Investors are suing the team behind Haliey Welch’s HAWK crypto project in a lawsuit alleging that crypto-newbies enticed by her endorsement suffered significant damages when the token crashed. 

Newsweek reports that the lawsuit filed today claims “defendants offered and sold to the public without proper registration.” This, it says, resulted in the “unlawful promotion and sale of the Hawk Tuah cryptocurrency memecoin.”  

It also states that “many of the investors were first-time cryptocurrency participants drawn to the project through Welch’s involvement,” and that after the token crashed, it caused “substantial damages to investors who relied on Welch’s participation and the project’s stated road map.” 

Read more: Haliey Welch’s HAWK token team breaks silence to shift the blame

Defendants listed in the lawsuit include the Tuah The Moon Foundation, overHere Ltd. and its exec, Clinton So, and Alex Larson Schultz, a.k.a. “Doc Hollywood.” Welch isn’t named as a defendant. 

The suit claims they “leveraged Welch’s celebrity status and connections to enhance the Token’s credibility and appeal.” It also claims “aggressive” promos and growth promises were used to create a “speculative frenzy.”

Welch hasn’t posted anything on her social media channels since launching the token. Indeed, the last thing she posted — that she was going to bed — quickly became a meme.

Despite radio silence from Welch, overHere did address the controversy, claiming that most of the blame should be placed on Schultz. It did admit, however, that it should’ve been more diligent.

The lawsuit seeks a trial by jury and over $150,000 in damages.

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The post Haliey Welch isn’t listed in HAWK memecoin lawsuit appeared first on Protos.

Craig Wright said he won’t be attending his contempt of court hearing in London today, citing a “lack of means for travel.” As a result, he will likely be found in contempt and face possible arrest and prison.

There was much speculation about whether Wright would show up at the London Royal Courts of Justice to face the hearing brought by the Crypto Open Patent Alliance (COPA). Last November, Mr. Justice Mellor ordered Wright to attend in person after deciding his arguments against attending carried “no justification.”

He said, “It is difficult to avoid the conclusion invited by COPA which was that his real motivation is a wish to avoid the consequences of his contempt (if proved).”  

Read more: COPA says Craig Wright used ChatGPT to write court submissions

Wright tried to argue that his autism and Christmas plans, among other things, should prevent him from attending.

COPA argues that Wright has breached his court injunctions after he filed a lawsuit against Jack Dorsey’s Square Up and BTC Core claiming £900 billion in damages.

Today’s High Court hearing was recorded by BitMEX Research, Bitnorbert, and patent attorney David Pearce. COPA reportedly offered to cover the costs of Wright’s travel. However, Wright, who now also dabbles in casino design, rejected the offer, reportedly asking for as much as £240,000.

According to Wright, this sum reflected the loss of business opportunities due to “COPA’s actions.”

COPA’s legal representative, Jonathan Hough, instructed by Bird & Bird, claimed, “Wright is voluntarily absenting himself to avoid consequences.” Hough later recommended that Wright should receive a custodial sentence of two years.

Judge Mellor has told COPA to invite Wright to a sentencing hearing tomorrow, which he can attend remotely, where a judgment will be handed down.

Update December 18, 12:49 UTC: Included Judge Mellor’s decision to hand down a judgment on Thursday.

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A judge has ordered Craig Wright to return to the UK to face a contempt of court hearing after the Australian entrepreneur failed to argue that his autism and plans for Christmas should prevent him from appearing in person.

Patent attorney David Pearce attended the hearing today and documented Wright and Crypto Open Patent Alliance (COPA) legal representative Jonathan Hough’s arguments for and against his attendance.

Today, COPA called Wright’s arguments “not remotely convincing,” and claimed, “wanting to spend Christmas in Indonesia is not a reason that should carry any weight.”

It also argued that Wright’s £900 billion claim would have to have, “very strong grounds against attendance in person.” Wright was also accused of “expert shopping” his autism expert, Dr. Kiln, and noted that Kiln never suggested he should give evidence remotely during previous trials. 

Read more: Craig Wright lawsuit made 184 ‘twisted and incoherent’ claims, say analysts

Wright previously argued that his autism should prevent him from attending in person and that the proposed timings weren’t ideal given his intended Christmas schedule.

Today, attending virtually, he claimed he has received social media abuse and that he needed two “ex-secret service” bodyguards to observe him over fears he was being followed.

Wright’s evidence also argued that the judge, overseeing today’s session, Mr. Justice Mellor, was affiliated with David Pearce. Mellor, however, shot down this allegation, noting that he’d only met him twice at official events. Mellor stated, “I reject in no uncertain terms any allegations of bias.”

COPA accused Wright of contempt of court earlier this month and claimed he breached his court injunctions when Wright filed a lawsuit against Jack Dorsey’s Square Up and BTC Core. 

Mellor ultimately rejected the argument supported by Wright’s expert and instead, admitted the evidence of another doctor who decided that Wright’s attempted remote attendance wasn’t justified.

The hearing is now scheduled to take place in person on December 18. 

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An alleged SIM-swap hacker accused of stealing $400 million in crypto from collapsed exchange FTX has reportedly requested a temporary release from home detention on the grounds that he would like to attend his girlfriend’s sister’s birthday party at an Illinois branch of Chuck E. Cheese.

Robert Powell, aka ‘ElSwapo1’ was arrested alongside two alleged accomplices back in February and subsequently granted home release on a $10,000 bond.

Other conditions of his release included that he avoid non-essential internet use and any online gambling and that he must remain at home other than to go to court or medical appointments. 

However, in a request to the court, Powell’s lawyers have requested that it “modify his conditions of release” and allow him to attend his girlfriend’s sister’s birthday party on Sunday, November 10 between the hours of 2 pm and 6 pm at an Arlington Heights Chuck E. Cheese.

According to the request, “Mr. Powell has been in full compliance with all his release conditions,” and, “All other release conditions shall remain in effect.”

It also states that “Pretrial and the government are not objecting to this request.”

Read more: OKX SIM-swap leads to discovery of 2FA security flaw

Dates of $400M heist matched FTX loss

Powell, along with Carter Rohn and Emily Hernandez, were charged with conspiracy to commit wire fraud and conspiracy to commit aggravated identity theft and access device fraud after they allegedly traveled to cellphone stores in more than 15 states.

The trio, known as the ‘Powell SIM Swapping Crew’ were arrested after $400 million worth of crypto was siphoned from the (then) world’s biggest crypto exchange on the day that it declared bankruptcy in November 2022.

There was initially some debate about who exactly the gang’s victim was and the initial indictment referred to ‘Victim Company-1.’ However, blockchain analytics firm Elliptic subsequently clarified in a blog post that, “We’re not aware of any other thefts of this magnitude on these dates.”

“It therefore seems likely that ‘Victim Company 1’ is FTX,” it added.

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Crypto.​com is facing its second regulatory battle in the European Union this year after its Malta-based operator Foris DAX MT was placed on an alert list by the Polish Financial Supervision Authority (KNF).

In a filing from November 6, Foris DAX MT is accused of providing financial services in Poland without the necessary authorization.

This allegation comes eight months after the De Nederlandsche Bank — the Dutch central bank — hit the company with a $3.1 million fine over breaches of anti-money laundering and anti-terrorist financing laws.

A Crypto.com spokesperson told Protos, “We are aware of an update from the KNF in Poland and are working closely with the regulator to resolve any questions they may have regarding our services.”

Read more: Former Crypto.com compliance officer charged with money laundering, extortion

Firms that are placed on a KNF alert list aren’t banned in Poland but their listing serves as a warning to users and potential investors that the company may be engaging in unauthorized financial activities.

Other crypto companies on the list include Bright Space LTD, which uses the website cryptotradecorp.com, and BitBay, which now operates as Zonda and is one of Poland’s biggest exchanges.

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Update 18:20 UTC, Nov 7: Updated piece to include comment from Crypto.com spokesperson.

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On Thursday, an Eastern District of New York courtroom filled with over 70 bystanders to hear Richard Heart’s lawyers argue his case for dismissing the SEC’s lawsuit against him and his crypto projects HEX, Pulsechain, and PulseX.

At the outset, Heart’s lawyers contested jurisdiction, asking the judge to dismiss the lawsuit entirely because, in Heart’s view, the SEC lacks jurisdiction over him and the entities it is suing.

Heart says that, although he grew up near Pittsburgh, Pennsylvania, he lived in Finland and elsewhere abroad during the time periods in question. Moreover, he believes the unincorporated entities HEX, Pulsechain, and PulseX are not subject to the jurisdiction of US courts.

First order of business: Jurisdiction

Heart’s lawyers used a considerable portion of Thursday’s oral argument to argue their stance on the SEC’s lack of jurisdiction. They explained why Heart believes the SEC did not plausibly allege a domestic securities transaction, failed to satisfy pleading requirements, and failed to plausibly allege how HEX, Pulsechain, and PulseX transactions passed the US Supreme Court’s Howey Test.

According to one “Hexican” who attended the hearing live, “We pretty much won on that front that this is out of the SEC’s jurisdiction. You know, obviously you can’t sue open-source software.” Of course, whether or not the SEC has jurisdiction is up to the judge, not bystanders. She has not yet filed her determination.

That bystander also claimed that the SEC’s chronology of events contained errors that weakened the commissioners’ case during Thursday’s hearing.

For context, that same bystander soon fawned that Heart’s lawyers “adjusted the syntax of my mind” as “a chill ran up my spine.” He claimed the SEC was trying to “take away people’s right to transact” and glowed about how “it really felt we were part of something really special. I feel like Richard Heart changed the syntax of how the legal system is going to have to grapple with this new technology.”

Read more: Finland wants to detain Richard Heart, alleges millions in unpaid taxes

Next steps for HEX and Heart’s motion to dismiss

After discussing jurisdiction, Heart’s lawyers asked the judge to discredit the SEC’s fraud claims. 

The SEC’s stance is that Heart committed fraud by using investor funds for personal gain, selling Hexicans’ contributions of ETH and other altcoins to buy personal luxuries like watches.

Heart’s lawyers spent most of their time focusing on his repeated reminders to his fans that they should never expect to profit from the efforts of others. These prominent disclaimers, in addition to other factors, allegedly discredit the SEC’s fraud claims.

Within a few days, Judge Amon will decide whether the SEC’s case against Heart will continue as originally pleaded. The judge may grant or deny Heart’s motion to dismiss in full or in part.

Observers may watch the docket for her upcoming determination. A decision might take up to 90 days.

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Craig Wright argued that his high-level autism and Christmas schedule should prevent him from attending a December court session after he was accused of contempt of court in a legal application filed today by COPA. 

BitMEX Research covered the hearing where Bird and Bird filed its claim on behalf of the Crypto Open Patent Alliance (COPA). The law firm argued that Wright has breached his injunction after he removed an online notice and launched his lawsuit against Jack Dorsey’s Square Up and BTC Core. 

On top of this, COPA wants to stay Wright’s lawsuit, halting the relevant court proceedings until the contempt of court filing is settled. 

Read more: Craig Wright files lawsuit against BTC Core and Square without barrister

COPA lawyer Jonathan Hough claimed, “It’s wrong in principle to hide behind a keyboard from a closet in Thailand. [Wright] says he is a UK resident and should be expected to return to the UK for the hearing.”

He added, “[Wright] is seeking to evade the consequences of his actions. He may want to avoid the police or avoid detention.” 

Craig claims autism prevents court appearance

COPA wants Wright to attend the contempt of court hearing in person but Wright argues that his high-level autism won’t allow it. “Look at me now,” he said while streaming from Singapore. “The lighting is set in a certain way. Being able to sit in a courtroom is a different issue, I might have a meltdown and I might not be cognitively able.” 

He also claims that he rarely sees his children and that it will be difficult for him to attend the hearing while his family is in Singapore in December. 

The judge ruled to stay Wright’s lawsuit against Square Up and scheduled a court session to determine if he was in contempt of court for December 18. A November 26 hearing will decide if Wright should attend this hearing in person or not.

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In New York today at 3pm, Nishad Singh entered a federal courtroom to hear a judge read his final sentencing for the crimes he committed at FTX.

After considering statutory minimums, sentencing guidelines, and other documents filed relevant to the decision, Judge Lewis Kaplan decided to administer a sentence of time served with three years of supervised release, according to reporting from InnerCityPress.

For context, FTX’s former CEO Sam Bankman-Fried received a 300-month prison sentence. Former co-CEO of FTX Digital Markets Ryan Salame received a 90-month sentence. Caroline Ellison, CEO of Alameda Research which stole funds from FTX customers, received a 24-month sentence.

Singh, FTX’s ex-Director of Engineering, pleaded guilty to six crimes last year. He also filed a sentencing submission — and received written support from bankruptcy cleanup lead John J. Ray III — that stressed his post-collapse cooperation with US authorities.

Both asked judge Kaplan to please avoid administering a prison sentence.

However, a filing today from representatives for the former Chief Operating Officer of FTX Japan challenges Singh’s claim that he took steps to preserve funds at FTX Japan, specifically describing Singh’s claims as “completely false.”

Singh’s hearing was scheduled for 3 pm Eastern Time. The judge handed down the sentence shortly after opening comments, recitations, and other formalities.

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Pro-Ethereum conglomerate Consensys has announced a mass round of layoffs that its founder and CEO Joe Lubin has primarily blamed on the Securities and Exchange Commission’s (SEC) “abuse of power” and “attacks.”

In a blog post announcing the 162 “right-size” job cuts — 19.5% of its 828 employees — Lubin also called out Congress for its “inability to rectify” Consensys’ legal woes.

The SEC is suing Consensys for several profitable business units that allegedly violate US law. In its June 28 suit, commissioners explained that Consensys’ Swaps feature of its MetaMask software acts as an unregistered broker that effects securities transactions on behalf of investors. Moreover, they say Consensys also sold unregistered securities through its MetaMask Staking.

Read more: SEC tries to expand crypto jurisdiction with Consensys lawsuit

For its part, the firm primarily argues that users control MetaMask software and do not rely on Consensys for these transactions. The SEC has counterargued in detailed court filings that the conglomerate’s suite of code, hosted services, nodes, relayers, and human-directed choices not only make MetaMask indispensable for many users but also demonstrate the company’s willful and profitable violations of law.

The main lawsuit is ongoing in the US District Court for the Eastern District of New York. The next meeting is scheduled for November 20 to set a schedule for evidence discovery.

Consensys has already lost one lawsuit against the SEC

Consensys has failed in many of its attempts to fend off SEC enforcement. Earlier this year, it preemptively sued the SEC after it received a Wells Notice.

On September 19, a federal judge dismissed that attempt. Lubin had asked a Texan court to rule that ETH transactions were somehow not securities transactions because they involved ETH, prohibit the SEC from suing companies for using ETH, and bless its Ethereum-friendly MetaMask wallet. The judge declined all of Lubin’s requests.

Consensys previously laid off 100 of its then-900 workers in January 2023. In 2018, when the company had some 1,200 workers, a layoff affected approximately 600 workers.

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On Friday, the Wall Street Journal broke news of another US government investigation into Tether. Anonymous sources familiar with the Manhattan US attorney’s office say that senior law enforcement officials are “looking at whether the cryptocurrency has been used by third parties to fund illegal activities.”

This announcement is yet another chapter in Tether’s legal saga. As early as 2012, lawsuits began against Bitcoinica — whose source code was used by Tether’s sister company, Bitfinex.

Legal issues would affect Tether every year since.

As the world’s largest stablecoin, tether (USDT) attracts criminals who find its properties of pseudonymity, chargeback resistance, and widespread acceptance to be useful. Although most uses of USDT are innocuous, its illegitimate uses are pernicious. 

To track Tether’s run-ins with the US government across time, Protos has created a chart of some major US government actions involving the stablecoin giant. Note that this chart includes only US governmental actions and excludes numerous civil lawsuits and criminal investigations around the world.

Read more: FBI details how USDT is laundered through Binance

US government actions involving Tether

• September 18, 2015
  • Bitfinex comments on its Commodity Futures Trading Commission (CFTC) probe.
  • USDT market cap: $451,000.
• June 2, 2016
  • Bitfinex settles a CFTC allegation that it illegally traded customers’ bitcoin.
  • USDT market cap: $2.9 million.
• July 21, 2016
  • Trendon Shavers, operator of a Ponzi scheme promoted by Bitfinex founder Raphael Nicolle, receives a prison sentence.
  • USDT market cap: $6.9 million.
• September 14, 2017
  • Tether admits to the New York State Attorney General (NYAG) that since April 2017, it has not had a bank account with more than $61.5 million in cash.
  • USDT market cap: $418 million.
• May 24, 2018
  • The Department of Justice (DoJ) and CFTC open a criminal probe into USDT-based bitcoin price manipulation.
  • USDT market cap: $2.5 billion.
• April 25, 2019
  • NYAG demands documents from Tether.
  • USDT market cap: $2 billion.
• May 1, 2019
  • Arizona US Attorney charges ‘shadow banker’ Reginald Fowler for fraudulently moving Tether’s funds.
  • USDT market cap: $2 billion.
• May 5, 2019
  • The Southern District of New York (SDNY) US Attorney charges Fowler and Ravid Yosef for criminally misappropriating Tether’s reserves.
  • USDT market cap: $2 billion.
• October 25, 2019
  • Ivan Manuel Molina Lee is arrested on charges of laundering money through Bitfinex.
  • USDT market cap: $4.2 billion.
• September 24, 2020
  • US attorneys file charges against cartel members for using USDT in bribes.
  • USDT market cap: $15.2 billion.
• February 23, 2021
  • Bitfinex pays $18.5 million to settle NYAG claims that it covered up major financial losses.
  • USDT market cap: $34.7 billion.
• July 26, 2021
  • DoJ probes alleged bank fraud committed by Tether executives.
  • USDT market cap: $62 billion.
• July 27, 2021
  • US President’s Working Group on Financial Markets discusses Tether.
  • USDT market cap: $62.2 billion.
• October 15, 2021
  • CFTC fines Tether $41 million for false claims about USD reserves.
  • USDT market cap: $70 billion.
• December 8, 2021
  • A US Senator chastises Tether executives for not attending a Senate hearing.
  • USDT market cap: $77 billion.
• February 8, 2022
  • Ilya Lichtenstein and Heather Morgan arrested for stealing money from Bitfinex.
  • USDT market cap: $78 billion.
• August 3, 2022
  • A Boston US Attorney seizes 73,586 USDT proceeds of crime.
  • USDT market cap: $66 billion.
• December 15, 2023
  • Tether admits it has complied with information requests from DoJ, IRS, and Secret Service.
  • USDT market cap: $90.8 billion.
• October 25, 2024
  • A Manhattan US Attorney is investigating Tether.
  • USDT market cap: $120 billion.

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The post CHART: Tether has attracted US government action 19 times appeared first on Protos.