Judge tosses fraud suit against Richard Heart, US bill tackles crypto ATM fraud: Law Decoded
A district court judge dismissed a United States Securities and Exchange Commission’s (SEC) lawsuit alleging that Hex founder Richard Heart raised over $1 billion through unregistered crypto offerings and defrauded investors of more than $12 million. Heart, whose real name is Richard Schueler, was also accused of spending the money on luxury items.
Judge Carol Bagley Amon said the case couldn’t be decided because the SEC had failed to establish that the US had jurisdiction over Heart’s crypto activities. The judge said the activities were global and did not specifically target US-based investors.
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US Senator introduces bill to stop crypto ATM fraud
Illinois Senator Dick Durbin proposed legislation targeting crypto ATM machine fraud in the US. The senator said there’s an alarming trend of crypto ATM fraud among the 30,000 machines in the US. Because of this, he introduced the Crypto ATM Fraud Prevention Act to place guardrails against fraud targeting senior citizens.
Durbin said the bill would require operators to warn consumers about scams and take “reasonable steps” to prevent fraud committed through their machines. The bill would also put measures in place to limit the amount consumers lose when they fall victim to such scams.
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OKX pleads guilty, pays $505 million to settle DOJ charges
Cryptocurrency exchange OKX operator Aux Cayes FinTech pleaded guilty to operating an unlicensed money-transmitting business in violation of US Anti-Money Laundering laws. The entity agreed to pay over $500 million in fines to resolve the matter.
The company settled the charges by paying $84 million in penalties and forfeiting $421 million in fees earned from institutional clients. OKX said that the company acknowledged that certain US customers had traded on the company’s global platform amid legacy compliance gaps.
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Upbit operator Dunamu files lawsuit to overturn business sanctions
Upbit operator Dunamu filed a suit against South Korea’s Financial Intelligence Unit (FIU), a division of the country’s Financial Services Commission (FSC), challenging sanctions it imposed. Dunamo said it had submitted a lawsuit on Feb. 27, seeking to overturn a partial suspension order from the FIU. In addition, the company applied for an injunction to halt the enforcement of FIU sanctions.
The suit is the company’s response to the FIU’s sanctioning Upbit with a three-month ban on servicing new clients. This blocked the exchange from processing external transactions for new users. However, existing customers remain unaffected.
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US lawmakers advance resolution to repeal crypto tax rule
US lawmakers advanced a resolution to repeal the “DeFi broker rule,” which requires brokers to report crypto transactions to the Internal Revenue Service. The regulation, approved on Dec. 5, expands reporting requirements to include decentralized exchanges and mandates that brokers disclose gross proceeds from crypto sales. This includes information on taxpayers involved in the transactions.
DeFi Education Fund CEO Miller Whitehouse-Levine said the rule is an unconstitutional overreach and needs to be overturned. He urged those who want to establish the US as a “hub for financial innovation” to act swiftly and overturn the “misguided rule.”
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