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The Morning Risk Report: BitMEX to Pay $100 Million to Resolve Regulator’s Lawsuit Over Crypto Derivatives Trading
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BitMEX offers leveraged trading in bitcoin and other cryptocurrency derivatives.
PHOTO: CHARLES KRUPA/ASSOCIATED PRESS
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Good morning. One of the world’s largest cryptocurrency exchanges has agreed to pay $100 million to resolve a regulatory lawsuit over its failure to follow U.S. rules while allowing Americans to access its trading platform.
BitMEX, which offers leveraged trading in bitcoin and other cryptocurrency derivatives, had been sued by the Commodity Futures Trading Commission last year. Its four co-founders were separately indicted at the same time for their alleged roles in failing to use an effective anti-money-laundering program. They have pleaded not guilty to criminal charges, and Tuesday’s civil settlement doesn’t resolve their cases.
[Continued below...]
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BitMEX, which was incorporated in the Seychelles, has also agreed to prevent U.S. residents from using its trading services, the CFTC said in a press release Tuesday. BitMEX was one of several overseas exchanges, many of them based in Asia, that became popular with traders globally who wanted to bet on cryptocurrency derivatives.
Crypto exchanges have increasingly collided with American regulators after years of trying to dodge compliance with many U.S. rules. The Securities and Exchange Commission earlier this week settled a $10 million enforcement action with Poloniex LLC, whose employees had said they wanted to be aggressive about testing the limits of what could be traded without regulatory compliance.
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Risk & Compliance Forum Survey
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We’re conducting a survey of compliance professionals on the impact of the Covid-19 pandemic and the reopening of the economy, with findings due to be presented at the WSJ Risk & Compliance Forum on Oct. 12. If you work in a compliance-related role, we’d love to hear from you via this survey link.
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From Risk & Compliance Journal
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Whistleblower Is Awarded Over $3.5 Million in Juniper Bribery Case
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The U.S. Securities and Exchange Commission awarded more than $3.5 million to a whistleblower whose tip helped the regulator expand an existing investigation that led to civil bribery charges against networking and cybersecurity solutions company Juniper Networks Inc.
The regulator, which announced the award Tuesday, didn’t name the company and didn’t identify the tipster, in keeping with its policy. But lawyers representing the whistleblower said the award was connected to the 2019 cease-and-desist order involving Sunnyvale, Calif.-based Juniper over allegations that the company violated the Foreign Corrupt Practices Act through its subsidiaries in Russia and China.
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NewAge Finds Possible Bribery Law Violations During Acquisition
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Health products company NewAge Inc. has disclosed potential antibribery violations that it became aware of during its merger with Ariix, a company with its own line of health and wellness products.
Denver-based NewAge said in a regulatory report the potential violations came to light in December when it was investigating the international business practices of Bountiful, Utah-based Ariix.
NewAge’s legal team identified conduct that may have violated the U.S. Foreign Corrupt Practices Act and disclosed the matter to the Department of Justice and the Securities and Exchange Commission this month, according to the report.
A NewAge spokeswoman did not immediately return a request for further comment. The company said its investigation was substantially complete, and that it had taken steps to prevent future problems.
—Dylan Tokar
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Traders use tether to get in and out of other cryptocurrencies because of its ease of use and quick transaction times.
PHOTO: ANDREW KELLY/REUTERS
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Tether Holdings Ltd. released the most detailed version yet of the assets backing its widely used digital currency, seeking to address regulatory concerns that it hasn’t previously disclosed enough about the currency’s underpinnings.
Tether is a stablecoin, a type of cryptocurrency designed to mimic the value of the U.S. dollar. Its use has exploded in recent years, making it the third most widely held cryptocurrency after bitcoin and ether.
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One of the largest voting-machine companies in the U.S. on Tuesday sued two conservative media networks and a businessman it said had defamed it by spreading accusations that it rigged the 2020 election for President Biden.
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Dominion Voting Systems filed suits against Newsmax Media Inc. and Herring Networks Inc.’s One America News Network. Dominion also sued Patrick Byrne, the former chief executive of Overstock.com Inc., an online seller of furniture and other goods.
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The federal judge overseeing the upcoming criminal trial of Theranos Inc. founder Elizabeth Holmes said on Tuesday the level of secrecy in the case concerned him and indicated he could unseal more documents in response to a challenge by The Wall Street Journal’s publisher. More than a third of the hundreds of documents filed in the case are under seal, the Journal found.
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The Senate passed a roughly $1 trillion infrastructure package with broad bipartisan support Tuesday, advancing a central piece of President Biden’s economic agenda that would amount to one of the most substantial federal investments in roads, bridges and rail in decades. A series of accounting maneuvers, along with applying reporting requirements to cryptocurrency transactions, are also meant to defray the bill’s overall cost.
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SoftBank Group Corp. said it is holding back on new investments in China while it sees how the country’s tech crackdown plays out. Beijing’s move to tame its technology sector continues to ripple through the investment world, driving investors to sectors still in the government's good graces.
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How much carbon comes from a liter of Coke? Math like this is fast becoming obligatory. Investors are increasing pressure on businesses to disclose the emissions of greenhouse gases related to their products and services. Regulators are starting to ask about that, too. Within the next couple of years, every public company in the U.S. might well be required to report climate information.
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Wells Fargo is still working to put its five-year-old fake-accounts scandal behind it.
PHOTO: AMIR HAMJA FOR THE WALL STREET JOURNAL
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Wells Fargo & Co. said on Tuesday that Charles Noski had stepped down as chairman of its board of directors and will be succeeded by Steven Black, a former JPMorgan Chase & Co. executive who joined the board last year.
Mr. Noski, a former chief financial officer of Bank of America Corp. who joined the board in 2019, will remain on the board until his retirement at the end of September.
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Taliban fighters seized the capital of Afghanistan’s Farah province on Tuesday.
PHOTO: MOHAMMAD ASIF KHAN/ASSOCIATED PRESS
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Afghanistan’s foreign minister called for international sanctions to be reimposed on Taliban leaders as the insurgent movement seized three more provinces, tightening their grip on the country and preparing for a push on Kabul.
With Tuesday’s fall of the capitals of Farah, Baghlan and Badakshan provinces, the Taliban have conquered nine of Afghanistan’s 34 provincial capitals, including important cities such as Kunduz, since Friday. They have also strengthened their circle around the country’s biggest regional hubs of Herat, Kandahar and Mazar-e-Sharif.
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A year after PG&E Corp. funded a trust to compensate victims of California wildfires with company stock, most have yet to be paid, and the shares have fallen in value after the utility acknowledged it might have started this year’s worst fire.
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Kim Jong Un’s sister vowed North Korea would amp up its national defense and deterrence after joint U.S.-South Korea military exercises that she demanded be canceled appeared likely to begin next week.
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Members of President Biden’s economic team generally support nominating Federal Reserve Chairman Jerome Powell to a second term, but growing resistance from prominent Democrats including Sen. Elizabeth Warren (D., Mass.) could lead to his replacement, according to people familiar with the matter.
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Chinese authorities say they are investigating a sexual assault accusation by an employee at Alibaba. PHOTO: QILAI SHEN/BLOOMBERG NEWS
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When sexual assault accusations by a female employee at Alibaba Group Holding Ltd. began circulating on the Chinese internet over the weekend, thousands of the firm’s employees—and many more online—felt a spark of familiarity around the details of the incident.
The employee’s story, which she detailed in an 11-page account that first circulated within Alibaba before it went viral on China’s internet, struck a chord in part because many Chinese were deeply familiar with the drinking and peer pressure that took place before she was allegedly abused sexually—both by her boss and by a male business client.
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Bankruptcy courts are facing a backlash among congressional Democrats over the growing practice of authorizing legal protection to accused wrongdoers who haven’t sought chapter 11 protection themselves.
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