Gate.io Blog Upcoming Crypto Court Cases: Post-SBF Legal Battles to Watch

Upcoming Crypto Court Cases: Post-SBF Legal Battles to Watch

17 April 13:43

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## [TL; DR]
The trial of several leading crypto figures like Changpeng Zhao, Do Kwon and Alex Mashinsky will continue in the post SBF trial period.

The crypto legal battles in the United States will likely set important precedents for the sector.

The trial of Sam Bankman-Fried and other crypto project leaders should conscientize blockchain based firms to comply with the relevant legal requirements in the jurisdiction they operate in.

## Introduction 
Although the trial of Sam Bankman-Fried, dubbed the crypto case of all times, has been concluded there are several other legal battles involving prominent crypto entrepreneurs like Do Kwon, Changpeng Zhao and Alex Mashinsky. The scope of this article is to discuss the other significant crypto court cases following the incarceration of Bankman-Fried.

Legal landscape following the Sam Bankman-Fried (SBF) saga
As hinted above, there are several high profile crypto court cases which may be concluded in 2024. These include the trials of Celsius Alex Mashinsky, Changpeng Zhao- the former Binance CEO- Avi Eisenberg, Tornado Cash’s Roman Storm, <a href="/price/safemoon-sfm" target="_blank" class="blog_inner_link">SafeMoon</a>’s John Karony as well as <a href="/price/kucoin-kcs" target="_blank" class="blog_inner_link">KuCoin</a> founders. Most of the cases during the post-SBF legal landscape revolve around money laundering, market manipulation, fraud and the sale of unregistered securities in the United States.

Although these cases affect individuals and specific crypto projects like exchanges they have far reaching consequences in the industry. This is because these SEC crypto lawsuits set precedents for future crypto regulation compliance.

Read also: [SBF's Sentence Is Expected to Be No Less Than 40 Years](https://www.gate.io/blog_detail/3364/daily-news-sbfs-sentence-is-expected-to-be-no-less-than-40-years-musk-plans-to-turn-the-x-platform-into-a-digital-bank-next-year "SBF's Sentence Is Expected to Be No Less Than 40 Years")

The SBF sentencing and subsequent imprisonment has sent a strong message to crypto projects that their businesses should comply with the laws in the jurisdictions they operate in. Now, let’s discuss some of the leading crypto legal battles starting with that of the [SEC vs. Changpeng Zhao](https://www.gate.io/blog_detail/2823/binance-vs-sec-epic-peaked "SEC vs. Changpeng Zhao"), affectionately known as CZ in the cryptocurrency sector. 
## The SEC vs. Changpeng Zhao Legal Battle
In November 2023 Changpeng Zhao [pleaded guilty to money laundering and terrorism funding through weak KYC rules](https://www.gate.io/learn/articles/why-are-crypto-exchange-founders-always-accused-of-money-laundering/2362 "pleaded guilty to money laundering and terrorism funding through weak KYC rules"). Based on the weight of CB trial charges the US may sentence Zhao ip to 18 years in prison. However, some legal experts believe that he is likely to have a lighter sentence since he cooperated well with the US regulatory and legal authorities.

The CZ Binance trial will likely indicate how US regulators will handle the AML and CTF laws while promoting innovation and the growth of the sector.  The U.S. Securities and Exchange Commission (SEC) filed a SEC crypto lawsuit against Zhao in June 2023 charging him  of “a web of deception” and operating an unregistered exchange as well as running a “sham” regulatory compliance program.

The SEC further alleged that Binance exchange inflated its trading volume figures, thereby deceiving the investors. It also alleged that the exchange diverted customer funds as well as misled clients about its market surveillance control system. Notably, the former Binance CEO will be sentenced this month. As of now, Zhao is stuck in the United States, waiting for the pronouncement of his sentence. 
## Update on Terraform Labs' Do Kwon's Legal Battle and Extradition Status
The next interesting legal case is that of Do Kwon, Terraform Labs co-founder and innovator of TerraUSD and Luna cryptocurrencies. Do Kwon is facing multiple legal charges of fraud in the United States. The SEC’s key allegation against Kwon is that he lied to investors about the stability of TerraUSD, the so-called “algorithmic stablecoin.

<a href="/price/terra-luna" target="_blank" class="blog_inner_link">Terra</a> USD, pegged against the United States dollar using an on-chain mint-and-burn mechanism against its sister token LUNA, depegged in in May 2022, wiping out over $60 billion in market capitalization. The SEC argues that Kwon misled the customers by claiming that the UST would “naturally heal” or “automatically self-heal.”

Read also: [Will LUNA Ever Recover?](https://www.gate.io/explore/terra-luna "Will LUNA Ever Recover?")

So far, the US has tried  Kwon in absentia since he is based in Montenegro after serving a 4- month jail term for faking travel documents. The Montenegrin authorities have not yet approved Do Kwon extradition to the United States or South Korea. The Balkan state is still assessing the possibility of granting Kwon’s extradition order.

## Avraham "Avi" Eisenberg's Trial for Alleged DeFi Protocol Exploitation
Avi Eisenberg trial is one of the ongoing crypto legal battles in the United States. The U.S prosecutors in Manhattan have slapped Eisenberg with several criminal charges that include commodities manipulation and wire fraud. Nonetheless, Eisenberg has pleaded innocence to these allegations.

It is the state’s case that in October 2022 Eisenberg syphoned over $110 million from Mango Markets, a <a href="/price/solana-sol" target="_blank" class="blog_inner_link">Solana</a> protocol, through what he termed a “highly profitable trading strategy.” However, the United States authorities maintain that he fraudulently obtained cryptocurrencies worth more than $110 from Mango Markets which crippled its operations. They said that Eisenberg manipulated the price of the MNGO token and borrowed all Mango deposits against his market positions.

Later, Eisenberg returned a portion of the amount on the understanding that Mango Markets would not take legal actions against him. Still, he maintains that what he did was legal as the Mango Markets’ smart contract permitted that. In October 2022 he posted the following statement.
![](https://gimg2.gateimg.com/image/article/17133323261.jpeg)
Source: [x.com ](https://twitter.com/avi_eisen/status/1581326199682265088 "x.com ")

Eisenberg’s trial which was supposed to start on 4 December 2023 will continue this month. In the meantime, he is in a Puerto Rican jail waiting for his trial to commence.

## Celsius Founder Alex Mashinsky Criminal Trial and Charge Overview
Another high ranking crypto entrepreneur who is facing criminal charges in the United States is Alex Mashinsky, the Celsius founder. Celsius Alex Mashinsky charges include market manipulation and conspiracy to commit fraud.

Related news: [Crypto Bankruptcies: Kirkland & Ellis Secures $120 Million in Celsius, Core Scientific, BlockFi, Voyager Cases](https://www.gate.io/blog_detail/3767/crypto-bankruptcies-kirkland-ellis-secures-120m "Crypto Bankruptcies: Kirkland & Ellis Secures $120 Million in Celsius, Core Scientific, BlockFi, Voyager Cases")

At its height, Celsius, a crypto lending platform, had assets worth more than $25 billion and used to claim that it was the “safest place for your crypto.” However, following the implosion of Do Kwon’s Terra network in May 2022 Celsius ceased its operations and filed for bankruptcy. It alleged that its balance sheet had a hole of $1.2 billion.

Later, the United States prosecutors filed a lawsuit claiming that Alex Mashinsky and his executive team artificially inflated the value of Celsius token (CEL), thereby misleading its customers.

The U.S.Federal Trade Commission (FTC) , the SEC and the CFTC also filed charges against Mashinsky for positioning Celsius as a safe investment destination yet they were taking risky steps in their bid to deliver the promise of a 17% return on investment.

Meanwhile Mashinsky has not pleaded guilty to the charges the US has leveled against him. The Celsius founder was released from custody on a $40 million bond and is awaiting his trial to continue in September 2024.

## Safemoon Leadership Facing Legal Troubles 
The Safemoon legal battle also shows the need for crypto projects to adhere to regulatory provisions in the countries they operate in. The United States authorities have laid charges of money laundering conspiracy and wire fraud against Braden John Karony, SafeMoon CEO. If convicted of the offenses Karony may spend up to 45 years in prison.

In the meantime, Karony pleaded innocence to all the charges. For this case, the United States has also charged Kyle Nagy, the SafeMoon creator and Thomas Smith,its chief technology officer for the same offences. The trio will also face the SEC’s charges for misappropriating funds and offering unregistered securities sales. Currently, Karony is on bail, Nagy is at large and Smith is trying to initiate a plea deal.

## Legal Challenges Facing Tornado Cash’s Roman Storm and Roman Semenov
Roman Storm, the Tornado Cash developer’s, trial is set to continue in 2024.The United States has laid several charges against him which include operating an unlicensed money transmitting business, conspiring to commit money laundering, and violating the International Economic Emergency Powers Act.
Roman Semenov is currently at large and is believed to be in Russia. In the meantime, Roman Storm has not pleaded guilty to the charges against him but is fighting to have them dropped, claiming that they had nothing they could do to prevent the United States citizens from accessing Tornado Cash services.
Overview of FTX Executives' Legal Proceedings and Potential Sentences.

One of the leading crypto legal battles is that of FTX executives. After SBF sentencing the United States authorities have turned their attention to FTX executives that include Zixiao “Gary” Wang, FTX co-founder, Nishad Singh, the engineering lead and Caroline Ellison, the former Alameda Research CEO.

Basically, these former FTX executive members face fraud charges for the misdeeds they carried on their crypto exchange. As a fact, the FTX executives fraud led to the collapse of the exchange in November 2022 that resulted in its customers losing a cumulative amount of over $8 billion.

Read also:[ Is the FTX Crash by SBF a Ponzi Scheme or Fraud?](https://www.gate.io/explore/ftx-sbf " Is the FTX Crash by SBF a Ponzi Scheme or Fraud?")

##  KuCoin and Founders' Charges by the U.S. government
The US SEC has charged KuCoin and other leading cryptocurrency exchanges like Kraken, Coinbase and Gemini for flouting its securities laws through selling unregistered securities. The KuCoin founder charges include failure to maintain an anti-money laundering program as well as operating an unregistered money-transmitting business.If convicted, Gan and Tang who are Chinese nationals face a prison sentence of over a decade each.
## SEC and CFTC Lawsuits
The United States SEC and the CFTC are the two legal agencies in the country that are taking an active role in prosecuting crypto offenders. Apart from the cases discussed in this article, the SEC has sued several other crypto businesses for operating unlicensed businesses and selling unregistered securities. One well-known SEC crypto legal battle involves Ripple which it accuses of offering unregistered securities.

On the other hand, the US Commodity Futures Trading Commission has been filing lawsuits against crypto projects that have been flouting the country’s crypto trading and derivatives rules. For example, in May 2023 the CFTC sued Binance and Zhao for selling unregistered crypto derivatives products to U.S. customers.

Also, in June 2023 the CFTC filed a lawsuit against Ooki DAO, a decentralized autonomous organization (DAO), for offering unregistered commodities. As a result, U.S. District Judge William H. Orrick ruled in favour of CFTC and ordered the firm to pay a fine of $643,542 and to stop its operation. The CFTC and the SEC’s active enforcement actions indicate that decentralized finance (DeFi) organizations can no longer evade the law in the United States. 
## Conclusion 
The United States is taking the lead in prosecuting leaders of crypto businesses who are reluctant to abide by the country’s legal requirements. SBF’s 25 year prison sentence should warn executives of crypto projects to comply with the relevant legislation that exists in different countries. Chanpeng Zhao, Roman Storm and Alex Mashinsky are some of the crypto leaders whose legal battles will continue in 2024.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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Upcoming Crypto Court Cases: Post-SBF Legal Battles to Watch

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