Sacramento – Assemblywoman Laurie Davies (R-Laguna Niguel) issued the following statement following the introduction of AB 76:
“California is a leader in consumer protection and ensuring our laws reflect the growing and innovative technology used for day-to-day transactions. This technology has continued to evolve to now include cryptocurrency. AB 76 is a common-sense measure to strengthen our state’s money laundering statutes and close the current loophole that permits the laundering of assets using cryptocurrency. It should also be noted that as we have seen a rise in drug trafficking, nefarious organizations are using this type of currency to escape detection and continue their illegal activities in the underground markets. California law must evolve to keep up with the digital operating methods of financial criminal organizations.”
AB 76 comes on the heels of news that cryptocurrency exchange FTX founder Sam Bankman-Fried was recently arrested in the Bahamas for a litany of federal charges including wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering.
Additionally, cryptocurrency has seen a surge in usage by those involved in human trafficking operations. As described by a 2021 Government Accountability Office (GAO) report, “…Polaris, a nonprofit organization knowledgeable about human trafficking, found that virtual currency was the second-most commonly accepted payment method on 40 platforms in the online commercial sex market—which has been used to facilitate sex trafficking.”
The bill is sponsored by the California Conference of Bar Associations (CCBA)
Editors note:
Under AB 76: This bill would expand money laundering to include conducting a transaction involving a monetary instrument of specified value using blockchain technology, as defined. The bill would expand the definition of a “monetary instrument” to include virtual assets that use blockchain technology, including, but not limited to, nonfungible tokens and cryptocurrencies. By expanding the scope of a crime, this bill would impose a state-mandated local program.
SEC Charges Samuel Bankman-Fried with Defrauding Investors in Crypto Asset Trading Platform FTX
Washington D.C., Dec. 13, 2022 —
The Securities and Exchange Commission today charged Samuel Bankman-Fried with orchestrating a scheme to defraud equity investors in FTX Trading Ltd. (FTX), the crypto trading platform of which he was the CEO and co-founder. Investigations as to other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.
According to the SEC’s complaint, since at least May 2019, FTX, based in The Bahamas, raised more than $1.8 billion from equity investors, including approximately $1.1 billion from approximately 90 U.S.-based investors. In his representations to investors, Bankman-Fried promoted FTX as a safe, responsible crypto asset trading platform, specifically touting FTX’s sophisticated, automated risk measures to protect customer assets. The complaint alleges that, in reality, Bankman-Fried orchestrated a years-long fraud to conceal from FTX’s investors (1) the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund; (2) the undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited “line of credit” funded by the platform’s customers and exempting Alameda from certain key FTX risk mitigation measures; and (3) undisclosed risk stemming from FTX’s exposure to Alameda’s significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens. The complaint further alleges that Bankman-Fried used commingled FTX customers’ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations. — Full Release
2 comments
State laws are not the appropriate means to address this issue. Federal legislation is.
How many hundreds of millions, if not billions did the state give away in fraud? How about you take care of this also. Oh yeah the Dems in this state have oversight.
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