The other crypto bosses are in the US authorities’ crosshairs. In a high-profile criminal case that shocked the industry, former cryptocurrency poster kid Sam Bankman-Fried was found guilty on Thursday of scamming users of his now-bankrupt cryptocurrency exchange, FTX.
Regulators are keeping an eye on more than just him. Regulators targeted several industry titans due to the sector’s other spectacular meltdowns that occurred last year when token values crashed.
Charges may not lead to convictions, and investigations are not always a sign of misconduct. The executives listed below have all denied any wrongdoing.
Zhao Changpeng “CZ”
In June, the CEO of Binance, Zhao, sued the U.S. Securities and Exchange Commission (SEC) for allegedly running “a web of deception.” The U.S. Commodities Futures Trading Commission also filed a lawsuit against Binance and Zhao in March, alleging that the two ran “illegal” exchanges and “sham” compliance programs.
The SEC accused Binance of inflating trade volumes artificially, misappropriating client funds, neglecting to prohibit U.S. consumers from using its platform, and misleading investors about its measures for market supervision.
The SEC’s complaint, according to the corporation, was “unjustified by the facts, by the law, or by the Commission’s precedent.” The CFTC’s complaint, according to millionaire Zhao, who was born in China and immigrated to Canada when he was twelve, was “unexpected and disappointing” and included an “incomplete recitation of facts.”
Do Kwon, a native of South Korea, created the TerraUSD and Luna currencies while co-founding Terraform Labs. A broader decline in token prices was sparked by the demise of TerraUSD and Luna, whose combined market values were once believed to be worth more than $40 billion.
Kwon was detained in Montenegro early this year on suspicion of faking documents, and he is facing many fraud accusations in the United States, according to the authorities. Additionally, Kwon and Terraform Labs are facing civil allegations from the SEC, which allege that the two are “orchestrating a multi-billion dollar crypto asset securities fraud.”
According to a news statement from the Montenegrin court, Kwon has denied falsifying papers. The SEC is “evidentiarily no closer to proving that the defendants did anything wrong,” according to Terraform in a court filing from October 30.
In July 2022, the firm, run by the former CEO and creator of cryptocurrency lender Celsius Network, declared bankruptcy.
He entered a not-guilty plea to U.S. fraud charges alleging that he deceived clients and artificially raised the value of the exclusive cryptocurrency token that belonged to his business. Mashinsky was sued in January by the attorney general of New York State, who also claimed fraud. Mashinsky disputed the accusations, according to his attorney at the time, and “looks forward to vigorously defending himself in court.”
The SEC, the CFTC, and the Federal Trade Commission (FTC) are also suing Mashinsky because he promoted Celsius as secure. At the same time, the business used progressively riskier actions to meet its 17% return guarantee.
Silbert is the CEO of Digital Currency Business, a cryptocurrency business whose Genesis Global Capital affiliate declared bankruptcy in January.
Last month, New York Attorney General Letitia James filed a lawsuit against him, Genesis, and DCG, claiming they had scammed clients out of almost $1 billion.
Silbert declared the claims untrue and vowed to contest the action in court.
“My aim and DCG’s goal last year was to assist Genesis weather the storm and set up Genesis for future success. It is regrettable that this lawsuit fails to provide such important information,” he stated.
Another victim of the cryptocurrency debacle of the previous year is Stephen Ehrlich’s Voyager Digital. The CFTC and the FTC have charged him for deceiving clients about the security of their money while taking “excessive risks” that ultimately failed the cryptocurrency loan.
In his own words, Ehrlich said he was being made into a “scapegoat for the bad actions of others at different companies.”
“Having spent nearly my entire career working in regulated markets, including more than 10 years at public companies, I have never had a single blemish on my record,” he stated in a statement issued last month.
In March, the SEC filed fraud charges against Chinese cryptocurrency entrepreneur Justin Sun and his businesses, which include the Tron Foundation. Sun is accused of fabricating trading volume figures for his firm’s cryptocurrency tokens and hiding celebrity payments to endorse them.
In a social media post on Platform X, Sun stated that the allegation “lacks merit.”