The judge stated that BiT Global did not provide sufficient evidence of harm. In Australia, ASIC started legal action against Binance for misclassifying retail clients, while South Korean lawmaker Kim Nam-kuk faces prison for allegedly concealing his crypto holdings. Meanwhile, SEC hacker Eric Council Jr. was granted holiday travel permission after being accused of a SIM swap attack on the SEC's X account back in January. BiT Global Fails to Prevent Coinbase From Delisting wBTC A federal judge ruled in favor of Coinbase in a legal dispute with BiT Global, and refused to issue a temporary restraining order (TRO) to prevent the exchange from delisting Wrapped Bitcoin (wBTC). The decision was made during a virtual hearing in the United States District Court for the Northern District of California on Dec. 18, where Judge Araceli Martínez-Olguín stated that BiT Global’s legal team failed to prove “imminent irreparable harm” in its case. The lawsuit was filed by BiT Global on Dec. 13, and argued that Coinbase’s decision to delist wBTC in November will harm the market and cause serious financial losses for holders of the token. The judge pointed out that BiT Global’s delay in filing the lawsuit undermined its argument and that the claims were speculative as they lacked evidence of immediate market impact. Coinbase announced the delisting decision on Nov. 19, and suspended wBTC trading starting Dec. 19, due to concerns over control of wBTC potentially falling into the hands of BiT Global’s affiliate, Justin Sun. The exchange pointed to Sun’s previous legal issues with U.S. authorities, including the SEC, as justification for its actions. BiT Global wanted the TRO to prevent the delisting before its effective date, and claimed that Coinbase’s decision was baseless and will only damage the token’s ecosystem. However, Coinbase held firm that its decision was a response to an “unacceptable risk” associated with Sun’s involvement, and pointed out that wBTC’s circulation already started to decline after BiT Global announced its partnership with Sun in August. BiT Global’s attorney, Cyclone Covey, accused Coinbase of using Sun as a pretext for the delisting and questioned the exchange’s timeline of due diligence. Meanwhile, Coinbase’s attorney, Sonal Mehta, defended the decision as necessary when it comes to mitigating risks to the platform and its users. Judge Martínez-Olguín ultimately allowed room for BiT Global to present more arguments in the future. ASIC Takes Legal Action Against Binance Australia Other crypto exchanges are also facing some legal heat. The Australian Securities and Investments Commission (ASIC) started legal proceedings against Binance Australia Derivatives, accusing the platform of major consumer protection failures. ASIC alleges that Binance misclassified more than 500 retail clients as wholesale investors between July of 2022 and April of 2023, which deprived them of the legal protections guaranteed under Australian financial laws. Retail clients are entitled to stronger safeguards, including a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and access to internal dispute resolution processes. ASIC Deputy Chair Sarah Court criticized Binance’s compliance systems, and also labeled them as “woefully inadequate.” She shared that many clients actually suffered large financial losses because of the lack of proper protections. The lawsuit outlines regulatory violations, including Binance’s failure to issue a PDS or TMD, inadequate dispute resolution mechanisms, and insufficient employee training. ASIC also accused Binance of failing to deliver its services “efficiently, honestly, and fairly.” After a review of Binance’s operations in April of 2023, ASIC canceled the exchange’s Australian financial services license. The regulator also recently fined Kraken’s Australian operator $12.8 million for similar breaches and is preparing new guidelines to mandate financial services licensing for crypto exchanges under the Corporations Act. ASIC Commissioner Alan Kirkland shared plans to extend licensing requirements beyond digital currency exchanges during a speech at the AFR Crypto and Digital Assets Summit in September. He believes that major crypto assets like Bitcoin (BTC) and Ethereum (ETH) are considered in the scope of the Corporations Act. Binance is also facing separate allegations of intellectual property theft in the United States. Mark Longo, the owner of Peanut the Squirrel, issued a cease-and-desist letter to Binance after accusing it of trademark infringement related to its PNUT-themed meme coin. South Korean Lawmaker Faces Prison Over Crypto Scandal It is not only crypto exchanges finding themselves in legal hot water. Kim Nam-kuk, a South Korean lawmaker, faces a potential six-month prison sentence for allegedly failing to disclose all his crypto holdings to the government. Prosecutors claim that Kim reported his assets as 1.2 billion Korean won in 2021, despite allegedly owning 9.9 billion in digital assets, and concealed an additional 990 million won worth of cryptocurrency in 2022. They argued that Kim’s actions obstructed the National Assembly Ethics Committee’s review of member assets and created potential conflicts of interest. Kim left the Democratic Party in 2023 due to allegations of liquidating millions in cryptocurrency before the enforcement of South Korea’s Financial Action Task Force Travel Rule, but denied any wrongdoing. He stated that he transferred funds to another exchange and argued that he was not obligated to declare the holdings. Since assuming office in 2020, Kim has been involved in legislation concerning digital assets, including efforts to delay a 20% tax on crypto gains, which lawmakers postponed to 2027. Despite these allegations, Kim’s trial was overshadowed by a political crisis after South Korean President Yoon Suk Yeol’s sudden declaration of martial law on Dec. 3. The move caused widespread unrest, and lawmakers from both the Democratic Party and Yoon’s People Power Party scaled parliament buildings to vote on rescinding the declaration. Martial law was lifted after the vote, but Yoon refused to resign. This led to his impeachment on Dec. 14 in a National Assembly vote of 204 out of 300 members. The Constitutional Court now has 180 days to decide whether to remove Yoon from office. Not long after the impeachment, Han Dong-hoon, leader of the People Power Party, announced his resignation on Dec. 16. SEC Hacker Granted Holiday Travel Permission Eric Council Jr., who is accused of hacking the United States Securities and Exchange Commission’s (SEC) X account in January and posting a fake message about Bitcoin exchange-traded funds (ETFs), has been given permission to travel for the holidays. According to a Dec. 13 court filing, Judge Amy Berman Jackson allowed Council to travel to North Carolina between Dec. 23 and 29 under the supervision of a third-party custodian. The judge required Council to provide his travel itinerary and accommodation details to Pre-Trial Services at least two business days before departure. Council pleaded not guilty to charges of conspiracy to commit aggravated identity theft and access device fraud. The hack happened on Jan. 9, when a message posted from the SEC’s account falsely claimed that spot Bitcoin ETFs were approved. The announcement temporarily caused Bitcoin’s price to surge by more than $1,000 before being debunked. The SEC officially approved spot Bitcoin ETFs roughly 24 hours later. The fake Bitcoin ETF approval post from the SEC’s hacked account Federal Bureau of Investigation officials arrested Council in Alabama on Oct. 17. While no trial date has been set, the court indicated that a plea agreement could be filed by Jan. 17, at which time Council is expected to appear in person. Authorities allege that Council was part of a group that executed a SIM swap attack to get access to the SEC’s X account. The incident took place during a time of anticipation in the crypto industry with regards to the SEC’s decision on spot Bitcoin ETFs. After the hack, X’s safety team reported that the SEC’s account did not have two-factor authentication. Despite the breach, the SEC encountered no further issues with its social media accounts during its subsequent announcements, including the approval of spot Ether ETFs in May.
