Archive for Cryptocurrency

Coinbase Supports Tornado Cash Users Filing Suit Against Treasury Department

The cryptocurrency service Coinbase is providing financial support for a lawsuit filed against the Treasury Department after it penalized the cryptocurrency service known as Tornado Cash. Coinbase and other crypto users claim that penalizing the service is both uncalled for and potentially dangerous, while the Treasury Department accused the service of enabling money laundering. Shortly after the lawsuit was filed, the Treasury clarified its stance on when users could legally access the service.

Tornado Cash is a service that mixes crypto deposits to increase anonymity. The process that the service uses effectively separates the initial deposit from the withdrawal for those same funds, meaning one party can deposit cash in crypto, have it mixed, and then have funds sent as a withdrawal that does not appear linked to the original depositor. A benefit of this type of service is making anonymous donations.

However, it also makes money laundering easier, and that’s what the Treasury Department is accusing Tornado Cash of doing. The Department says billions of dollars were laundered for North Korean groups.

Tornado Cash uses open-source software, and the idea of sanctioning open-source software opens the door to potential abuse down the road, in the eyes of the users and employees who are suing the Treasury Department.

It should be noted that the Treasury issued more information about what exactly is penalized regarding Tornado Cash in the days after the lawsuit was filed. According to Coindesk, the Treasury has said the penalties do not refer to accessing the code itself for legal purposes or to accessing Tornado Cash on internet archives. However, Paul Grewal, who is Coinbase’s chief legal officer, told CNBC that sanctioning open-source code could create a precedent that allows any technology to be sanctioned, effectively removing access for all users from that technology. Grewal compared the situation to banning the use of a highway because some robbers once used it to get away from police.

This is not the first time the Treasury Department has penalized software and blacklisted it through the Office of Foreign Assets Control. The first was, which was sanctioned in May 2022.

Investors in Bankrupt Crypto Lender Celsius Face Uncertainty

The crypto market has always been volatile, but the last several months have been disastrous for crypto investors and companies. Several well-known crypto companies have gone bankrupt. One of the most prominent crypto investment firms, Celsius, recently filed for chapter 11 bankruptcy. They were severely affected by the downturn in the crypto market. Many investors did not receive refunds for the money they invested with the company. Read on to learn more about Celsius filing for bankruptcy and what this means for their investors.

Celsius Files for Bankruptcy

Celsius filed for bankruptcy in July 2022, which was a surprise to many in the crypto industry. However, insiders and Celsius investors may not have been entirely surprised. The company froze withdrawals several weeks before it filed for bankruptcy. When a crypto company does this, this often means that the company is in serious trouble. Celsius is not the first company to freeze withdrawals and file for bankruptcy shortly after. Some investors were able to get their money out before all withdrawals were frozen. However, the majority of investors were not able to withdraw their money.

Massive Downturn in Crypto Market

The crypto market is notoriously volatile and has been through several major downturns in recent years. However, the massive downturn in the crypto market that started in Spring 2022 and continued into Summer 2022 was unexpected and unprecedented. Major cryptocurrencies like Bitcoin and Ethereum have lost 40 to 50% of their value since the beginning of the year. The severity of this downturn has led many to question whether crypto has a future. Unsurprisingly, Celsius is hardly the only crypto company to go bust during this period.

Investors Will Have to Wait for Refunds

Celsius has ensured investors that they will go to great lengths to refund their money. Most investment firms that have declared Chapter 11 bankruptcy do end up refunding most, if not all, of their investors’ money. However, this process could take months or even years. Also, there is a good chance that investors will not get all of their money back.

Jury Reaches a Verdict Regarding the Lawsuit Filed Against Craig Wright, Man Who Claims To Be Satoshi

Bitcoin has completely changed the way people look at the economy; however, the creator of the cryptocurrency is still unknown, going only by the name Satoshi. Recently, an Australian computer scientist who claims to have invented Bitcoin was informed by a jury in the United States that he needs to pay more than $100 million in damages due to claims that he cheated a friend, now deceased, over intellectual property related to the digital currency.

Taking place in federal court in Miami, the jury took more than a week to reach a verdict. The verdict came after a trial that lasted more than three weeks. Even though the jury rejected those claims made against Craig Wright, the Australian computer scientist, the jury still decided that the computer scientist owed the plaintiff more than $100 million. Of note, this trial does not settle the debate over the creator of the renowned cryptocurrency.

The lawsuit was brought by the brother of Dave Kleiman, who is a cybersecurity expert who passed away in 2013. The lawsuit alleged that Kleiman worked with Wright during the early years of Bitcoin, seeking to mine the cryptocurrency during its early phases. The lawsuit alleges that Wright did not give Kleiman his fair share of the mined Bitcoin, meaning that he was shorted hundreds of millions of dollars, given the rapid growth of Bitcoin during the past decade.

Even though Craig Wright feels that the verdict proves he is the creator of Bitcoin, most other people disagree. A lot of investors in Bitcoin view Craig Wright as a fake, and the result of the trial has done little to convince the public that this man is the true creator of Bitcoin itself.

Even though the verdict and settlement amount can be staggering in the eyes of a lot of people, Bitcoin has appreciated significantly since the time of the alleged incident, meaning that Wright could have billions of dollars in Bitcoin to his name. This could be the reason why he is not going to appeal the verdict. On the other hand, an attorney representing Kleiman hailed the verdict as marking a new precedent in the history of cryptocurrency.