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