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Roger Ver Faces 30 Years, CZ Jailed, Signaling New Era of Enforcement – Ex-Biden Advisor Warns

Last Updated May 21, 2024 3:20 PM
Teuta Franjkovic
Last Updated May 21, 2024 3:20 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Recent legal actions by the DOJ signal intensified scrutiny and a new phase of enforcement in the crypto industry.
  • Investors are likely to shift towards asset-backed and regulated cryptos, as they offer greater transparency and security.
  • The need for proactive regulation in the crypto sector can help to balance innovation with investor protection.
  • The IRS plays a key role in enforcing tax compliance and providing clear guidelines.

There are questions regarding crypto’s long-term viability, the need for regulatory oversight, and the safety of investments. Both regulators and holders have to work out how best to protect people while also allowing new developments.

In a recent interview with CCN, Moe Vela, a Senior Advisor to Unicoin and former Senior Advisor to President Joe Biden, and an lawyer, weighed in on several high-profile legal actions in the cryptocurrency industry, including Changpeng Zhao‘s sentenching and Roger Ver’s arrest.

Ex-Biden Advisor: DOJ Sending Message on Compliance to Industry

Vela’s insights are particularly valuable. They come against the backdrop of Binance founder Changpeng Zhao’s recent sentencing and ongoing legal challenges within the crypto sector.

Zhao was sentenced to for charges related to inadequate anti-money laundering measures at Binance. This case is part of a larger crackdown by the Department of Justice (DOJ) on regulatory compliance in cryptocurrency.  

As well as that, the arrest of Roger Ver, another prominent figure in the cryptocurrency world, has stirred significant attention. Known for his early investments in Bitcoin and his advocacy, Ver faces accusations  of evading $48 million in taxes. The charges involve complex dealings through his companies and substantial cryptocurrency assets. Ver’s case could potentially lead to a stringent sentence, considering the recent precedents set by other cases in the crypto industry​​.

 

Changpeng Zhao Sentence: A Warning But Not a Major Political Issue – Yet

CCN asked Vela how he evaluates the length of Zhao’s sentence in comparison to other recent sentences for crypto executives like Sam Bankman-Fried, and whether it reflect an inconsistency in how the law handles different cases within the crypto industry.

He explained that after the recent crackdowns by the federal government on crypto nefarious activities, the lighter sentence for Zhao is a clear indicator that his infraction was viewed as much less severe. 

He said:

“I still believe that the mere fact that he was indicted and sentenced is a reminder to the cryptocurrency sector that, in spite of the lack of regulatory parameters for the sector, nefarious and questionable behavior will not be allowed nor tolerated.”

Vela shared his perspective on whether the recent sentencings could make cryptocurrency regulation a major political issue. He noted that under normal circumstances, high-profile legal cases would likely propel regulation to the forefront of political discourse.

However, he believes that due to the ongoing international conflicts such as the Ukraine/Russia conflict and the Israel/Gaza situation, along with pressing domestic issues, cryptocurrency regulation is likely to remain a secondary topic in the upcoming US election cycle.

CZ’s Sentencing Signals Stronger Regulation and a Move Towards Asset-Backed Cryptos

CCN asked Moe Vela how Changpeng Zhao’s sentencing might affect both current investors and those considering entering crypto. We  also asked whether this could spur a shift towards asset-backed cryptocurrencies.

Vela responded said investors generally prefer to minimize risks and are astute and careful in their investment choices. He believes the legal outcomes for figures like Bankman-Fried and Zhao will likely reassure the investment community regarding the security and regulatory compliance of cryptocurrencies. This might lead investors to increasingly consider transparent, compliant and asset-backed cryptocurrencies.

Vela explained US goverment crypto was inevitable. 

He stated:

“Regulations are created to protect, prevent and empower, or they should be created for those reasons.  Cryptocurrency is still a new frontier and I believe it is here to stay and will grow in prevalence and utilization each passing day.  The federal government has no choice but to establish a regulation environment that will protect investors, prevent nefarious activities by bad actors and empower the sector by not over-regulating as they tend to do at times.”

SVela emphasized the significance of Zhao’s sentencing as a decisive message to the sector.

He said that the action taken against Zhao sends a stark warning. Vela said the United States will not tolerate wrongdoing in the cryptocurrency sector any more than it would in any other industry. He also noted that the federal government’s stance is that, while the cryptocurrency sector is still relatively new and regulations are not yet fully established, any criminal or dubious behavior will not be excused in the interim before more definitive regulatory frameworks are put into place.  

Ver Faces Serious Charges, Says Vela

CCN asked Vela what the potential legal consequences were if a court found Roger Ver guilty of mail fraud and tax evasion. We also asked how his possible sentencing, from two months to thirty years, reflected on the severity of his actions.

Vela said Ver’s indictment and charges were another clear and loud message from the DOJ that they would not tolerate any nefarious or questionable behavior in the crypto industry. 

He added:

“Regrettably, bad actors will be bad in any industry and sector.  This is not unique to the crypto industry.  If Mr Ver is found guilty of these charges, I predict that the DOJ and the judicial system will continue to use these cases to set an example and enhance the message that they will enforce a zero-tolerance policy in even this newer sector.”

Vela furthermore addressed the recent arrest and charges against Ver, He said they showed the risks associated with early cryptocurrencies like Bitcoin, which are decentralized, anonymous, and unregulated. Vela also expressed concerns that these characteristics have shown to be reckless, dangerous, and risky. He argued the sequence of arrests and charges suggests the foundational principles of early cryptocurrencies may neither be sustainable nor safe.

Vela believes these high-profile legal cases serve as a deterrent, pushing investors towards safer alternatives within crypto. He highlighted asset-backed and transparent offerings as preferable options for those looking to invest in crypto with reduced risk and greater compliance. Vela said Unicoin, where he serves as a Senior Advisor, was cryptocurrency that aligned with safer investment criteria.

IRS Enforcement Highlight Growing Scrutiny and the Need for Compliance

Vela shared his thoughts on the IRS’s role in regulating cryptocurrency. He said that, despite the largely unregulated status of cryptocurrency and its novelty in the financial marketplace, the principles of taxation remain unchanged. In other words, income is income, and it attracts tax responsibilities. Vela also said the IRS should provide clear and precise guidelines for those earning income from cryptocurrencies.

Vela has said that regulation of cryptocurrency is not just expected but inevitable. He wants the cryptocurrency industry not to passively wait for regulations that could be perceived as restrictive or punitive. Instead, he encourages active participation and collaboration with regulatory bodies. By engaging in the regulatory process, the industry can help shape policies that prevent malfeasance without stifling innovation.

He said that whether it be under US tax law, securities law or criminal law, cryptocurrency businesses are now on alert. They have have been warned that they will be scrutinized.  There also seems to be no hesitation to enforce on behalf of the American government. 

He concluded:

“Personally, I believe it should NOT take these arrests and convictions for the cryptocurrency industry to be compliant and ethical in how they conduct their business.  It should be inherent to comply and abide.  I encourage the crypto industry to be a role model on how to establish and develop a sector that will be of the utmost ethics, compliant, transparent and a healthy alternative to traditional financial systems.”

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