Howells’ case was dismissed in a UK court. Meanwhile, Coinbase was subpoenaed by the CFTC over its connections to Polymarket. In the UK, the Treasury excluded crypto staking from collective investment scheme regulations, while the IMF urged Kenya to implement a more robust regulatory framework for cryptocurrencies. Lost Bitcoin Saga Ends in Courtroom Defeat James Howells, an IT engineer from Newport, Wales, lost a long-standing legal battle to recover a hard drive containing more than $770 million worth of Bitcoin (BTC). The hard drive holds 8,000 BTC that was mined in 2009, but was mistakenly discarded in 2013 and ended up in a local landfill. Newport City Council consistently denied Howells access to the landfill due to environmental permit restrictions, and this refusal was upheld in a recent court decision. Judge Keyser, the Circuit Commercial Judge for Wales, dismissed Howells’ case on Jan. 9, 2025, ruling that the legal arguments had ”no realistic prospect” of succeeding at a full trial. Howells is extremely disappointed with the decision, and criticized the UK court system for not giving the case the attention the asset’s value deserved. While the court did not dispute Howells’ ownership of the Bitcoin, it denied him the opportunity to recover the hard drive. Howells’ attempts to access the landfill have been ongoing since 2013. Despite offering a share of the Bitcoin’s value to Newport City Council and proposing sophisticated excavation methods, the council consistently refused because of the serious environmental risks involved. The council also reportedly declined to meet Howells in person. Over the years, the case attracted a lot of attention, particularly during Bitcoin's historic rally to $100,000 in 2024, which saw its value soar by over 130% that year alone. Reflecting on the court’s decision, Howells stated that he plans to explore alternative avenues to monetize his ownership of the 8,000 BTC, including potential tokenization efforts. Bitcoin’s price action over the past year (Source: CoinMarketCap ) Despite this setback, Howells’ legal team is still in negotiation with the council and the court over the final wording of the order. He also accused the council of environmental violations by alleging improper handling of the landfill site, which he claims is leaking harmful substances into the environment. The council denied these allegations, and held firm that excavation of the landfill is not possible under its current environmental permits. Coinbase Subpoenaed Over Polymarket by CFTC In other legal news, Coinbase exchange has reportedly been subpoenaed by the Commodity Futures Trading Commission (CFTC) in connection with the decentralized crypto-based prediction market platform Polymarket. The news of the subpoena was revealed in a customer notice on Jan. 8, 2025, and later shared on social media platform X by Eric Conner , the co-founder of EthHub. The notice informed users that Coinbase may be required to share general customer information, including account-related data, with the CFTC unless a legal motion to quash the subpoena is filed by Jan. 15, 2025. Naturally, the situation drew attention to Polymarket, which has faced scrutiny from regulators in the past. In mid-November of 2024, the FBI raided the home of Polymarket CEO Shayne Coplan, which raised questions about the platform's operations. The raid took place shortly after Donald Trump’s victory in the US presidential election on Nov. 5, 2024, which saw cryptocurrency investors profit quite a bit. Some even earned up to $50 million through bets placed on Polymarket. As a result, concerns were raised by industry leaders about potential market manipulation on Polymarket’s platform. Polymarket is headquartered in New York, and has been inaccessible to US residents since 2022 after a $1.4 million settlement with the CFTC over allegations of operating an unregistered derivatives trading platform. Despite the geo-blocking measures, media reports suggest that many US users were able to circumvent the ban by using VPNs. In addition to the scrutiny from the CFTC, French regulators also reportedly launched investigations into Polymarket’s compliance with local gambling laws. UK Treasury Excludes Crypto Staking from CIS Rules The UK Treasury amended its laws to clarify that crypto staking, a key process for proof-of-stake blockchains like Ethereum and Solana, does not fall under the definition of a “collective investment scheme” (CIS), which is subject to strict regulatory oversight. The amendment was announced on Jan. 8, and the changes to The Financial Services and Markets Act 2000 explicitly excludes “arrangements for qualifying crypto asset staking” from being classified as a CIS. This definition includes validating transactions on a blockchain or similar distributed ledger technology networks. The updated law will take effect on Jan. 31. Updates section of The Financial Services and Markets Act 2000 (Source: The National Archives ) This change was welcomed by industry experts, including Bill Hughes , a lawyer at Consensys. He described it as a very positive development. Hughes believes that blockchain operation is not similar to an investment scheme but rather a cybersecurity mechanism. In the UK, CIS arrangements involve participants pooling investments for shared profits or income, typically including ETFs and investment funds, and are heavily regulated by the Financial Conduct Authority (FCA). Staking involves locking up a blockchain’s native token to validate transactions, with participants earning additional tokens as rewards. The clarification is seen as an important step in reducing regulatory uncertainty surrounding staking services in the UK. The move also aligns with the government’s commitment to establishing a more comprehensive crypto regulatory framework by early 2025. Economic Secretary to the Treasury Tulip Siddiq previously stated that regulations will address staking, stablecoins, and other aspects of the crypto industry, and pointed out that classifying staking as a CIS would not be appropriate. IMF Urges Kenya to Regulate Crypto Market Meanwhile, the International Monetary Fund (IMF) urged Kenya to establish a clear and predictable regulatory framework for cryptocurrencies to protect consumers and address the risks related to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). This advice was outlined in a technical assistance report that was released on Jan. 8, after a request from Kenya’s Capital Markets Authority (CMA). The IMF pointed out that Kenya’s reliance on outdated regulations for traditional markets leaves the crypto sector largely unregulated, which is contributing to a rise in scams and other illicit activities. During consultations in Nairobi, the IMF noticed major uncertainty and a lack of consensus among Kenyan lawmakers with regards to the regulation of crypto assets. To address these issues, the IMF recommended that Kenya develop a regulatory framework aligned with international standards, including the Bali Fintech Agenda, FATF Recommendations, and the FSB Global Regulatory Framework for Crypto-Asset Activities. This framework should balance encouraging innovation, protecting consumers, and maintaining financial stability while addressing Kenya’s unique challenges and opportunities in the crypto market. The IMF also proposed some short-term actions like conducting empirical analysis, improving collaboration among regulatory bodies, and clarifying the scope of regulations in the next six to twelve months. Over the medium and long term, the recommendations include implementing a legal and licensing framework, enhancing supervisory resources, and aligning Kenya’s laws with global standards. The IMF also advised moving beyond surveys to perform much deeper market analysis. To further mitigate risks, the IMF recommended that Kenya engage with foreign regulators to address issues related to international crypto exchanges operating in the country and to foster cross-border cooperation for effective enforcement.
