News: Ex-employee sues Kraken, Reggie Fowler to change not-guilty plea, Circle sheds another crypto business

It’s the first night of Hanukkah and a few days before Christmas. A lot of folks are off work for the rest of the year, and those still working are barely working. But the news never sleeps, so here’s a roundup of important crypto news from last week. 

kRAKENOn top of the list — an ex-employee is suing Kraken, a prominent U.S. crypto exchange. (Here’s the complaint.) The ex-employee claims the firm fired him for bringing to light illegal business practices. Among his accusations: Kraken used employee addresses to falsify business records and did business with entities on the Office of Foreign Assets Control list of Specially Designated Nationals and Blocked Persons — a big no-no.

David Gerard, who broke the story on Tuesday, summarizes the important details in a blog post. The story has now made it into the mainstream press and could screw up the exchange’s plans to launch a “cryptobank” in Wyoming.

Next up, Reginald Fowler, the ex-NFL owner accused of operating a “shadow bank” that processed hundreds of millions of dollars of unregulated transactions on behalf of crypto exchanges, plans to change his not guilty plea. In a hearing set for Jan. 10, he is expected to plead guilty to at least one of the charges. 

As an aside, previously, I’d heard that the two wealthy friends who put up a substantial portion of Fowler’s $5 million bail in May — back when he entered a plea of not guilty — were Lori Fowler, his ex-wife, and Molly Stark, the club director of Spiral Volleyball, a company he owned. Indeed, here are the court docs with both their signatures on it.

In other news, Coinfloor, the oldest running crypto exchange in London, announced on Tuesday plans to delist ethereum and bitcoin cash. As of Jan. 3, it will only focus on bitcoin. The move comes ahead of the Ethereum 2.0 launch. Being a small exchange, the hassle of dealing with forks was apparently too much for the business to deal with. 

Circle is shedding another crypto business. The Boston firm announced Tuesday that it sold Coin Trade, its over-the-counter crypto trading desk, to Kraken. The move comes after it sold off its crypto exchange Poloniex and co-CEO Sean Neville stepped down. In 2020, Circle plans to focus mainly on stablecoins, or more specifically, its own USD Coin. Leo Jakobson does a nice job covering the story for Modern Consensus.  

The European Central Bank is exploring the use of an “anonymity voucher” to give prospective central bank digital currency users privacy in their retail transactions. Of course! What better way to make it screamingly obvious that you are hiding something than to flag it with an anonymity voucher. I can’t see this being very effective.

Several lawmakers sent a letter to the IRS on Friday asking for clarity on crypto tax laws. Apparently, guidance the IRS issued in October on the handling of forks and airdrops brought up more questions than answers. (Story in CoinDesk.)

Grayscale conducted an incredibly sexist study on women bitcoin investors, which CoinDesk wrote up. According to the study, 93% of women would be more open to buying bitcoin if we only had more educational resources available to us. The big question is, why did Grayscale even conduct a silly study like this? 

FT’s Jemima Kelly has an answer. As she so cleverly points out “… this is of course not about what women want. It’s about what crypto men want, and they want more people to buy into crypto so that their own HODLings can grow more valuable.”  

Finally, Michael Patrick McSweeney, who many of us have long known as Stan Higgins — a pen name he began using when he started working for CoinDesk in 2014 — has landed a new gig as managing editor at The Block. McSweeney left CoinDesk on Oct. 31.  

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