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SEC Scrutinizes Terraform’s $166M Transfer to Dentons

Crypto | Feb 29, 2024

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SEC scrutinizes Terraform Labs for a $166 million fund amid bankruptcy proceedings

The U.S. Securities and Exchange Commission (SEC) is taking action against Terraform Labs by scrutinizing a $166 million transfer to the law firm Dentons.  Amidst Terraform Labs' bankruptcy saga, the move raises questions about the intentions behind substantial financial transfers made since the start of 2023. The SEC's allegations suggest these funds may have been aimed at evading potential future judgments related to the SEC's lawsuit against the company. This development adds a new layer to the complex narrative surrounding Terraform Labs, particularly in light of the company's involvement in the dramatic collapse of the TerraUSD stablecoin, which erased billions in investor assets.

  • The SEC has highlighted suspicious financial activities involving Terraform Labs, including a significant $166 million transfer to Dentons. This action is part of a broader investigation into the company's financial management and legal strategies following its bankruptcy filing.
  • Terraform Labs' decision to file for Chapter 11 bankruptcy was reportedly influenced by the looming financial penalties from federal regulators. The company's financial maneuvers, including the contested transfers, were ostensibly aimed at covering legal expenses, including those of its co-founder, Do Kwon, who faces criminal charges in multiple jurisdictions.

See:  SEC Intensifies Accounting Audits in 2023

  • While the SEC does not oppose Terraform Labs' payment of legitimate legal expenses, the regulator has raised concerns over the magnitude of the funds transferred to Dentons. The SEC's objections reflect apprehensions about the potential misuse of company assets, emphasizing the need for transparency and accountability in the use of such funds.

Follow the Money

  • Following its bankruptcy declaration, Terraform petitioned the court overseeing its bankruptcy for authorization to engage Dentons as its special litigation counsel and to allocate $6.3 million towards the legal expenses of its staff and essential external collaborators embroiled in litigation. Terraform's legal documents reveal that approximately $3.25 million from this sum is designated for covering the legal costs of its employees.
  • Terraform is also pursuing approval to expend roughly $1.33 million on a lawsuit in the UK, which it believes will unearth crucial evidence from a cryptocurrency trading firm beneficial to its defense against the SEC's legal actions.

See:  Federal Judge Rules Against Terraform labs

  • According to the SEC, the bulk of the retainer fees, amounting to $122 million, were moved to Dentons within the 90 days leading up to Terraform's bankruptcy filing. Consequently, this sum might be subject to reclamation to settle debts with Terraform's other creditors, presenting a possible conflict of interest between Terraform and Dentons, as pointed out by the regulatory body.
  • Bottom line:  The SEC contends that Dentons should be precluded from representing Terraform, its staff, or its contractors unless it reimburses $81 million still held in the retainer fund and agrees to have its subsequent charges reviewed and approved by the bankruptcy court.

SEC Said:

The money has been "siphoned" into an "opaque slush fund for its lawyers," to the detriment of the investors and creditors who will seek to be repaid in Terraform's bankruptcy.

See:  Winklevoss’ Gemini to Refund $1.1 Billion After NYDFS Findings

Why It Matters

For stakeholders in the fintech and investment sectors, this case underscores the importance of regulatory compliance, financial transparency, and the potential repercussions of legal entanglements on corporate stability and investor trust.


NCFA Jan 2018 resize - SEC Scrutinizes Terraform's $166M Transfer to DentonsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Techstars Toronto’s Uncertain Future – Sad News

News | Feb 26, 2024

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Techstars Revises Strategy and is Closing Some Accelerators, Techstars Toronto's Future Uncertain

Techstars, a leading global startup accelerator, is closing some accelerators and relocating its headquarters to New York City that have put the future of its Toronto Techstars accelerator in a state of uncertainty. This move has led to the pausing of applications for the Toronto accelerator and has sparked discussions about the impact on the local and national tech ecosystem in Canada.

See:  Open Banking Insights: Decoding Canada’s Financial Future

The Toronto accelerator has paused its programming, with its long-serving managing director, Sunil Sharma, transitioning away after seven years.  As the managing director of Techstars Toronto, Sharma has been at the forefront of supporting and nurturing startups, fostering a vibrant community of founders, investors, and tech enthusiasts. His dedication to the growth and success of Canadian startups is evident in his work with Techstars, where he has led the program to make significant investments in the Canadian tech ecosystem.  Despite the changes, Techstars has expressed a continued focus on Canada, having invested in 250 Canadian startups to date such as notable fintech, Balance. The organization believes in the growth potential of Canadian companies within its global network.

Sunil Sharma told Betakit:

"Canada is a brand that resonates globally and represents an investment thesis in itself. The global diaspora is what makes us truly great, and this trend will only increase from here. I am confident that the number of Canadian companies supported by our many programs will continue to grow, as Techstars has proven itself to be a big believer in Canadian founders."

See:  CIC Launch Delayed Impacting Innovation Funding Landscape

Criticism and Concerns

Former Techstars members and Seattle managing director Chris DeVore criticizing the group’s strategic choices  which can be can be broken down into more precise concerns:

  • Loss of Local Focus: Techstars historically operated city-based accelerators that were deeply integrated into local startup ecosystems. Critics argue that the organization's shift away from this model undermines the unique local support networks that were crucial for early-stage startups. This local focus was seen as a core strength of Techstars, providing startups with tailored support, access to local investors, and a deep understanding of regional market dynamics.
  • Centralization of Fundraising: The move to centralize fundraising efforts, moving away from local fundraising for city-based accelerator programs, has been criticized for diminishing the engagement and investment of local communities in the success of startups. Critics believe that local investors and stakeholders play a vital role in the ecosystem, offering more than just financial support—they also provide mentorship, connections, and a vested interest in the startups' success. The centralization of funds is seen as diluting this local commitment and support.

See:  Fintech Differentiation in a Tech-Saturated Market

  • Corporate Sponsorship Focus: Some of the criticism has targeted Techstars' increased reliance on corporate sponsors to fund its programs. Critics argue that this shift prioritizes the interests of corporate partners over the needs and best interests of startups. There is a concern that corporate-sponsored programs may not align with the mission of fostering genuine innovation and entrepreneurship, potentially leading to a misalignment of goals between startups and the accelerator.
  • Shift Away From Startup-Centric Culture: At the heart of the criticism is a perceived shift away from Techstars' original startup-centric culture. Former staffers and participants worry that the changes may lead to a culture that is more focused on financial and corporate interests rather than on fostering innovation, supporting founders, and building sustainable startup ecosystems.

Outlook

Toronto, Techstars has been a crucial player in supporting startups, and any changes to its operations could have wide-reaching implications for local founders, investors, and the broader community.  The future of Techstars, amidst its strategic shifts and operational changes, is closely tied to its fundraising capabilities and its ability to adapt to the competitive landscape of startup accelerators.

See:  Golden Ventures’ $100M Boost for Canada’s Tech

With a significant fundraising round in 2019 and a $150 million fund closed in 2021, the organization's efforts to raise a second $150 million vehicle have been met with silence regarding its progress. CEO Maëlle Gavet's reluctance to comment on fundraising specifics, coupled with indications that the 2024 fund has seen some capital inflow, suggests cautious optimism about the organization's financial health and its capacity to support its revamped focus.


NCFA Jan 2018 resize - Techstars Toronto's Uncertain Future - Sad NewsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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EU Advocates Against Big Tech’s Market Control

Policy | Feb 23, 2024

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Urgent Call for Reform Against Big Tech's Grip in EU Digital Markets

In a letter to the Financial Times, Sebastiano Toffaletti, Secretary-General of the European Digital SME Alliance, is highly concerned about the state of the European Union's digital markets, dominated by a handful of tech giants. Toffaletti's letter, published on February 20, 2024, responds to the EU's chief competition official, Olivier Guersent, and critiques the European Commission's current stance on competition enforcement. He argues for a totally new approach to tackle the monopolistic practices of Big Tech, emphasizing the existential threat they pose to small businesses and startups.

  • Despite the European Commission's efforts, the digital market remains under the control of a few large corporations, stifling competition and innovation.
  • Big Tech's reluctance to comply with the Digital Markets Act by the March 7 deadline exemplifies the industry's resistance to change. Apple's criticized compliance measures, imposing significant financial burdens on app developers, serve as a case in point.

See:  The Impact of Big Tech in Finance

  • Toffaletti advocates for a shift in focus from consumer welfare and price indices to the broader economic and societal impacts of Big Tech's power accumulation.  Highlighting the "fierce sense of urgency" noted by Lina Khan, chair of the US Federal Trade Commission, Toffaletti calls for immediate and decisive action to protect the welfare of small businesses and startups.

Why It Matters

Toffaletti's call for a revolution in EU's digital market enforcement is an urgent wake-up call to address the monopolistic dominance of Big Tech. This dominance not only stifles competition but also hampers innovation and growth among European digital SMEs. By advocating for a broader consideration of the impacts of Big Tech's power, the letter urges the European Commission to adopt a more aggressive stance in fostering a fair, competitive, and innovative digital market.  Stay tuned for more to come.


NCFA Jan 2018 resize - EU Advocates Against Big Tech's Market ControlThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Women’s Critical Role, Impact, and Empowerment in AI

Women in AI | Feb 21, 2024

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Bridging the Gender Gap in Artificial Intelligence

A recent TechCrunch article titled "The women in AI making a difference" highlights the significant contributions of women in the field of artificial intelligence (AI), aiming to give them the recognition they deserve.   Some of the notable individuals mentioned include:

  • Irene Solaiman, head of global policy at Hugging Face.
  • Eva Maydell, a member of the European Parliament and advisor on the EU AI Act.
  • Lee Tiedrich, an AI expert at the Global Partnership on AI.
  • Rashida Richardson, senior counsel at Mastercard focusing on AI and privacy.

Understanding the Gender Gap

The gender gap in AI is a multifaceted issue rooted in educational barriers, workplace challenges, and societal norms. Despite the critical roles women have played in advancing AI technology, their representation remains disproportionately low. A 2021 Stanford study revealed that only 16% of tenure-track faculty focused on AI are women, and a World Economic Forum report highlighted that women hold just 26% of analytics-related and AI positions. This disparity is not narrowing; in fact, a 2019 analysis by Nesta showed a declining trend in the proportion of AI research papers authored by women since the 1990s.

See:  U.S. Seed Fundraising Insights and Trends

Reasons for the disparity include judgment from male peers, discrimination, and a lack of opportunities for women to intern in AI or machine learning during their undergraduate studies. Many women report leaving employers or considering leaving the tech industry altogether due to unequal treatment and pay.

Women Bring Diverse Perspective

Women are of utmost importance in AI for several compelling reasons that span ethical, innovative, and economic dimensions. Their inclusion and active participation in AI are critical for the following reasons:

  • Diversity Drives Innovation --> Diverse teams, including those with a balance of men and women, bring a variety of perspectives, ideas, and experiences to the table. This diversity is crucial for fostering creativity and innovation in AI development. Women can offer unique insights and solutions that might not emerge in a homogenous group, leading to more innovative and comprehensive AI technologies.
  • Reducing Bias in AI Systems --> AI systems learn from data, and if this data is biased, the AI systems will inherently be biased too. Women, especially those from varied backgrounds, can help identify and mitigate biases in AI algorithms. Their involvement is essential in creating fair, unbiased AI systems that serve all segments of society equally, preventing the perpetuation of stereotypes and discrimination.
  • 50/50 --> Women constitute roughly half of the global population and, therefore, half of the potential user base for AI technologies. Having women involved in AI development ensures that products and services are designed with the needs and perspectives of a more holistic audience in mind, leading to more universally useful and accessible AI solutions.

See:  Work Trends: Employees Feel the Opposite but the ‘Data doesn’t lie’ | Women Leaving Companies at Highest Rate Ever

  • Ethical Considerations and Social Impact --> Women are more likely to consider the societal, ethical, and political implications of AI in their work. This sensitivity towards the broader impact of technology is crucial in guiding AI development in a direction that benefits society as a whole, ensuring that AI technologies are developed and deployed responsibly.
  • Economic Growth and Opportunity --> Incorporating more women into the AI workforce can also drive economic growth. By tapping into the full potential of the talent pool, the AI industry can accelerate innovation, enhance productivity, and create more economic opportunities. Additionally, achieving gender parity in high-growth areas like AI can contribute to closing the gender pay gap and promoting economic equality.
  • Addressing the Skills Shortage --> The AI field is rapidly expanding, and there is a growing demand for skilled professionals. By encouraging and supporting women to pursue careers in AI, the industry can address the skills shortage it faces. This not only benefits the AI sector by filling essential roles but also provides women with opportunities for high-value, rewarding careers.
  • Mentorship and Role Modeling --> Having more women in AI helps to establish a network of role models and mentors for younger generations, encouraging more girls to pursue STEM (Science, Technology, Engineering, and Mathematics) education and careers. This positive feedback loop can gradually change the gender dynamics in the tech field, leading to a more balanced and equitable workforce.

Tackling the Gender Gap

Some organizations and initiatives are making strides in supporting and promoting women in the field of Artificial Intelligence (AI) such as:

1. Women in AI Ethics™

  • This organization focuses on highlighting the work of women in AI ethics, aiming to create a more inclusive and ethical AI landscape.
  • They compile annual lists of women making significant contributions to AI ethics, providing visibility and recognition for their work.

2. World Woman Foundation (Davos Agenda 2024)

  • The World Woman Foundation is dedicated to enhancing women's leadership in various fields, including AI, through global initiatives and partnerships.
  • Their agenda includes events and keynotes addressing the disruptive future of equality, women’s health, and the role of women in leading technological advancements.

What Can Be Done?

To bridge the gender gap in AI, concerted efforts across multiple fronts are necessary:

  • Education and outreach aimed at encouraging girls to pursue STEM fields from a young age are crucial. Programs like Girls Who Code and AI4ALL seek to demystify AI and technology for young women, providing them with the tools and confidence to enter these fields.
  • Companies and institutions must implement policies that promote gender equality, from hiring practices to career advancement opportunities. Efforts to ensure equal pay, provide mentorship programs, and create inclusive work environments are essential steps towards retaining women in AI roles.
  • Amplify the achievements of women in AI through media, conferences, and leadership positions can inspire future generations and highlight the importance of diverse perspectives in technology development.

See:  McKinsey Report: Diversity in Global Private Markets 2022 and Institutional Investors as Catalysts for Change

  • Build communities and networks for women in AI facilitates mentorship, collaboration, and support. Organizations such as Women in Machine Learning (WiML) and Women in AI (WAI) play a pivotal role in fostering a sense of belonging and empowerment among women in the field.

Empowering Women in AI:  Call to Action

The underrepresentation of women in AI not only stifles innovation but also perpetuates bias in AI systems, underscoring the urgent need for diversity in this field. Women bring diverse perspectives that drive innovation, reduce bias in AI systems, and ensure that AI technologies meet the needs of a broader audience. Their involvement is crucial for ethical considerations and social impact, driving economic growth and addressing the skills shortage in the rapidly expanding AI sector.

Whether you're a professional in the tech industry, a student considering a career in AI, or simply an advocate for equality, your actions can make a difference. By supporting educational programs, advocating for inclusive policies, and celebrating the achievements of women in AI, you contribute to a more equitable and innovative future.


NCFA Jan 2018 resize - Women's Critical Role, Impact, and Empowerment in AIThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Canada’s Shift to Enhanced Climate Disclosures

Climate Disclosure | Feb 20, 2024

Embracing New Climate Disclosure Standards in Canada

With the Canadian Securities Administrators (CSA) proposing the National Instrument 51-107 Disclosure of Climate-related Matters (NI 51-107) and its Companion Policy 51-107CP, alongside the Office of the Superintendent of Financial Institutions (OSFI) introducing the B-15 Climate Risk Management guidelines, the governance implications for directors, boards, and public company governance are profound.

See:  Fintech Can Combat Corporate Greenwashing

This article sheds light on these regulatory shifts, offering insights and implications for Canadian fintechs and public companies, in alignment with the International Sustainability Standards Board's (ISSB) global standards.

CSA's Climate Disclosure Proposals

The CSA's Climate Disclosure Proposals aim to enhance transparency and accountability in how Canadian public companies assess and disclose climate-related risks and opportunities. This initiative reflects a growing recognition of the importance of climate-related information for investors, both in Canada and globally. The proposals are designed to align with the Task Force on Climate-related Financial Disclosures (TCFD:  disbanded October 2023 with mandate picked up by IFRS) recommendations, covering governance, strategy, risk management, and metrics and targets for climate-related issues.

OSFI's B-15 Climate Risk Management Guidelines

Simultaneously, OSFI has introduced the B-15 guidelines, marking a critical regulatory development for financial institutions in Canada. These guidelines mandate banks, insurance companies, and other financial entities to robustly assess, disclose, and manage the physical and transitional risks associated with climate change. The B-15 guidelines emphasize the need for financial institutions to integrate climate risk into their overall risk management frameworks and enhance transparency in their climate-related disclosures.  These guidelines are now in effect.  Yet, despite push back OSFI is still playing catch-up when evaluating international comparators such as climate change disclosure initiatives in the UK, climate risks and regulatory capital frameworks, and on integrity.

ISSB's Global Standards

The ISSB has introduced proposed standards for climate-related disclosure and sustainability-related financial information, setting a new benchmark for global sustainability disclosures. These standards aim to serve as "the global baseline" upon their finalization, emphasizing the need for disclosures that provide consistent and comparable information for investors.

In 2024, the International Sustainability Standards Board (ISSB) has implemented the IFRS S1 and S2 standards as voluntary standards for organizations, focusing on disclosures about governance, strategy, risk management, and metrics and targets for material sustainability and climate-related risks and opportunities. These standards, which incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), aim to simplify the landscape of disclosure initiatives for companies and investors, ensuring consistent and comparable information.

See:  Decarbonizing Insurance and the Adaptation of Carriers to a New Zero Economy

The ISSB has also updated the Sustainability Accounting Standards Board (SASB) standards and released resources to aid in applying IFRS S2, emphasizing the nature and social aspects of climate-related risks and opportunities.  Learn more about what to expect from the ISSB in 2024 here.

Implications for Governance

For directors and boards of Canadian public companies and financial institutions, these developments underscore the necessity of robust governance frameworks that explicitly address climate-related risks and opportunities. This includes establishing clear oversight mechanisms, delineating management's responsibilities, and ensuring that board committees, particularly the audit committee, are equipped to assess and manage climate risks effectively.

  • Boards must integrate climate-related risk oversight into their governance structures, updating charters and mandates to reflect this priority.
  • Clearly defined responsibilities for assessing and managing climate-related risks are essential, necessitating robust disclosure controls and procedures.
  • Boards are tasked with evaluating the materiality of climate-related risks and opportunities, potentially employing scenario analysis to assess the resilience of business strategies.

Opportunities for Fintechs

As Canada aligns its climate disclosure regulations with global standards, the collaborative efforts of regulatory bodies, public companies, and the fintech sector will be key to fostering a sustainable and transparent corporate ecosystem.

See:  Climate Inflation Discussion for a Sustainable Future

The regulatory shift towards comprehensive climate disclosure presents a unique opportunity for the Canadian fintech sector.  Fintechs have an opportunity to lead innovation in climate risk assessment and disclosure solutions, offering tools and platforms that enable companies to meet these new standards efficiently. By developing solutions and integrating new technologies that facilitate data analysis, reporting, and scenario modeling, fintechs can enhance transparency and sustainability in the financial sector.


NCFA Jan 2018 resize - Canada's Shift to Enhanced Climate DisclosuresThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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SEC’s Recordkeeping Crackdown No Joke, $81 Million Fine

Regulation and Enforcement | Feb 14, 2024

Takeaways from the SEC's Latest Enforcement on Off-Channel Communications

As highlighted in this article by Mayer Brown, on February 9, 2024, the Securities and Exchange Commission (SEC) recently announced charges against a collective of financial entities, comprising 5 broker-dealers, 7 dually registered broker-dealers and investment advisers, and 4 affiliated investment advisers. This action, resulted in over $81 million in combined civil penalties, sending a message that the SECs campaign to enforce recordkeeping regulations is serious, a campaign that has been active since September 2022.

So what were the charges and implications?

The charges were levied due to the failure of these firms and their employees to maintain and preserve electronic communications, a foundational requirement under securities law for dealer-brokers and investment advisors.  The SEC's findings revealed that employees across various levels, including supervisors and senior managers, used personal text messages and other off-channel means to discuss business matters, thereby violating these rules.

Its critically important that companies maintain comprehensive records of all business-related communications, a task complicated by the increasing use of personal devices for professional purposes.

See:  SEC Intensifies Probe of Wall Street’s Use of Messaging Apps

In response to these violations, the charged firms were ordered to cease and desist from further breaches, subjected to censure, and mandated to engage independent compliance consultants. These consultants are tasked with conducting in-depth reviews of the firms' policies and procedures regarding the retention of electronic communications on personal devices, aiming to rectify the identified lapses and prevent future non-compliance.

Conclusion

The message is clear: robust electronic communication policies and procedures are essential components of a compliant and trustworthy operation.  This includes not only the establishment of clear policies and regular training for employees but also the implementation of effective monitoring and supervisory mechanisms to detect and prevent violations.


NCFA Jan 2018 resize - SEC's Recordkeeping Crackdown No Joke, $81 Million FineThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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CZs Sentencing Delayed to Late April, Fuelling Speculation

News | Feb 13, 2024

Binance Founder, Changpeng Zhao (CZ), Sentencing has been Postponed to April 30, 2024

Changpeng Zhao (CZ), the founder of Binance, faces up to 18 months in prison over money laundering charges, according to a recent update. However, a filing by the prosecution indicated that he might face a harsher punishment than initially expected, with the possibility of any sentence up to the statutory maximum of ten years.  The court has rescheduled CZ's sentencing which was originally scheduled for February 23 to April 30, 2024, extending the timeline for legal proceedings.

See:  Trust Fallacy: 75% of Payment Fraud in Crypto is Carried Out by KYC-verified Accounts

Former U.S. Securities and Exchange Commission official John Reed Stark suggested that Zhao could face a 12–18 month sentence at a minimum security prison under U.S. sentencing guidelines. Nonetheless, Zhao's legal team is expected to request no jail time or an alternative sentence, combining prison time with home detention and probation. Currently, Zhao is out on bail on a $175 million bond and resides in the U.S. awaiting his sentencing.

The specific reasons for the delay have not been publicly disclosed, but such postponements are not uncommon in complex legal cases involving financial regulations and international operations.

The case against Changpeng Zhao is part of a broader trend of increasing regulatory scrutiny on cryptocurrency exchanges and other digital asset service providers. Regulators worldwide are focusing on compliance with anti-money laundering (AML) standards, know your customer (KYC) procedures, and other regulatory mandates to ensure the integrity and stability of financial markets.  The postponement and eventual outcome of CZ's sentencing are of great interest to investors, regulatory bodies, and other market participants.

See:  The Vanguard of Decentralized Exchanges (DEX)

While the exact details of the potential punishment remain speculative until the court's final decision, the charges against Zhao could lead to significant legal repercussions and stiffer sentence. These may include hefty fines and possibly restrictions on his and Binance's operations, depending on the nature of the violations and the court's final judgment.

Outlook

This delay in sentencing allows for further speculation and preparation among stakeholders within the cryptocurrency industry. The outcome of this case could set important precedents for how digital asset companies operate and are regulated on a global scale.


NCFA Jan 2018 resize - CZs Sentencing Delayed to Late April, Fuelling SpeculationThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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