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How Should A Nation State Hold Bitcoin?
Published
2 years agoon
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Quite a lot of ink has been exhausted writing about El Salvador as the world’s first nation state to make bitcoin legal tender within its territory. Moving from a fiat to a bitcoin standard isan essential milestone in bitcoin’s global adoption. Whether this move will gain support is a debate of its own right. Bitcoiners will have discussions on this matter many times over as Nayib Bukele, El Salvador’s President, acquires a growing portion of the strictly limited supply of 21 million bitcoin. El Salvador’s national treasury holds 1,801 bitcoin, according to Forbes, worth around $60 million as of today. Who will be next: Mexico? Argentina? Paraguay?
Holding bitcoin for a nation-state is a novelty. Trusting third-party custodians for holding bitcoin is common practice, especially for large financial institutions and publicly-traded companies such as MicroStrategy, which now holds 124,391 bitcoins on expenditures of $3.75 billion. For a sovereign nation-state with exposure to geopolitical risk, trusting a regulated custodian may not be compatible with its threat model. In the past, custodians for gold, such as the Bank of England, declined settlement of gold to Venezuela that had trusted them with their holdings worth more than $1 billion at the time. This is not to say that the censorship was good or bad, but worth mentioning here simply to highlight that it happened. Custodians can, and will, censor, seize and freeze bitcoin custody accounts if compelled to do so by regulatory agencies. Forward-thinking countries such as El Salvador must think about this and may not want to trust third party custodians with their national bitcoin treasury.
In this article, we discuss issues around bitcoin self-custody for a nation-state in 2022 and raise major questions around the topic of sovereignty. “Not your keys, not your bitcoin” holds particularly true for sovereign nation-states. It is timely to reflect on the best practices nation-states could adopt as they gradually move to a bitcoin standard in the coming years. Using a theoretical example, we illustrate how a nation-state could manage their bitcoin stack using wallets on self-hosted infrastructure to manage their keys on their own terms.
The First Domino
As a sovereign nation-state in Central America, The Republic of El Salvador is a political entity that is represented by one centralized government that has full control over its territory. El Salvador has a permanent population of approximately 6.8 million people, a defined territory of roughly 21,000 square kilometers (interestingly), one single government and the ability to form relations with other sovereign nation-states. El Salvador is part of the U.N.’s list of 206 sovereign member states. In its current form, El Salvador is a democratic republic, instituted by the 1983 Salvadoran constitution. It is led by the president of the Republic, Nayib Bukele, and a legislative assembly composed of 84 members all elected by universal suffrage, of which 56 are from Bukele’s political party “Nuevas Ideas.”
In a country with a fixed term limit and democratic elections, government officials come and go. Externally, while El Salvador maintains friendly relations with other sovereign states, its recent adoption of bitcoin as legal tender is creating tensions with international organizations. Some have argued that El Salvador adopting bitcoin as legal tender marked the beginning of a global de-dollarization process. Getting off the U.S. dollar can make for spicy international relations with the United States and its fiat standard, though that is not the topic at hand. Internally, governance can be quite complicated for a country to manage as different officials handle access control to the national bitcoin stack.
As briefly mentioned, a country has two broad options for managing its national bitcoin holdings: Either by trusting a third party custodian, or holding its own keys. Usually, and for practical reasons, trusting a regulated custodian that is well capitalized and recognized as a reliable counterparty would be the preferred method of storage currently. But as it is the case for gold, custodians for bitcoin have the capacity to sever the relationship with their customers shall they be required to do so by law. And law is by nature specific to a particular jurisdiction, which can also evolve over time. This is outside the control of clients trusting custodians with their holdings. For nation-states holding bitcoin, sovereignty should be a top priority.
Questions Around Custody And Sovereignty
So how does a nation-state hold its keys? Should it trust someone else for custody? Absolutely not. A truly sovereign state cannot rely on trusted third parties to safeguard its bitcoin holdings. On the other hand, building hardware, software and operational controls to hold its own keys is a complicated endeavor that requires a diverse set of skills. Such is not impossible, but it is expensive. On top of that, there are multiple considerations:
- How does a nation create and backup its private keys?
- Should a nation use multisig vaults or multiple singlesig wallets? A combination of both?
- How are backups stored? How is access restricted?
- What about signing? Are there withdrawal rate limiters? How many people are required to approve spendings?
- Who has the final signing authority? How is collusion protected against?
- Do they even run their own node to validate consensus rules and broadcast their transactions independently to the network?
An important prerequisite for all leaders of sovereign nations looking into bitcoin custody: “Trusted third parties are security holes.”
Trusted Third Parties Are Security Holes
Thanks to the writings of Nick Szabo, Mt. Gox and other scandals such as QuadrigaCX, it is accepted wisdom that trusted third parties are security holes. Nayib Bukele, president of the world’s first country to publicly adopt bitcoin as legal tender, surely knows this too. While using mainstream custodians such as BitGo, Gemini or even Fidelity Digital Assets is commonplace for corporations and high net worth individuals storing tens of billions of dollars worth of bitcoin, this avenue should seem out of the question for a sovereign state. And yet, it appears that El Salvador and other large bitcoin holders may not be in control of their own keys to this day.
Plus, most of the major custodians are regulated U.S. companies, trusts, and banks, which bears political risk in a world constrained by strict regulatory oversight by governments and more recently by global travel restrictions. In cases of litigation, the jurisdiction in which the custodian is regulated may have legislation that acts against its customer’s interests preventing resolutions and redeemability of their bitcoin IOUs that were issued by the custodian. Trust entities mitigate that risk, but it still remains non-zero.
What these custodians provide is an authentication and access control layer. As highly regulated entities, these entities safeguard important amounts of bitcoin with hybrid setups made up of human policies and information system security. Custodians allow client admins to view funds, but most importantly request withdrawals and will ask for video-based authentication, paired with SMS, email or hardware device 2FA. Problem is: bitcoin should not be locked behind closed doors for which you don’t have the keys, if you’re a nation state. That is true for sovereign individuals and companies as well.
Today, bitcoin is still relatively insignificant on the geopolitical scene with a monetary value oscillating around $1 trillion. If or when bitcoin hits $10 trillion, as it becomes the most prominent monetary base in USD terms, that will change. Regulated custodians holding hundreds of billions of dollars worth of bitcoin, let alone trillions, will be highly sought-after targets. Private gold ownership was deemed reprehensible with hefty fines and imprisonment in the U.S. after Executive Order 6102 was pronounced. Gold custody was much more centralized thereafter with the forced sale of private gold bullion. Bitcoin is no different from that angle if entrusted in the hands of custodians. Bitcoin custody accounts can be seized, censored and frozen.
Today bitcoin custodians are also narrowly covered by insurance policies with limits not exceeding 5-10% of the total assets they hold. Such a level of risk exposure seems inadequate, to say the least. Sovereign nation-states cannot accept such a risk, as they hold bitcoin in their national reserves.
Trust Minimization Is Essential
Restricting access control to bitcoin holdings, namely signing keys and backups, is the name of the game. Ideally, access may be governed by strong mechanisms that cannot be corrupted by power or greed. This is not the case with human policies. Policies are guides that can be followed at all times but that can also be modified, deprecated or simply bypassed. Errors can be made too. If policies can be corrupted or bypassed, they will most likely be. Power corrupts. What prevents collusion from happening, if a government cannot trust internal policies to protect its bitcoin holdings?
Bitcoin is highly secure, perhaps even close to being considered unbreakable as a monetary network. At the peripheries of the network, private keys that are used to move bitcoin can be utilized in different ways. Spending conditions from a bitcoin wallet are programmable such that custom rules can be implemented to withdraw from any wallet. Today, bitcoin’s scripting language is still limited in its abilities though it’s gotten better over the years and with recent software upgrades such as Taproot.
Improvements have come out such as projects like Miniscript, a language for efficiently writing correct bitcoin scripts for wallet spending conditions. Theoretically, using such technology, complex organizations such as governments could implement authorizations to spend bitcoin, where multiple officials representing Treasury and Labor departments, for instance, would be required to sign off on a multisig wallet, which itself is part of another multisig vault managed by the president and vice-president offices.
Another alternative could be to apply governance controls with a wallet setup that is hosted and managed by the government itself, allowing for flexibility while keeping spending conditions off-chain. Bitcoin wallet management should remain flexible and adjustable to different models of governance that will vary based on distinct governments looking to self-custody. As discussed, a sovereign nation may not want to outsource bitcoin custody, which may very well become a matter of national security in the coming years. Defending its own bitcoin holdings from external threats, a government may want to find a way to protect itself from internal corruption and insider theft: collusion.
- What happens if government officials try to steal and succeed?
- How is access control designed such that more than 3, 5 or 10 distinct people must collude together to steal funds?
Adding security by limiting access to funds comes with trade-offs. Bitcoin self-custody is optimized based on security, simplicity and sovereignty trade-offs. Usually, only two out of three may be fully optimized. Commercial custodians rank high on simplicity and security but may lack sovereignty features for the customer. Mainstream hardware wallets rank high on simplicity and sovereignty but may lack security where custom governance and group access controls are required. Where does that lead us? Solutions that rank high on sovereignty and security, that may be adding extra complexity for long-term bitcoin self-custody. Sovereign nation-states may be better off hosting their own bitcoin key management solutions, allowing for flexibility, security and full sovereignty on their holdings. Whether or not nation-states hold their own keys will determine if they truly have sovereign bitcoin reserves when they need them the most.
May a government use popular open-source products such as Specter, Sparrow or BlueWallet paired with hardware devices such as Coldcard, Trezor and BitBox? Unlikely. While these products are of the highest standards and state of the art when it comes to open-source bitcoin software and hardware, they lack the flexibility for complex governance models. They were also designed as consumer products, and are currently not built for enterprise or institutional applications that require custom controls, as mentioned previously.
What could be the preferred method for governments around the world to hold bitcoin? Let’s look into self-hosted enterprise wallet solutions:
Protecting The Entire Key Lifecycle
Let’s start with the basics: generating bitcoin private keys.
- How does one do it safely?
- What is a secure private key as opposed to a weak one?
Using a random number is a critical first step in bitcoin security. Good entropy is the starting point. Using closed-source hardware to generate entropy as the source of randomness for the private key is putting a lot of trust in the chip manufacturer or the company providing the service. A good practice would be to use a mix of physical and digital entropies to guarantee a strong basis for private key generation. If the base entropy is poor, all the remaining security measures around bitcoin key management could be all for nothing if it’s cracked at the root. It would be like using a weak password that is easy to brute force with repetitive trial and error attempts. Some hardware wallet manufacturers have closed-source firmware, which prevents anyone from auditing the source code to ensure good entropy generation. While auditibality is useful, true randomness of the seed is what matters to protect private keys from being cracked.
Once a bitcoin private key exists, it must be stored securely. Using a dedicated hardware device to secure it is usually the recommended method. Relying on different vendors can help reduce the risk of supply chain attacks by diversifying manufacturers.
- How does a nation-state pick a hardware manufacturer knowing supply chain attacks are possible?
- How much trust is required?
- Can generic hardware be used to secure keys?
- Can multiple vendors be used to source hardware?
As a nation-state is a politically exposed entity, there are chances that the manufacturers sourcing components and assembling their hardware devices would be co-opted to supply modified or spooked versions. Using open hardware as the basis to build hardware devices for private key storage can be an efficient way to optimize security. Assuming a nation-state cannot trust any hardware device manufacturer seems like a reasonable position to take moving forward, which increases the need for open standards in hardware design, especially chip manufacturing and entropy generation. What is the risk of relying on international manufacturers in times of lockdowns and supply chain disruptions? Another alternative is to manage and oversee the manufacturing of bitcoin hardware devices and build a national supply chain to avoid the reliance on external vendors.
After this point, what’s important is to think about private key backups for business continuity and disaster recovery planning, involving strict access control measures to prevent collusion and internal theft.
- How many people should be involved?
- What’s the level of permission that should be cleared for people to be involved in such a procedure?
- How is this procedure tested and regularly verified?
Generally, bitcoin key backup storage may not be controlled by the same entities responsible for the signing operations. Backups may be vaulted by distinct security providers in trust with several individuals in charge. Only a major event such as a destruction of keys at the signing operations may be able to trigger a recovery.
- How does one vet these people with access to backups ?
- How is the procedure documented and transferred to all and new staff?
- How is personnel turnover managed? How is access control regularly updated to ensure only the required personnel are in control?
All procedures may be performed with a number of registered agents so as to diminish collusion risk. Another best practice for backup management would be around key and backup access controls. It may be preferable for personnel dealing with backups to not ever be in presence of enough backups such that they could gain signing authority on a wallet. Operationally, a government managing a bitcoin wallet may want to have strict procedures that technically make internal theft extremely difficult to successfully perform.
- How are keys used?
- Should bitcoin be held in single-signature wallets or multiple-signature vaults?
- How many signers are required? Out of how many authorizing agents? How do they coordinate remote signing operations in distinct locations to avoid exposure to losses?
One option is to connect distinctly generated hardware keys into multi-signature vaults, such that custom approvals can be designed where multiple authorizations are required to withdraw bitcoin. As mentioned, governments, like companies, have turnover. As businesses, governments have complicated internal structures where multiple people should be signing off on withdrawals. Distinct from businesses, governments have a lot more public scrutiny and internal politics. Bitcoin holdings may have been collected from and will be used for the public. This form factor bears high responsibility and requires extensive measures to safeguard the underlying bitcoin from being lost or stolen. Designing a system that allows for key rotation when officials change roles in the securing of bitcoin is paramount.
- How often should key health checks be performed?
- When keys are deemed out of order, should a wallet be swept into a new one or a key simply re-generated into the existing quorum?
- To what extent should wallets be offline or online?
- Is cold storage the end-all-be-all for security? How available should funds be? What’s the risk of being online for a public wallet?
Most key management for large holdings tend to happen offline, disconnected from any network. The only activity that may be connected to a network is to update wallet and vault balances, transaction history or to share partially-signed bitcoin transactions, and broadcast signed bitcoin transactions. In other words, the generation, archival and storage (signing) of keys would be better off disconnected from any network, in a cold storage environment. Hot network-connected operations may be preferred for small operations where low-latency is needed for transactions to be signed, for instance. Should quorums of signers be different between hot and cold wallets?
Sovereignty Redefined Under The Bitcoin Standard
Governments that hold bitcoin may want to think about other nation-states in their threat modeling, as well as internal collusion. Off-the-shelf hardware and software components may be useful, but may want to be adequately audited, and may just lack advanced features for bespoke governance models. External threats, such as thefts and losses, may be as severe as internal collusion and errors made by officials.
When managing large amounts of public funds stored in bitcoin, the temptation to steal is high, which will trigger new attacks by sophisticated actors. Building in-house or deploying a self-hosted infrastructure to manage the entire key lifecycle appears to be a safe way to self-custody for governments looking to secure bitcoin in their national reserves.
- Who has access to the blueprints? How many people should be required to be “in the know?”
- What’s the right ratio of security versus complexity for managing wallet operations?
- Should governments be 100% independent or seek support in setting up their bitcoin custody department?
Does sovereignty mean going alone at tackling a hard problem such as self-custody for bitcoin? Perhaps it does. Companies like Knox think about these questions all the time. We can also help deploy self-hosted bitcoin enterprise wallet solutions for nation-states looking to be self-sovereign with their bitcoin holdings. What does it mean? Allowing entities to hold large amounts of bitcoin to safely self-custody by limiting counterparty risk. Using self-hosted bitcoin custody infrastructure, a government would be able to deploy bitcoin key management within its own jurisdiction with limited reliance on external vendors. How does it work under the hood? What’s the risk in deploying such a setup? Why is this practice not more generalized these days? Many of these questions still remain unanswered to this day.
As more nation-states adopt bitcoin while bitcoin legal tender laws are enacted, these concerns will be unearthed and addressed as a matter of national security and sovereignty. Moving off the fiat standard, governments will be incentivized to answer these questions as the notion of lender of last resort fades away. Centralized custodians will probably remain popular as a means to safeguard bitcoin UTXOs, while others may be nationalized or seized when bitcoin reaches a certain threshold of geopolitical exposure. Nation-states are better off being safe rather than sorry, and hold their own keys.
This is a guest post by Thibaud Marechal. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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dYdX Founder Advises Crypto Industry to Abandon US Customers, Deeming Market Effort Unrewarding
Published
1 month agoon
August 28, 2023By
Team CG
The founder of the decentralized exchange, dYdX, asserts that individuals involved in cryptocurrency development should direct their efforts toward international markets beyond the United States for the upcoming five to ten years.
Antonio Juliano conveys to his audience of 49,400 on the social media platform X that the prevailing regulatory uncertainty within the United States does not merit the associated challenges or concessions.
Juliano contends that it would be more prudent for cryptocurrency developers to establish their products in alternative countries and subsequently re-enter the United States from a position of strength.
“Cryptocurrency developers would be well-advised to temporarily discontinue catering to the US market and instead seek re-entry in a span of 5-10 years. The complications and compromises involved do not warrant the endeavor. Moreover, a substantial portion of the market exists overseas. It is recommended to innovate in those regions, ascertain product-market fit, and then return with greater bargaining power…
The paramount objective shared among all stakeholders is to secure a significantly more potent product-market fit for cryptocurrency. The pursuit of a robust product-market fit does not necessitate flawless distribution. A multitude of substantial overseas markets present avenues for experimentation.”
Juliano articulates that advocating for more amiable cryptocurrency regulations demands time, although the process could be expedited if developers manage to introduce products that elicit consumer demand.
“However, this perspective does not undermine the importance of efforts to influence US cryptocurrency policy. On the contrary, such endeavors are absolutely vital. Given the protracted timeframe required (in anticipation of re-entry), and considering that much of the world takes cues from the United States, it becomes evident that our progress in shaping policies hinges upon achieving global-scale product usage.”
The dYdX founder proceeds to emphasize that, with time, American citizens will come to realize that cryptocurrency is inherently aligned with US values and principles.
“The tenets of cryptocurrency closely align with American values. What concept could be more quintessentially American and reflective of capitalist ideals than a financial system conceived for the people, driven by the people, and answerable to the people? This, indeed, constitutes the very essence of our endeavor.”
Read Also: Bloomberg Analyst Mike McGlone Predicts Bitcoin Vulnerability in Economic Downturn
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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Bloomberg Analyst Mike McGlone Predicts Bitcoin Vulnerability in Economic Downturn
Published
1 month agoon
August 27, 2023By
Team CG
Bloomberg Intelligence’s senior macro strategist, Mike McGlone, is conveying a pessimistic outlook for Bitcoin (BTC) in the immediate future.
During a recent interview on Kitco News, McGlone underscored that Bitcoin is currently displaying bearish signals even amidst the ascent of other high-risk assets.
“In the event of a downturn, adhering to a rule prevalent in bear markets, resources across the board could witness a reduction in value, and Bitcoin will not be an exception.
A crucial observation is the necessity for Bitcoin to exhibit divergent strength at a certain juncture, akin to the behavior of treasury bonds and gold in a deflationary economic environment. Regrettably, this pattern has not materialized.
After attaining its peak towards the conclusion of Q1, reaching approximately $31,000, driven by optimism and the influence of exchange-traded funds (ETFs), Bitcoin subsequently retraced to $25,000 or approximately $26,000. Presently, it is manifesting divergent weakness in contrast to the concurrent upsurge in the stock market.”
According to McGlone’s analysis, the ongoing “economic reset” implies a continuation of Bitcoin’s recent downward trend, although he anticipates that the premier cryptocurrency will ultimately attain a six-figure valuation.
“While I believe that Bitcoin will eventually achieve a valuation of $100,000, the onset of a global economic reset, as I anticipate, characterized by a standard deflationary recession leading to a decline in the housing and stock markets, analogous to the conditions of 2008—though arguably exacerbated due to the ongoing removal of liquidity from the system—Bitcoin’s role as an influential precursor comes to the forefront.
This underscores my point that Bitcoin has recently been taking on the role of a harbinger of trends. Its value ascended briefly to around $31,000, only to subsequently trend downwards. From my perspective, it serves as a leading indicator for a majority of high-risk assets.”
As of the time of writing, Bitcoin is trading at $26,079.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
News
Lead Developer Announces Imminent Public Reopening of Shibarium
Published
1 month agoon
August 24, 2023By
Team CG
Shiba Inu’s (SHIB) Latest Layer-2 Scaling Solution Nears Public Relaunch Following Recent Technical Challenges
Shytoshi Kusama, the enigmatic lead developer behind the SHIB project, has shared in a recent blog post that significant progress has been made in addressing the technical setbacks that temporarily halted the operation of Shibarium, SHIB’s new layer-2 scaling solution. The initial release of Shibarium encountered network issues that prompted its temporary closure. However, Kusama assured the community that diligent testing and parameter adjustments have led to notable improvements.
Kusama elaborated, stating, “After extensive testing and parameter refinements aimed at achieving a ‘ready’ status, Shibarium has undergone enhancements and optimization. While still undergoing testing, it is now successfully producing blocks.” Additionally, to prevent a recurrence of the past network overload, Kusama revealed the implementation of a new monitoring system and supplementary fail-safe measures. These include rate limiting at the RPC (remote procedure call) level and an automated server reset mechanism in the event of another surge in traffic.
With these advancements in place, the team is on the verge of reopening Shibarium to the public. As part of this progression, more network validators will be integrated into the ecosystem on August 23rd. Kusama emphasized the significance of this step, remarking, “Tomorrow, additional validators will become operational, expanding the options available for staking BONE. This will allow for a distribution of rewards earned through their roles within our community. As testing concludes, we will once again prepare for public utilization.”
Shibarium’s previous technical difficulties were attributed to an overwhelming influx of users and transactions during its initial launch. As of the current writing, SHIB is trading at $0.00000798, marking a 0.4% increase over the past 24 hours.
Read Also: Sam Bankman-Fried, Co-Founder of FTX, Files for Temporary Release from Incarceration
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News
Sam Bankman-Fried, Co-Founder of FTX, Files for Temporary Release from Incarceration
Published
1 month agoon
August 20, 2023By
Team CG
FTX’s co-founder, Sam Bankman-Fried, is currently seeking a temporary release from incarceration. The purpose behind this endeavor is to engage in collaborative strategizing with his legal representatives within the confines of the federal courthouse situated in Manhattan.
In a formal letter dispatched to US District Judge Lewis Kaplan on a Friday, Bankman-Fried’s legal team expounded that their client’s capacity to effectively scrutinize the extensive legal documents pertaining to his case has been significantly curtailed during his time spent incarcerated at the Metropolitan Detention Center (MDC) in Brooklyn.
Christian Everdell, the attorney representing Bankman-Fried, divulged that the government recently disseminated a voluminous three-quarters of a million pages of Slack communications. These were originally due several months prior. Expressing the urgency of the situation, Everdell articulated, “Only last week did the government furnish an aggregate of approximately seven hundred and fifty thousand pages of Slack communications that were originally stipulated for release months ago. Given the current timeline, it is a futile endeavor for Mr. Bankman-Fried to endeavor to review these materials.”
He underlined the pivotal necessity for Bankman-Fried to collaborate meticulously with his legal team, emphasizing his dire need to avail himself of an internet-enabled laptop within the courthouse premises. Such a resource would undoubtedly expedite the process of comprehensive document review, an imperative undertaking in light of his impending fraud trial scheduled for the forthcoming October.
In riposte to Bankman-Fried’s plea for reprieve, the prosecuting body voiced apprehensions regarding his adherence to the prerequisites concerning his planned defense strategy. Notably, they underscored that Bankman-Fried is yet to furnish the complete gamut of essential information regarding the counsel upon which he predicated his actions.
The prosecutors proffered caution that unless Bankman-Fried promptly discloses the minutiae regarding the counsel he received and the provenance thereof, any attempt to interject such a defense during the trial should be summarily proscribed.
Although the prosecutors extended an offer to facilitate the transfer of documents onto hard drives for Bankman-Fried’s perusal within the MDC premises, a viable laptop-based solution was deemed unattainable. Initially, the notion of relocating Bankman-Fried to a more compact, upstate correctional facility where he could access an internet-enabled laptop was contemplated by the prosecutors. However, this proposal was met with resistance from prison officials.
Regarded for its starkly onerous conditions, the Metropolitan Detention Center has cultivated a notorious reputation among its inmate population.
Bankman-Fried’s Incarceration Stemming from Unsanctioned Internet Utilization
As documented, Judge Kaplan sanctioned the re-imprisonment of the beleaguered cryptocurrency luminary, citing alleged instances of witness tampering.
In that juncture, Judge Kaplan pronounced that a strong prima facie case existed indicating that the accused had endeavored to tamper with witnesses on no fewer than two separate occasions.
The decision was additionally influenced by Bankman-Fried’s unsanctioned use of the Internet while released on bail under the guardianship of his parents at their abode located in California.
Judge Kaplan discerned that Bankman-Fried had indulged in excessive communication with various individuals via electronic correspondence, even resorting to the utilization of a virtual private network.
Concurrently, the disgraced progenitor of FTX is simultaneously grappling with novel allegations brought forth by the Department of Justice (DOJ). These allegations encompass the misappropriation of customer deposits, including the purported embezzlement of said funds.
An indictment filed on the most recent Monday delineates that Bankman-Fried stands accused of diverting and embezzling customer deposits from the FTX platform. The illicitly obtained funds were purportedly channeled towards political campaign contributions, collectively amassing a substantial sum exceeding one hundred million dollars, in advance of the 2022 US midterm elections.
The indictment further posits that despite Bankman-Fried’s intimate knowledge of FTX’s fiscal insufficiencies, he continued to channel the purloined funds into personal investments, acquisitions, and political campaign contributions.
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News
U.S. Securities and Exchange Commission Nearing Appeal in Ripple Lawsuit’s XRP Decision
Published
1 month agoon
August 19, 2023By
Team CG
The U.S. Securities and Exchange Commission (SEC) is taking significant steps towards pursuing an appeal in their recent legal battle against Ripple, indicating a potential shift in the course of the lawsuit.
James K. Filan, an experienced defense attorney specializing in crypto-related legal matters, has shed light on the latest developments. District Judge Analisa Torres has initiated a structured process for considering the SEC’s request to present an interlocutory appeal—a move that would allow the SEC to contest certain aspects of the ongoing case.
It’s important to note that this preliminary step does not guarantee the authorization of an interlocutory appeal; rather, it signifies that the SEC has been given the opportunity to formally request such an appeal.
Judge Torres has outlined the timeline for this process in her official order. The SEC is expected to file their motion for the appeal by August 18th. Subsequently, Ripple is given until September 1st to submit their opposition papers. If the SEC deems it necessary, they have until September 8th to file a reply.
The news of these developments had an immediate impact on the cryptocurrency market. Following the announcement of the judge’s order, the value of XRP experienced a sharp decline. The price, which had been trading at approximately $0.571, dropped to around $0.499 at the time of writing. This decrease of over 12% aligns with the broader trends observed across the cryptocurrency landscape.
The legal clash between the SEC and Ripple began when the regulatory agency filed a lawsuit against the San Francisco-based payments company in late 2020. The SEC alleged that Ripple had engaged in the sale of XRP without registering it as a security.
In a significant turn of events last month, Judge Torres issued a ruling that had mixed implications for both parties. She determined that Ripple’s automated programmatic sales of XRP, which occurred on the open market, could not be classified as securities offerings—a pivotal point of disagreement between the SEC and Ripple.
However, the judge did uphold a key aspect of the SEC’s argument. She agreed with the agency’s assertion that Ripple’s direct sales of XRP to institutional buyers indeed amounted to a securities offering, reinforcing the complexity of the case.
As the legal battle continues to unfold, the spotlight remains on the actions and responses of the SEC and Ripple, and how their ongoing dispute could shape the future regulatory landscape for cryptocurrencies and digital assets.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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