In a recent development in the digital assets world, the Trump administration made significant changes that are causing ripples throughout the cryptocurrency community. The U.S. Department of Justice took a major step by shutting down its National Cryptocurrency Enforcement Team (NCET) and shifting its focus on investigating crimes related to terrorism, drug cartels, and organized crime. This move was initiated by Deputy Attorney General Todd Blanche, who criticized the previous administration led by Joe Biden for their “reckless strategy of regulation by prosecution” of digital assets. The NCET, established in 2022, was responsible for handling high-profile cases like the prosecution of Binance and its founder Changpeng Zhao for money laundering. Under President Donald Trump, the enforcement approach towards cryptocurrencies has taken a more crypto-friendly stance, with a directive based on an executive order supporting open blockchain access for individuals and businesses.
Another significant development came from the Acting U.S. Securities and Exchange Commission (SEC) Chair, Mark T. Uyeda, who instructed agency staff to review past staff statements related to cryptocurrency and securities regulation. This review aims to align the SEC’s priorities with the Trump administration’s policies, as outlined in the executive order titled “Unleashing Prosperity Through Deregulation.” Key documents under review include guidance on applying the Howey test to digital assets, which helps determine if an asset qualifies as a security. The SEC’s move comes as the regulatory body signals a shift in its approach, with recent statements suggesting that most meme coins may not fall under securities laws. The review also includes considerations for crypto-related disclosures following industry bankruptcies.
In the realm of bug bounties, decentralized stablecoin protocol Usual made waves by launching what is claimed to be the largest bug bounty in tech history. With a reward of $16 million for identifying critical vulnerabilities in its codebase, Usual aims to incentivize ethical hackers to uncover flaws before they can be exploited. This record-setting bounty surpasses previous rewards in the crypto industry, signaling a commitment to security and resilience in the digital asset space.
On the cybersecurity front, a phishing campaign known as “PoisonSeed” was identified for hijacking corporate email marketing accounts to steal cryptocurrency. The campaign targets users of platforms like Mailchimp, SendGrid, HubSpot, Mailgun, and Zoho, primarily focusing on individuals using Coinbase and Ledger wallets. Attackers compromise accounts, send phishing emails to victims, and trick them into entering their seed phrases, leading to the theft of their assets. This highlights the importance of robust security measures and vigilance in protecting digital assets from phishing attacks.
In a separate incident, nearly 400,000 creditors of the bankrupt cryptocurrency exchange FTX face the risk of losing a combined $2.5 billion in repayments due to their failure to complete the required Know Your Customer (KYC) process. The deadline for KYC verification has been extended, but unverified claims may be permanently disqualified after June 1. The repayment plan aims to distribute funds to creditors with valid claims, with larger claims exceeding $1.9 billion. The recovery plan intends to repay 98% of creditors at least 118% of their original claim value in cash.
Lastly, Coinbase addressed a misleading error message in its account activity logs that caused confusion among users, leading to concerns about compromised accounts. The error message, which appeared after phishing attempts or incorrect password entries, created anxiety among users. Coinbase acknowledged the issue and plans to revise the message to provide clearer information to users.
These recent developments underscore the evolving landscape of digital assets and the importance of regulatory clarity, security measures, and user awareness in safeguarding cryptocurrencies and blockchain technologies. As the industry continues to grow and adapt to changing dynamics, stakeholders must remain vigilant and proactive in addressing emerging threats and challenges in the digital asset space.