Calling All Unreasonable Financial Professionals: a personal message from Bill Singer Esq (BrokeAndBroker.com Blog)
https://www.brokeandbroker.com/6881/unreasonable-financial-pro
fessionals/
Maybe this year, finally, someone launches a trade group for the industry's hundreds of thousands of financial professionals. Yeah, I know, wishful thinking. But there are rumblings. I hear them. I feel them. The industry's grunts are getting fed up. In 2023, if pressed, many financial professionals would admit that they now realize that they can deliver better customer service if they weren't shackled to a large industry employer by anti-consumer laws and rules enforced by co-opted industry regulators. 

SEC Obtains Court Order for Partial Asset Freeze and Other Temporary Relief in Fraud Action Against Microcap Public Company and CEO (SEC Release)
https://www.sec.gov/litigation/litreleases/2023/lr25638.htm
In a Complaint filed in the United States District Court for the District of Connecticut, the SEC charged Seong Yeol Lee and Ameritrust Corporation with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act and Rule 10(b)-5 thereunder. The Court entered a temporary order prohibiting Lee and Ameritrust from violating certain antifraud provisions of the securities laws and from soliciting or accepting funds from investors; and the TRO freezes assets in certain bank accounts of Ameritrust and two affiliated entities named as relief defendants in the SEC's action. The TRO will be in effect for sixty (60) days, to allow time for Lee and Ameritrust to retain counsel to represent them in the SEC's action. By agreeing to the entry of the TRO, Lee and Ameritrust did not admit to any wrongdoing and did not waive any rights to assert any defenses. As alleged in part in the SEC Release:

[T]hrough a network of recruiters acting at his direction, Lee solicited more than $20 million from investors primarily in the Republic of Korea, who sent money to corporate and personal bank accounts that Lee controls in the United States to buy shares of Ameritrust, a publicly traded company in the United States. Lee, either directly or through his recruiters, allegedly told investors that their money would buy shares in a U.S.-based company that would be listed on a national stock exchange, guaranteeing profits for anyone holding the shares. In reality, the complaint alleges that Ameritrust has no real operations and has not taken any steps to apply for any exchange listing. According to the SEC's complaint, Lee misappropriated at least $4 million of investor funds by transferring money from corporate bank accounts to his personal bank accounts and to three of his adult children, who are also named as relief defendants in the SEC's action. Lee and Ameritrust also allegedly defrauded the public by making materially false statements or failing to disclose material information in Ameritrust's filings with the Commission.

Kraken to Discontinue Unregistered Offer and Sale of Crypto Asset Staking-As-A-Service Program and Pay $30 Million to Settle SEC Charges (SEC Release)
https://www.sec.gov/litigation/litreleases/2023/lr25637.htm
In a Complaint filed in the United States District Court for the Northern District of California, the SEC Payward Ventures, Inc. and Payward Trading Ltd., a/k/a  "Kraken" with failing to register the offer and sale of their crypto asset staking-as-a-service program.
https://www.sec.gov/litigation/complaints/2023/comp-pr2023-25.pdf Without admitting or denying the allegations in the SEC's Complaint, the Kraken entities consented to the entry of a final judgment that would permanently enjoin each of them from violating Section 5 of the Securities Act and permanently enjoin them and any entity they control from, directly or indirectly, offering or selling securities through crypto asset staking services or staking programs. In settling the charges, the Kraken entities agreed to immediately cease offering or selling securities through crypto asset staking services or staking programs and pay $30 million in disgorgement, prejudgment interest, and civil penalties. As alleged in part in the SEC Release:

[S]ince 2019, Kraken has offered and sold its crypto asset "staking services" to the general public, whereby Kraken pools certain crypto assets transferred by investors and stakes them on behalf of those investors. Staking is a process in which investors lock up - or "stake" - their crypto tokens with a blockchain validator with the goal of being rewarded with new tokens when their staked crypto tokens become part of the process for validating data for the blockchain. When investors provide tokens to staking-as-a-service providers, they lose control of those tokens and take on risks associated with those platforms, with very little protection. The complaint alleges that Kraken touts that its staking investment program offers an easy-to-use platform and benefits that derive from Kraken's efforts on behalf of investors, including Kraken's strategies to obtain regular investment returns and payouts.

SEC Awards Almost $3 Whistleblower Award to Claimant 
Order Determining Whistleblower Award Claim ('34 Act Release No. 34-96887; Whistleblower Award Proc. File No. 2023-35)
https://www.sec.gov/rules/other/2023/34-96887.pdf
The SEC's Claims Review Staff ("CRS") issued Preliminary Determinations recommending a Whistleblower Award of almost $3 million to Claimant for both a Covered Action and a Related Action. The Commission ordered that CRS's recommendations be approved. The Order asserts in part that [Ed: footnotes omitted]:

In making this determination, we find that (i) the above-referenced criminal action constitutes a “related action” to the Covered Action within the meaning of Exchange Act Section 21F(a)(5) and Rule 21F-3(b) promulgated thereunder; (ii) the original information that Claimant  provided to the Commission that led to the successful enforcement of the Covered Action also led to the successful enforcement of the Related Action; and (iii) Claimant otherwise satisfies the award criteria for a “related action” set forth in Exchange Act Section 21F and the rules promulgated thereunder.  We also find that the Related Action has a more direct or relevant connection to the Commission’s whistleblower program than to another whistleblower program,including REDACTED (“Other Agency”) whistleblower program.5 This is because the Related Action primarily charged the defendant with securities fraud in connection with REDACTED , similar to the Commission’s own charges in the Covered Action.  
= = =
Footnote 5:  We understand that Claimant is also seeking a whistleblower award for the Related Action from the Other Agency, but that the Other Agency has not yet adjudicated Claimant’s award claim. The Commission’s rules do not permit a claimant to obtain a “double recovery” on the same enforcement action. Pursuant to Exchange Act Rule 21F3(b)(3)(iii)(C), Claimant’s award in the Related Action “shall be conditioned on the claimant making an irrevocable waiver of any claim to an award from the [the Other Agency]. The claimant’s irrevocable waiver must be made within 60 calendar days of the claimant receiving notification of the Commission’s Final Order.”

CFTC Charges Three Puerto Rico Residents and Their Companies with Misappropriating Over $13 Million in Connection with Commodity Pool Ponzi Scheme (CFTC Release)
https://www.cftc.gov/PressRoom/PressReleases/8656-23
In a Complaint filed in the United States District Court for the District of Puerto Rico
https://www.cftc.gov/media/8161/enffxlatinocomplaint021023/download, the CFTC charged  Ramon Salvador Delgado-Gomez, FX Latino (FXL), FXL Investment PR LLC (FXLI), Walmy Rivera-Santiago, JRH Services Inc. (JRH), Hector Javier Santos-Pagan (Santos), and Infinity Investment and Construction Management Corp. (Infinity) with fraud and registration violations. As alleged in part in the CFTC Release:

[F]rom approximately November 18, 2019 through February 8, 2021, Gomez and FXL, aided and abetted by, among others, Rivera and Santos and their respective companies, JRH and Infinity, conducted a scheme which solicited and accepted at least $17 million from over 2,000 individuals and entities in Puerto Rico and the continental United States for the purpose of engaging in a pooled investment in forex trading. According to the complaint, rather than using the pool participants’ funds to trade on behalf of the pool, FXL engaged in little to no trading, and, instead, FXL and Gomez misappropriated at least $13 million of pool participants’ funds to pay purported returns to existing pool participants in a manner typical of a Ponzi scheme. The complaint further alleges Gomez and FXL misappropriated pool participant funds to pay business and personal expenses and to make payments to Gomez, some of the aiders and abettors, and other unnamed individuals and entities involved in the scheme.

As charged, FXLI, JRH, and Infinity, by and through their respective principals, Gomez, Rivera, and Santos, aided and abetted FXL’s and Gomez’s misappropriation by, among other things, using FXLI’s, JRH’s, and Infinity’s bank accounts to accept pool participants’ funds; transfer pool participants’ funds amongst themselves, FXL, Gomez, and other entities and individuals involved in the scheme; and make Ponzi-type payments to pool participants.

The complaint also charges FXL with failure to register as a commodity pool operator (CPO) and Gomez with failure to register as an associated person of a CPO.

Notice Regarding Paxos-Issued BUSD (Consumer Alert / New York State Department of Financial Services)
https://www.dfs.ny.gov/consumers/alerts/Paxos_and_Binance

Paxos Trust Company (“Paxos”) is a limited purpose trust company under the supervision of the New York State Department of Financial Services (“DFS”).

DFS has ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance in regard to Paxos-issued BUSD. In response, on February 13, 2023, Paxos notified customers of its intent to end its relationship with Binance for BUSD.

The Department is monitoring Paxos closely to verify that the company can facilitate redemptions in an orderly fashion subject to enhanced, risk-based, compliance protocols.

It is important to note that the Department authorized Paxos to issue BUSD on the Ethereum blockchain. The Department has not authorized Binance-Peg BUSD on any blockchain, and Binance-Peg BUSD is not issued by Paxos. There is currently no restriction on the listing or exchange in New York of existing Paxos-issued BUSD by DFS-licensed entities. 

Pursuant to DFS requirements, all stablecoins issued by DFS-regulated entities are required to be fully backed 1:1 by cash or cash equivalents. These reserves are regularly reviewed through third-party attestations and internal and external, independent reviews. Compliance with the DFS stablecoin guidance and bespoke supervisory agreements are also part of the examination process.

Paxos is required to redeem their Paxos-issued BUSD tokens for U.S. dollars through Paxos at a 1:1 exchange rate pursuant to compliance protocols for customers in good standing.

U.S. residents who own Paxos-issued BUSD and are not already Paxos customers in good standing can apply to be onboarded as a Paxos customer. Once a customer has gone through the onboarding and due diligence process, Paxos is required to redeem Paxos-issued BUSD for USD at a 1:1 exchange rate pursuant to compliance protocols

Per DFS requirements, Paxos is required to conduct due diligence on every new customer. There may be a high volume of new customer and redemption requests that will require extended processing time. If you have any issues creating an account with Paxos or would like to know the status of your redemption request, please submit a support request through the Paxos Support Website, at help.paxos.com.