Dec 29, 2023

Pending court cases that could have a large impact on the crypto industry are top of mind for many market watchers as 2024 nears.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right, there are a few pending court cases that could have a large impact on the industry. These are top of mind as we head into 2024. Joining us now to discuss this coin desk, global policy and regulation, managing editor Nick Day, who is also the editor of coin desk's state of crypto newsletter. Nick. Good morning. Good morning. All right. It feels like we've already experienced so much when it comes to the courts in this industry all throughout 2023. But 2024 has, I think just as much excitement, I guess if you want to call it that uh let's, let's talk about the first court case. Uh I want to touch on here. One of the big figureheads in our industry who fell from grace. Alex Minsky is facing fraud charges over the collapse of Celsius. That trial is set to begin in September. Uh What are you expecting to happen before the trial? Talk to us about 2024 for Moshinsky. Yeah. So this is gonna be an interesting one. I think it's also probably gonna be the one that's most comparable to Sam Breed's trial. Um, you know, the two cases are kind of similar, right? You have a company that filed for bankruptcy and collapsed pretty dramatically. Um Big concern is uh you know, having to cost response and what happened to the users money. Where are those funds now? What are people getting back, getting back and the fraud charges against the CEO S of the companies are kind of, uh, you know, they're interesting, they're almost secondary to the financial concerns just, you know, from like, uh, you know, what are people most concerned about? But we'll see, you know, a if there's any kind of settlement, if Miki decides to, you know, change his mind and plead guilty at the last minute, uh, or if he decides to go through a trial. And if so, you know, what are prosecutors going to say? We haven't seen a lot of crypto executives and prosecute them quite this way. Same make agreed again, the really obvious comparison and also the equal high profile one. And if there's anything like that, then, you know, the DOJ is going to just point to the fact that the ones are gone and say, ok, well, you know, here's the key piece of evidence that there was fraud. Uh, all you have to do is tie to it somehow they have to, you know, verify those allegations. Well, I mean, Nick, if it was anything like SB F's trial? The DOJ is gonna take no mercy on Moshinsky. It seems to be a trend. They are coming down hard on the industry. Do you think if he decides to plead guilty ahead of the trial, they might, they might go a little easy on him since they went hard on SPF Yeah. I mean, just generally, you know, if you see a plea deal means there's going to be a lighter sentence. Um, finance is easy is probably the other good example from the crypto industry. Uh, you know, he's accused of violating the Bank Secrecy Act. Finance was accused of doing all sorts of stuff and allowing, uh, you know, people from regions and terrorist groups and all sorts of folks uh, to trade on a platform who they shouldn't have. And, um, you know, they're basically getting away with, you know, I don't want to call a slap on a risk. It's a massive fine and the compliance costs are gonna be insane, but Binance is still running and still doing his thing. CZ is looking at maybe 18 months in prison at most. And so it's definitely, you know, miles away vastly different. All right. Now on the topic of SPF, he actually has another case that he's facing next year. He's already facing up to life in prison from his trial in 2023. Talk to us about what we can expect in 2024 if he does get life in prison. Might this go away or what's gonna happen? Yeah, there's a couple different timelines we're looking at for 2024 and I make, um, obviously he's currently scheduled for sentencing in March of 2024. He's also, but that is a tentative date. He's also facing a potential second trial in March of 2024. And that trials on slightly different charges than the first trial was. We'll find out basically by February. Uh, if the DOJ intends to pursue the second trial, if so sentencing is gonna be pushed back and any additional convictions will just pile on top of the, you know, seven he's already facing or the seven charges he's already been convicted of, um, for his work and it still doesn't sound like he's necessarily facing life in prison, uh, just given, you know, the circumstances probably a couple of decades at most, which is still to be clear, a very, very, very long time. And, uh, you know, not gonna be, uh, it's not a quick experience, but there are a lot of variables out there right now that we're gonna be paying attention to and seeing, you know, are we going to have a second trial? Are we gonna have a sentencing just straight away? Uh, what does that mean if there's a second trial, are there gonna be additional, you know, potential prison sentences on top or is it because the same, you know, conduct same allegations basically at the core of this, uh, will it just be the same sentencing that we're looking at already? All right. And lastly, the SEC targeted a handful of exchanges this year, we have the SEC versus Coinbase, the SEC versus finance and the SEC versus Kraken to look forward to talk to us about what might happen with those. Yeah, obviously all three of these cases are still in their relatively early stages. The oldest ones began in June of this year. So it's only been six months as of, you know, when we're reporting this. But um, it's definitely going to be interesting to see how they proceed. It doesn't look like any of these three companies are going to settle. You know, that's kind of the most important thing. We've seen other crypto exchanges settle these charges. The A and R for example, coin based finance is us and Kraken all have the resources to fight this case. And obviously, this is gonna be the kind of precedent we're looking at. If any one of these cases does get to a resolution, it's going to be a huge cabinet better of whichever party ends up winning. Um The sec obviously is trying to win one or more of these cases just to be able to make the argument. Ok. Yeah, security exchanges or sorry exchanges are securities exchanges. Here's why. And that means that these cryptocurrencies are securities. And so the issuers have to be subject to XYZ disclosure regimes of the registration process and all that stuff. So I don't think we'll get to necessarily a trial by the next year, but we'll start seeing more and more signs of what exactly, you know, the parties are looking at, we'll start seeing some of the arguments that they're putting in for, you know, motions to dismiss and, uh, if the judge decides to hold a hearing on the motion to dismiss for any of these cases, um, judges, I should say, I think three different judges for each of the cases. So we'll see kind of hints of how the, you know, these parties are approaching the cases of the arguments and what that might mean for the full trial or the final resolution later on. All right, Nick, we're gonna have to leave it there. Thank you very much for joining me. It's always a pleasure unpacking everything to do with regulation with you. We'll see you next time. Thank you. That was Coin Desk Global Policy and Regulation. Managing editor Nick Day and don't forget to sign up for Coin Desk's state of crypto newsletter on Coin

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