Compliance weekly – 11 January 2022

Why compliance is important in the digital asset industry

In this report we observe and track all relevant events that have unfolded in the compliance and digital asset space in the past seven days.


It has been a slow and steady strat for BTC this year as it keeps within the US$40,000 region; however, as prices are stabilising, some traders remain cautious. With more countries looking at the prospects of accepting BTC as legal tender, Estonia has denied claims that it intends on banning crypto and has “reassured crypto investors the government will not ban digital assets as it moves to tighten money laundering rules.” The UK parliament has launched the All Party Parliamentary Group (APPG) signalling that crypto has finally made it to the UK parliament alongside other alternative finance and fitech projects. The key focus it seems of the group is to “ensure that we have an appropriate regulatory framework in the UK which supports innovation and guarantees that the UK remains an attractive destination for innovative firms to set up and grow.”

Chainalysis has released an interesting report revealing the all-time low of illicit crypto currency transactions due to the overall growth of legitimate cryptocurrency usage. Despite an increasing number of traditional investors moving towards the crypto space due to its transparency and high transaction speed, India’s central bank, the Reserve Bank of India (RBI) has issued another warning against the instability of decentralized finance and the risks it poses against the country’s financial stability. Amongst others the RBI has stressed that: “[t]he proliferation of private cryptocurrencies across the globe has sensitized regulators and governments to the associated risks” and “[n]ew illicit financing typologies continue to emerge, including the increasing use of virtual-to-virtual layering schemes that attempt to further muddy transactions in a comparatively easy, cheap and anonymous manner.” These warnings that add to regulatory uncertainty, come after the Indian government has again delayed the finalizing of its crypto Bill. 


The two founders of the alleged fraudulent crypto platform Africrypt, are still at large as disgruntled investors are requesting that criminal charges be brought against the brothers who stole more than US$ 3,6 Billion in 2021. A new scam titled the Pig Butchering Scam is showing its head in dating apps whereby victims are lured by potential partners to deposit money into a fake investment app. Once a victim of  the PB scam wants to withdraw the investment, the app has withdrawn the funds and leaves the investor with zero balance. 

Hackers wasted no time in 2022 and compromised the Twitter account of the Indian Medical Association (IMA), Indian Council of World Affairs (ICWA), and Mann Deshi Mahila Bank. As the exact reason for compromising the accounts remains uncertain, the hackers took to twitter accounts by changing the account names to that of Elon Musk and promulgating inaccurate information such as that India is now accepting BTC as legal tender.


In Valencia, police have arrested one of the biggest crypto fraudsters yet. In a collaborative effort titled Operation Bitdrop, the Valencia Guardia arrested and charged a man with seven counts of fraud and money laundering. Mirror Trading International (MIT) CEO Johann Steynberg has been arrested after one year in Brazil where fake ID’s Laptops and Credit Cards were seized. 

The Commodity Futures Trading Commission (CFTC)  has charged Polymarket with a monetary penalty amounting to US$1,4M for offering off-exchange event-based binary options contracts and failure to obtain designation as a designated contract market (DCM) or registration as a swap execution facility (SEF). In the USA, the Securities and Exchange Commission (SEC) has filed a complaint against Craig Derel Sproule the founder of Crowd Machine ICO who allegedly, fraudulently and unregistered sold digital asset securities totaling US$33M. In London, Mishcon de Reya has been fined and agreed to pay £232,500 following several beaches of money laundering rules. The Financial Intelligence Analysis Unit (FIAU) has fined a Maltese investment fund €300,000 for the “serious” failures during its years in operation


The compliance and crypto space is ever changing and far reaching; however, we are seeing government groups and regulators working together to streamline crypto compliance and take action on bad actors. We can only hope that 2022 marks a step towards global crypto adoption and in turn, market stabilisation. 

If you have any questions about crypto compliance, please feel free to have a look at our services or contact us to set up a free call to discuss your needs.

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