
Each month, our panel of crypto lawyers looks at the legal implications of some of the thorniest problems facing the industry in different jurisdictions around the world.
United States authorities have recently charged 18 individuals with cryptocurrency market manipulation following a Federal Bureau of Investigation (FBI) sting operation, in which law agents created a token to lure market makers into illegal wash trading.
The case has sparked debate on the application of traditional financial laws, such as anti-market manipulation rules, within the cryptocurrency industry. The case also raises potential copyright concerns, with allegations that the FBI may have improperly used open-source code for its token.
Meanwhile, technologies like autonomous AI agents now play roles in controlling crypto wallets, and questions of accountability in crypto transactions and tokens become more complex: Who ultimately bears responsibility?
FBI’s token draws copyright infringement allegations. (David Trinks)
Magazine spoke with a panel of legal experts to find out more: Digital & Analogue Partners co-founder Catherine Smirnova in Europe, co-chair of the Hong Kong Web3 Association Joshua Chu from Asia, and Rikka Law Managing Partner Charlyn Ho from the United States.
The discussion has been edited for clarity and brevity.
Magazine: The US Justice Department has charged 18 individuals and entities for alleged market manipulation and wash trading. How is wash trading defined legally, and how does it apply to the crypto industry?
Old rules are good enough for new markets, Chu says. (Kaboompics)
Smirnova: The definition [of wash trading] is more or less similar in different markets, whether it’s the US, the United Kingdom or the European Union. It belongs to the financial markets, not only to crypto markets. It involves simultaneous buying and selling transactions of the same security to create misleading…
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