Payment Expert’s Blockchain Bulletin analyses how the world of blockchain is constantly evolving and heavily impacting the payments industry, with cryptocurrencies, NFTs and the metaverse revolutionising the space.
This week, the fallout from Binance’s money laundering charges continue as ex-CEO Changpeng Zhao is deemed a potential flight risk and Cristiano Ronaldo has been hit with a lawsuit over promoting the crypto exchange.
US DOJ pushing back on Zhao leaving the US
After entering the US last week to admit breaching the country’s money laundering laws and paying a $175m bail out, former Binance CEO Changpeng Zhao is seeking to return to his residency in the United Arab Emirates before his sentencing in February next year.
However, according to recent court filings, the US Department of Justice is pushing back against Zhao’s defence team, claiming that the crypto kingpin could potentially not return back to US soil if he heads back to the UAE, which has no treaty policy in place with the US.
Zhao’s defence team claims that he possesses no flight risk as his ties with the US are minimal whilst also acknowledging that he voluntarily turned himself in and admitted to the charges placed against, which Judge Tsuchida described as “compelling”.
The sentence date for Zhao is set for 23 February 2024 and he could face 18 months, although a court filing revealed that prosecutors are “free to argue for any sentence up to the statutory maximum of 10 years”.
Ronaldo feels effect of Binance issues through new lawsuit
Binance’s regulatory troubles in the US have crossed into the world of football, in particular with Cristiano Ronaldo, who is being sued over the promotion of NFTs on the exchange.
The new lawsuit against the global football star claims that he “promoted, assisted in, and/or actively participated in the offer and sale of unregistered securities in coordination with Binance”.
Ronaldo agreed a partnership with Binance last year where he would curate and release yearly NFTs for fans to engage with. However, plaintiffs are arguing that the Portuguese forward helped drive users to other Binance services, such as staking and trading.
The three claimants, Gordon Lewis, Michael Sizemore and Mikey Vongdara, are seeking damages and funds compensation.
UK green lights tokenisation in landmark “milestone”
The UK’s Financial Conduct Authority (FCA) recently confirmed that the tokenisation of funds will be made possible in the near future after outlining plans for its integration next year.
The first phase will see the introduction of regulatory guidelines to safeguard against potential money laundering, with the second phase looking to pilot tokenisation methods to financial services creating use cases of its benefits, likely to be introduced in February 2024.
Michelle Scrimgeour, Chief Executive of Legal & General Investment Management, commented: “Fund tokenisation has great potential to revolutionise how our industry operates, by enabling greater efficiency and liquidity, enhanced risk management and the creation of more bespoke portfolios.”
Would crypto security benefit from integrating a chargeback system?
Consumer protection has been one of the more concerning issues surrounding the crypto sector in recent years, with the collapse of FTX and other companies going bankrupt.
Monica Eaton, Founder of Chargebacks911, told Payment Expert that the sector would greatly benefit from a chargeback mechanism that would enhance investor security as they provide more clarity and assurance if they become a victim of a fraud attack.
She said: “As we’ve seen with investors who have lost money through the FTX debacle, crypto desperately needs to evolve to adopt a chargeback mechanism to protect consumers should they be treated unfairly.”
FTX’s failures continue to linger as MLB & Mercedes hit with lawsuits
The MLB and Mercedes-AMG Petronas F1 team have both had a lawsuit filed against them over promoting the now collapsed FTX.
The lawsuits filed by plaintiffs state that they were misled by both parties, which were responsible for “aiding and abetting and/or actively participating in the FTX Group’s massive, multibillion-dollar global fraud”.
The filing further revealed that the partnerships between the defunct crypto firm and both sports organisations has caused baseball and racings fans to be misled with the security of their funds.
South Korea accelerates CBDC plans
Central Bank Digital Currencies (CBDCs) could be making its first introduction to South Korean citizens after its government announced a wholesale CBDC will be distributed to 100,000 people next year.
The selected individuals will be able to make transactions with the digital currency from a number of eligible banks.
Over the course of this pilot testing period, Korean technology companies will develop further use cases and evaluate the overall effectiveness of the CBDC and whether it could become a viable and sustainable form of currency.