WazirX approved for hack repayments, Tornado Cash sanctions overturned: Law Decoded
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The High Court of Singapore has approved the restructuring plan for crypto exchange WazirX, allowing the platform to repay its customers after it was hacked for $235 million in July 2024. WazirX has estimated that users could recover up to 80% of their account balances.
The company will initiate a voting process, which is expected to conclude in three months. If a majority of users vote in favor of the scheme, the plan will be implemented. This will allow the exchange to distribute liquid assets to users based on their claims, including gains from the bull market.
The Singaporean court supported restructuring over liquidation, saying a speedy resolution and distribution of funds would be the best for users.
US court overturns Tornado Cash sanctions in pivotal case for crypto
In a significant legal development for crypto privacy technologies, the United States District Court for the Western District of Texas reversed the US Treasury’s Office of Foreign Assets Control (OFAC) sanctions on Tornado Cash.
OFAC sanctioned the privacy protocol in 2022, accusing it of facilitating money laundering by North Korea’s Lazarus Group. The hacker group is believed to have laundered over $455 million in stolen crypto through it.
Despite the sanctions’ reversal, Tornado Cash developer Alexey Pertsev remains in police custody on money laundering-related charges.
Coinbase asks appeals court to rule crypto trades aren’t securities
In a Jan. 21 filing, crypto exchange Coinbase asked the US Second Circuit Court of Appeals to rule that crypto trades are not securities as it continues to fight a Securities and Exchange Commission lawsuit.
Coinbase said understanding whether secondary market transactions are investment contracts under securities laws is important for the industry. It argued the case presents the vehicle to address the question and “provide clear rules” for the industry.
Coinbase added that without the ruling, market participants will face different rules in different courts.
US Department of Government Efficiency slapped with more lawsuits
The US Department of Government Efficiency (DOGE), established via executive order by President Donald Trump, is facing legal challenges following Trump’s Jan. 20 inauguration.
The organization, led by billionaire Elon Musk, faces lawsuits from ethics watchdog Citizens for Responsibility and Ethics and consumer protection group Public Citizen. A nonprofit membership organization called the Center for Biological Diversity also filed a suit against DOGE.
Citizens for Responsibility and Ethics seeks a ruling that the establishment of DOGE is unlawful. The ethics watchdog wants the court to force DOGE to comply with transparency, ethics, records retention and equal representation required under the Federal Advisory Committee Act.
SEC wins in killing Kraken’s major questions doctrine defense
The SEC partially won its bid to throw out the legal defenses laid out by crypto exchange Kraken, with a federal judge axing the exchange’s argument that Congress did not give the securities regulator power over digital assets.
The major questions doctrine — the defense by Kraken — says government agencies can’t use powers that Congress has not delegated to them. Other crypto companies have also cited the doctrine in their defenses against SEC lawsuits, including Coinbase, Ripple and Binance.
In an order, California Federal Judge William Orrick said that the SEC was not asserting a highly consequential power beyond what Congress granted.
