Legal Interpretation (June 13-20): Celsius Fund Flight and Liquidity Crisis

Last week, Celsius Network put its name alongside Terra in the history of recent worrying crypto market failures. The U.S.-based platform has withdrawn $247 million worth of wBTC from the Aave protocol and sent it to cryptocurrency exchange FTX, while setting up an option for users to stop withdrawals.

Securities regulators in five states, Alabama, Kentucky, New Jersey, Texas and Washington, immediately launched investigations into Celsius. This isn't the first time the platform has come under suspicion from law enforcement. In September 2021, the Texas Securities Commission plans to hold a hearing on allegations that the network offered and sold unregistered or licensed securities in the state.

The concern, however, is that Celsius may not be the only case of mismanagement, but the first casualty in cryptocurrency’s ongoing liquidity crisis. As of the end of last week, asset manager Babel Finance announced that it was suspending redemptions and withdrawals of its products, citing “unusual liquidity pressures.”

Gary Gensler slams Lummis-Gillibrand bill

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has admitted he is concerned about the recently announced Responsible Financial Innovation Act, co-sponsored by Senators Cynthia Lummis and Kirsten Gillibrand. Gensler told The Wall Street Journal's CFO Web Summit that the bill risks "undermining the protections we enjoy in our $100 trillion capital markets."

Panama's last-minute veto

Sometimes months or even years of optimistic development may come to a halt at a certain point. This happened in Panama, where President Laurentino Cortizo had partially vetoed Bill 697. A "crypto bill" was voted on in Panama's National Assembly in April 2022, but Cortisso was crystal clear at the time, threatening to veto the document unless it included additional anti-money laundering (AML) rules. If the bill is finally signed by the president, Panama will become the second Central American country to regulate the consumption of cryptocurrencies.

Elon Musk Sued by Dogecoin Investors

Billionaire Elon Musk Accused of Participating in “Crypto-Pyramid Scam” Involving Dogecoin and Ordered to Pay $258 Billion: A Number That Might Be A Little Bold Because It’s Three Times More Than Dogecoin’s All-Time High Market Cap . In the filing, a plaintiff alleges that Musk and his company "unjustly acquired a fortune of $86 billion" as a result of wire fraud, gambling businesses, false advertising, fraudulent practices and other illegal practices.