Article: The Number One Threat To Global Finance? Cyber Attacks

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The Number One Threat To Global Finance? Cyber Attacks

PYMNTS, 13 April 2021

Cyberattacks are the greatest threat to the world’s financial system, Federal Reserve Chairman Jerome Powell said in an interview with CBS News this week. Speaking to “60 Minutes” on Sunday (April 11), Powell said the risks posed by cybercriminals are greater than the lending and liquidity troubles that triggered the 2008 financial crisis.

“There are scenarios in which a large financial institution would lose the ability to track the payments that it’s making, where you would have a part of the financial system come to a halt, or perhaps even a broad part,” he said. “And so, we spend so much time and energy and money guarding against these things. There are cyberattacks every day on all major institutions now. That’s a big part of the threat picture in today’s world.” Continue reading “Article: The Number One Threat To Global Finance? Cyber Attacks”

Article: Archegos Exposes SEC Blind Spots, Dithering on Market Oversight

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Archegos Exposes SEC Blind Spots, Dithering on Market Oversight

Robert Schmidt and Benjamin Bainx, 10 April 2021

The U.S. Securities and Exchange Commission was supposed to be able to spot a whale like Bill Hwang by now. As the financial world knows, it didn’t. Will the agency be able to catch the next one?

The collapse of Hwang’s Archegos Capital Management represents one of the most spectacular failures of risk-management and oversight in recent memory. For the SEC, it caps a decade of foot-dragging on protections that were meant to avert, or at least minimize, just such a blowup. Continue reading “Article: Archegos Exposes SEC Blind Spots, Dithering on Market Oversight”

Article: INSIGHT: U.S. cryptocurrency regulatory path appears long and complex

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Todd Ehret, 06 April 2021

Bitcoin, other cryptocurrencies, and essentially all digital assets have surged in price recently amid surging interest by the public, investors of all types, and the financial industry. Despite a steadily growing acceptance and anticipation of a crypto-friendly regulatory environment under the new administration in Washington, the future regulatory framework for digital assets is complex and uncertain. Continue reading “Article: INSIGHT: U.S. cryptocurrency regulatory path appears long and complex”

Article: Morgan Stanley backs Bitcoin for 12 mutual funds

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Morgan Stanley backs Bitcoin for 12 mutual funds

EXPLICA .CO, 02 April 2021

US investment bank Morgan Stanley has filed an update to its prospectus related to bitcoin (BTC) with the Securities and Exchange Commission (SEC). The institution applied for 12 of its funds to have exposure with the first cryptocurrency.

According to the bank, the funds would have indirect exposure to bitcoin in two ways: through cash-settled futures and through the Grayscale Bitcoin Trust (GBTC), one of the world’s largest trusts focused on digital assets.

On the type of futures that funds can invest in, Morgan Stanley noted: “The only bitcoin futures that a fund can invest in are cash-settled bitcoin futures that are traded on listed futures exchanges. CFTC ‘.

In the document, the bank explains that the Selected funds will be able to invest up to 25% of their assets in bitcoin. The institution also stressed that this type of operation implies a risk of illiquidity since bitcoin futures are not traded so “intensely” because they are relatively new. Continue reading “Article: Morgan Stanley backs Bitcoin for 12 mutual funds”

Article: CFTC Obtains Another Guilty Plea of Market Manipulation, Makes Criminal Referral

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CFTC Obtains Another Guilty Plea of Market Manipulation, Makes Criminal Referral

Levi McAllister, Patrick R. Pennella, 31 March 2021

The Commodity Futures Trading Commission (CFTC) announced last week that it has obtained another admission from a trader of violations of the Commodity Exchange Act and CFTC regulations, demonstrating its continued aggressive enforcement of its market anti-manipulation provisions.

Emilio José Heredia Collado (Heredia) of Lafayette, California, admitted to engaging in the manipulation of a US price-assessment benchmark relating to physical fuel oil products for more than four years while employed as a fuel oil trader for a trading company. The CFTC imposed a permanent ban from trading commodity interests or engaging in other related activities and a $100,000 civil monetary penalty and made a criminal referral to the US Department of Justice. Continue reading “Article: CFTC Obtains Another Guilty Plea of Market Manipulation, Makes Criminal Referral”

Article: Former Glencore oil trader pleads guilty to market manipulation charges

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Former Glencore oil trader pleads guilty to market manipulation charges

Chris Prentice,  29 March 2021

A former Glencore Plc fuel oil trader pleaded guilty and agreed to pay $100,000 to settle charges of market manipulation of a key U.S. pricing benchmark, U.S. authorities said on Thursday.

Emilio José Heredia Collado admitted to a multiyear conspiracy to manipulate the fuel oil market, the U.S. Department of Justice said. Heredia agreed to a lifetime ban and a civil penalty of $100,000 to settle parallel charges filed by the U.S. Commodity Futures Trading Commission.

From as early as June 2012 to at least August 2016, Heredia and others at Glencore sought to boost their profits from oil trading by manipulating prices, U.S. officials said.

A Glencore spokesperson said the firm is cooperating with the ongoing investigation.

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Article: CFTC hits former fuel-oil trader with $100,000 penalty for market manipulation

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CFTC hits former fuel-oil trader with $100,000 penalty for market manipulation

Reuters, 25 March 2021

WASHINGTON — The U.S. Commodity Futures Trading Commission (CFTC) has settled charges against a former fuel oil trader for market manipulation, the regulator said in a statement on Thursday.

Emilio José Heredia Collado admitted to manipulating, and attempting to manipulate, a U.S. fuel oil benchmark. The CFTC hit Heredia with a $100,000 civil penalty and permanently banned him from trading commodity interests, the statement said.

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Article: The Legal and Economic Implications from Recent UK Spoofing Cases

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The Legal and Economic Implications from Recent UK Spoofing Cases.

Yan Cao, Marlene Haas, Greg Leonard, 23 March 2021

The UK Financial Conduct Authority (“FCA”)[1] has in recent years intensified its efforts in securities and commodities markets to detect and pursue the type of disruptive trading behaviour called “spoofing.” This emphasis coincides with a similarly increasing focus by the US Commodity Futures Trading Commission (“CFTC”) and the US Department of Justice (“DOJ”) on spoofing cases in the US. Spoofing may take different forms, but usually involves the placing of non-bona fide orders, often of large quantity, on one side of the market while trying to execute a bona fide order on the other side of the market. Once the bona fide order has been executed, the trader cancels the non-bona fide orders quickly. To date, more than 40 enforcement actions targeting spoofing have been filed against individuals and companies by US regulators and more than 5 have been filed by UK regulators. In February 2019, Julia Hoggett, the FCA’s Director of Market Oversight, delivered a speech about the FCA’s commitment to tackling market abuse, calling compliance with such rules “critical to the integrity and health of our financial markets.” Continue reading “Article: The Legal and Economic Implications from Recent UK Spoofing Cases”

Article: Coinbase pays $6.5M to settle government investigation into false reporting

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Coinbase pays $6.5M to settle government investigation into false reporting

DUNCAN RILEY, 21 March 2021

Cryptocurrency exchange Coinbase Global Inc. has been fined $6.5 million by the U.S. Commodity Future Trading Commision to settle allegations that it undertook reckless false, misleading or inaccurate reporting as well as so-called wash trading between 2015 and 2018.

Along with the fine, announced Friday, Coinbase is also subject to stop any further violations of the Commodity Exchange Act or CFTC regulations.

Between January 2015 and September 2018, Coinbase is said to have operated two automated trading programs, Hedger and Replicator, that generated orders that at times matched one another on the GDAX electronic trading platform operated by the company. Although the GDAX rules did disclose that Coinbase was trading on the GDAX it failed to disclose that Coinbase was operating more than one trading program and trading through multiple accounts. Continue reading “Article: Coinbase pays $6.5M to settle government investigation into false reporting”

Article: Coinbase Expected to Pay $ 6.5 Million Fine Following Market Manipulation Allegations

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Coinbase Expected to Pay $ 6.5 Million Fine Following Market Manipulation Allegations

EXPLICA.CO, 20 March 2021

The Commodity Futures Trading Commission (CFTC) issued on Friday (19) a request to file and resolve charges against Coinbase, the San Francisco, California-based exchange, for “reckless, false, misleading or inaccurate reports, as well as negotiations for employee laundering in the GDAX (current Coinbase Pro) of the Coinbase platform. ”The order requires the broker to pay a civil penalty of US $ 6.5 million (R $ 35.69 million) and stop any other violation of the Commodity Exchange Act or CFTC regulations, as charged.

“Reporting false, misleading or inaccurate transaction information undermines the integrity of digital asset pricing,” said Chief Inspector Vincent McGonagle. “This enforcement action sends the message that the Commission will act to safeguard the integrity and transparency of such information.”

Understand the case:

According to the prosecution, between January 2015 and September 2018, Coinbase “recklessly delivered false, misleading or inaccurate reports on transactions in digital assets, including Bitcoin, on the GDAX e-commerce platform that it operated.” During these 3 years, Coinbase operated two trading bots, Hedger and Replicator, which generated orders that sometimes coincided with each other. The GDAX trading rules specifically disclosed that Coinbase operated on GDAX, but did not disclose that Coinbase operated more than one trading program and was effectively generating volume across multiple accounts.

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Article: Current Attempts To Define Regulator Roles in Cryptocurrency Enforcement Actions

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Current Attempts To Define Regulator Roles in Cryptocurrency Enforcement Actions

Kenneth M. Breen and Phara A. Guberman, 19 March 2021

On March 5, 2021, the U.S. Attorney’s Office for the Southern District of New York charged John McAfee and his former employee, Jimmy Gale Watson, with conspiracy, fraud, and money laundering charges in connection with his cryptocurrency activities—specifically McAfee’s Twitter statements touting various cryptocurrencies and his false and misleading statements concerning personal investments or other involvement with those same cryptocurrencies. The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have filed civil charges against McAfee and his former colleague in separate parallel actions, each based on a different aspect of McAfee’s alleged scheme. This case and the expected upcoming congressional task force on cryptocurrencies are likely to provide the market with more clarity on how coins and projects will be treated in investigations, including whether they can be treated as securities or commodities and the relative roles of the SEC and CFTC.

In the McAfee case, the first alleged part of the scheme is a pump-and-dump. A pump-and-dump scheme generally involves a party or entity acquiring a position in a financial instrument and then artificially inflating the value of that instrument before selling at an inflated price. In this case, McAfee and his team allegedly bought large quantities of various less popular than Bitcoin but publicly traded cryptocurrencies, such as Dogecoin, Reddcoin, and Verge. McAfee, a public figure of sorts because of his anti-virus software and social media following, then publicly endorsed and recommended a particular cryptocurrency on Twitter. When the value of that cryptocurrency increased, McAfee and his team sold their investments, earning a cumulative profit of approximately $2 million. According to the indictment, McAfee liquidated many of his cryptocurrency holdings through New York Stock-Exchange-based companies, implicating various securities laws.

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Article: Bank of America, Morgan Stanley win dismissal of metals spoofing litigation

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Bank of America, Morgan Stanley win dismissal of metals spoofing litigation

Jonathan Stempel, 05 March 2021

NEW YORK (Reuters) – A federal judge in Manhattan on Thursday dismissed litigation by traders and trading firms accusing Bank of America Corp and Morgan Stanley of manipulating the precious metals futures market by placing trades and then cancelling them before execution, or “spoofing”.

U.S. District Judge Lewis Liman in Manhattan said the June 2019 lawsuit over alleged spoofing in gold, silver, platinum and palladium futures from 2007 to 2014 was filed long after the two-year federal statute of limitations had run out.

The investors said the clock started in January 2018 when the traders Edward Bases and John Pacilio, both from Connecticut and also defendants, were charged with commodities fraud. Six other people were criminally charged at the time. Continue reading “Article: Bank of America, Morgan Stanley win dismissal of metals spoofing litigation”

Article: Ignoring years of silver price manipulation, Orwellian CFTC now goes after Reddit Apes

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Ignoring years of silver price manipulation, Orwellian CFTC now goes after Reddit Apes

Ronan Manly, Bullion Star, 04 March 2021

On Monday 1 March, an article in Bloomberg Law by CFTC connected lawyers from law firm Clifford Chance revealed that the Commodity Futures Trading Commission (CFTC) is reportedly investigating retail silver trader activity in the silver price and that the US Department of Justice looks set to investigate as well.

Before looking at this shocker of an Orwellian development, it’s helpful to provide some context on the CFTC’s track behavior in this area and to show how hypocritical such a development would be. Continue reading “Article: Ignoring years of silver price manipulation, Orwellian CFTC now goes after Reddit Apes”