This week’s newsletter captures a dynamic moment in the evolving regulatory landscape for digital assets. From the CFTC’s push to integrate crypto into mainstream markets and the SEC’s narrowed enforcement focus, to California’s new protections for dormant assets and upcoming compliance deadlines for fund managers, regulators are signaling both momentum and caution. Meanwhile, high-profile developments such as the Gemini Earn settlement, President Trump’s pardon of Binance founder Changpeng Zhao, and a class action against Trust Wallet underscore the legal and political complexities facing the crypto industry today.

Also read about How One Definition in a Token Warrant Sparked a $273M Lawsuit.

Regulatory Updates

CFTC Accelerates Digital Asset Integration

CFTC Acting Chair Caroline Pham announced on October 21, 2025 the agency is moving quickly to implement the White House’s digital asset strategy. Listed spot crypto trading is expected to go live by the end of 2025. Looking ahead to 2026, derivatives clearing organizations may begin accepting stablecoins as collateral as early as Q1 or Q2. These steps mark a significant shift toward integrating digital assets into U.S. financial markets.

SEC Refocuses Crypto Enforcement Strategy

In its fiscal year 2025 enforcement review, the U.S. Securities and Exchange Commission (SEC) indicated a shift in its approach to crypto-related enforcement in the first six months of Chairman Atkins. The agency has significantly reduced actions focused on failure to register securities, with several legacy cases being dropped. However, the SEC has continued to pursue enforcement in cases involving alleged fraud, including actions against crypto trading firms accused of misappropriating investor funds. This reflects a narrowing focus on fraud-based violations rather than broad registration-related claims in the crypto sector. | Read more

California Safeguards Dormant Crypto Assets

California has become the first U.S. state to enact legislation protecting unclaimed cryptocurrency from forced liquidation. Under SB 822, dormant digital assets held by the state will remain in their original form, providing asset owners additional time and control to reclaim their funds. | Read More

Fund Managers Face December Deadline for Enhanced Safeguards and Incident Response

Large registered fund managers with more than $1.5 billion in AUM need to comply with amendments to Regulation S-P by December 3, 2025. The amendments include: (1) require covered institutions to adopt an incident response program within their written safeguards policies and procedures that is reasonably designed to detect, respond to and recover from unauthorized access to or use of customer information, including assessing the nature and scope of the incident and taking steps to contain and control further access; (2) require oversight, due diligence and monitoring of service providers under written policies and procedures; (3) mandate notice to affected individuals if sensitive customer information was or is reasonably likely to have been accessed or used without authorization, where notice must be provided as soon as practicable and no later than 30 days after awareness; (4) align the safeguards and disposal rules to also cover non‑public information received from other financial institutions; and (5) require written records documenting compliance with the safeguards and disposal rules. | Read more

Litigation Updates

Gemini Earn Settlement Highlights Regulatory Uncertainty

The proposed settlement between the U.S. Securities and Exchange Commission (SEC) and Gemini Trust Company (“Gemini”) over the “Gemini Earn” crypto-lending program emphasizes the regulatory shift under the Trump administration. This case underscores the need for platforms to carefully evaluate how they structure, disclose, and market their offerings, but also highlights why the industry needs clearer legislation. | Read More

President Trump Pardons Binance Founder Changpeng Zhao

On October 23, 2025, President Trump officially pardoned the convicted founder of Binance, Changpeng Zhao. Zhao pled guilty in 2023 to money laundering charges. White House Press Secretary Karoline Leavitt made the announcement, stating that the President “exercised his constitutional authority by issuing a pardon for Mr. Zhao, who was prosecuted by the Biden Administration in their war on cryptocurrency.” Read More

Trust Wallet Faces Class Action Over Alleged Scam Interface

A New York court received a class action lawsuit against Trust Wallet. Plaintiff Kuang Yu Lin alleges that he and dozens of others were “deceived into transferring cryptocurrency assets to a fraudulent investment interface” within the Trust Wallet application. The Plaintiff argues Trust Wallet is liable because it enabled the scammers while advertising itself as a “secure platform.” This case highlights the dearth of remedies available to victims of cryptocurrency scams. | Read More

DOJ Seizes $15 Billion in Bitcoin in “Pig Butchering” Crypto Scam Tied to Cambodian Kingpin

The U.S. Department of Justice has charged Cambodian national Chen Zhi, 37, founder and chairman of Prince Holding Group, with wire fraud conspiracy and money laundering conspiracy for orchestrating  a sprawling transnational fraud empire. According to the DOJ, Zhi directed forced-labor scam compounds in Cambodia where individuals were held against their will and were coerced into running elaborate “pig butchering” crypto scams which stole billions of dollars from victims in the U.S. and globally. The filing also includes the largest forfeiture action in U.S. history: roughly 127,271 Bitcoin, worth roughly $15 billion, held in private key wallets tied to the scheme are now in the custody of the U.S. government. This action underscores the DOJ’s aggressive convergence of human trafficking, cyber fraud, and money laundering strategies and sends a clear message that complex crypto schemes will be pursued at the highest levels.  

Tether Pays $300 Million to Settle Celsius Lawsuit, Avoiding Extended Court Battle

On October 14, the Blockchain Recovery Investment Consortium (BRIC) announced that Stablecoin issuer Tether has agreed to pay $299.5 million to resolve litigation with the bankrupt crypto lender Celsius Network, ending the high-profile dispute over allegations that the lender was improperly liquidated by Tether.  The settlement is notably lower than the near $4.5 billion that was originally sought by Celsius but is still marks one of the largest legal resolutions in the ongoing Celsius wind-down. Former Celsius CEO Alex Mashinsky was sentenced to 12 years in prison for fraud and market manipulation in May of this year.

Crypto “Bonnie and Clyde” Trial Highlights the Exploitation of Ethereum’s Architecture

Brothers Anton and James Peraire-Bueno have been alleged by federal prosecutors of one of the most sophisticated Ethereum-based thefts to date. The duo face allegations that in April 2023 they executed a sophisticated exploit of the Ethereum blockchain to siphon off approximately $25 million cryptocurrency in just 12 seconds. Prosecutors contend that the brothers “manipulated the and tampered with the process and protocols by which transactions are validated and added to the Ethereum blockchain” which allowed the brothers to fraudulently gain access to the pending private transactions and thereby alter those transactions and acquire the victims’ crypto. The case is widely viewed as a pivotal test of how traditional fraud statutes apply to decentralized finance and the boundary between aggressive trading and criminal manipulation. If they are convicted on the charges including conspiracy to commit wire fraud and conspiracy to commit money-laundering, each brother faces up to 20 years in prison.  

Legislative Updates

Financial Stability Board Warns of Major Gaps in Crypto and Stablecoin Regulation.

The FSB’s October 2025 review found that despite the progress since its 2023 global framework, countries remain uneven and inconsistent in implementing crypto-asset and stablecoin regulations. Many jurisdictions have advanced their oversight of crypto service providers but have lagged in establishing comprehensive, cohesive rules for global stablecoin arrangements, leaving room for regulatory arbitrage and cross-border risk. The FSB warned that fragmented supervision undermines financial stability and urged regulators to accelerate alignment, strengthen international cooperation, and close persistent implementation gaps to promote a globally coherent and resilient framework for digital asset markets.  

Senate Democrats Signal Continued Openness to Crypto Legislation

In what seems to be a notable shift from past skepticism, U.S. Senate Democrats have reassured leading crypto CEOs that they remain committed to advancing digital asset legislation despite the partisan gridlock. During a recent meeting with industry leaders, Democratic lawmakers, including Senator Kristen Gillibrand, emphasized a pragmatic approach that balances innovation and regulatory clarity. While acknowledging differences with their Republican counterparts on the regulatory scope and agency authority, the senators indicated that bipartisan cooperation was achievable. The meeting represents the continued effort to form a dialogue between policymakers and the crypto sector as Congress weighs various frameworks that could provide long-sought clarity following years of regulatory ambiguity.

Senate GOP Bill Seeks to Triple AML Reporting Thresholds Under Bank Secrecy Act

A newly introduced Senate Republican bill, dubbed the Streamlining Transaction Reporting and Ensuring Anti-Money Laundering Improvements for a New Era Act (“Streamline Act”), proposes tripling key Bank Secrecy Act thresholds to reduce the regulatory burden on financial institutions. Sponsored by Senator John Kennedy (R-LA) and backed by the major banking trade groups, the bill would raise currency transaction reporting from $10,000 to $30,000 and suspicious activity triggers from $5,000 to $10,000, with inflation indexing. Proponents of the bill argue that modernization would cut excessive paperwork and improve data quality for law enforcement. However, critics theorize that the bill could weaken AML oversight. The bill aligns with the Treasury Department’s push toward risk based compliance and comes amid partisan divides that may determine its legislative fate.

Market Updates

Google-backed TeraWulf Completes $3.2 Billion Bond Sale for Data Center Expansion

Crypto mining company TeraWulf Inc. completed a $3.2 billion high-yield bond sale on October 24, 2025, to finance its data center growth, marking one of the largest junk bond transactions since 1989. The news comes shortly after the TeraWulf announced an AI hosting arrangement that included terms for Google to receive warrants for a 14% ownership stake in the company. The bond offering represents more than half of TeraWulf’s $5.7 billion market capitalization and is intended to finance a portion of its Lake Mariner data-center campus in upstate New York.

Coinbase Acquires Echo for $375 Million to Bolster Onchain Fundraising

On October 21, 2025, Coinbase announced its acquisition of Echo, an onchain capital formation platform founded by crypto trader “Cobie,” in a cash-and-stock deal valued at approximately $375 million. Echo has facilitated over $200 million in raises across roughly 300 deals since its launch, and the integration aims to expand Coinbase’s tools for token sales, tokenized securities, and real-world assets, complementing its earlier purchase of LiquiFi.

Fireblocks Acquires Dynamic to Expand Custody-to-Consumer Stack

Digital asset infrastructure firm Fireblocks acquired wallet technology startup Dynamic on October 23, 2025, in a deal with undisclosed terms, adding tools for user onboarding, authentication, and embedded wallets that power over 50 million accounts for clients like Kraken, Magic Eden, and Ondo Finance. The move creates an end-to-end platform from institutional custody to consumer-facing apps, with Dynamic’s 30-person team joining Fireblocks to accelerate enterprise adoption of onchain products.

Global Crypto ETFs Attract Record $5.95 Billion Inflows in Early October

For the week ending October 4, 2025, global cryptocurrency ETFs saw unprecedented net inflows of $5.95 billion, with U.S.-based products contributing $5 billion, primarily into Bitcoin and Ether funds. This institutional surge aligned with Bitcoin hitting an all-time high above $126,000, although its value has since declined, likely due to escalating U.S.-China trade tensions.

Grayscale Lists First U.S. Multi-Asset Crypto Fund on NYSE

On October 24, 2025, Grayscale Investments celebrated the listing of its Grayscale CoinDesk Crypto 5 ETF on the New York Stock Exchange. The Fund, with ticker GDLC, is the first multi-asset cryptocurrency investment product in the U.S and tracks the CoinDesk 5 Index, which currently contains Bitcoin, Ethereum, XRP, Solana, and Cardano. The Fund provides broader digital asset exposure to traditional investors by increasing access to smaller cap assets such as Solana and Cardano.

Recent Insights

Our team continues to monitor rapidly evolving developments in financial regulation, enforcement, and digital assets. Stay informed with deeper insights from our team on the latest legal developments in the digital asset industry.

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