Connect with us

Regulation

Restitution Nears for Victims of BitConnect and Mt. Gox – Regulations Weekly

mm

Published

 on

U.S. DOJ Auction

While thefts and scams happen regularly in crypto, there remain a few of these events from over the years that stand out – one being the BitConnect fiasco.

The United States Department of Justice (USDOJ) has just announced that it is auctioning off roughly $56M worth of digital assets confiscated from its investigation in to BitConnect.  While it will surely be ‘pennies-to-the-dollar’, the proceeds of this auction will be used to compensate victims of BitConnect.

The USDOJ states, “…the government will begin the process of seeking to make whole victims of the BitConnect scheme by selling the cryptocurrency and holding the proceeds in U.S. dollars. The government will maintain custody of the seized proceeds in cryptocurrency wallets and intends to use these funds to provide restitution to the victims pursuant to a future restitution order by the court at sentencing.”

Mt. Gox Conclusion

Continuing with the trend of infamous cryptocurrency events, another which may soon come to a conclusion is the saga surrounding Mt. Gox.  The now defunct exchange was the victim of a hack which resulted in the loss of 850,000 BTC – an amount which holds a staggering value of roughly $50 billion.

Despite occurring in 2011, victims of the event still have not been paid a decade later.  According to the exchange trustee Nobuaki Kobayashi, this may soon change with a ‘rehabilitation plan’ finally being completed.

Unfortunately, much like the redistribution of funds to victims of BitConnect, this rehabilitation plan will most likely result in restitution that is also ‘pennies-to-the-dollar’, with only 150,000 BTC available.

A Vision by Ripple

When in the crosshairs of the SEC, it is often easier to roll over and simply pay a fine – the result of ‘regulation through enforcement’.  Ripple on the other hand decided to make the regulator work for it money, taking the SEC to court.  Recognizing that it is not alone in its battle, Ripple has now released a proposal for ‘How Existing Financial Regulatory Frameworks Can Be Used to Advance Innovation and Enhance Consumer and Market Protections’.

In its proposal, Ripple elaborates on three areas which it believes are crucial to ensure that the digital assets sector not only thrives, but remains rooted within the United States.

  • Public-private collaboration should be at the core of any legislative proposals
  • Utilize existing frameworks to regulate cryptocurrencies
  • Foster and encourage innovation through cryptocurrency sandboxes

Overall, Ripple believes that these points can, “…provide legal clarity to industry, markets, and consumers in a way that an ad hoc, regulation-by-enforcement approach simply cannot.”

Binance Losses

Over the past few months, Binance has found itself on the receiving end of regulatory crackdowns around the work.  One of the ways in which the world’s largest digital asset exchange went about placating regulators was to introduce a new, more stringent KYC process.

When these new measures were implemented, many wondered whether there would be a mass exodus of users from the platform.  Interestingly, in a recent conversation with Bloomberg, Binance CEO Changpeng Zhao indicates that the exchange saw a roughly 3% loss in its user base.

Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Advertiser Disclosure: Securities.io is committed to rigorous editorial standards to provide our readers with accurate reviews and ratings. We may receive compensation when you click on links to products we reviewed.

ESMA: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Investment advice disclaimer: The information contained on this website is provided for educational purposes, and does not constitute investment advice.

Trading Risk Disclaimer: There is a very high degree of risk involved in trading securities. Trading in any type of financial product including forex, CFDs, stocks, and cryptocurrencies.

This risk is higher with Cryptocurrencies due to markets being decentralized and non-regulated. You should be aware that you may lose a significant portion of your portfolio.

Securities.io is not a registered broker, analyst, or investment advisor.