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Efforts to pass crypto legislation in the US Senate face mounting resistance amid growing ethical concerns around US President Donald Trump’s ties to crypto.In a May 5 letter to the US Office of Government Ethics, Senators Elizabeth Warren and Jeff Merkley said that Trump and his family stand to personally profit from an investment involving UAE state-backed firm MGX, crypto exchange Binance and World Liberty Financial (WLFI).The senators called for an urgent probe, warning the deal may violate the US Constitution’s Emoluments Clause and federal bribery statutes.At the center of the controversy is WLFI’s USD1 stablecoin, reportedly chosen for a $2 billion investment MGX plans to make into Binance.The senators said the transaction amounts to a potential backdoor for foreign influence and self-enrichment, with Trump’s allies allegedly set to receive hundreds of millions of dollars:“This deal raises the troubling prospect that the Trump and Witkoff families could expand the use of their stablecoin as an avenue to profit from foreign corruption.”Further raising ethics concerns, Trump hosted a $1.5 million-per-plate dinner on May 5 at his golf club in Sterling, Virginia. The event came just days after hosting a $1 million-per-plate fundraiser for the MAGA Inc. super PAC.He also plans to hold a gala dinner with major Official Trump (TRUMP) memecoin holders on May 22 despite multiple US lawmakers expressing concern over the initiative.Source: Elizabeth WarrenRelated: America’s crypto renaissance is already failing; but we can fix itGENIUS Act faces roadblocksTrump family’s controversial $2 billion crypto deal comes as the Senate prepares to vote on the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act and other crypto-related bills.The fallout is already being felt in Congress. Some Democratic lawmakers are pushing for additional hearings before advancing any legislation, while others question whether Trump’s personal stake in digital assets is undermining bipartisan support for crypto regulation.On May 5, Senate Majority Leader John Thune signaled a willingness to amend the GOP-backed stablecoin legislation to pass the bill in the coming weeks.Speaking to reporters, Thune said changes can be made on the floor and that he is waiting to hear what Democrats are asking for, per a report from Politico.Internal GOP challenges also remain, with Senator Rand Paul expressing uncertainty about backing the bill, according to the report.The stalling isn’t limited to the Senate. House Financial Services Committee Ranking Member Maxine Waters plans to block a Republican-led event discussing digital assets on May 6.The hearing, “American Innovation and the Future of Digital Assets,” is expected to discuss the new crypto markets draft discussion paper pitched by Thompson, Hill, and other committee members.Related: Elizabeth Warren joins call for probe of Trump over crypto tokensCrypto community slams political pushbackProminent crypto figures are speaking out as political resistance threatens to derail stablecoin legislation in the US Senate.“Elizabeth Warren and Chuck Schumer haven’t learned their lesson,” Tyler Winklevoss, co-founder of Gemini, posted on X.“If they want Democrats to continue losing elections, they will continue standing in front of crypto legislation like the stablecoin bill which they are stalling out in the Senate.”Source: Tyler WinklevossMagazine: Trump’s crypto ventures raise conflict of interest, insider trading questions

The new “Digital Asset Market Structure Discussion Draft” introduced by House Republicans on May 5 could work to reduce the dominance of large crypto firms and promote more participation in the broader market, according to an executive from Paradigm. The discussion draft, led by the House agricultural and financial services committee chairs Glenn Thompson and French Hill, is an “incremental, albeit meaningful, rewrite” of the Financial Innovation and Technology for the 21st Century Act (FIT21), Paradigm’s vice president of regulatory affairs Justin Slaughter said in a May 5 X post.One-pager of the digital asset market structure discussion draft submitted by House Republicans on May 5. Source: US House Agriculture CommitteeOne of the major changes from FIT21 is that the draft defines an affiliated person as anyone who owns more than 1% of a digital commodity issued by the project — down from 5% in the FIT21 bill — a move Slaughter said may curb the influence of big crypto firms and lead to more participation in the crypto market.“This is a portent of the entire bill. There are often criticisms of crypto being too dominated by a few large firms. This bill makes clear the regulatory regime proposed is going to push against that fact and strongly encourage more small-d ‘democratization’ of the space.”The draft also defines a “mature blockchain system” as one that, together with its related digital commodity, is not under the “common control” of any person or group.Source: Justin SlaughterThe Securities and Exchange Commission would be the main authority regulating activity on crypto networks until they become sufficiently decentralized, Slaughter noted.The draft also clarified that decentralized finance trading protocols are those that enable users to engage in a financial transaction in a “self-directed manner.” Protocols that meet this criterion are exempt from registering as digital commodity brokers or dealers.The draft also referred to digital commodities as “investment contract assets” to distinguish their treatment from stocks and other traditional assets under the Howey test.According to Slaughter’s analysis, securities laws won’t be triggered unless the secondary sale of tokens also transfers ownership or profit in the underlying business.Crypto firms would also have a path to raise funds under the SEC’s oversight while also having a “clear process” to register their digital commodities with the Commodity Futures Trading Commission, the committee members said in a separate May 5 statement.Joint rulemaking, procedures, or guidelines related to crypto asset delisting must be established by the CFTC and SEC should a registered asset no longer comply with rules laid out by the regulators.A ‘clear opportunity’ to advance crypto innovation, rules once and for allSpeaking about the need for a comprehensive crypto regulatory framework, the House committee members said crypto is a “clear opportunity” to advance innovation in the US — most notably through modernizing America’s financial infrastructure and reinforcing US dollar dominance.The Republicans criticized the previous Biden administration and the Gary Gensler-led SEC for adopting a regulation-by-enforcement strategy rather than creating clear rules for market participants.Related: VanEck files for BNB ETF, first in USMany crypto firms were stuck in “legal limbo” as a result of the unclear rules, which pushed some industry players overseas, where clearer rules exist, the House committee members said.“America needs to be the powerhouse for digital asset investment and innovation. For that to happen, we need a commonsense regulatory regime,” said Dusty Johnson, chairman of the subcommittee on commodity markets, digital assets and rural development.Slaughter added: “This is the bill that will, finally, provide a clear regulatory regime on crypto that many have been calling for.”Republicans already facing roadblocks over discussion draftHouse Financial Services Committee Ranking Member Maxine Waters plans to block a Republican-led event discussing digital assets on May 6, a Democratic staffer told Cointelegraph.The hearing, “American Innovation and the Future of Digital Assets,” is expected to discuss the new crypto markets draft discussion paper pitched by Thompson, Hill, and other committee members.However, according to the unnamed Democratic staffer, the current rules require all members of the House Financial Services Committee to agree on such hearings.Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight

US President Donald Trump’s crypto businesses are drawing increased scrutiny on Capitol Hill and beginning to influence the progress of US digital asset legislation. As Republican lawmakers in the US House of Representatives unveiled their draft of a digital asset market structure bill on May 5, Democrats prepared for a united response to Donald Trump’s deepening connections with the industry.Speaking to Cointelegraph on May 5, a Democratic staffer with knowledge of the matter said that House Financial Services Committee Ranking Member Maxine Waters planned to lead some members of her party out of a Republican-led hearing discussing digital assets. The May 6 hearing, entitled “American Innovation and the Future of Digital Assets” and led by Committee Chair French Hill, could address draft legislation proposed by Republican lawmakers to establish a crypto market regulatory structure.In a May 5 statement, Rep. Hill and three top Republicans unveiled the draft bill, which could clarify the treatment of digital assets by the US’s financial regulators: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Hill and others echoed some of Trump’s talking points on crypto — e.g, making the US a “crypto capital of the world” — suggesting deference to the president’s previously announced policies.The draft bill included a provision requiring the SEC and CFTC to issue joint rules defining digital commodities. According to the text, transactions involving digital commodities “shall be deemed not to be an offer or sale of an investment contract” as long as the purchaser did not have “an ownership interest or other interest in the revenues, profits, or assets.”According to the Democratic staffer, rules required all members of the House Financial Services Committee to agree to move forward with the digital asset hearing, suggesting that Waters intended to block the Republican-controlled event and conduct a shadow hearing to explore Trump’s and his family’s ties to the crypto industry. At least nine Democrats have reportedly considered a similar move to oppose a proposed stablecoin bill in the Senate.Calls for impeachment, criticism from both sidesSome members of Congress have already called for Trump’s impeachment after he offered the opportunity for some of his top memecoin holders to tour the White House and attend a private dinner. In addition to the memecoin, the president’s family has backed the firm World Liberty Financial, which recently launched its own stablecoin, and an Abu Dhabi-based investment firm used the USD1 stablecoin to settle a $2 billion investment in Binance.Related: US Senator calls for Trump impeachment, cites memecoin dinnerWaters, according to the staffer, requested that Hill and Republicans amend any proposed legislation to explicitly prevent potential conflicts of interest in which Trump could personally enrich himself through crypto ventures. Cointelegraph reached out to Hill’s office but did not receive a response at the time of publication. The Arkansas lawmaker reportedly said in March that the Trump family’s involvement in the crypto industry makes related legislation “more complicated.”Republican lawmakers in the United States currently have control of the House, Senate, and presidency. At least two senators supportive of Trump have criticized his memecoin dinner, hinting that the president was selling access to his office. It’s unclear at the time of publication who among the memecoin holders could attend the May 22 dinner in person.Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questionsThis is a developing story, and further information will be added as it becomes available.

Alex Mashinsky, the founder and former CEO of bankrupt crypto lending platform Celsius, has blasted the government’s 20-year “venom-laced” sentence request, declaring it a “death-in-prison sentence.”The US Department of Justice requested Mashinsky receive at least 20 years behind bars in the May 8 sentencing for his role in misleading Celsius users and profiting from the price manipulation of Celsius (CEL), which would make the 59-year-old 79 if he serves the whole sentence.Lawyers acting for Mashinsky argued in a May 5 reply memorandum filed in a New York district court that he should receive no more than 366 days, because the DOJ hasn’t taken into account his status as a nonviolent first-time offender with a previously unblemished 30-year history in business.  “The government’s venom-laced submission recasts this case as one involving a predator with an intent to target victims, harm them, and steal their money,” they said.“It concludes by recommending that a first time, nonviolent offender who pled guilty and accepts responsibility receive a death-in-prison sentence.”Lawyers acting for Mashinsky argue the DOJ has ignored their client’s background in its sentencing request. Source: Court ListenerMashinsky pleaded guilty to two out of seven charges As part of a plea agreement, Mashinsky pleaded guilty in December 2024 to commodities fraud and manipulating the price of CEL, earning $48 million by selling his holdings before Celsius collapsed in June 2022. Prosecutors initially filed seven charges in July 2023.Lawyers acting for Mashinsky allege the DOJ’s push for a 20-year sentence is because their client is unwilling to “capitulate to the government’s exaggerated characterizations of his actions,” specifically that he was a “fraud from the get-go.” “Alex is inserted as the scapegoat for every corporate action, every group decision, every unanimous vote, every market fluctuation, and every employee’s watercooler speculation,” they said.As part of its April 28 sentencing request, the DOJ said Mashinsky’s guilty plea showed that his crimes were deliberate, calculated decisions to lie, deceive and steal.Days earlier on April 23, US federal prosecutors also filed statements from hundreds of victims who lost money due to the Celsius collapse. They detailed how some had entrusted their life savings to the protocol, believing Mashinsky’s assurances that it was safe.Related: What do crypto users want to happen to Alex Mashinsky?Celsius filed for Chapter 11 bankruptcy on July 13, 2022, owing $4.7 billion to creditors after halting withdrawals in June, citing volatile market conditions.In November 2023, a US bankruptcy court approved Celsius’ restructuring plan to repay customers, and in August 2024, $2.53 billion was paid to 251,000 creditors.Former Celsius chief revenue officer Roni Cohen-Pavon also pleaded guilty in September 2023 to similar charges, but his Dec. 11 sentencing has been delayed until after Mashinsky is sentenced.Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight

Samourai Wallet’s lawyers allege federal prosecutors suppressed advice that the firm didn’t need a license before they charged executives at the crypto mixing service months later. In a May 5 letter to a Manhattan federal court, lawyers for Samourai co-founders Keonne Rodriguez and William Hill said prosecutors disclosed that the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) representatives told them six months before they charged the pair “that under FinCEN’s guidance, the Samourai Wallet app would not qualify as a ‘Money Services Business’ requiring a FinCEN license.”“Shockingly, six months later, the same prosecutors criminally charged Keonne Rodriguez and William Hill with operating just such a business without a FinCEN license,” the lawyers added.The letter claimed that prosecutors were required to share their discussions with FinCEN over Samourai two weeks after they unsealed charges, making the deadline May 8 last year, but instead “suppressed this information for over a year, disclosing it only on April 1, 2025.” Prosecutors charged Samourai CEO Rodriguez and its technology chief Hill with conspiracy to operate an unlicensed money transmitting business and money laundering conspiracy in February 2024, unsealing the charges and arresting the pair in April that year. Samourai’s mixing service took crypto from multiple users and blended it together to hide its origins. The government alleged the platform helped with over $2 billion in illegal transactions and facilitated over $100 million worth of money laundering transactions from online black markets and scammers.Rodriguez and Hill both pleaded not guilty.In the letter, their lawyers said prosecutors shared details of a call with Kevin O’Connor, chief of FinCEN’s Virtual Assets and Emerging Technology Section in the Enforcement and Compliance Division, and Policy Division staffer Lorena Valente.According to an email from one of the prosecutors summarizing the call, FinCEN said that “because Samourai does not take ‘custody’ of the cryptocurrency by possessing the private keys to any addresses where the cryptocurrency is stored, that would strongly suggest that Samourai is NOT acting as an MSB [money services business].”An excerpt of an email from prosecutor Andrew Chan said FinCEN “did not have a sense” of what it would decide on Samourai. Source: CourtListenerThe email said O’Connor and Valente agreed that the government could try to argue that Samourai functionally controlled the crypto, “but that has never been addressed in the guidance, and so it could be a difficult argument” for prosecutors.Samourai’s lawyers asked the court for a hearing “to determine the circumstances surrounding the Government’s late disclosure” and to administer a remedy.Samourai to renew dismissal bid if case goes onRodriguez and Hill’s lawyers said that, using this latest information, they would again ask for the charges to be dismissed, arguing they lacked fair notice and “understood they were acting lawfully.”Related: US Treasury’s OFAC can’t restore Tornado Cash sanctions, judge rules Prosecutors and Samourai asked the court for more time on April 28 to consider potentially dismissing the case after the Justice Department rolled back its crypto enforcement.Rodriguez and Hill bid to dismiss the case in early April, arguing it should be dropped as Deputy Attorney General Todd Blanche said in an April 7 memo that the Justice Department wouldn’t prosecute crypto mixers for “unwitting violations of regulations.” In the latest letter, their lawyers said if the government “were to resist the Blanche Memo’s directive and push forward,” then they would bid to dismiss as “if they were not money transmitters under FinCEN’s guidance, then they could not possibly be prosecuted for not having a license.”Magazine: Tornado Cash 2.0 — The race to build safe and legal coin mixers 

The Securities and Exchange Commission’s (SEC) enforcement approach on crypto firms has left a lasting “regulatory overhang” within the industry, according to Devin Finzer, co-founder and CEO of OpenSea. Speaking to Cointelegraph, Finzer said that during Biden’s administration the agency unfairly targeted good actors in the crypto space, including OpenSea. “There’s all sorts of digital assets, you know, you shouldn’t treat them all the same. That’s obvious. But I think the approach that the prior SEC was taking was kind of this, you know, very, very generic.”The SEC issued a Wells notice — a formal notification that is often a precursor to enforcement action — to OpenSea in 2024, alleging that the NFT marketplace was operating as an exchange for unregistered securities. At the time, Finzer criticized the SEC for taking an approach of “regulation by enforcement” and said that OpenSea was prepared to “stand up and fight.”With the SEC under new leadership by Chair Paul Atkins, Finzer is hopeful for a more balanced regulatory framework. “Good crypto regulation needs to balance, sort of, protecting consumers but also preserving the ability to innovate,” Finzer said. “It’s not just a one-size-fits-all problem, right?”Under the Trump administration, the SEC has scaled back enforcement actions against several crypto firms, marking a policy shift in the US after years of enforcement actions led by former Chair Gary Gensler.For instance, the agency has withdrawn legal challenges against exchanges Coinbase and Kraken, NFT companies Yuga Labs and OpenSea, and decentralized finance protocol Uniswap — most of them opened during Gensler’s term. The SEC has even dismissed its years-long case against Ripple.During the 2024 US election cycle, the crypto industry widely backed then-candidate Donald Trump, who promised to make the United States “the crypto capital of the planet.” Overall, crypto super political action committees, or PACs, donated over $119 million into the coffers of pro-crypto candidates, helping shape the elections.Related: Crypto’s debanking problem persists despite new regulationsNFTs: Low trading volume, high innovationThe SEC crackdown on crypto firms had weighed on the markets downturn following FTX collapse in November 2022, driving investors away from crypto products such as nonfungible tokensSince then, NFT trading volume has plummeted from its 2021 peak, affecting protocols and platforms such as OpenSea. In 2023, the company laid off 50% of its staff amid the market turmoil.Finzer says the NFT space is still flourishing, with innovation and new applications coming to life — especially in the gaming industry and art collectibles. Despite this, OpenSea has started exploring other areas, seeking to diversify its business to become a destination for all onchain trading beyond NFTs.“I mean, for the first time in the history of the internet, people have the ability to own digital stuff, right, in a real way,” Finzer said. “[…] you can move them around between different applications and take them with you wherever you go on the internet. And that’s something that’s really powerful.”Related: OpenSea denies NFT airdrop rumors, calls website a test page

A Russian-Israeli citizen allegedly involved in the $190 million Nomad bridge hack will soon be extradited to the US after he was reportedly arrested at an Israeli airport while boarding a flight to Russia. Alexander Gurevich will be investigated for his alleged involvement in several “computer crimes,” including laundering millions of dollars and transferring stolen property allegedly connected to the Nomad Bridge hack in 2022, The Jerusalem Post reported on May 5.Gurevich returned to Israel from an overseas trip on April 19 but was ordered to appear before the Jerusalem District Court for an extradition hearing soon after, according to the report. On April 29, Gurevich changed his name in Israel’s Population Registry to “Alexander Block” and received a passport under that name at Israel’s Ben-Gurion Airport the next day.He was arrested at the same airport two days later, on May 1, while waiting to board a flight to Russia. Gurevich allegedly identified a vulnerability in the Nomad bridge, which he exploited and stole roughly $2.89 million worth of tokens from in August 2022.Dozens of copycat hackers discovered and capitalized on the security vulnerability soon after, leading to a total loss of $190 million.Gurevich allegedly reached out to a Nomad executive on TelegramProsecutors allege that shortly after the hack, Gurevich messaged Nomad’s chief technology officer, James Prestwich, on Telegram using a fake identity, admitting that he had been “amateurishly” seeking a crypto protocol to exploit.He allegedly apologized for “the trouble he caused Prestwich and his team” and voluntarily transferred about $162,000 into a recovery wallet the company had set up.Prestwich told Gurevich that Nomad would pay him 10% of the value of the assets he had stolen, to which Gurevich responded that he would consult his lawyer. However, Nomad never heard back from him after that.Alleged messages between Gurevich and Nomad’s James Prestwich were shared on X by Israel-based Walla News journalist Yoav Itiel. Source: Yoav ItielAt some point during the negotiations, Gurevich demanded a reward of $500,000 for identifying the vulnerability.Related: Do Kwon is in US custody after extradition battleUS federal authorities filed an eight-count indictment against Gurevich in the Northern District of California on Aug. 16, 2023, in addition to obtaining a warrant for his arrest. California is where the team behind the Nomad bridge is based.The US submitted a formal extradition request in December 2024, the Post noted.The money laundering charges that Gurevich faces carry a maximum of 20 years, significantly harsher than what he would face in Israel.Gurevich is believed to have arrived in Israel a few days before the $190 million exploit occurred, prompting Israeli officials to believe he carried out the attack while in Israel.Magazine: Financial nihilism in crypto is over — It’s time to dream big again

Acting US Attorney for the Eastern District of New York (EDNY) John Durham has departed as President Donald Trump’s pick takes control of the office.In a May 5 notice, the US Attorney’s Office for EDNY said Joseph Nocella will serve as interim US Attorney for the region for 120 days or until a Senate-confirmed nominee assumes the role. Nocella’s appointment came as jury selection began in the criminal trial of Braden John Karony, the former CEO of crypto firm SafeMoon.It’s unclear how the advancement of Nocella, appointed by US President Donald Trump this month, could affect prosecutors’ case against Karony, who faces charges of securities fraud conspiracy, wire fraud conspiracy, and money laundering conspiracy. Nocella said he intended to help prosecute “narcotics-traffickers, gang members, terrorists, human-traffickers and other criminals.”The former SafeMoon CEO asked the court in February to consider pushing back the start of the trial based on “significant changes” Trump had proposed affecting US securities laws, potentially impacting his criminal case.Related: What do crypto users want to happen to Alex Mashinsky?Though not as well known for criminal cases involving high-profile figures in the crypto industry, the Eastern District of New York has been responsible for overseeing cases against individuals tied to digital assets, including a Securities and Exchange Commission (SEC) complaint against Hex founder Richard Heart and fraudsters. Its neighboring district, the Southern District of New York, will oversee the sentencing of former Celsius CEO Alex Mashinsky on May 8. Jay Clayton, a Wall Street insider and the former chair of the SEC, became the interim US Attorney for the district in April.Criminal trial to start on May 6SafeMoon’s Karony, Kyle Nagy, and Thomas Smith were charged in November 2023 for “diverted and misappropriated millions of dollars’ worth” of the platform’s SFM token between 2021 and 2022. Karony has pleaded not guilty to all charges and has been free on a $3 million bond since February 2024.In a May 5 filing, Karony agreed to have jury selection for his trial proceed under US Magistrate Judge James Cho. District Judge Eric Komitee is expected to oversee the trial starting on May 6.Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight

ChatGPT-maker OpenAI has abandoned plans to become a for-profit company and reaffirmed commitment to its nonprofit status. In a May 5 blog post, OpenAI confirmed plans to convert its for-profit business unit into a so-called Public Benefit Corporation (PBC), which would remain under the nonprofit’s control. PBCs are for-profit companies that are legally obligated to prioritize a social mission alongside the interests of shareholders. The plans mark a reversal for OpenAI, which had previously floated a for-profit conversion involving spinning out the nonprofit entity. “OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit,” the ChatGPT-maker said. This can be done without compromising OpenAI’s ability to raise funds for AI development, which “currently requires hundreds of billions of dollars and may eventually require trillions of dollars,” OpenAI’s CEO, Sam Altman, said in a letter to employees announcing the decision. In 2024, OpenAI took a starkly different view, asserting that the for-profit entity was “necessary” for raising capital to amass the “vast quantities of compute” needed to run AI models. OpenAI’s May 5 governance announcement. Source: OpenAIRelated: OpenAI expects to 3X revenue in 2025 but Chinese AI firms are heating upControversial Plans OpenAI was originally founded as a nonprofit in 2015, and in 2019 it created a for-profit entity purportedly to help AI developers raise funds. The for-profit unit has remained under the nonprofit’s control since then. In 2024, Tesla CEO Elon Musk — one of OpenAI’s cofounders — sued Altman for allegedly “violating terms of Musk’s foundational contributions to the charity,” according to a November court filing. In the lawsuit, Musk alleges Altman “assiduously manipulated Musk into co-founding their spurious nonprofit venture, OpenAI,” while secretly planning to convert OpenAI to a for-profit entity. Musk has since launched xAI, the developer of AI chatbot Grok, which he said has fallen victim to OpenAI’s allegedly anti-competitive practices.OpenAI’s leadership expects its revenue to hit $29.4 billion by 2026, Bloomberg reported in March. It forecasts earning revenues of $12.7 billion in 2025. In March, OpenAI raised $40 billion from Softbank at a $300 billion valuation. Magazine: Bitcoin to $1M ‘by 2029,’ CIA tips its hat to Bitcoin: Hodler’s Digest, April 27 – May 3