Is Trump right to worry that China could ‘take over’ crypto?

Vladimir Smerkis, a co-founder of the Telegram-based crypto project Blum, has reportedly been arrested in Moscow, Russia, on fraud allegations, amid Blum confirming he is no longer affiliated with the project.The Zamoskvoretsky District Court of Moscow approved a request from investigators to keep Smerkis in custody while he is being investigated, Russian state-owned news outlet TASS reported on May 18.Smerkis — who previously ran operations for Binance in Russia — is suspected of committing fraud on a “large scale,” pursuant to Article 159 of the Criminal Code of the Russian Federation, violations of which can result in imprisonment ranging from two to 12 years.It isn’t clear if charges have been filed against Smerkis.Russian news outlet Mash tied the fraud allegations against Smerkis to his involvement in The Token Fund and Tokenbox crypto ventures that he co-founded in 2017, where investors reportedly suffered combined losses of around $15 million.Blum, which is not involved in The Token Fund and Tokenbox ventures, wrote to X on May 18 that Smerkis resigned from his role as the firm’s chief marketing officer and would no longer be involved in the project in any capacity.Source: BlumBlum said its team remains fully committed and focused on its goals and that its day-to-day operations would continue as usual.Blum is a crypto project that integrates a decentralized exchange into Telegram Mini Apps, enabling users to trade crypto, earn rewards and participate in token airdrops.No Smerkis, no BLUM token?The incident sparked concerns that Blum’s token airdrop won’t follow through as planned. In an April 3 X post, Blum hinted at a potential BLUM token listing in the third quarter of this year.Blum users could receive BLUM tokens by earning Blum points in its newly launched Drop Game, where users tap on snowflakes falling from their mobile phone screen, and convert those points into tokens during the project’s slated token generation event.Related: Pavel Durov rejects EU pressure to censor Romanian election contentHowever, the news of Smerkis’ arrest appears to have shaken community confidence that the BLUM token airdrop will happen.“Blum owes its users a clarification on the planned airdrop,” one X user and Blum community member said, while crypto influencer RK Gupta added:“No airdrop. No updates. Just silence. Was it all for nothing?”Magazine: Pranksy: Inside the anonymous life of an NFT legend — NFT Collector

Attorneys for Tornado Cash developer Roman Storm filed a motion asking the court to reconsider the motion to dismiss the case due to the prosecution withholding exculpatory evidence in the form of communications with the Financial Crimes Enforcement Network (FinCEN) dating back to 2023.According to a May 16 letter from Storm’s attorneys to Judge Katherine Polk Failla, the FinCEN documents show that non-custodial crypto mixers do not fall under the legal definition of a “money transmitting business” and that prosecutors have known this since at least 2023.Despite having knowledge of the FinCEN guidance on crypto mixers, state prosecutors still proceeded with cases against the Samourai Wallet developers and Tornado Cash, the attorneys alleged.Letter sent by Roman Storm’s attorneys to Judge Failla. Source: Court ListenerUS prosecutors denied they withheld the evidence, claiming they submitted the FinCEN communications within the stipulated timeframe to produce the documents for the defense and the court during legal discovery.Storm’s defense cited the same legal documents and the same argument the Samourai Wallet developer’s attorneys posed to the court in a May 5 legal letter. Storm’s attorneys wrote:”The disclosures in the Samourai case reveal that the government, at the very least, played fast and loose and, at worst, affirmatively misled this Court with its arguments about FinCEN guidance when responding to the motions to dismiss and to compel discovery.”The letter went on to argue that although the government continues to claim that the cases bear only “superficial similarities” to each other, they share the core characteristics of cryptocurrency mixers under the law, thus making the FinCEN documents salient to dismissing the case against Storm.The 2023 communications between US prosecutors and FinCEN. Source: Court ListenerRelated: Crypto group asks Trump to end prosecution of crypto devs, Roman StormRoman Storm’s trial moves ahead despite sanctions against Tornado ruled unlawfulFederal Judge Robert Pitman issued a ruling on April 28 denying the Office of Foreign Assets Control (OFAC) the ability to reimpose sanctions on Tornado Cash — setting a legal precedent for non-custodial mixer cases.Despite this, US federal prosecutors still moved ahead with the case against Storm although the charges have been modified.Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers

Telegram founder Pavel Durov said he rejected pressure from a European Union (EU) country to censor political content on the social media platform ahead of the May 18 presidential elections in Romania.According to Durov, a Western European government, which he hinted at with a baguette emoji, approached the platform and requested it censor conservative voices, which he flatly denied. Durov wrote in a May 18 Telegram post:”You can’t ‘defend democracy’ by destroying democracy. You can’t ‘fight election interference’ by interfering with elections. You either have freedom of speech and fair elections — or you don’t. And the Romanian people deserve both.”The Telegram founder is an ardent defender of free speech, who is highly regarded in the crypto community for his stances on freedom of expression, autonomy, privacy, and individual liberty.Source: Pavel DurovRelated: Pavel Durov says Telegram would exit markets before betraying usersDurov thrust into the spotlight following arrest in FrancePavel Durov was arrested in France in August 2024, sparking widespread condemnation from the crypto community and free speech advocates worldwide, who accused the French government of orchestrating a politically-motivated arrest.French President Emmanuel Macron denied the arrest was political while claiming the French government was “committed to freedom of expression and communication” in an August 26 X post.”You can’t keep founders personally liable, and charge them up to 20 years, for not moderating speech, and at the same time claim you are deeply committed to freedom of expression,” Helius Labs CEO Mert Mumtaz wrote in response to Macron.Shortly after Durov’s arrest, Chris Pavlovski, the CEO of Rumble — a free speech online video platform — announced that he safely departed the European Union after France threatened Rumble.The CEO also criticized the French government for the arrest of the Telegram co-founder, characterizing it as an attempt to pressure him into censoring speech on the platform.Durov maintains that Telegram complies with lawful information requests made by law enforcement officials and said that the company has a legal representative in France who handles such requests.The Telegram co-founder also criticized the French government for bypassing the legal representative and choosing to issue an arrest warrant instead.Magazine: Did Telegram’s Pavel Durov commit a crime? Crypto lawyers weigh in