This is not the first time that THORChain has had to pause its network due to issues. In October 2022, the network was paused due to a software bug that caused “non-determinism between individual nodes.” After 20 hours of maintenance, the network was fully functional once again.

In 2021, THORChain also had to halt its network after suffering a breach, resulting in hackers stealing $7.6 million worth of cryptocurrency assets.

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After about eight hours of the initial announcement, THORChain updated its Twitter account, stating that the vulnerability was credible but would require a malicious node in the last churn, which is when new nodes are added to the network. THORChain has resumed trading as no nodes can exploit the current vulnerability, according to the update.

In conclusion, THORChain’s temporary network pause due to a potential vulnerability serves as a reminder of the risks associated with decentralized protocols. While such protocols offer many benefits, they can also be susceptible to security vulnerabilities and breaches. THORChain’s quick response and resolution to the situation demonstrate the importance of having a dedicated security team and protocol in place to handle potential issues swiftly and efficiently.



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