US State Department Assures Support for Detained Binance Employee in Nigeria

7Ary...USep

11 May 2024

US State Department is actively involved in the detained Binance executive case in Nigeria amid growing concerns over legal implications.

HIGHLIGHTS

The US State Department is actively involved in supporting Tigran Gambaryan, a detained Binance executive in Nigeria.
Binance CEO Richard Teng has expressed serious concerns about the circumstances surrounding Gambaryan's detention.
Binance refutes claims reported by The Wall Street Journal regarding market manipulation on its platform.

The US State Department has confirmed its active involvement in the case of Tigran Gambaryan, a Binance executive and US citizen detained in Nigeria. Over 70 days have passed since Gambaryan’s arrest, and the State Department spokesperson stated they are in constant communication with him, his family, and his legal team. They are committed to providing all necessary support to address his prolonged detention, which has sparked considerable concern both domestically and internationally.

Binance CEO Raises Concerns Over Executive’s Detention

Richard Teng, CEO of Binance, has voiced significant worries regarding the safety and legal implications of Gambaryan’s arrest, which occurred under dubious circumstances. According to Teng, Gambaryan was invited to Nigeria for a business meeting but was detained by local authorities immediately upon arrival. This incident has raised serious questions about the safety of foreign nationals engaging in business in Nigeria, pushing for a swift diplomatic resolution to mitigate the risks to international business relations.
Amidst the controversy over Gambaryan’s detention, Binance has had to confront allegations of allowing market manipulation on its cryptocurrency exchange platform. These allegations, initially reported by The Wall Street Journal, have been strongly denied by Binance.
The company maintains that it has strict protocols to prevent any form of market abuse and has been proactive in enforcing its rules. Over the last three years, Binance has terminated the accounts of nearly 355,000 users, who collectively handled transactions worth over $2.5 trillion, for violating its terms of service.

IMF Calls for Enhanced Crypto Oversight in Nigeria

In related news, the International Monetary Fund (IMF) has advised Nigeria to establish registration or licensing requirements for global cryptocurrency trading platforms operating within its borders. This recommendation came after the 2024 Article IV consultation with Nigeria, which focused on strengthening the country’s financial stability. The IMF emphasized the necessity of a robust regulatory framework for the cryptocurrency market to ensure investor protection and maintain financial order.

Spot Ethereum ETF: ARK 21Shares Updates Application, No Staking

ARK Invest and 21Shares remove staking from their spot Ethereum ETF filing to streamline SEC approval, decision expected by May 23, 2024.

HIGHLIGHTS

ARK 21Shares removes staking from spot Ethereum ETF filing, simplifying compliance with SEC's regulatory requirements.
SEC delays spark concerns as ARK 21Shares excludes staking to align its Ethereum ETF application with potential guidelines.
Balchunas reduces odds of SEC approval as ARK 21Shares eliminates staking from spot Ethereum ETF proposal.

ARK Invest and 21Shares have removed a key staking component from their spot Ethereum ETF application, marking a significant amendment to the fund’s proposal. The previous filing indicated that the ETF sponsor might intermittently pool some of the trust’s ether assets through reputable third-party providers.
As a result, the fund would receive staking rewards that would be deemed income, with possible risks such as slashing penalties. Nevertheless, the most recent filing from ARK Invest or 21Shares has left this element out completely.

Eric Balchunas, an analyst at Bloomberg ETF, commented on the updated filing and, appreciating the strategic move, guessed what the reasons would be. He proposed that this could be an effort to simplify the application procedure by meeting with the future SEC guidelines or by eliminating a potential objection that would lead to a failure.

Background of the Spot Ethereum ETF Proposal

Originally filed in September 2023, the ARK Invest and 21Shares Ethereum ETF aims to offer investors direct access to ether by trading on the Cboe BZX Exchange. The fund is constructed to utilize the CME CF Ether-Dollar Reference Rate—New York Variant for precise price tracking.
Functioning as the trust sponsor, 21Shares, providing the trustee role, Delaware Trust Company, and the ether custodian, Coinbase Custody Trust Company, the ETF is anticipated to provide an effective way for investors to gain exposure to Ethereum through standard brokerage accounts.
ARK Investment Management is the supervisor of the fund and provides marketing assistance as well.

Challenges to Approval and Regulatory Sentiment

The optimism for the approval of a spot Ethereum ETF by the SEC has decreased over the past few months. In April, Balchunas recalibrated his approval likelihood prediction to 25% by the end of May as opposed to the original 70%.
Regulatory delays and shifts in sentiment have also had an impact on the broader cryptocurrency ETF market, with the SEC delaying decisions on a number of proposed funds.
Many of the applications for spot Ethereum ETFs are still pending, with no confirmation yet of SEC approval. At the same time, Grayscale Investments drew back its Ethereum Futures ETF application and turned its attention to converting its Ethereum Trust (ETHE) into a spot Ethereum ETF.

Investor Expectations

The omission of the staking component represents the changing regulatory landscape and the unfolding of compliant structures that conform to SEC standards.
If approved, a potential Ethereum ETF could represent one of the most crucial entry opportunities for institutional and retail investors who prefer exposure to digital assets via traditional, regulated vehicles.
The ETF market, however, continues to await regulatory decisions, with Invesco Galaxy‘s spot Ethereum ETF decision now postponed to July 2024. ARK 21Shares expects to receive a response to its amended application by May 23, 2024, though it remains to be seen if or when the SEC will provide approval.
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Coinbase CLO Slams US SEC For Contradictions In Opposition To Appeal Request

Coinbase CLO Paul Grewal has called out an inconsistency in the SEC's position in its ongoing legal battle following a recent filing

HIGHLIGHTS

Coinbase CLO has flagged inconsistency in the SEC's tone in latest filing
The legal veteran is a known strong critic of the market regulator
SEC's regulatory crackdown extended to Robinhood recently

Coinbase Chief Legal Officer (CLO) Paul Grewal has once again called out the United States Securities and Exchange Commission (SEC). This time, the legal veteran is concerned about the inconsistency in the regulator’s tone in its recent filing opposing its request for an Interlocutory Appeal.

Coinbase CLO: We Need to Maintain Honest Conversations

Recall that Coinbase filed a request for an interlocutory appeal in April after a Judge denied its Motion to Dismiss (MTD) request. The Gary Gensler-led Commission has filed its opposition to the appeal demand from the trading platform.
The regulator maintained that the Court should prevent Coinbase from filing the appeal. Coinbase’s stance for filing the appeal hinges on the differences in Opinion in a 1946 U.S Supreme Court case the regulator typically quotes. The major contention in the regulator’s filing against Coinbase is that majority of its supported assets are investment contracts.
This classification hinges on the provisions of the Howey Test, a keenly contested yardstick by crypto innovators. In his post on X, the Coinbase CLO said the Commission could not help contradicting its own help contradicting its own arguments. Grewal spotted different arguments in the same kind of appeal in the Ripple Labs lawsuit.

The Coinbase CLO is known to always call out the regulator. This time around, he specifically noted that the regulator contradicted itself as it relates to the need for appellate review. Grewal reiterated that in order to make headway, there need to be honesty between the regulator and the exchange’s team.

“Let’s at least have an honest conversation. Forget about a split across agencies, circuits and elsewhere. There’s not even a consensus about Howey and digital assets among the district judges in the same courthouse at Foley Square,” the Coinbase CLO said in his post on X.

Compounding Coinbase and SEC Loggerhead

Besides the securities lawsuit, the US SEC and Coinbase has other unsettled legal battles to sort. The exchange has sued the Commission for not providing regulatory clarity upon demands by industry stakeholders.
While neither party is willing to back down, it remains to be seen how the current securities lawsuit will pan out. The SEC is now known for its unending enforcement actions and recently, it sent a Wells Notice to Robinhood. The charges from the regulator remains the same, sending a concern to crypto stakeholders on when there will be regulatory clarity to guide their activities.
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