In This Article
Michael Saylor and MicroStrategy settled a tax evasion lawsuit with the District of Columbia for $40 million. This makes it the “biggest-ever income tax fraud recovery” in the district. Meanwhile, a Chinese trader lost $1 million on Binance though a Google Chrome plugin hack. The trader believes the hack was Binance’s fault, but Binance denies responsibility. Binance is also preparing for the upcoming Markets in Crypto-Assets Regulation (MiCA), which will enforce new rules for stablecoins in the European Economic Area.
Michael Saylor Agrees to $40M Settlement
MicroStrategy and its pro-Bitcoin founder, Michael Saylor, have settled a lawsuit with the attorney general for the District of Columbia for $40 million, according to The New York Times on Jun. 3. This settlement is now labeled the “biggest-ever income tax fraud recovery” in the district.
Saylor was accused of evading income tax for more than a decade. The lawsuit was filed in August of 2022 under the district’s amended False Claims Act, and claimed that Saylor avoided more than $25 million in income taxes, with potential penalties initially estimated at $75 million.
Saylor's tax evasion accusations led to his resignation as CEO of MicroStrategy in August 2022, though he was still executive chairman and chairman of the board. Despite stepping down as CEO, Saylor is still a huge fan of Bitcoin, and very often announces new purchases on his social media.
In March 2024, MicroStrategy made a large 12,000 BTC purchase through an $800-million convertible note offering. By May 1, 2024, the company held 214,400 BTC, which was bought at an average price of $35,000 per BTC, totaling approximately $7.5 billion.
Saylor has become a very well-known Bitcoin advocate since 2020, when he revealed his personal purchase of 17,732 BTC for $175 million. Before this, in December of 2013, he was still a bit skeptical about Bitcoin, and even suggested it was at risk of being regulated out of existence.
Binance Account Hacked for $1M
Meanwhile, a Chinese trader lost $1 million to a hack that involved a promotional Google Chrome plugin called Aggr. The plugin steals cookies from users, which then allows hackers to bypass password and two-factor authentication (2FA) verification to log into the victim’s Binance account.
Nakamao’s Tweet shortened because of size (Source: X)
The trader is known as CryptoNakamao on X, and they shared on the social media platform how their Binance account started trading randomly on May 24. By the time they looked for help from Binance, the hacker had withdrawn all funds.
The hacker accessed the trader's web browser cookie data through the Aggr plugin. Installed to access prominent trader data, the plugin was actually designed to steal users' web browsing data and cookies. The hacker used the stolen cookies to hijack active user sessions without needing a password or authentication, making multiple leveraged trades to spike the price of low liquidity pairs and profit from them.
Although 2FA prevented direct withdrawals, the hacker used cookies and active login sessions to profit through cross-trading. The hacker bought several tokens in the Tether trading pair and placed limit sell orders exceeding the market price in Bitcoin, USD Coin, and other trading pairs with scarce liquidity.
They then opened leveraged positions, bought large amounts in excess, and completed the cross-trading, a practice where buy and sell orders for the same asset are offset without recording the trade on the exchange.
The trader now blames Binance for not implementing essential security measures despite unusually high trading activity and failing to act even after they made timely complaints. The trader also discovered that Binance was aware of the fraudulent plugin for some time and was conducting an internal investigation.
Despite knowing the hacker’s address and the nature of the plugin scam, Binance did not inform traders or take actions to prevent the fraud at all. The trader wrote that Binance did nothing despite knowing of the theft and frequent cross-trading, allowing hackers to manipulate accounts for over an hour, causing extremely abnormal transactions without any risk control, and failing to freeze the hacker’s account on time.
Binance Claims No Responsibility
Binance does not seem to have a lot of sympathy for the hack victim at the moment. Yi He, co-founder of Binance, dismissed claims that a platform security breach led to the user's $1 million crypto loss. According to He, the user's computer was hacked, not the platform.
He explained that after the hack, the hacker couldn't withdraw funds and instead sold the victim’s coins, leading to trading losses. Binance claimed it froze the account within "one minute and 19 seconds"of receiving Nakamo’s request, but the hacker already completed several leveraged trades by then. Binance also stated that they can not compensate for losses due to compromised user devices from malicious plugins.
Nakamo disagreed with this and alleged that Binance was aware of the plugin’s existence and even encouraged key opinion leaders (KOLs) to gather more information from the hacker. He claimed his account was stolen during the plugin’s promotion and that Binance tracked the hacker's address and identified the plugin weeks earlier.
Yi He warned users about the risks of logging into accounts with active cookie plugins to avoid typing passwords, reiterating that Binance cannot compensate for losses when users' login devices are compromised.
Binance Prepares for MiCA
While Binance deals with the hack fallout, the exchange is also preparing to comply with the upcoming Markets in Crypto-Assets Regulation (MiCA) rules for stablecoins, which take effect at the end of the month. The exchange informed users in the European Economic Area about some of the changes they will experience, including a gradual transition from unauthorized to regulated stablecoins as more compliant options become available.
While no specific stablecoins have been deemed compliant with MiCA yet, Binance will primarily use a "sell-only" strategy to meet the new requirements. This approach will particularly affect the Binance Convert function, which will operate in a "sell-only" mode for unauthorized stablecoins.
Binance plans to minimize any potential disruptions by implementing a phased transition. The company stated in a blog post that this strategy is designed to prevent harmful impacts on the EEA and global crypto markets, which could result from users rushing to swap their stablecoin holdings with limited exit options.
MiCA has also prompted other exchanges to take preemptive actions. OKX delisted Tether in Europe in March, although they did not directly point towards MiCA for this decision. In September, Binance also dismissed reports that suggested it planned to delist all stablecoins in Europe after comments from Binance France’s legal head.
Expert opinions on MiCA's impact on the European crypto market are divided. However, many people see the regulation positively, particularly for stablecoins. European Commission economist Joachim Schwerin believes that MiCA could make the region more open to stablecoins overall.
MiCA
The Markets in Crypto-Assets (MiCA) regulation is a proposed regulatory framework by the European Union that is aimed at governing the issuance and provision of services related to crypto-assets. While not yet formally adopted, MiCA wants to balance fostering innovation with protecting consumers and participants in the crypto market. It also establishes rules and licensing requirements for crypto-asset service providers (CASPs) operating across the EU, ensuring a standardized approach to market operations.
MiCA mandates that companies offering services like custody and advisory must register with national regulators and meet specific organizational, operational, and business conduct standards. These include measures to protect client assets, prevent conflicts of interest, and ensure market transparency.
Crypto-asset issuers are also required to share detailed information through their "whitepapers," very clearly outlining the asset's rights and risks. Stablecoins, in particular, face stringent reserve, governance, and stabilization requirements.
The regulation targets three main categories of crypto-assets: asset-referenced tokens (ARTs), electronic money tokens (EMTs), and other crypto-assets. ARTs are stablecoins that reference other assets to maintain a steady price, while EMTs are stablecoins pegged to a single fiat currency, like the Euro.
The "other crypto-assets" category includes utility tokens and other digital assets that are not classified as ARTs or EMTs, with less stringent transparency requirements. Excluded from MiCA are security tokens, non-fungible tokens (NFTs), and central bank digital currencies (CBDCs).
