The three were engaged in crypto activities themselves, and the U.S. Treasury Department says they were tied to the networks of DPRK entities laundering stolen crypto or moving illicit funds for that country.

The U.S. Treasury Department’s sanctions watchdog banned three North Korean individuals for supporting the Lazarus Group, a North Korean hacking team known for crypto thefts that U.S. authorities say have been used to support the nation’s weapons program.

Two of the sanctioned individuals, Cheng Hung Man and Wu Huihui, were OTC traders who facilitated crypto transactions for Lazarus, Treasury said, while a third person, Sim Hyon Sop, provided other financial support.

“The DPRK continues to exploit virtual currency and extensive illicit facilitation networks to access the international financial system and generate revenue for the regime,” said Brian Nelson, the Treasury’s undersecretary for terrorism and financial intelligence, in a statement.

The Lazarus Group has been accused of mounting a multibillion-dollar campaign against the crypto world, the proceeds of which are said to fund North Korea’s weapons program. The Treasury says the hacker group is controlled by North Korea’s intelligence organization, the Reconnaissance General Bureau, and it was behind the largest-ever crypto heist when it stole $625 million in digital assets from the Ronin network tied to the Axie Infinity game.

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A class action lawsuit filed in a Georgia court alleges the crypto exchange failed to secure users’ accounts against theft and hacks, and seeks damages upwards of $5 million.

Coinbase failed to properly secure customers’ accounts, leaving them vulnerable to theft and unauthorized transfers, a putative class action lawsuit filed against the crypto exchange last week alleges.

The complaint, filed in the U.S. District Court for the Northern District of Georgia, also accuses the company of causing financial harm to users by locking them out of their accounts permanently or for long periods of time, as well as violating federal law by listing securities on its trading platform.

Coinbase, which last year became the first cryptocurrency exchange to go public in the U.S., is facing a string of lawsuits from unhappy investors. In addition to another aspiring class action lawsuit filed in New Jersey alleging the company allowed U.S. persons to trade unregistered securities, earlier this month, a Coinbase shareholder accused the company of misleading investors about last year’s public listing. The platform is also trying to settle two separate lawsuits filed by investors through arbitration.

The Georgia lawsuit represents a class of more than 100 people, including lead plaintiff and Georgia resident George Kattula, though Kattula’s attorneys say there may be more victims.

“We are aware of a large number of fraudulent transactions in the accounts of Coinbase customers,” said John Herman of Herman Jones LLC, the Georgia-based law firm representing Kattula, in an emailed statement to CoinDesk. “We are encouraging all Coinbase account holders to review their accounts carefully and advise us promptly of any irregular activity.”

The lawsuit details some of these alleged issues, citing a 2019 incident in which the exchange reportedly took over six months to let a customer back into their own account, a pattern the suit alleges the company repeated.

Coinbase first requires customers to use its support team, and if the issue is not resolved that way, customers then have to go through the “Formal Complaint Process,” the complaint said.

“If that fails to resolve the customer’s dispute, only then can customers attempt to resolve disputes through arbitration. But Coinbase systemically fails to follow those pre-arbitration dispute resolution mechanisms as set forth in the User Agreement, thereby rendering the provision, including its delegation provision, void …,” the filing said.

Moreover, the suit alleges that some of the assets listed on Coinbase match the U.S. Securities and Exchange Commission’s (SEC) definition of a security, and the company itself may be an “exchange” under federal law, meaning it would have to register with the regulator.

The lawsuits began piling up this year after the SEC said it was investigating Coinbase over the alleged sale of crypto securities in July.

“Coinbase’s user growth has outpaced its ability to provide the account services and protections it promises to consumers,” Kattula’s complaint said.

The suit alleges Coinbase’s failure to “establish and maintain adequate cybersecurity measures” caused investors to lose their “wallet and account access, the assets and investments in those accounts” as well as “sensitive personally identifiable information stored in their Coinbase accounts, and, among other things, their investment opportunities.”

Kattula’s suit is seeking damages exceeding $5 million (excluding his legal costs and fees), a binding judgement, and injunctive relief, which is an order to prohibit involved parties from carrying out certain activities.

Coinbase did not respond to a request for comment by press time.

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U.S. Sen. Pat Toomey said whistleblowers had informed him that the FDIC was pressuring banks to stop providing services to crypto companies.

The Federal Deposit Insurance Corporation (FDIC) may be leaning on banks to prevent them from providing services to cryptocurrency companies, U.S. Sen. Pat Toomey (R-Pa.) said Tuesday, citing communications he had received.

In a letter directed to Acting FDIC Director Martin Gruenberg, Toomey wrote that he had heard from “affected parties” and whistleblower communications which claimed that the federal bank regulator had tried to “deter banks from doing business with lawful cryptocurrency-related companies,” even though providing services to these companies is not illegal. Toomey asked the regulator to confirm whether any FDIC official had indeed asked banks to not do business with crypto firms, and if so, to explain why.

American Banker first reported the letter on Tuesday.

Toomey referenced “Operation Choke Point,” a former FDIC and Department of Justice initiative whose stated purpose was to pressure banks not to provide services to payday lenders and financial fraud charges, but which appeared to also pressure banks not to provide services to companies engaging in legal activities like gun sellers.

“According to whistleblower communications that we have corroborated, personnel in the FDIC’s Washington, D.C. headquarters are urging FDIC regional offices to send letters to multiple banks requesting that they refrain from expanding relationships with crypto-related companies, without providing any legal basis for sending such letters,” Toomey wrote. “… As I understand it, in one or more of these cases, a bank planned to give customers access to a crypto-related company’s trading platform via the bank’s mobile or internet banking app.”

FDIC officials also allegedly directed a regional branch to “downgrade” the classification of a loan made by a bank to a crypto company, which Toomey called “highly atypical.”

In a statement, the FDIC said, “The FDIC is acting consistent with longstanding legal authorities to ensure that banks engaging in crypto-related activities are doing so in a safe and sound way that protects consumers. This may involve the FDIC requesting that an institution delay initiating or refrain from expanding crypto-related activities until supervisory feedback is taken into account. Given the risks readily apparent in the crypto-asset markets, these are necessary and appropriate actions to take.”

The regulator has published statements before directing banks to be cautious about working with crypto companies.

In April, the FDIC published an open letter addressed to any banks or other institutions it oversees, directing them to contact the FDIC before it engages in “a crypto-related activity.” The regulator said it would assess the information provided by the bank to check for “safety and soundness,” and provide feedback if needed.

“The information requested by the FDIC will vary on a case-specific basis depending on the type of crypto-related activity. However, the initial notification to the FDIC Regional Director should describe the activity in detail and provide the institution’s proposed timeline for engaging in the activity,” the letter said.

The letter is similar to one published by the Federal Reserve this week, which also directs banks under its supervision to contact the central bank prior to engaging in crypto activities.

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“This is my third crypto winter,” the U.S. brokerage CEO said at Consensus 2022, looking back on the firm’s trailblazing journey into digital assets.

Offering battle-tested advice to the crowd at Consensus 2022 in Austin, Texas, Fidelity Investments chairman and CEO Abigail Johnson said her belief in the long-term fundamentals of cryptocurrency remains strong.

“I figure this is my third crypto winter. There’s been plenty of ups and downs but I see that as an opportunity,” Johnson said of the bear market. “I was raised to be a contrarian thinker and so I have this knee jerk reaction: If you believe that the fundamentals of a long term case are really strong, when everybody else is dipping [out], that’s the time to double down and go extra hard into it.”

To be clear, though, Johnson did not sound sanguine about the recent sharp correction. “I feel awful about the value that is lost, but I also believe the industry in crypto has a lot more to come,” she said.

Fidelity – which Johnson’s grandfather founded the year after World War II ended – stood up a separate legal entity called Fidelity Digital Assets, in October 2018. But the closely held Boston-based investment brokerage’s (and particularly Johnson’s) involvement stretches back to Bitcoin’s early days around 2014, a journey she reflected on in a fireside chat Thursday afternoon with Castle Island Ventures founding partner Matt Walsh.

Attracted by this “clean-slate approach to finance and moving wealth,” Johnson recalled, Fidelity came up with “about 52 use cases” for Bitcoin, the vast majority of which ended up mired in complexity and languishing on the shelf.

Early on, the decision to focus on the technology’s foundational level led Johnson’s team toward custody – but that was not one of the firm’s original use cases, she said, adding candidly that on the product side of things, she was not as far along as perhaps had been hoped when the journey started.

“When we first started talking about it, I think if someone had suggested offering custody for bitcoin, I’d have said ‘no, that’s the antithesis of bitcoin. Why would anyone want to do that?’”
Fidelity was one of the first major institutional players to deal with crypto directly rather than dabble with watered-down versions of blockchain technology, the fashionable route for corporations for a time. Walsh alluded to this distinction, quipping, “It’s not like you were trying to put lettuce on the blockchain.”

Johnson also talked about her decision to get into bitcoin mining at an early stage, which elicited a mix of consternation and confusion from many around her in the financial services space. Indeed, even most crypto people wanted to do something more interesting than mining back in 2014, Johnson said.

“I really wanted to do mining because I wanted us to understand the whole ecosystem, I wanted us to have a seat at the table with people who were really driving things and understand the full stack,” Johnson said.

Johnson said a plan she’d hatched to spend some $200,000 on bitcoin mining equipment was initially rejected by Fidelity’s finance department. “People said ‘What is this? You want to buy a bunch of boxes from China?’”

Johnson pointed out she no longer has to justify the move into mining as mere “innovation theater,” adding that she feels the same strength and commitment to Fidelity’s recent move to offer bitcoin exposure for clients’ 401 (k) retirement schemes.

“I would have never thought that we would have gotten so much attention for bringing a little bit of bitcoin to a little bit of the 401(k) business,” Johnson said. “A lot of people now, that they’ve heard about it, have been asking, so I’ve been happily surprised at the amount of positive feedback that we’ve gotten on that.”

That said, the move to bring crypto to the 20 million or so retirement plans it oversees was met with immediate pushback from the U.S. Department of Labor as well as Sen. Elizabeth Warren (D-Mass.), citing concerns about the volatility of crypto.

“Seeing some of the regulators trying to lean into this is very encouraging and exciting for us,” Johnson said. “Because if they don’t give us a route to make some of these connections, then it makes it really hard for us in the background to be able to make it feel seamless.”

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The Italian luxury brand plans to expand the payment mechanism across North America.

Are you long crypto but short shoes? Gucci is now accepting crypto at a handful of stores in the U.S., according to a report in Vogue Business.

Gucci has rolled out the crypto payment mechanism at flagship stores in the U.S., including Rodeo Drive in Los Angeles, Wooster Street in New York and in Las Vegas, with plans to expand the service to its directly operated North America stores in the near future.

Various digital assets will be accepted including bitcoin, bitcoin cash, ether, wrapped bitcoin, dogecoin, shiba inu, and a variety of stablecoins.

Gucci will convert the crypto into fiat currency, the report said.

Various attempts to sell high-value items for crypto have failed because of money laundering concerns and tax implications for U.S. residents.

Tesla’s attempt to sell its cars in bitcoin flopped, and was quickly cancelled, because of the tax hit U.S. residents would incur when they liquidated their crypto, along with the overhead cost of anti-money laundering disclosures required.

Payment by crypto was once accepted by developers in Thailand for real estate, but was banned in March after local authorities raised concerns about the potential for money laundering.

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