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The U.S. Securities and Exchange Commission sued Coinbase, accusing it of illegally operating without registration with the regulator. That happened a day after the SEC filed a lawsuit against Binance and its CEO, Changpeng Zhao. Coinbase shares were down 13.4% at $50.81 after earlier hitting their lowest level since January. Also, after falling earlier, Bitcoin , the world's biggest cryptocurrency, was up 1.4%. Coinbase had disclosed in March that it received a "Wells notice" from the SEC threatening a potential lawsuit over certain products.
Persons: Coinbase, Changpeng Zhao, Matt Stucky, Shannon Stapleton, Binance's cryptocurrency, Paul Grewal, we'll, Grewal, Manya Saini, Shristi, Sinéad Carew, Paul Simao Organizations: Coinbase, U.S . Securities, Exchange Commission, SEC, Binance, Global, Northwestern Mutual Wealth Management Company, Coinbase Global Inc, Nasdaq, Times, REUTERS, Mining, Marathon, Thomson Locations: Manhattan, New York, U.S, Bengaluru
“Coinbase has elevated its interest in increasing its profits over investors’ interests, and over compliance with the law and the regulatory framework that governs the securities markets and was created to protect investors and the U.S. capital markets,” the filing said. said Coinbase has made billions facilitating the sale of crypto assets as an unregistered exchange, but deprived investors of significant protections. “You simply can’t ignore the rules because you don’t like them or because you’d prefer different ones: the consequences for the investing public are far too great,” Gurbir S. Grewal, the director of the S.E.C.’s enforcement division, said in a statement. The action is consistent with the S.E.C.’s long-held view that most crypto products are no different from stocks, bonds and other securities and must comply with U.S. laws. That means the firms that operate as exchanges and provide a platform for trading and selling crypto products must be registered like any exchange or brokerage that facilitates stock or bond trading.
Persons: , Coinbase, Grewal Locations: U.S, Manhattan
Coinbase stock had already fallen 9% on Monday, after the SEC unveiled charges against rival crypto exchange Binance and its founder Changpeng Zhao. Coinbase's flagship prime brokerage, exchange and staking programs violate securities laws, the regulator alleged in its complaint. The SEC has alleged that at least 13 crypto assets available to Coinbase customers were considered "crypto asset securities" by the regulator. Coinbase's institutional service, Prime, its retail exchange product, and its self-custody Wallet service all offered one or more crypto asset security, the SEC said in its complaint. Coinbase's staking program was also identified as a investment contract and as an unregistered security: The SEC had already taken similar action to force the closure of crypto exchange Kraken's staking service.
Persons: Changpeng Zhao, Gary Gensler, Gensler, Coinbase, Paul Grewal, we'll, Coinbase's Organizations: Securities, Exchange Commission, SEC, CNBC, New York Stock Exchange, Labs, Coinbase, Regulators Locations: New York
Companies Coinbase Global Inc FollowMay 30 (Reuters) - A former product manager for Coinbase Global Inc (COIN.O) and his brother have agreed to settle U.S. Securities and Exchange Commission (SEC) charges related to insider trading of crypto asset securities. A lawyer for Ishan Wahi declined to comment on the settlement. Ishan Wahi was sentenced to two years in prison earlier this month. In January, Nikhil Wahi was sentenced to 10 months in prison. In pleading guilty to the criminal charges, Ishan Wahi said he did not believe any of the relevant tokens were securities.
Persons: Ishan Wahi, Nikhil Wahi, Gurbir Grewal, Nikhil, , Kanishka Singh, Chris Prentice, Hannah Lang, Bill Berkrot, Cynthia Osterman Organizations: Coinbase, Coinbase Global Inc, U.S, Securities, Exchange Commission, SEC, Thomson
SEC issues largest ever whistleblower award of $279 million
  + stars: | 2023-05-05 | by ( ) www.reuters.com   time to read: +1 min
May 5 (Reuters) - The U.S. Securities and Exchange Commission (SEC) has issued its largest ever award of nearly $279 million to a whistleblower whose information helped the regulator's enforcement action, it said on Friday. The award is more than double the $114 million that it had issued in October 2020. Payments to whistleblowers are made out of an investor protection fund that was established by Congress and financed entirely through monetary sanctions paid to the SEC by securities law violators. Awards to whistleblowers can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million. Reporting by Manya Saini in Bengaluru; Editing by Devika SyamnathOur Standards: The Thomson Reuters Trust Principles.
SEC awards record $279 million to whistleblower
  + stars: | 2023-05-05 | by ( Chelsey Cox | ) www.cnbc.com   time to read: +1 min
WASHINGTON — The nation's top securities regulator on Friday announced it had given a $279 million award through its whistleblower program — the largest in its history. The Securities and Exchange Commission said the unnamed whistleblower provided information and assistance that led to a successful enforcement action, which the agency didn't describe. The payout is well more than double the second-largest award of $114 million, issued in October 2020. Whistleblower payments are withdrawn from an investor protection fund established by Congress. Rewards can range from 10% to 30% of the money collected when sanctions exceed $1 million.
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailMastercard announces new blockchain standards, and Coinbase responds to the SEC: CNBC Crypto WorldCNBC Crypto World features the latest news and daily trading updates from the digital currency markets and provides viewers with a look at what's ahead with high-profile interviews, explainers, and unique stories from the ever-changing crypto industry. On today's show, Raj Dhamodharan of Mastercard and Paul Grewal of Coinbase
Crypto exchange Coinbase filed suit against the Securities and Exchange Commission on Monday, asking that the regulator be forced to publicly share its answer to a months-old petition on whether it would allow the crypto industry to be regulated using existing SEC frameworks. The SEC did not offer a specific public response to Coinbase's petition, but in recent months has aggressively ramped up enforcement actions and warnings against crypto exchanges, including Coinbase. "From the SEC's public statements and enforcement activity in the crypto industry, it seems like the SEC has already made up its mind to deny our petition. So the action Coinbase filed today simply asks the court to ask the SEC to share its decision," Coinbase chief legal officer Paul Grewal said in a blog post. "Yet Coinbase and other crypto companies are facing potential regulatory enforcement actions from the SEC, even though we have not been told how the SEC believes the law applies to our business."
Charlie Javice, who sold her student-aid startup Frank to JPMorgan Chase, was charged with fraud. The bank claimed Javice faked millions of customers to convince it to buy Frank for $175 million. Federal prosecutors in Manhattan charged Javice with wire fraud affecting a financial institution, securities fraud, bank fraud and conspiracy on Tuesday. JPMorgan acquired Frank in 2021 for $175 million, but began to question the authenticity of the startup's purported 4 million users after an email marketing campaign ended in "disaster," according to the bank's lawsuit and a filing by prosecutors. Out of 400,000 emails sent to Frank users, more than 70% bounced back and only 103 were opened, the bank claimed.
Experts shed light on what digital transformation in finance means for banks and people. In the session "Demystifying digital transformation in finance," part of the "Finance Meets Its Future" event presented by Amberdata, experts discuss digital transformation in finance on wall street. Customer convenience is at the forefront of digital transformation discussions. Reetika Grewal, head of digital transformation for CB and CIB at Wells Fargo said that that client concerns are at the center of digital transformation. Digital transformation poses key challengesWhen asked about the challenges of driving digital transformation in banks, Akwaboah said the industry is contending with multiple competing agendas.
Discussions between the SEC and Coinbase broke down in recent weeks, with one source saying the two sides had moved "further apart." The crypto industry believes it operates in a regulatory gray area not governed by existing U.S. securities laws - and that new legislation is needed to regulate the industry. "But if necessary, we welcome the opportunity for Coinbase and the broader crypto community to get clarity in court." Prior to Gensler's arrival, the SEC engaged in targeted enforcement, but the Democratic chair has ratcheted up focus on crypto platforms themselves. "There couldn't be a more significant development for crypto markets and crypto investors," said Philip Moustakis, former SEC enforcement lawyer and partner with Seward and Kissel LLP in New York.
Coinbase said it got a Wells notice from the SEC alerting it of possible enforcement action. The regulator told the crypto exchange it had identified potential violations of securities law, but little more. Coinbase said Wednesday that it got a Wells notice from the SEC alerting it of potential enforcement action for possible violations of securities law after "a cursory investigation," but that the SEC didn't expand much more. The exchange said the notice from the SEC touched on unspecified portions of its listed digital assets, its staking service, its self-custody crypto wallet and an aspect of its exchange called Coinbase Prime. The famed money manager now holds a 7% stake in the crypto exchange worth $837 million.
Lindsay Lohan attends/performs during a photocall for "Speed The Plow" at Playhouse Theatre on September 30, 2014 in London, England. The Securities and Exchange Commission has unveiled fraud and unregistered securities charges against crypto founder and Grenadian diplomat Justin Sun, alongside separate violations against the celebrity backers of his Tronix and BitTorrent crypto assets, which included Jake Paul, Lindsay Lohan and Soulja Boy. The unregistered offer and sale charges, on the other hand, are similar to charges the SEC has unveiled against other crypto offerings and exchanges, including Genesis, Gemini and Do Kwon's Terraform Labs. “This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” said SEC Chair Gary Gensler. Tron and his backers' alleged behavior was part of an "age-old playbook to mislead and harm investors," SEC enforcement chief Gurbir Grewal said in a statement.
The Securities and Exchange Commission issued crypto exchange Coinbase a Wells notice, warning the company that it identified potential violations of U.S. securities law. "Based on discussions with the Staff, the Company believes these potential enforcement actions would relate to aspects of the Company's spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet," Coinbase said in a regulatory filing. A Wells notice is typically one of the final steps before the SEC formally issues charges. Coinbase described the investigation as "cursory," and said the Wells notice provided relatively little information about potential violations. The SEC sent a Wells notice to stablecoin issuer Paxos in February.
New York CNN —The Securities and Exchange Commission on Wednesday charged Lindsay Lohan, Jake Paul and several other celebrities with failing to disclose that they were paid to promote crypto. The celebrities agreed to pay $400,000, including fines, and return what they were paid for the promotion. For their violations, Lohan agreed to pay $30,000 in fines in addition to the $10,000 she earned for the promotion. Paul agreed to pay $75,000 in fines on top of the $25,000 he earned. “At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation.”
[1/5] Guo Wengui (also known as Miles Kwok) holds a news conference with Steve Bannon in New York, New York, U.S., November 20, 2018. Guo, 52, was charged with 11 criminal counts including securities fraud, wire fraud and concealment of money laundering, after "lining his pockets with the money he stole," U.S. Attorney Damian Williams in Manhattan said in a statement. They will propose a "robust bail package," according to Tamara Giwa, a federal public defender who represented Guo at Wednesday's hearing. Bannon is not accused of wrongdoing in Guo's criminal case. It said it also seized assets purchased with proceeds from Guo's alleged fraud, including a Lamborghini Aventador, and wants Guo to forfeit the yacht.
Former White House Chief Strategist Steve Bannon greets fugitive Chinese billionaire Guo Wengui before introducing him at a news conference on November 20, 2018 in New York. The controversial exiled Chinese billionaire businessman Guo Wengui — an associate of former Trump White House advisor Steve Bannon — was arrested in New York on Wednesday for orchestrating what federal prosecutors called a more than $1 billion fraud conspiracy that duped online followers with promises of outsized investment returns. Former President Donald Trump months later pardoned Bannon in that case, shortly before Trump left the White House. IThe defendants are charged with wire fraud, securities fraud, bank fraud, and money laundering in the criminal case. Both Guo and Je face ossible sentences of up to 20 years in prison if convicted.
In a statement, U.S. Assistant Attorney General Kenneth Polite called the charges a "groundbreaking" effort to prevent the misuse of so-called 10b5-1 trading plans. The U.S. Securities and Exchange Commission also announced civil insider trading charges against Peizer in a parallel action. Executives can use trading plans under rule 10b5-1 as a defense against insider trading charges by planning to sell shares in advance at predetermined times. In a recent case, the SEC in September charged Cheetah Mobile Inc's (0C9y.F) CEO and its former president with insider trading in connection with a trading plan. The SEC in December voted to make changes to the insider trading programs to address concerns over abuse.
The forms were filed in the name of the shell companies, instead of Ensign Peak Advisers. Ensign Peak Advisers agreed to pay a $4 million penalty to the SEC, while the church agreed to pay $1 million, the agency said. "Since 2000, Ensign Peak received and relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio. As a result, Ensign Peak established separate companies (LLCs) that each filed Forms 13F instead of a single aggregated filing. Ensign Peak and the Church have cooperated with the government over a period of time as we sought resolution," Moore added.
Instead, the firm filed forms for shell companies that obscured the church’s portfolio and misstated the firm’s control over the church’s investment decisions, the SEC said. The SEC filed charges against both the church for causing the violations as well as Ensign Peak. To settle the charges, Ensign Peak agreed to pay a $4 million fine and the LDS church agreed to pay a $1 million penalty. Members of the LDS church are expected to donate a tenth of their income to the church, a longtime practice known as tithing. In a statement Tuesday, the LDS said Ensign Peak and the church cooperated with the government to seek a resolution.
The markets watchdog said the church and its nonprofit investment company, Ensign Peak Advisers Inc, used shell companies to mask its growing investments in public companies, which reached $32 billion in 2018, due to concerns of negative publicity. The use of shell companies came to light in 2019, when a former employee of Ensign Peak filed a whistleblower complaint. From 1997 through 2019, those shell companies filed the mandatory forms detailing the investments and improperly claimed to operate independently. In reality, the investments were still controlled by Ensign Peak, and the church was aware of the arrangement with church employees heading most of the companies, according to the SEC. The church agreed to pay $1 million, while Ensign Peak will pay $4 million to settle charges.
The Mormon Church and its investment adviser with pay millions to settle charges with the SEC. The regulator says the Church's investment manager "went to great lengths" to avoid disclosures. The Church of Jesus Christ of Latter-day Saints' has a $100 billion investment portfolio, according to a 13F form. Roger Clarke, the head of Ensign Peak, told the Wall Street Journal that the fund was an emergency account to be used in difficult times. Ensign Peak and the Church have cooperated with the government over a period of time as we sought resolution."
Coinbase reported user numbers that fell short of analysts' estimates even as fourth-quarter earnings and revenue beat projections. Loss of $2.46 per share, vs. loss of $2.55 per share as expected by analysts, according to Refinitiv. Revenue: $629 million, vs. $590 million as expected by analysts, according to Refinitiv. With crypto staking, investors typically vault their crypto assets with a blockchain validator, which verifies the accuracy of transactions on the blockchain. Haas added that staking was less than 3% of net revenue, so it was not material source of net revenue at this time — but an "important part of the ecosystem" that the platform plans to grow.
The SEC has charged fugitive crypto boss Do Kwon and his company Terraform Labs with alleged fraud. The suit is linked to the collapse of stablecoin TerraUSD which led to a $60 billion wipeout last year. Terraform was "simply a fraud propped up by a so-called algorithmic 'stablecoin'," the SEC alleges. The Securities and Exchange Commission has accused them of misleading US investors about the stability of algorithmic stablecoin TerraUSD, or UST, which was meant to be pegged to the US dollar. At the same time, the SEC is also charging Terraform and Kwon over the sale of unregistered securities, the markets regulator said.
Do Kwon, co-founder and chief executive officer of Terraform Labs, insists that he is not on the run from South Korean authorities. Terraform Labs, the company that Kwon founded, is behind the collapsed cryptocurrencies terraUSD and luna, which combined were worth $60 billion before they crashed. The Securities and Exchange Commission charged Terraform Labs and its CEO, Do Kwon, with fraud, alleging that they orchestrated a multibillion dollar "crypto asset securities fraud," the SEC said Thursday. The SEC alleges that Kwon marketed those assets, including those mAsset swaps and Terra, as profit-bearing securities, "repeatedly claiming" the tokens would increase in value. Kwon is wanted in South Korea for his involvement in the collapse of TerraUSD.
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