SEC sues Do Kwon, Paxos ready to sue, SBF VPN: Hodler's Digest, February 12-18

Top stories this week Paxos 'categorically disagrees' with SEC that BUSD is a security

(SEC) defined the Binance USD (BUSD) stablecoin as a security in a Wells notice sent to its issuer, Paxos Trust Company. The SEC alleges that the organization has not registered the BUSD under federal securities laws. The company, however, "categorically disagrees" with the authority's view, and that is the case in US courts. Also this week, Paxos received token instructions from the New York Department of Financial Services. The alleged department of Circle - another stablecoin issuer - claiming that Binance's reserves were insufficient to support BUSD.

SEC sues Do Kwon and Terraform Labs for fraud

against Terraform Labs and its founder Do Kwon for allegedly "orchestrated a multi-billion dollar crypto asset fraud". The regulator said Kwon and Terraform offer and sell an "interconnected suite of crypto asset securities, many of them in unrecorded transactions." He pointed to the company's now-collapsed algorithmic stablecoin TerraClassicUSD (USTC) and its connected cryptocurrency Terra Classic (LUC). The complaint alleges violations of registration and anti-fraud provisions of securities laws.

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Federal judge hints at denying Sam Bankman-Fried all internet access as bail condition

in court for the first time in days after using a VPN for allegedly watching football. Prosecutors raised "several potential concerns", after the former CEO contacted potential witnesses in his criminal case earlier this month. Prosecutors want to bar Bankman-Fried from using cellphones, tablets, computers, or the Internet, that is, or other video games. In FTX bankruptcy news, a federal judge for $250 million bail. Bankman-Fried's criminal trial is set to begin in October, while FTX's bankruptcy filing is pending.

El Salvador will open a "Bitcoin embassy" in the United States

by El Salvador in the United States. Ambassador Milena Mayorga said the country's representative office and the state of Texas will work on new joint projects to promote Bitcoin adoption. In another headline, the International Monetary Fund plans to increase exposure to Bitcoin, citing the "speculative nature" of crypto markets, as well as its impacts on fiscal sustainability and consumer protection. Bitcoin has been legal tender in El Salvador since 2021.

Celsius chooses NovaWulf's offer to emerge from bankruptcy

has chosen NovaWulf Digital Management as the sponsor of its proposed Chapter 11 restructuring plan, which will see the investment advisory firm take over operations from a new company, with most former Celsius clients expected to recover up to 70% of their funds. The proposed plan has the support of the committee of unsecured creditors and would see the creation of a new public platform called NewCo wholly owned by Earn's creditors. Six companies made bids on Celsius' crypto assets, including Binance and Galaxy Digital.

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