Latest news with #TerraUSD
The Star
4 days ago
- Business
- The Star
Central bank body BIS delivers stark stablecoin warning
FILE PHOTO: The tower of the headquarters of the Bank for International Settlements (BIS) is seen in Basel, Switzerland March 18, 2021. REUTERS/Arnd Wiegmann/File Photo LONDON (Reuters) -The Bank for International Settlements issued its starkest warning yet on the risks posed by stablecoins and urged countries to move rapidly towards the tokenisation of their currencies. The BIS, often dubbed the central bankers' central bank, outlined its concerns, including stablecoins' potential to undermine monetary sovereignty, transparency issues and the risk of capital flight from emerging economies. It comes less than a week after the U.S. Senate passed a bill to create a regulatory framework for U.S.-dollar-pegged stablecoins, a move which, if rubberstamped by the House, is expected to fuel a further explosion in their popularity. Stablecoins are a type of cryptocurrency designed to maintain a constant value, usually a 1:1 dollar peg, backed by real-world assets such as U.S. Treasuries or gold. Dollar-pegged coins currently account for 99% of the market, which is estimated to have over $260 billion worth of coins in circulation. "Stablecoins as a form of sound money fall short, and without regulation pose a risk to financial stability and monetary sovereignty," BIS said in a early-released chapter of its annual report due to be published on Sunday. Hyun Song Shin, the BIS' Economic Adviser, explained that stablecoins lack the traditional settlement function provided by a central bank with fiat money. He likened them to private banknotes circulating in the 19th-century Free Banking era in the United States. It means they can often trade at varying exchange rates depending on the issuer, undermining the no-questions-asked principle of central bank-issued money. "Singleness is either you have it or you don't," Shin said, also warning of the risk of "fire sales" of the assets backing stablecoins if they collapse, as TerraUSD (UST) and the cryptocurrency LUNA did in 2022. There is also the concern around who controls stablecoins. Tether currently has more than half of the overall stablecoin market, but quit the EU following the introduction of new rules which require stablecoin operators to be licensed by the bloc. "The whole question of disclosure, this is where some of the stablecoins differ," BIS Deputy General Manager Andrea Maechler said. "You will always have the question about the quality of the asset backing. Is the money really there? Where is it?" BOLD ACTIONS The BIS wants central banks to go down the route of tokenised "unified ledger" incorporating central bank reserves, commercial bank deposits and government bonds. It would mean central bank money remains both the primary means of global payment and that currencies and bonds from around the world could effectively be integrated into the same "programmable platform". Tokenisation is aimed at creating a digitalised central bank system that settles payments and securities trades almost instantaneously and more cheaply by cutting the need for certain time consuming checks, as well opening up new functionality. It can also make the system more transparent, resilient and interoperable and may protect the system from some of the more unpredictable elements of cryptocurrencies. There would be a number of key issues to overcome, including who gets to set the rules governing the platform and that individual countries are likely to want to retain significant control of how and who uses their currencies. "Realising the full potential of the system requires bold action," the outgoing head of the BIS, Agustin Carstens, said. (Reporting by Marc Jones, Additional reporting by Elizabeth Howcroft, Editing by Louise Heavens)
Mint
4 days ago
- Business
- Mint
Central bank body BIS delivers stark stablecoin warning
LONDON (Reuters) -The Bank for International Settlements issued its starkest warning yet on the risks posed by stablecoins and urged countries to move rapidly towards the tokenisation of their currencies. The BIS, often dubbed the central bankers' central bank, outlined its concerns, including stablecoins' potential to undermine monetary sovereignty, transparency issues and the risk of capital flight from emerging economies. It comes less than a week after the U.S. Senate passed a bill to create a regulatory framework for U.S.-dollar-pegged stablecoins, a move which, if rubberstamped by the House, is expected to fuel a further explosion in their popularity. Stablecoins are a type of cryptocurrency designed to maintain a constant value, usually a 1:1 dollar peg, backed by real-world assets such as U.S. Treasuries or gold. Dollar-pegged coins currently account for 99% of the market, which is estimated to have over $260 billion worth of coins in circulation. "Stablecoins as a form of sound money fall short, and without regulation pose a risk to financial stability and monetary sovereignty," BIS said in a early-released chapter of its annual report due to be published on Sunday. Hyun Song Shin, the BIS' Economic Adviser, explained that stablecoins lack the traditional settlement function provided by a central bank with fiat money. He likened them to private banknotes circulating in the 19th-century Free Banking era in the United States. It means they can often trade at varying exchange rates depending on the issuer, undermining the no-questions-asked principle of central bank-issued money. "Singleness is either you have it or you don't," Shin said, also warning of the risk of "fire sales" of the assets backing stablecoins if they collapse, as TerraUSD (UST) and the cryptocurrency LUNA did in 2022. There is also the concern around who controls stablecoins. Tether currently has more than half of the overall stablecoin market, but quit the EU following the introduction of new rules which require stablecoin operators to be licensed by the bloc. "The whole question of disclosure, this is where some of the stablecoins differ," BIS Deputy General Manager Andrea Maechler said. "You will always have the question about the quality of the asset backing. Is the money really there? Where is it?" The BIS wants central banks to go down the route of tokenised "unified ledger" incorporating central bank reserves, commercial bank deposits and government bonds. It would mean central bank money remains both the primary means of global payment and that currencies and bonds from around the world could effectively be integrated into the same "programmable platform". Tokenisation is aimed at creating a digitalised central bank system that settles payments and securities trades almost instantaneously and more cheaply by cutting the need for certain time consuming checks, as well opening up new functionality. It can also make the system more transparent, resilient and interoperable and may protect the system from some of the more unpredictable elements of cryptocurrencies. There would be a number of key issues to overcome, including who gets to set the rules governing the platform and that individual countries are likely to want to retain significant control of how and who uses their currencies. "Realising the full potential of the system requires bold action," the outgoing head of the BIS, Agustin Carstens, said. (Reporting by Marc Jones, Additional reporting by Elizabeth Howcroft, Editing by Louise Heavens)
Reuters
10-04-2025
- Business
- Reuters
Former top Trump diplomat settles legal fee fight for $1.1 million
April 10 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to opens new tab) The U.S. State Department has agreed to pay $1.1 million to settle a lawsuit over legal fees sought by a former top U.S. official who testified against President Donald Trump during his first impeachment. Gordon Sondland, who served as Trump's ambassador to the European Union, accused the State Department in a 2021 lawsuit of violating an oral agreement to pay his legal bills, which he said were $1.8 million. Sondland, a wealthy Republican donor and hotelier, testified to lawmakers about Trump's interactions with Ukraine in 2019, ahead of the 2020 U.S. presidential election. Sondland was fired in 2020. Sondland was represented at the time of Trump's impeachment by a team from Paul Hastings, including Washington litigator Robert Luskin and another top partner Kwame Manley. The then-Secretary of State Mike Pompeo had denied ever agreeing to pay Sondland's legal tab. In January, Sondland's case seeking fees went to a bench trial in the U.S. Court of Federal Claims, but the sides reached a settlement before any final order. The State Department paid $1.1 million on March 31, records show. The State Department did not immediately respond to a request for comment. 'Ambassador Sondland simply sought to hold the government accountable for the clear and unequivocal commitments made to him by former Secretary of State Pompeo and other State Department officials,' Sondland's attorney, Mark Barondess, said in a statement. Barondess called the settlement "a rare example of the government being bound to an oral agreement." He said courts enforce such agreements "only under very strict conditions and are generally reluctant to do so unless the facts are unusually compelling." At trial, Manley, who is Paul Hastings' global litigation head, testified that the work the firm did for Sondland was extensive and urgent. 'He knew he was not going to look to the yellow pages or to someone on TV to hire for this,' said Manley, who told the court that he bills at about $1,900 an hour now. In congressional investigations and crisis management, Manley said, "you drop everything, you work 16 hours a day." -- In other legal fee news, a U.S. bankruptcy judge on Wednesday rejected White & Case's $430,000 bill for less than two weeks of work in the bankruptcy of crypto company Terraform Labs, saying the law firm was never formally retained to represent Terraform's junior creditors. U.S. Bankruptcy Judge Brendan Shannon, who is overseeing Terraform Labs' Chapter 11 filing, said during a Wednesday court hearing in Wilmington, Delaware, that lawyers must be formally retained and submit fee applications if they want to be paid from funds provided by a bankrupt company. Terraform is the company behind the stablecoin TerraUSD, which collapsed and roiled cryptocurrency markets in 2022. Spokespeople for White & Case, Terraform and Weil, Gotshal & Manges — which is representing Terraform Labs in the bankruptcy — did not immediately respond to requests for comment. -- Brown Rudnick said Friday it will pay about $8 million to resolve a dispute over the law firm's bankruptcy work for exiled Chinese businessman Guo Wengui, who was convicted on fraud charges in the U.S. last year for stealing hundreds of millions of dollars from online followers. Guo retained Brown Rudnick to represent him when he filed for personal bankruptcy in February 2022. Guo's bankruptcy case was turned over months later to a Chapter 11 trustee — Luc Despins of Paul Hastings — after creditors argued that Guo was hiding assets and not complying with court orders. Despins said Friday that Guo's creditors had legal claims against Brown Rudnick over its advice and Guo's conduct in the early days of the bankruptcy. But a settlement was the best option, providing money for creditors without the risk or delay of litigation, according to the trustee. Brown Rudnick said in a statement that it "unequivocally denies" the trustee's legal claims but was pleased to resolve the matter. The firm will return $948,000 that it received as a retainer payment and pay an additional $7 million, according to the settlement agreement. A spokesperson for Paul Hastings did not immediately respond to a request for comment. Latham, Northwestern seek fees from conservative group in bias case
Reuters
09-04-2025
- Business
- Reuters
White & Case loses bid for $430K fee in Terraform Labs bankruptcy
NEW YORK, April 9 (Reuters) - A U.S. bankruptcy judge on Wednesday rejected White & Case's $430,000 bill for less than two weeks' work in the bankruptcy of crypto company Terraform Labs, saying the law firm was never formally retained to represent Terraform's junior creditors. U.S. Bankruptcy Judge Brendan Shannon, who is overseeing Terraform Labs' Chapter 11, said during a Wednesday court hearing in Wilmington, Delaware that U.S. bankruptcy law requires lawyers to be formally retained and submit fee applications if they want to be paid from funds provided by a bankrupt company. Terraform, the company behind the stablecoin TerraUSD, which collapsed and roiled cryptocurrency markets in 2022, filed for bankruptcy in January 2024. White & Case submitted a bill for its work representing Terraform's creditor committee early in the bankruptcy, at a time when the creditors committee decided to hire both White & Case; and McDermott Will & Emery to represent it. The committee later changed its mind and only worked with McDermott Will & Emery. The committee never filed an application to retain White & Case. Shannon said that he was "not faulting anybody" and he had no reason to doubt the value of the work that White & Case had provided early in the case. "I'm sympathetic to the position that they're in, looking to get paid for services that were provided when a client simply made a decision to go with different counsel," Shannon said. "In a non-bankruptcy situation, there would be remedies – they did the work." In many Chapter 11 cases, including Terraform's case, bankrupt companies fund the work of official creditors' committees as a way to provide oversight and ensure that junior creditors' interests are adequately represented in a bankruptcy. Terraform had reached settlements with the U.S. Securities & Exchange Commission and its creditors after a jury in Manhattan found the company liable for defrauding investors. As part of the bankruptcy settlement, the SEC had agreed to collect payment only after Terraform repays creditors who suffered losses after the collapse of Terraform's cryptocurrencies. White & Case acknowledged that it was not formally retained by Terraform's creditors, but it argued that its fees could be paid due to its "substantial contribution" to the success of Terraform's bankruptcy. The firm pointed out that the early days of Terraform's bankruptcy were unusually litigious, with Terraform challenging its creditors committee as "illegitimate" and pushing a "false" narrative that the company had no significant creditors, according to its court filings. White & Case attorney Gregory Pesce told Shannon that denying the fees would provide an unfair "windfall" to Terraform, which benefited from his firm's work on a settlement strategy that ultimately brought the Chapter 11 case to a peaceful resolution with its creditors. The U.S. Justice Department's bankruptcy watchdog, the Office of the U.S. Trustee, objected to the fees. The U.S. Trustee's attorney, Jane Leamy, told Shannon that White & Case's push for payment was an "improper runaround" to rules around attorney retentions in bankruptcy. Shannon agreed that the fees could not be paid, but he did not fault White & Case for trying. "The case law talks about 'end runs' and things like that, which is kind of a loaded term, and I don't see any of that," Shannon said. White & Case had billed about $430,000 for 13 professionals who provided a total of 316.20 hours of work for Terraform's creditors committee between February 29 and March 12, including one partner who billed $2,300 per hour. White & Case did not immediately respond to a request for comment on the ruling. The case is In re Terraform Labs Pte Ltd, U.S. Bankruptcy Court for the District of Delaware, No. 24-10070 For White & Case: Gregory Pesce and Colin West of White & Case For the U.S. Trustee: Jane Leamy and Linda Richenderfer of the Office of the U.S. Trustee
Yahoo
01-04-2025
- Business
- Yahoo
5 of the biggest crypto blowups, frauds and rug pulls
Cryptocurrency has long been associated with frauds and outright scams, dating back to at least the massive loss of Bitcoin from the Mt. Gox crypto exchange in 2014. In many ways, crypto is an ideal vehicle to commit fraud because of its broad adoption by criminals, the anonymity of transactions and a gullible public that views cryptocurrencies as lottery tickets to riches. While cryptocurrency really hit the mainstream with the run-up in Bitcoin in 2017, it's exploded in popularity since 2020, when the Federal Reserve dropped interest rates to zero, encouraging a flight to risky assets. Even U.S. President Donald Trump now has a cryptocurrency ($TRUMP) and First Lady Melania Trump has her coin, too ($MELANIA). President Trump has become a notable crypto supporter and introduced the U.S. Strategic Bitcoin Reserve. The recent emergence and explosion of cryptocurrency into the mainstream has also brought along with it a raft of fraud, blowups and rug pulls, where crypto creators simply leave with the money that's been invested in their crypto project. Here are five of the largest crypto scandals. The many, many crypto scams are testament to the danger of investing in cryptocurrency. FTX was one of the world's largest crypto exchanges and one of the biggest blowups, following the slump in cryptocurrency markets in 2022. FTX was supposed to hold $11.3 billion in clients' assets at Alameda Research, the company's hedge fund arm. However, just $2.3 billion of those funds could be found, as FTX had moved funds out of customer accounts and used them for its own purposes — embezzlement, according to the U.S. Department of Justice. FTX filed for bankruptcy in November 2022. FTX founder and CEO Sam Bankman-Fried was convicted of fraud and conspiracy to launder money, and was sentenced to 25 years in prison in March 2024. Binance Holding, the name behind the huge Binance crypto exchange, pled guilty in November 2023 to a variety of crimes, including violations of the Bank Secrecy Act and failure to register as a money-transmitting business. The company agreed to pay more than $4 billion as part of the charges. At the same time the company's CEO, Changpeng Zhao, pled guilty to failing to maintain an effective anti-money laundering program, and then resigned as CEO. 'Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,' said Secretary of the Treasury Janet L. Yellen at the time. Binance was launched in 2017 and quickly became the world's largest cryptocurrency exchange. The year 2022 was rough for cryptocurrency, as rising rates drove risk-averse traders away from the sector. And that lack of confidence helped blow up Terra USD, a stablecoin pegged to the U.S. dollar. In May 2022, traders began selling the stablecoin and, for technical reasons, it had trouble maintaining its peg with the dollar. After that initial break from the peg, the coin spun out of control and plummeted, becoming virtually worthless over a few days. It was one of the first crypto blowups in 2022 as the Federal Reserve rapidly raised interest rates to fight inflation. The Squid Game coin was launched in 2021 to piggyback on the popularity of the Netflix series 'Squid Game,' promising an 'play-to-earn' online game based on the series. Unfortunately, the coin's developers treated its investors every bit as badly as the contestants on the series were treated. Squid coin was a classic rug pull operation, with the project's founders absconding with clients' funds just a few days after launching the project. The coin skyrocketed in its few days of existence, peaking around $2,861 per coin, but investors had trouble selling the tokens. Days after the launch, the project's founders cashed out $3.36 million put up by investors and disappeared. In minutes the coin plummeted to less than a cent in price. While small in total value, the fraud was a media sensation, with many crypto traders learning what a rug pull is. Javier Milei, the president of Argentina, promoted a cryptocurrency called $LIBRA in February 2025 posts on social media outlets. 'This private project will be dedicated to encouraging the growth of the Argentine economy by funding small Argentine businesses and startups,' said a message on X in translation. Following the message, millions poured into the coin. But just hours later insiders, who owned most of the cryptocurrency, sold out and took an estimated $250 million with them, and the crypto's price crashed by 90 percent or more. The marketing team behind the Argentina fraud is also the same one that launched Melania Trump's cryptocurrency. Donald Trump's own cryptocoin generated $2 billion in cumulative losses for some 800,000 investors, according to the New York Times. Cryptocurrency is associated with scams for a variety of reasons: Get-rich-quick mentality: Cryptocurrency as a whole promises the ability to get rich quickly, turning what purports to be an investment into a lottery ticket. No question, many cryptos have soared, but literally thousands are virtually worthless. Scammers prey on the lack of knowledge of victims looking for an easy way to get wealth. Public ignorance of cryptocurrency: Few members of the public understand how cryptocurrency works and the necessity of securing digital assets, so it can be easy to bamboozle a technically unsophisticated victim. Cryptocurrency is not backed by anything: Most cryptocurrency is not backed by anything such as assets or the cash flow of an underlying business. A few individuals could put together a website for memecoins, for example, with no money and attempt to sell them to investors as a get-rich-quick investment. Since crypto has no fundamental value, the only thing propping up the prices of crypto is the demand for them. Anyone can create a cryptocurrency: Literally anyone can create a cryptocurrency, and a reported 37 million already exist as of March 2025, according to Tangem, a blockchain company. Semi-anonymity of transactions: Cryptocurrency allows people to move money anonymously (or at least semi-anonymously). So those who don't want their transactions associated with them, such as criminals, find it an effective means to move money. Facilitates crime: Because of its anonymity, crypto is an effective way to facilitate crime, allowing criminals to extort individuals, pay for illicit transactions and then launder money. Crypto transactions are irrevocable: Once crypto coins have been sent somewhere or been stolen, they're gone for good. It's next to impossible to get them back. Criminals can run away with your money and you won't be able to do anything about it. These factors have all created an environment that makes it easy for scammers to use crypto to dupe the public. Cryptocurrency is an ideal means to facilitate crime, and the public's lack of knowledge about crypto and its desire to get rich quick combine to create a great recipe for scams and frauds. Traders need to be aware of the risks they run when trading crypto and protect themselves from scams. Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. 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