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Maybe we should rename it The Blockchain of Gibraltar.
The British Overseas Territory of Gibraltar froze the assets of some of the world’s largest crypto exchanges Tuesday in an attempt to locate $43 million in missing funds from a now liquidated trader. The crackdown comes as the Iberian peninsula tries to reestablish itself as a crypto city upon a hill.
(Not) Solid as a Rock
In case you missed it, 2022 was not a good year for crypto. Bitcoin dropped 60% in value, multiple lenders filed for bankruptcy, and of course, there was Sam Bankman-Fried and FTX. But apparently, that wasn’t all. The Financial Times reported that Globix, a little-known and unlicensed crypto trading platform based in Gibraltar, closed its doors to investors last June as the sector faced massive headwinds. Last month, the company’s director and only shareholder, Damian Carreras, put Globix into liquidation and it’s still on the hook for $43 million owed to investors.
Despite Gibraltar introducing crypto regulations in 2018, making it one of the first to do so, Globix somehow slipped through the cracks. Now the government is scrambling to correct the situation:
- A court injunction ordered Binance, Crypto.com, Bitstamp, and Kraken to reveal the identities behind certain crypto wallets associated with the Globix platform, the FT reported.
- Thanks in part to the Globix blunder, Gibraltar was placed on the Financial Action Task Force’s “grey list.” Think of it like Santa’s naughty list for countries that didn’t properly address money laundering schemes and terrorist financing.
Nails in the coffin: Minimal regulation has always been both the greatest appeal and greatest risk of crypto from the start, but with governments addressing the decentralized chaos of recent months by clamping down on the sector, crypto prophets are losing faith in digital currencies. Tech investor Chamath Palihapitiya, a prominent bitcoin bull who once proclaimed it would replace gold, has fully changed his tune and is now claiming that, thanks to overzealous regulators, “Crypto is dead in America.” But how does he feel about SPACs?