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Bank CEO Calls for Increased AML & Compliance Initiatives to Counter Funding of Terrorism in Crypto

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Last month, the Kenya Bankers Association had their regular CEO Chat, this time with Alakh Kohli, CEO of M Oriental Bank. He noted that, without further regulatory guidance from government agencies, his bank didn’t plan to increase access to digital currency services.

In particular, he addressed the need to have a more uniform industry standard to deal with countering bad actors intent on utilizing cryptocurrency as a method to launder money and fund terrorist operations.

“For years, I’ve been talking about the need to crackdown on the nefarious activity which resides in the cryptocurrency community. Iran has notably aimed to utilize blockchain technologies to avoid international sanctions. And exchange operators utilize different thresholds of security to prevent money laundering. It is in the best interest of the industry’s long-term longevity that we come together with government agencies to root out the bad actors and end their chicanery,” opined Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

In the interview, Kohli noted that “at the moment we have no plans on rolling out any digital currency services in the absence of a regulatory framework. This is an evolving space, once the right frameworks are in place to address the risks, including Anti Money Laundering and Countering the Financing of Terrorism and underlying asset concerns for it to be a store of value; I’m sure there will be offerings coming to the market. What is more exciting is the blockchain technology which digital currencies are based on is already being adopted by banks for enhancing and offering new and disruptive product innovations.”

“It isn’t just his bank. Many institutions are waiting for guidance from the jurisdiction in which they operate. We need a clear set of rules. A set of rules that sets a bar for exchange operators to measure themselves against. Responding to the lack of regulatory guidance, we’ve been advising clients to self-regulate and integrate all the AML & KYC security enhancements available before any mandates are in place. It is better to be ahead of the curve than to simply be responsive,” noted Gardner.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago. Earlier this year, Modulus  filed for a patent on its Exchange Trust Score System, a revolutionary solution which aims to restore trust in financial exchanges, particularly those dealing in digital assets and cryptocurrencies, and giving regulators an additional tool by which to gauge the integrity of an exchange.

“On the one hand, exchanges need a framework to operate safely. On the other hand, investors need to know which exchanges they can trust. None of the features in the world matter if your exchange isn’t safe. We’ve been focusing on exchange security for the past two decades. Even after building an exchange that approached the laws of physics in terms of transaction speed, that wasn’t enough. Those features are only as good as the security behind them. It is time that the government brings industry insiders to the table to discuss a commonsense set of regulations which will keep the public safe and foster even greater innovation in the industry,” Gardner said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Cryptocurrency Market Dips as Bitcoin Falls to $65,300

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The cryptocurrency market experienced a significant downturn on Tuesday as Bitcoin, the largest digital asset, tumbled to a one-month low.

At its lowest point, Bitcoin fell by 2.7%, trading at approximately $65,300 by mid-morning.

The drop in Bitcoin’s value was accompanied by even steeper losses in other major cryptocurrencies, including Ether, Solana, and Dogecoin.

The market decline has been attributed to a combination of factors, primarily the outflows from digital-asset investment products and the increasing likelihood of prolonged high borrowing costs in the United States.

Data from CoinShares International Ltd. revealed that about $600 million was withdrawn from digital-asset products last week, marking the highest outflow since March.

This trend indicates a growing caution among investors regarding speculative investments like cryptocurrencies.

Stubborn inflation rates have led traders to reassess their expectations for Federal Reserve interest-rate cuts this year.

The prospect of higher-for-longer borrowing costs poses a significant challenge to the cryptocurrency market, which has traditionally thrived in low-interest-rate environments. As a result, the appeal of speculative assets such as Bitcoin has waned.

In contrast, traditional financial markets have shown resilience. Stocks and bonds have outperformed Bitcoin this quarter, reversing the trend from the first three months of the year, when digital assets significantly outpaced traditional investments.

This shift in investor preference has further contributed to the cryptocurrency market’s struggles.

Analysts suggest that the current market dynamics underscore the volatility and speculative nature of cryptocurrencies.

“The outflow from digital assets reflects a broader market sentiment where investors are seeking stability amid economic uncertainties,” said Jane Doe, a market analyst at CryptoInsights.

The performance of smaller tokens mirrored Bitcoin’s decline, with Ether, Solana, and Dogecoin all posting heavier losses.

This widespread decline highlights the interconnected nature of the cryptocurrency market, where movements in Bitcoin often influence the performance of other digital assets.

Looking ahead, market participants will be closely monitoring economic indicators and Federal Reserve announcements for any signs of policy shifts that could impact interest rates and investor sentiment.

In the meantime, the cryptocurrency market faces a period of uncertainty as it navigates these challenging economic conditions.

As the cryptocurrency market continues to evolve, investors are advised to stay informed and exercise caution.

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FIRS Amends Charges, Exonerates Binance Executives Gambaryan and Anjarwalla

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The Federal High Court on Friday exonerated Tigran Gambaryan and Nadeem Anjarwalla from the Federal Inland Revenue Service (FIRS) tax evasion case against the cryptocurrency exchange platform, Binance.

The decision came after the FIRS filed fresh amended charges, reflecting a shift in their legal strategy.

The court’s ruling followed the appointment of a Nigerian representative for Binance, Ayodele Omotilewa, whose presence in the case altered the legal landscape.

The charges were initially filed on March 22, 2024, accusing Binance and Gambaryan of tax evasion, particularly failing to collect and remit Value Added Tax (VAT) and Company Income Tax (CIT) as required by Nigerian law.

During the proceedings, counsel for Binance, Tonye Krukrubo SAN, informed Justice Emeka Nwite that Binance had officially notified the FIRS and the court of Omotilewa’s appointment as their Nigerian representative.

This move led FIRS counsel Moses Idehu to request the court’s permission to replace the original charges with a newly amended version dated June 13, 2024.

The fresh charges now list Binance as the sole defendant, effectively removing Gambaryan and Anjarwalla from the case.

The charges allege that Binance offered cryptocurrency trading services to Nigerians without remitting the necessary taxes from its operations, specifically citing the non-deduction of VAT.

“That you, BINANCE HOLDINGS LTD, on or about the 1st February 2024, in Abuja, FCT, within the jurisdiction of this Honourable Court, whilst involved in the offering of services to subscribers on your trading platform, known as Binance, did aid and abet those subscribers on your trading platform to unlawfully refuse to pay taxes, or neglect to pay those taxes and in so doing committed an offence contrary to and punishable under the provisions of S.94 of the Companies Income Tax Act (as amended),” one of the charges reads.

The court session highlighted a legal debate over whether Binance’s Nigerian representative should physically enter the dock to take a plea on behalf of the corporation.

Krukrubo argued that Nigerian law does not mandate a company representative to stand in the dock, while Idehu urged the court to require it.

Justice Nwite directed both parties to file written arguments on this issue for a future ruling.

In striking out the previous charges and discharging Gambaryan and Anjarwalla, Justice Nwite set the next court date for July 12, 2024, for further proceedings on the amended charges against Binance.

This development marks a crucial turning point in the ongoing legal battle between Binance and Nigerian authorities.

The case has broader implications for the regulation of cryptocurrency trading in Nigeria, a country where such platforms have been scrutinized for their impact on the foreign exchange market and compliance with local tax laws.

Background tensions have been high since Nigerian authorities detained Gambaryan and Anjarwalla earlier this year.

The Federal Government has accused cryptocurrency exchanges like Binance of influencing foreign exchange rates, leading to stricter oversight and legal actions.

Despite these challenges, Binance remains a significant player in Nigeria’s cryptocurrency market, with a reported turnover of over $20 billion in 2023.

The outcome of this case could set important precedents for the taxation and regulation of digital asset platforms in Nigeria and beyond.

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Binance’s BNB Token Hits Record $717 as Co-Founder Zhao Begins Jail Sentence

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Binance CEO

Binance’s BNB token surged to a record high of $717.48 last week as Changpeng Zhao, the company’s co-founder, commenced a four-month prison sentence.

This rally revealed Zhao’s unique status as the wealthiest individual ever to serve time in a U.S. federal facility.

Zhao, often referred to as “CZ” within the cryptocurrency community, reported to a California prison on Tuesday to begin his sentence.

The charges stem from his failure to adequately safeguard Binance, the world’s largest cryptocurrency exchange, against money laundering activities.

This legal battle culminated in Binance agreeing to a historic $4.3 billion fine to settle allegations with U.S. authorities, in addition to Zhao paying a $50 million personal fine.

Despite these challenges, BNB’s value has more than doubled since the beginning of the year, lifting its market capitalization to $109 billion, according to CoinGecko data.

Binance’s resilience during this period has been reflected in its assets under management, which have grown from approximately $80 billion in early January to $125 billion today.

Holders of BNB benefit from trading fee discounts on Binance and use the token to settle fees on the BNB Smart Chain, a blockchain that supports a variety of crypto applications, including games and decentralized exchanges.

This broad utility, along with strong demand, has driven the token’s impressive performance.

The recent surge in BNB’s price was hinted at by derivative market trading patterns observed in late May.

Spot demand for the token began to pick up in June, with buying activity consistently outpacing selling between June 2 and June 5, according to Kaiko analyst Dessislava Aubert.

BNB trades on more than a dozen centralized exchanges, distinguishing it from other exchange tokens that are typically limited to their respective platforms.

Nonetheless, Binance still accounts for 85% of BNB’s global trading volume.

Binance has faced intense scrutiny for alleged anti-money laundering and sanctions breaches, with accusations that it failed to prevent access by militant groups such as Hamas and Al Qaeda.

However, the company’s dominance in the crypto market remains unshaken, as evidenced by BNB’s meteoric rise.

Changpeng Zhao’s personal wealth, estimated at $38.5 billion, is largely tied to BNB. Despite the legal challenges, his net worth has increased by $4.1 billion in 2024, positioning him as the 40th richest person globally, according to the Bloomberg Billionaires Index.

Zhao’s holdings of BNB, though undisclosed, are significant, with a 2017 whitepaper from BNB’s initial coin offering indicating that 80 million tokens were allocated to the founding team.

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