Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Regtech, Compliance, Governance
Jury to Decide on SEC’s Claims Against Crypto Exchange
Legal | March 28, 2024
Image: Unsplash/PiggyBank
SEC's Securities Claims Against Coinbase to be Heard by Jury at Trial
As reported by Coindesk, Katherine Polk Failla, a judge at the U.S. District Court for the Southern District of New York, on Wednesday, largely denied Coinbase's request to dismiss the SEC's lawsuit (see ruling) She determined that the Securities and Exchange Commission's (SEC) presented a "plausible" argument against the exchange and that parties should agree on a timeline for the case to proceed to trial.
- The SEC's lawsuit against Coinbase, which accused the exchange of operating as an unregistered securities exchange, has largely been upheld by the court. The SEC has long argued that certain digital assets offered and sold by cryptocurrency exchanges qualify as securities and, therefore, must adhere to the commission's regulatory framework. This decision marks one of the most significant regulatory actions against a cryptocurrency entity to date.
- For Coinbase, the jury's decision could have major implications, ranging from financial penalties to mandatory operational changes, depending on the verdict. The case also puts a spotlight on the exchange's past and present compliance efforts with securities laws. Following the announcement, Coinbase's stock experienced a notable decline, shedding light on the immediate financial repercussions for the company.
See: Coinbase’s CEO Speaks Out on the SEC’s Request to Delist Assets (Except Bitcoin)
- The outcome of this trial could influence investor confidence and market stability within the cryptocurrency sector. A ruling in favor of the SEC might lead to increased regulatory scrutiny across the board, potentially affecting the valuation and operation of numerous digital assets.
- This case is being closely watched by legal experts and industry stakeholders globally as it could establish a legal benchmark for defining and regulating digital assets as securities. The decision could guide future regulatory actions and influence legislative efforts concerning the cryptocurrency market.
SEC Representative:
"We're pleased that yet another court has confirmed that, while the term 'crypto' may be relatively new, the framework that courts have used to identify securities for nearly 80 years still applies. It's the economic realities of a transaction, not the labels, that determine whether a particular offering constitutes a security."
See: Historic Nod from Regulators. Coinbase Secures Approval for Crypto Futures Trading
Why It Matters
Legal experts and industry analysts are concerned that the SEC vs Coinbase trial could trigger a wave of compliance and registration efforts among cryptocurrency firms. Additionally, it may encourage other regulatory bodies globally to adopt a similar stance.
The 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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Philippines SEC Blocks Binance for Failing to Secure License
Binance | March 27, 2024
Image: SEC Philippines Blocks Binance, press release
Philippines SEC blocks Binance, citing unlicensed operations and investor risk
After threatening for months, the Philippines Securities and Exchange Commission (SEC) has now mandated the blocking of Binance for failing to secure the necessary operational licenses. The ban will be implemented within three months, providing investors with a window to exit their positions on Binance. This grace period reflects the SEC's intention to minimize disruption for Filipino investors engaged with the platform.
See: Binance Executive Escapes from Custody in Nigeria
- The Philippines SEC, with assistance from the National Telecommunications Commission, has ordered the blockage of Binance due to its lack of a proper license to operate within the country - view press release.
- SEC Chair Emilio B. Aquino highlighted the risk to Filipino investors' funds as a primary concern, pointing out Binance's unauthorized solicitation of investments and operation of a securities exchange platform.
- Since 2023, the SEC has been in communication with Binance, urging compliance and warning the public about potential actions against the platform. Despite these efforts, Binance failed to obtain the necessary licenses, leading to the current blockade.
Digital Assets in the Philippines
The Philippines has shown a generally positive stance towards cryptocurrencies, recognizing the growing interest among Filipinos in digital assets and the potential benefits they offer. The government has taken steps to regulate the cryptocurrency sector to ensure investor protection, market integrity, and compliance with financial regulations. This includes efforts to tax profits from crypto sales at a rate of 15 percent, indicating an attempt to integrate cryptocurrency transactions into the formal economy while ensuring that they contribute to the nation's revenue.
See: OSC Pursues Binance Investigation, Unfazed by Crypto Exchange’s Departure from Canada
However, the government also makes it clear that cryptocurrencies are not recognized as legal tender in the Philippines. Its a cautious approach that welcomes innovation and investment opportunities presented by cryptocurrencies, while implementing measures to protect investors and prevent financial crimes.
Conclusion
This move, while specific in its immediate impact on Binance and its users, reflects the Philippines' nuanced stance on crypto: open to innovation and the economic opportunities they present, yet commitment to ensure a secure, regulated, and compliant digital asset environment.
The 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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4 AML Challenges for 2024 and Beyond
March 26, 2024
Image: Freepik/macrovector
Anti-money laundering is an issue plaguing more than just the financial industry. Due to our everyday lives becoming more digitized, it’s easier than ever to participate in financial means.
AML regulations exist to regulate and stop fraud, trafficking, tax evasion, and other illegal activities. Unfortunately, implementing regulations is hardly enough to prevent money laundering.
There are multiple challenges that pose obstacles for authorities and various institutions in finding a be-all and end-all solution.
Having said that, the current challenges shouldn’t be an entity that stops all the efforts to minimize money laundering.
Those struggling with the scheme should learn about the challenges and consider potential solutions that we’ll mention in this article.
1. Lack of Sufficient Systems and Processes
Some organizations are simply too small to implement sufficient systems and processes to fend off money laundering threats.
It’s one thing to know about transaction monitoring rules and screening processes and another to actually have sufficient resources to create a functioning system.
Customer data, transactions, and third-party involvement create a complicated ecosystem. And it’s not just the missing tools. Despite advancements in automation, there still have to be competent officers and teams to keep everything in check.
How do we overcome this challenge? Institutions could look for ways to dedicate more resources, even if it means taking from another sector.
Adopting advanced analytical tools and hiring qualified personnel or investing in AML staffing and training programs are worth a shout, too.
2. Insider Threats
Insider threats are another example of a challenge that disrupts an organization’s workflow. Current employees might take advantage of their position to benefit personally.
They avoid detection by using modern technology and collaborating with external criminal networks.
Privilege abuse lets internal threat abusers manipulate data and carry out sophisticated attacks that are hard to detect.
An insider malicious actor might slip up and get themselves caught. However, counting on that is anything but smart.
Taking a proactive approach is a more effective solution. Organizations ought to assess insider risks and implement analytical tools to monitor and identify suspicious behavior.
Significant penalties as a regulation do their job as well. If somebody knows about the potential consequences of laundering money within an institution, they are less likely to engage in such activities.
3. Keeping Up With Changing Regulations
Considering the volume of money laundering worldwide and locally, the regulatory landscape suffers from constant evolution. At least in the sense that institutions struggle to keep up.
Modernizing and implementing more effective solutions by itself is a good thing, but from a company’s point of view, it’s tricky to stay up to date. Changes lead to compliance gaps and ensure confusion, which then means additional costs to an already expensive venture.
Since keeping up with changing regulations is imperative, the best way to go about it is by finding an AML solution that works as a single source for compliance. Regardless of the change, the solution remains up to date, as well as regulatory requirements.
4. Modern Money Laundering Schemes
Criminals are usually ahead because they find new ways to launder money. Regulators have to react and detect these activities to prevent them. And when they do, the criminals probably have another new method or two up their sleeves, ready to move on and stay ahead.
It’s hard to imagine a scenario where regulators are in front and predict what the next money laundering scheme will look like. They dedicate resources to solve current problems instead.
See: Rising Threats: The Global Impact of Push Payment Fraud
Nevertheless, with enough resources, reducing the gap is not out of the question. At the very least, utilizing the latest technology to identify the latest money laundering methods to control them helps.
The 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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Binance Executive Escapes from Custody in Nigeria
Crypto | March 26, 2024
Image: Freepik/master1305
Facing Legal Charges, Binance Executive, Nadeem Anjarwalla, Flees Nigeria
According to Premium Times and several outlets, Nadeem Anjarwalla, a British-Kenyan Binance executive, escaped from custody in Nigeria after being detained on charges of tax evasion and other offenses. The Nigerian government has leveled multiple charges against Binance and its executives, including failure to register with the Federal Inland Revenue Service, non-payment of value-added tax (VAT), and aiding customers in tax evasion. These charges highlight the Nigerian authorities' crackdown on financial crimes and tax evasion, especially within the cryptocurrency sector.
See: New Binance CEO’s First Thoughts + His Latest
- Nadeem Anjarwalla, a British-Kenyan citizen and a Binance executive, along with Tigran Gambaryan, a U.S. citizen overseeing financial crime compliance at Binance, were detained in Nigeria upon their arrival on February 26, 2024. They were held for alleged tax evasion and other offenses.
- Shortly after their detention, Anjarwalla escaped from custody on March 22, 2024. He was taken from the Abuja guest house, where he was detained, to a nearby mosque for prayers due to the ongoing Ramadan fast. It is believed he then used a Middle East airliner to fly out of Abuja. His escape was facilitated despite his British passport, used to enter Nigeria, being held by Nigerian authorities. He reportedly fled using a Kenyan passport, raising questions about how he obtained it.
- Following the escape, the Nigerian government sought assistance from Interpol to issue an international arrest warrant for Anjarwalla.
- The incident has prompted discussions within Nigerian security and immigration circles about the oversight and security measures that allowed the escape. The Nigerian government has expressed its intention to pursue the case, emphasizing the need for compliance with its tax and financial regulations by international companies operating within its borders.
See: Binance Under DOJ Microsope and Unprecedented Monitorship
- The legal challenges faced by Binance in Nigeria have broader implications for the cryptocurrency industry, especially in emerging markets where regulatory frameworks are evolving. The incident has sparked discussions about the need for clearer regulations, better compliance mechanisms, and more robust engagement between cryptocurrency platforms and local authorities.
Why This Matters
As former Binance CEO Changpeng Zhao (CZ) awaits sentencing in the United States, the escape of Nadeem Anjarwalla from Nigerian custody adds another layer to the legal challenges confronting the company. This incident highlights the pressing need for stringent compliance frameworks full stop.
The 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 Scrutinizes Ethereum as ETF Approvals Delayed
Crypto | March 22, 2024
Image: Freepik/wirestock
The SEC's Ethereum Probe and ETF Delays
The SEC's active investigation into Ethereum, particularly its classification as a security following its transition to a proof-of-stake model, has raised alarms across the fintech sector. The probe's focus on the Ethereum Foundation's governance and financial dealings underscores the regulatory uncertainties facing the second-largest cryptocurrency, valued at a $426 billion market cap. "The SEC's energetic legal campaign to classify Ethereum as a security delivers a further blow to the crypto industry's hopes," reports Fortune.
See: Federal Judge Sanctions SEC for ‘Gross Abuse of Power
Adding to the complexity, the SEC has postponed decisions on Ethereum ETF applications from leading financial firms including Blackrock, signaling a cautious regulatory stance. This delay not only impacts the asset managers involved but also affects the broader investment community, introducing uncertainty in an already volatile market.
Market Reactions
Aaron Arnold, a noted analyst warned that classifying Ethereum as a security could have drastic implications for the U.S. crypto market. Such a designation would necessitate stringent regulatory compliance, potentially stifling innovation and limiting market growth. "If the SEC labels Ethereum as a security, that would pretty much nuke the cryptocurrency market in the United States," said Aaron, highlighting the potential for widespread regulatory impact.
See: BlackRock Launches New Fund on Ethereum, Bullish on Tokenization
Despite the current market volatility, Ethereum has shown resilience with its price experiencing indicating a somewhat defiant optimism among investors and market participants. It's crucial to recognize the global and decentralized nature of cryptocurrencies. Even if the SEC imposes strict regulations on Ethereum within the U.S., the network's international presence and governance by a Swiss entity highlight the limited reach of any single regulatory body, and may mitigate the long-term impact of the SEC's actions on Ethereum's development and adoption.
Outlook
The SEC's indecision on Ethereum ETFs and its problem introduce uncertainty in an already volatile market. ETFs are seen as a way to bring cryptocurrency investments into the mainstream, offering a regulated and potentially less risky entry point for institutional and retail investors alike. Delays in approval may deter investment in Ethereum and other cryptocurrencies, affecting market liquidity and price stability.
The 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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Federal Judge Sanctions SEC for ‘Gross Abuse of Power
SEC | March 20, 2024
Image: Freepik
SEC Sanctioned for Misrepresenting Evidence in the DEBT Box Case
This week, a US federal court sanctioned the Securities and Exchange Commission (SEC) for what was called 'a gross abuse of power' for its misrepresentation and inappropriate actions against DEBT Box, a crypto company based in Utah. This news quickly became a focal point for discussions on regulatory overreach and the appropriate scope of SEC oversight in the fintech sector. The ruling sends a strong message about the limits of regulatory authority and the need for clear, consistent guidelines for fintech and cryptocurrency entities.
- The SEC brought a lawsuit against Debt Box in August 2023, alleging a $50-million fraudulent cryptocurrency scheme and requested a temporary restraining order (TRO) and asset freeze, claiming a risk of funds being transferred overseas. Note that the SEC has since removed the original press release announcement published on their website.
- Based on the SEC's claims, including the alleged overseas transfer of $720,000, the court initially granted the TRO and asset freeze.
See: SEC Intensifies Accounting Audits in 2023
- Federal judge Robert J. Shelby later found that the SEC misrepresented evidence; the $720,000 was actually transferred within the United States, not overseas. The SEC admitted to not being 'forthcoming' and that its presentation wasn't fully honest but argued against sanctions.
- Judge Shelby sanctioned the SEC for acting in bad faith, citing intentional lying about evidence and stating this constituted a "gross abuse of power" and undermined the judicial process.
Reactions
The incident led to calls for the termination of involved SEC staff, reforms within the agency, and suggestions that SEC lawyers should bear personal liability for such conduct. The judge has ordered the SEC to pay the attorneys' fees of the defendants in the case.
The judge in the Debt Box case has issued an 80 page opinion sanctioning the SEC for egregious misconduct in the case.
The opinion is devastating to the SEC as an institution and to the particular lawyers who committed the misconduct.
The judge made it crystal clear that the…
— MetaLawMan (@MetaLawMan) March 18, 2024
Gurbir Grewal, the Chief of SEC Enforcement, extended an apology to Judge Shelby for the errors committed in the DEBT Box case. Michael Welsh, the SECs attorney on the case, expressed regret for his actions, too.
See: Peirce Laments, SEC ‘Squandered A Decade’
Grewal announced plans to introduce mandatory training for SEC enforcement personnel, focusing on the requisite standards for pursuing emergency legal actions.
Closing Perspective
The DEBT Box case highlights the potential for regulatory overreach and the need for transparent, fair, and equitable guidelines that support the dynamic nature of fintech and cryptocurrency sectors. The symbolic impact of imposing sanctions on the SEC could create a precedent and potential recalibration for regulatory bodies worldwide.
The 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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Tax Tips for Canadian Crypto Users in 2024
Crypto Taxes | March 18, 2024
Image: Freepik/fabrikasimf
Income Tax Considerations for Canadian Crypto Users
With the 2024 tax season upon us, understanding the nuances of crypto taxation is more crucial than ever. Below is an overview of some essential tax tips and strategies to help you comply with Canada Revenue Agency (CRA) regulations. From record-keeping best practices to identifying taxable events, the CRA published an information guide for crypto users and tax professionals that has you covered.
1. Every transaction you make with crypto-assets can trigger a tax event
Here are the most common types:
- Trading. Buying and selling crypto-assets can result in capital gains or losses, depending on the value of the asset at the time of the transaction compared to when it was acquired.
- Mining. Income from mining activities, whether as a hobby or a business, has tax implications. If mining is a business activity, the income needs to be reported as business income. If it's a hobby, the value of mined coins at the time they are acquired is taxable.
- Staking. Rewards received from staking are considered income at their fair market value at the time of receipt and must be reported accordingly.
- But what about Airdrops and Forks? These can result in unexpected income, with the fair market value of the new tokens being taxable in the year they are received.
2. Determining Business Income vs. Capital Gains
The nature of your crypto transactions significantly impacts your tax obligations. The CRA looks at several factors to determine whether your activities constitute a business or are investment-related, which affects whether your earnings are taxed as business income or capital gains:
See: CRA Tax Implications for Individuals and Crypto Platforms
- Regular and frequent trades might be considered a business activity.
- Short-term holdings frequently turned over could indicate a business operation.
- Purchasing with the intention to resell for profit suggests business income.
- A professional level of knowledge or a pattern that aligns with trading practices can imply business activity.
3. Record-Keeping for Tax Purposes
Compliant record-keeping goes beyond tracking buy and sell transactions. It includes documenting the intent behind transactions, the research conducted before investments, and the strategy for buying or selling assets. These records can be crucial in establishing the nature of your income from crypto-assets.
4. Tax Reporting and Compliance
- For investments, only 50% of your capital gains are taxable.
- Business income from crypto activities is 100% taxable.
- If you're operating a crypto business, certain expenses related to your operation may be deductible.
See: UK Leading Charge in Global Crypto Tax Crackdown
Conclusion
The CRA's stance on crypto-assets is evolving. Staying informed about new guidance and regulations is imperative for compliance and for optimizing your tax situation.
The 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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