"Judge Dismisses SEC's $1B Crypto Case; Durbin Targets Crypto ATM Fraud; OKX Fined $500M; Upbit Challenges South Korea Ban; Lawmakers Push to Repeal 'DeFi Broker Rule'"

A district court judge has dismissed a lawsuit brought by the United States Securities and Exchange Commission (SEC) against Richard Heart, the founder of Hex. The SEC alleged that Heart raised over $1 billion through unregistered crypto offerings and defrauded investors of more than $12 million. However, Judge Carol Bagley Amon ruled that the case could not be decided because the SEC failed to establish that the US had jurisdiction over Heart's crypto activities, which were global in nature and did not specifically target US-based investors.

In separate news, US Senator Dick Durbin has proposed legislation targeting crypto ATM machine fraud in the US. The senator expressed concern about the growing trend of fraud involving the 30,000 crypto ATMs in the US, particularly those targeting senior citizens. The Crypto ATM Fraud Prevention Act would require operators to warn consumers about scams and take "reasonable steps" to prevent fraud committed through their machines. The bill would also limit the amount consumers lose when they fall victim to such scams.

Meanwhile, cryptocurrency exchange OKX operator Aux Cayes FinTech has pleaded guilty to operating an unlicensed money-transmitting business in violation of US Anti-Money Laundering laws. The company agreed to pay over $500 million in fines to resolve the matter, including $84 million in penalties and $421 million in fees earned from institutional clients. OKX acknowledged that certain US customers had traded on the company's global platform amid legacy compliance gaps.

In South Korea, Upbit operator Dunamu has filed a lawsuit against the country's Financial Intelligence Unit (FIU) to overturn business sanctions. Dunamu challenged a three-month ban on servicing new clients, which blocked the exchange from processing external transactions for new users. The company applied for an injunction to halt the enforcement of FIU sanctions, arguing that the ban was unfair and disproportionate.

US lawmakers have advanced a resolution to repeal the "DeFi broker rule," which requires brokers to report crypto transactions to the Internal Revenue Service. The regulation, approved on Dec. 5, expands reporting requirements to include decentralized exchanges and mandates that brokers disclose gross proceeds from crypto sales, including information on taxpayers involved in the transactions. DeFi Education Fund CEO Miller Whitehouse-Levine argued that the rule is an unconstitutional overreach and urged lawmakers to act swiftly to overturn the "misguided rule."