Law Decoded, June 13–20: Celsius exodus and liquidity crisis
American platform became the first one to freeze the withdrawal operations, but might not be the last
Last week, the Celsius Network wrote its name in the alarming recent history of the crypto market failures alongside Terra. The American platform has unstaked $247 million worth of Wrapped Bitcoin (wBTC) from the Aave protocol and sent it to crypto exchange FTX while putting the withdrawal option for users on a stop.
Immediately after that, United States securities regulators from five states — Alabama, Kentucky, New Jersey, Texas and Washington — opened an investigation into Celsius. This isn’t the first time the platform is facing suspicions from law enforcement. In September 2021, The Texas State Securities Board scheduled a hearing related to allegations that the network had offered and sold securities in the state that were not registered or permitted.
What is worrying, though, is that Celsius might not appear as a single case of poor management but the first victim in a row amid the ongoing liquidity crisis in crypto. By the end of the week, Hong Kong-based asset manager Babel Finance announced the temporary suspension of redemptions and withdrawals from its products, citing “unusual liquidity pressures.”
Gary Gensler attacks a Lummis-Gillibrand bill
United States Securities and Exchange Commission (SEC) Chair Gary Gensler admitted that he’s worried, and the object of his anxiety is the recently published “Responsible Financial Innovation Act,” co-sponsored by Senators Cynthia Lummis and Kirsten Gillibrand. Speaking at The Wall Street Journal’s CFO Network Summit, Gensler implied the bill has the potential to “undermine the protections we have in a $100 trillion capital market.”
Last-minute veto in Panama
Sometimes months or even years of optimistic development can just stop at one moment. It happened in Panama, as the country’s president Laurentino Cortizo has partially vetoed Bill No. 697. A “crypto bill” passed the National Assembly voting in April 2022, but Cortizo was pretty clear even at that point, threatening to veto the document unless it included additional Anti-Money Laundering (AML) rules. Should the bill finally receive the president’s signature, it would make Panama the second Central American country to regulate the spending of cryptocurrencies.
A Dogecoin lawsuit for Elon Musk
Billionaire Elon Musk has been used for $258 billion on the allegations of being “engaged in a crypto pyramid scheme” involving Dogecoin (DOGE): a number that might be a bit audacious, as it exceeds Dogecoin’s all-time high market cap by three times. In the filing, one of the plaintiffs states that Musk and his corporations were “unjustly enriched” by $86 billion as a result of wire fraud, gambling enterprise, false advertising, deceptive practices and other unlawful conduct. The case could certainly color up the media space.