Last Week [In] Crypto: Google and Apple Slammed Over Fake Crypto Apps, Tether Says It Holds Zero Chinese Commercial Paper

Keeping up with the news might be too much of a hassle, but fret not! Be[in]Crypto has rounded up the most critical stories in the crypto industry, from the incoming waves of lawsuits to the arrest of a Coinbase employee for insider trading, Zipmex filing for bankruptcy, the delay of a bipartisan stablecoin bill, and Tesla’s bitcoin impairment loss.

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An avalanche of lawsuits in crypto

Lawyers in the virtual currency industry are staring at an avalanche of lawsuits following the events of the last week. Yuga Labs, creators of the Bored Ape Yacht Club (BAYC) are facing a class action lawsuit from disgruntled BAYC investors over allegations of fraudulently promoting” the NFT collection and its native token.

Binance founder Changpeng Zhao has headed to court on grounds of a defamatory article published by a Bloomberg subsidiary in Hong Kong. Zhao’s lawyers stated in the filing that the publication made false claims that Binance’s CEO was running a Ponzi scheme and had ties with money laundering.

Troubled Terra is still not out of the woods yet, as a fresh wave of class-action lawsuits has been brought against the company. In a press release, law firm Bragar Eagel & Squire stated that Terra violated the Exchange Act in a scheme that “deceived retail investors” and manipulated them to buy Terra tokens.

The Federal Trade Commission (FTX) sued Meta over its plans to buy the VR fitness app, Supernatural. The FTC hinged its argument on the premise that Meta was actively buying its way to the top in violation of antitrust legislation.

Law enforcement reining crypto crime

Last week, the Latvian government seized the earnings of NFT artist Ilya Borisov on allegations of money laundering. Borisov remains adamant over his innocence, saying that the earnings took place during the NFT peak season of 2021, but he faces a 12-year prison sentence if found guilty.

Apple and Google have been criticized for their lack of effort in vetting scam cryptocurrency apps on their app stores. Sherrod Brown, head of the Senate banking committee, penned a strongly worded letter to the CEOs of both companies and cited the Federal Bureau of Investigation (FBI) report on the rise of fake crypto apps in the industry. 

Law enforcement agencies arrested a Coinbase employee and two other persons during the week on charges of insider trading. Cobie, a top crypto influencer on social media, expressed skepticism over the arrest. He added that the arrested individual was merely collateral damage and that the problem was an institutional one that ran deep.

The ailing crypto exchanges

The last 30 days have been torrid for cryptocurrency exchanges in the ecosystem, and the events of the last week were no different. Email addresses belonging to Celsius clients were leaked to a third party that could compound the troubles of the users as they stare at the possibilities of increased phishing attacks.

Zipmex has filed for bankruptcy protection for five of its affiliated companies. On top of the request of the distressed exchange is the granting of moratorium reliefs to enable the company “puts its house in order” without dealing with lawsuits.

Coinbase’s woes continue as the Securities and Exchanges (SEC) is reportedly launching an investigation into the crypto exchange’s activities. The investigation borders on the allegation of listing unregistered securities and allowing Americans to trade them. Coinbase’s head of legal has refuted the allegations, laying the foundations for a showdown.

Following the probe, Ark Invest has dumped its Coinbase stock worth over $75 million. On the other hand, a Filipino group has urged the country’s SEC to shut down Binance’s operations in a 12-page complaint.

Amid the chaos of the last week, FTX continues coasting on bullish waves, having reached advanced stages in negotiations to buy Bithumb while its U.S. affiliate FTX.US has launched stock trading on its platforms.

Regulatory thunderstorms are brewing

Ahead of Ethereum’s transition to proof-of-stake (POS), there are rising concerns that ETH could be classed as a security. Adam Levitin, Professor of Law, posits that the expectation of profits from stakers could and the common enterprise of staking could serve as pointers for regulators in reaching a decision.

U.S. senators have tendered a bill seeking to remove capital gains tax on purchases less than $50. The bill, if passed into law, will simplify the use of virtual currencies for everyday purchases while boosting adoption.

A bipartisan stablecoin bill has been delayed till September due to a delay in finalizing the draft before a committee vote. The delay in the bill was due to the tentative issues of custodial wallets, with the intention of the draftsmen hoping to prevent a repeat of the TerraUSD (UST) de-pegging.

Macroeconomic factors threaten the cryptoverse

Events outside the crypto markets have cast a dark shadow over the industry. The Feds raised interest rates by a 0.75% point hike, which sparked doubts over the viability of digital assets as a hedge over inflation.

Tesla disclosed a $170 million bitcoin impairment loss in its latest filing with the SEC. The automobile manufacturer had earlier rocked the industry by announcing the sale of 75% of its bitcoin holdings to put its books in order ahead of an earnings report.

Tether fired back on critics over claims that it had Chinese commercial paper as part of its reserves. The report stated that Tether’s reserves include short-term loans to big Chinese corporations, which the stablecoin issuer vehemently denies.

Zooming out of the cryptoverse, the U.S. government has altered the definition of a recession in a bid to debunk claims that the economy was headed for a recession. The Council of Economic Advisers stated that the benchmark for a recession is not the two successive quarters of rising inflation, but rather a holistic look at all economic data including consumer spending, labor market, and industrial production.