Good morning. Three decentralized finance companies agreed to settle charges filed by the Commodity Futures Trading Commission that they illegally offered derivatives trading in cryptocurrency, the agency said Thursday.

The CFTC said the companies, Opyn and ZeroEx, both based in California, and North Carolina-based Deridex, illegally offered leveraged and margined retail commodities transactions in cryptocurrency. Deridex and Opyn were also charged with failing to register with the CFTC for digital asset derivatives trading and to have know-your-customer programs in compliance with money-laundering laws.

• CFTC continues its crack down on DeFi: “Somewhere along the way, DeFi operators got the idea that unlawful transactions become lawful when facilitated by smart contracts,” said Ian McGinley, the CFTC’s director of enforcement. “They do not.”
   
• Dissent from CFTC Commissioner Summer Mersinger: DeFi protocols per se weren’t an area that had previously been the subject of CFTC enforcement, as opposed to centralized digital asset exchanges, which have faced several such actions, she said. In these three cases, the agency didn’t provide any evidence that customer funds had been mis- appropriated or market participants harmed by the protocols, she said.

IRS, with AI help, readies audits of large hedge funds, real estate firms

The Internal Revenue Service this month will begin auditing 75 large partnerships, including hedge funds and real-estate firms, as the tax agency tries to build its case for keeping what is left of a pot of money Congress gave it last year.

IRS Commissioner Danny Werfel said the agency used artificial intelligence to help select the companies, which it can’t name publicly. They average $10 billion in assets and will receive formal notice of the audits in the coming weeks.

The IRS has long had difficulty auditing large multitiered partnerships and is planning to use the new money from Congress to reverse that trend.

“We’ve been overwhelmed in this area for years,” Werfel said. “These new tools are helping us see patterns and trends that we couldn’t see before.”

Boss of failed crypto exchange gets 11,196-year sentence

The founder of a collapsed cryptocurrency exchange has been sentenced to more than 11 millennia in jail.

The 11,196-year sentence was handed down late Thursday by a panel of judges in Turkey to Faruk Fatih Özer, Turkey’s state-run Anadolu Agency reported. Özer was the founder of the Thodex exchange, which imploded in 2021. Other defendants sentenced Thursday included siblings of Özer.

• The co-founders of Israeli artificial intelligence startup Vesttoo ran a forgery scheme that included a fake bank employee persona named “Alex Garcia” to obtain billions of dollars in bogus letters of credit for insurance deals, the now-bankrupt company said.
   
• The National Football League criticized DirecTV, a longtime media partner, saying that the satellite-TV provider’s commercials promising access to every game of the season mislead fans about the breadth of its offer.
   
• Kent Walker successfully took on Microsoft in the defining tech competition battle of the 1990s. Now he is defending Google against a new generation of antitrust enforcers, arguing that the online-search giant doesn’t pose the same threat.
   
• A federal appeals court ruled the Biden administration’s policing of social-media content during the pandemic likely violated the First Amendment, a decision that bars White House aides and other officials from pressuring online platforms to suppress protected speech.
   
• A federal judge in New York on Friday ordered cash-strapped Argentina to pay about $16 billion over the government’s decision to seize majority control of the energy company YPF in 2012.

U.K. regulator to increase oversight of bank risk controls

The U.K.’s financial regulator warned the country’s largest banks not to cut their risk controls amid tough economic conditions and other pressures, saying it intends to step up its oversight.

Though banks face a challenging environment—including inflation, weak growth, rising interest rates and geopolitical tension—short-term revenue pressure shouldn’t take priority over regulatory obligations, the Financial Conduct Authority said Friday.

• As Russia’s war in Ukraine drags on, a wave of Russian gubernatorial elections is turning into an effort to gloss over the horrific cost of the conflict and instead laud the generous handouts and other support the Kremlin has provided for families of those killed in combat and those with loved ones still in the field.
   
• Elon Musk said he declined a request to activate Starlink satellite communications around Sevastopol in Ukraine’s Russian-occupied Crimea, thwarting what he described as an attempt to sink Russian ships there.
   
• In the early years of his decade in power, Chinese leader Xi Jinping was one of the world’s most traveled leaders, regularly meeting with friends and rivals, visiting economic powers and developing nations alike as he sought to expand China’s global influence. Today, Xi is more known for his absences. 
   
• California would force large corporations that do business in the state to disclose all greenhouse-gas emissions associated with their operations, under a bill being considered by the legislature in its last, frenzied week of work in this year’s session.
   
• China’s move to limit Apple’s reach is a development that investors have feared for years, signaling that a once-untouchable partner in the country is now ensnared in rising tensions between the world’s two foremost superpowers.

• Government plans to limit greenhouse gas emissions in the coming years aren’t nearly ambitious enough to limit global warming in line with the Paris climate accord, the United Nations said in a report that examines progress toward the agreement’s goals eight years after it was signed.
   
• Putin wants his hit man back. Moscow seeks the return of a covert operative serving a life sentence in Germany, possibly in exchange for Wall Street Journal reporter Evan Gershkovich and others held by Russia. 
   
• Covid-19 is back on the minds of America’s CEOs and school principals.
   
• Almost half of employees at the dating app Grindr resigned after they were told to return to the office, according to the Communications Workers of America.

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