Craig Wright, an Australian computer scientist who claimed to be Satoshi Nakamoto, was ruled not to be Nakamoto by a UK judge. This verdict was the result of a lawsuit started by the Crypto Open Patent Alliance (COPA), which plans to prevent Wright from claiming the Bitcoin creator's identity. Meanwhile, the SEC's lawsuit against crypto firms Gemini and Genesis, which is focused on unregistered securities sales through the Gemini Earn program, will continue. Additionally, Bybit faces regulatory warnings in Hong Kong for operating without a proper license.
Craig Wright Is Not the Father of Bitcoin
Craig Wright, an Australian computer scientist who has claimed to be Satoshi Nakamoto, the pseudonymous creator of the Bitcoin network, since 2016, was ruled not to be Nakamoto by Judge James Mellor in the United Kingdom on Mar. 14. The verdict came after closing arguments in the lawsuit started by the Crypto Open Patent Alliance (COPA) against Wright, which began in London on Mar. 12. COPA wanted injunctive relief to stop Wright from claiming to be the creator of Bitcoin, accusing him of extensive document forgery to support his claim.
The trial, which started on Feb. 5, saw COPA alleging that Wright fabricated an entire biographical history, supported by numerous forged documents. Wright proposed an out-of-court settlement on Jan. 24, which COPA declined.
COPA was formed in 2020 and wants to promote the adoption and advancement of crypto technologies and eliminate patents as a barrier to growth and innovation. Its membership includes some pretty well known companies like Coinbase, Block, Meta, MicroStrategy, Kraken, Paradigm, Uniswap, and Worldcoin.
In 2023, Wright escalated his legal battles by suing 13 Bitcoin Core developers and several companies, including Blockstream, Coinbase, and Block, for copyright violations related to the Bitcoin white paper. The Bitcoin Legal Defense Fund criticized these lawsuits as frivolous yet effective, as they stopped many developers from contributing to Bitcoin due to the potential legal risks and costs.
Wright's claim to the copyright of the Bitcoin white paper and the code within it in 2019 further complicated matters. However, the Bitcoin white paper is now under an MIT open-source license, which allows for its free use and modification.
Judge Allows SEC's Case Against Gemini and Genesis to Proceed
In other legal news, a federal judge in New York has allowed the United States Securities and Exchange Commission's (SEC) lawsuit against crypto firms Gemini and Genesis to proceed, dismissing motions from the defendants to stop the legal action. The lawsuit revolves around the Gemini Earn program, which the SEC believes involved the sale of unregistered securities.
Judge Edgardo Ramos, in a 32-page order dated Mar. 13, found that the SEC's allegations against the Gemini Earn program — a crypto yield-bearing product offered by Gemini and managed by Genesis — were, in fact, plausible. According to the SEC, this program did not meet the necessary registration requirements for securities, once again referring to the Howey test. The SEC's suit claims that Genesis pooled assets on its balance sheet and lent these funds to institutional borrowers based on its discretion, with customer profits dependent on Genesis's efforts, thus meeting the Howey test's criteria.
Furthermore, the SEC argues that the Gemini Earn agreements qualify as notes, a type of debt security that necessitates the repayment of loans with interest.
This lawsuit came after a very turbulent time for the crypto industry, with the bankruptcy of Genesis after the SEC filed its lawsuit in January of 2023, and the collapse of FTX in November of 2022. Before its challenges, the Gemini Earn program boasted approximately 340,000 customers and $900 million in assets under management.
Genesis has reached a preliminary agreement to settle the SEC's lawsuit for $21 million, according to a bankruptcy court filing last month. Additionally, Gemini has agreed to return $1.1 billion to Gemini Earn customers through the Genesis bankruptcy proceeding, in a settlement with New York's financial regulator.
Bybit Under Scrutiny
Meanwhile, it seems like the Bybit exchange stepped on some toes in Hong Kong. Hong Kong's Securities and Futures Commission (SFC) issued a warning against the crypto exchange on Mar. 14, stating that the platform, along with its 11 crypto-related products, operates without a proper license in Hong Kong.
The regulator's concern revolves around Bybit's offerings, including futures, options, leveraged tokens, and wealth management services, to Hong Kong investors without being registered with the SFC for conducting regulated activities in the region.
The warning specifically targets Bybit Fintech Limited, a Seychelles-registered company that owns bybit.com, distinguishing it from bybit.com.hk, owned by Spark Fintech Limited, which currently does not offer crypto services in Hong Kong. Despite Bybit's efforts to secure a virtual asset trading platform (VATP) license in Hong Kong through its subsidiary, Spark Fintech Limited, the city only recognizes two licensed crypto exchanges: OSL Exchange and HashKey Exchange, licensed in December of 2020 and November of 2022, respectively.
The SFC's warning comes after the Feb. 29 deadline set for crypto exchanges to apply for a VATP license, with a stipulation that unlicensed platforms have to stop operations in Hong Kong by May 31. Furthermore, exchanges with rejected VATP applications by the SFC are required to completely exit the market in three months.
