💏🚔Billion-Dollar Laundering Scheme Busted! - Proof of Intel

Ding dong! Who's there? It's your digital friend Mochi, serving up scoops of fresh web3 and crypto news topped with sprinkles of humor and a cherry of insight. Welcome back, fellow dessert enthusiasts, to another mouth-watering edition of Proof of Intel (PoI). This week, we've got stories sweeter than a vanilla sundae and twists twistier than a mint-choc-chip swirl cone! So grab a spoon, settle down, and prepare your tastebuds for an intellectual sugar rush. 🎠🎢

SUMMARY 📓🖋️

🟧 "Crypto couple," Ilya Lichtenstein and Heather Morgan, are expected to plead guilty to their roles in a $4.5 billion bitcoin-laundering saga related to the 2016 Bitfinex hack.

🟧 SEC allegedly asked Coinbase to halt all non-Bitcoin trading, according to CEO Brian Armstrong, a move that he claimed could've ended the US crypto industry.

🟧 In a major win for the crypto world, two cryptocurrency-focused bills have taken a step closer to becoming law in the United States, gaining approval from the House Financial Services Committee (FSC).

🟧 Richard Schueler, aka Richard Heart, the creator of Hex crypto token, has been accused by the U.S. Securities and Exchange Commission (SEC) of illegally using millions of investor funds for personal luxury purchases, including a massive 555-carat black diamond.

🟧 Social media claims that all charges against FTX founder Sam Bankman-Fried were dropped are false; only a single campaign finance charge has been dropped.

TL;DR at the bottom.

💏🚔 The Crypto Bonnie and Clyde Plead Guilty

Ladies and gents, we've got a real thriller to unpack today. Picture this: a Manhattan couple strolls around the block with their pet Bengal cat. Sounds ordinary? Not quite, especially when this couple, Ilya Lichtenstein and Heather Morgan, also known as the "Crypto Couple," are set to plead guilty to a minor $4.5 billion bitcoin-laundering scheme!

Our leading lady, Heather, moonlights as a rapper, "Razzlekhan," while her hubby Ilya, oh, he just has a penchant for navigating dark-web markets and virtual currency exchanges. But they're just like us, right? Minus the alleged conspiracy to commit money laundering and defraud the United States part.

Here's the plot twist: they didn't pull off the original heist. Back in 2016, Bitfinex suffered a massive hack, and 119,754 bitcoins were whisked away. Rather than being the crafty cat burglars, our dynamic duo were more like opportunistic scavengers, pouncing on the looted bitcoins and spiriting them away into their own accounts.

However, their plot thickens with every twist and turn! Investigators found meticulous notes detailing their cunning plans, a list of 2,000 virtual currency addresses, and login details for cryptocurrency-exchange accounts. It's almost like they wanted to get caught!

It's not just about the money, honey. Our crypto Bonnie and Clyde were allegedly planning a daring escape to Russia with new identities. In a plot worthy of a Hollywood blockbuster, authorities found hollowed-out books, burner phones, and bags of cash. So much for being low key!

🐻 SEC's Crypto Tightrope Walk

Well, well, well, here we are folks, in a wild-west world where the SEC plays sheriff, and our buddy, Brian Armstrong, the CEO of Coinbase, dons the ten-gallon hat of a crypto cowboy. If what Armstrong says is true, it looks like the SEC wanted Coinbase to stop trading everything but the good ol’ Bitcoin. That’s like asking a candy store to only sell chocolate and forget about the rainbow of other tasty sweets!

According to Armstrong, the SEC believes every crypto asset that isn't Bitcoin is as serious as a heart attack, aka a "security." And if Coinbase had given in, it would have been as if the sheriff declared all candy other than chocolate illegal! As you can imagine, the majority of US crypto ventures would've gone "Pfft, guess we're outlaws now!"

The SEC, with their big sheriff badge gleaming under Gary Gensler's leadership, didn’t explain their Bitcoin-Only verdict, so Coinbase was left scratching their heads. The one thing they did know was that complying would've been like flipping off the lights on the US crypto industry. Thus, the gauntlet was thrown down and Armstrong said: “let's go to court and find out what the court says." What a high-stakes showdown at the OK Corral, eh?

🏛️📜 Congressional Victories: A Tale of Two Bills

Break out the champagne, crypto enthusiasts! Regulatory clarity is (possibly) on the horizon. The U.S. House Financial Services Committee gave a thumbs-up to two pivotal crypto bills last week. We're talking about the aptly named Financial Innovation and Technology for the 21st Century Act and the Blockchain Regulatory Certainty Act.

The former is all set to create some much-needed rules about when crypto firms need to check in with either the CFTC or the SEC. On the other hand, the latter looks to strip away roadblocks for "blockchain developers and service providers," including miners and decentralized finance platforms.

But before you pop that bottle, it wasn't all smooth sailing on the crypto sea. The Digital Assets Market Structure Bill received a cold shoulder from lawmakers, including Representative Maxine Waters, for being a little too cozy with the crypto industry's calls and ignoring regulatory advice from the SEC.

In other news, the U.S. Senate passed a beefy $886 billion 2024 National Defense Authorization Act. This crypto-amended bill could set examination standards for crypto and compel the U.S. Treasury Department to launch a study to unmask anonymous crypto transactions. Who knew privacy could be such a battlefield, right?

Meanwhile, up north, Canada’s financial watchdog is mulling over changes to its approach to crypto assets. The potential rule changes will categorize crypto assets into four buckets based on perceived risk.

Across the pond, Mother Russia is making strides in the digital currency world. President Putin officially signed off on the digital ruble bill, setting the stage for the first Central Bank Digital Currency (CBDC) pilot with real consumers.

In the east, crypto giant Binance and its CEO, Changpeng “CZ” Zhao, are facing a rough legal patch. They're seeking to dismiss a lawsuit filed by the CFTC, claiming it's exceeding its regulatory authority by trying to police foreign individuals and corporations operating outside the U.S.

💎😲 Big Diamond Purchase Lands Hex Creator in Hot Water

Richard Schueler, also known as Richard Heart, the creator of Hex crypto token, is in a legal pickle. The SEC alleges he illegally used millions of investor funds for personal luxury purchases, including a massive 555-carat black diamond, known as “The Enigma.”

Heart is accused of raising over $1 billion by selling unregistered securities, which includes the Hex coin and other tokens affiliated with his PulseChain blockchain network and PulseX decentralized finance platform. When the lawsuit was announced, the price of Hex and other affiliated tokens took a nosedive.

This case marks the latest in a series of SEC's crypto enforcement actions this year. The regulator isn't holding back when it comes to crypto, having already taken legal action against other major players in the space like Coinbase Global Inc. and Binance Holdings Ltd.

😅👩‍⚖️ All Charges Dropped Against FTX Founder? Nah, Just Kidding!

Oh, the drama! You know, they say the truth is stranger than fiction, and in the case of FTX founder Sam Bankman-Fried, it's also stickier than a triple-scoop sundae on a hot summer day. Some social media connoisseurs had their cones in a twist, claiming that the DOJ had dropped all charges against Sam. Spoiler alert! That's a big ol' FALSE! Like the surprise gummy bear at the bottom of your gelato, the reality is far more complex and chewy.

While the prosecutors have indeed dropped one campaign finance charge against Bankman-Fried, the man is not exactly off the hook. He's still going to face other charges in an October courtroom drama. And guess what, folks? There might be a second serving of legal action in 2024. That's right, a sequel! It's like the Rocky series of court cases!

According to our little birds in the court (otherwise known as the AP), the DOJ is not pursuing the campaign finance charge due to a "Bahamian-bikini-fine-print" issue related to Bankman-Fried's extradition from the Bahamas to the U.S. However, Bankman-Fried still has a full-course trial waiting for him, with the main dishes being customer and lender fraud. And a potential dessert of a second trial involving charges of conspiracy to violate anti-bribery provisions of the Foreign Corrupt Practices Act. Ah, the sweet taste of justice!

TL;DR: 🔻💯

🟧 The notorious "Crypto Couple," Ilya Lichtenstein and Heather Morgan, are due in court to plead guilty to orchestrating a $4.5 billion bitcoin-laundering scheme. This saga involves money, hacking, dark-web dealings, burner phones, and an escape plan to Russia.

🟧 Brian Armstrong, CEO of Coinbase, says that the SEC requested they stop trading all crypto assets except Bitcoin. Armstrong suggests that agreeing to this could've been the curtain call for the US crypto industry. Hence, they chose to tango with the law and took the matter to court.

🟧 It's a big week in the crypto world, with two key crypto bills making progress in the U.S. Congress, aiming to provide regulatory clarity. Meanwhile, Binance is grappling with lawsuits, and Russia is moving forward with its Central Bank Digital Currency.

🟧 Richard Heart, creator of the Hex crypto token, has been accused by the SEC of illegally using investor funds for personal luxury items, including a colossal black diamond. As news of the lawsuit hit, the price of Hex and related tokens plummeted.

🟧 Despite social media's rumor mill working overtime, the DOJ hasn't dropped all charges against FTX founder Sam Bankman-Fried. They've only let go of one campaign finance charge due to extradition hiccups. Our man Sam still has a main course of other charges to face this October, with the potential of another trial in 2024.