Cryptocurrency executives are increasingly facing regulatory scrutiny as the sector experienced significant upheaval in recent times due to plummeting token prices. A number of industry moguls have come under the authorities’ radar, with investigations underway. However, it’s important to note that investigations do not necessarily indicate wrongdoing, and charges may not lead to convictions. Here’s a look at some of the prominent crypto executives facing regulatory challenges:
Changpeng “CZ” Zhao: The CEO of Binance, Changpeng Zhao, was sued by the U.S. Securities and Exchange Commission (SEC) for alleged deceptive practices in June. The SEC accused Binance of artificially inflating trading volumes, misappropriating customer funds, failing to restrict U.S. customers, and providing misleading information about market surveillance controls. Binance and CZ also faced a lawsuit from the U.S. Commodity Futures Trading Commission (CFTC) for operating an “illegal” exchange and a “sham” compliance program.
Do Kwon: A South Korean national, Do Kwon co-founded Terraform Labs and was involved in developing the TerraUSD and Luna cryptocurrencies. The market value of TerraUSD and Luna was once valued at over $40 billion, but their decline contributed to a broader downturn in token prices. Kwon faces multiple charges of fraud in the U.S. and was arrested in Montenegro for alleged document forgery. The SEC has filed civil charges against Kwon and Terraform Labs, accusing them of orchestrating a “multi-billion dollar crypto asset securities fraud.”
Alex Mashinsky: The founder and former CEO of crypto lender Celsius Network, Alex Mashinsky, filed for bankruptcy in July 2022. He has pleaded not guilty to U.S. fraud charges related to alleged misleading of customers and artificially inflating the value of his company’s proprietary crypto token. Mashinsky is also facing lawsuits from the SEC, CFTC, and the U.S. Federal Trade Commission (FTC) for promoting Celsius as safe while taking increasingly risky actions to fulfill promised returns.
Barry Silbert: The head of crypto group Digital Currency Group (DCG) had one of its subsidiaries, Genesis Global Capital, file for bankruptcy in January. Silbert was sued by New York Attorney General Letitia James, along with Genesis and DCG, for alleged fraud that defrauded customers of over $1 billion. Silbert rejected the allegations and expressed intentions to fight the lawsuit in court.
Stephen Ehrlich: Stephen Ehrlich, associated with Voyager Digital, faced regulatory issues due to the crypto lender’s demise during last year’s crypto market turmoil. The CFTC and the FTC accused him of misleading customers regarding asset safety and engaging in “excessive risks” contributing to the lender’s failure. Ehrlich defended himself, stating that he was being used as a “scapegoat for the bad actions of others at different companies.”
Justin Sun: Chinese cryptocurrency entrepreneur Justin Sun and his companies, including the Tron Foundation, were charged by the SEC in March for fraud. They were accused of inflating trading volumes for their crypto tokens and concealing payments to celebrities for token promotion. Justin Sun dismissed the complaint, stating that it “lacks merit.”
