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New York tightens up its coin listing and delisting rules, US lawmakers request a full accounting of Hamas crypto wallets, and LUNA creator Do Kwon sees his Montenegro prison sentence upheld.

The New York State Department of Financial Services (DFS) has  that its new token listing and delisting rules are now live, with special restrictions placed on stablecoins.

On Wednesday (November 15), DFS superintendent Adrienne Harris wrote to all New York-licensed crypto firms to inform them of the changes.

In September, as covered by ����žž, the DFS opened a consultation on the proposed changes, and the responses have since been incorporated into the finalised rules.

Under the latest guidance, firms that previously had an approved coin listing policy are not permitted to self-certify any coins until they submit a new coin listing and delisting policy to the DFS.

If the policies are approved by the DFS, the firm may resume self-certification of certain coins and may offer them to New Yorkers.

However, firms cannot self-certify any stablecoin that is not on the DFS Greenlist.

This restriction also applies to any token that is intended to act as collateral for any stablecoin that is not on the Greenlist.

Likewise, firms cannot self-certify any token that is issued by or on behalf of a crypto trading platform (such as Binance’s BNB token).

Self-certification means that a firm can automatically list a token without having to obtain written permission from the DFS.

Without a DFS-approved coin listing policy, firms may only list coins that are included on the DFS Greenlist.

In September, as reported by ����žž, the Greenlist was reduced from 25 to just eight crypto-assets, six of which are stablecoins.

There is no obligation for firms to submit a new coin listing policy, but at a minimum they must submit a coin delisting policy.

Firms must meet with the DFS by December 8 to preview their draft delisting policy, and their final delisting policy must be submitted for approval by January 31, 2024.

‘Enhanced’ guidelines for a safer market

Coin listing policies should cover three main areas: governance; risk assessment; and monitoring.

The governance provisions ensure that a "Governing Authority" made up of directors or delegates of directors of a firm is responsible for listing reviews and decisions.

The Governing Authority must also identify and review conflicts of interests, keep records and communicate policy changes with the DFS.

Risk assessment should take into account a wide range of technical, operational, cybersecurity, market, liquidity, illicit finance and reputational risks, and monitoring provisions ensure that listed tokens are regularly reviewed.

Similarly, in their delisting policies, firms must be able to demonstrate that they can respond to a DFS order, should one be issued, to delist a particular token in a safe, sound and timely manner.

US lawmakers want answers on Hamas crypto ties

On Capitol Hill, 53 lawmakers sent a  to the White House this week, once again demanding answers on how Hamas is able to access crypto-assets to finance its operations.

Led by Representative Tom Emmer (R-MN), majority whip, they said that Congress must understand the size, scope and duration of Hamas’ crypto activities if they want to prevent them in future.

In yet more bad press for the exchange, Binance is mentioned by name as an important conduit for crypto-assets linked to Hamas.

“It appears that Hamas’s digital asset fundraising targets are exploiting exchanges connected to adversarial jurisdictions,” the lawmakers said.

“These digital asset exchanges include Russia-based Garantex, which is already sanctioned by the US; Chinese-affiliated Binance, a non-compliant and unregistered entity headquartered outside of the United States; and Gaza-based Buy Cash.”

The letter calls on President Joe Biden and Treasury secretary Janet Yellen to publish how many wallets have been identified that can be linked to Hamas, and the value of the funds they have handled.

The same request is also made for wallets linked to the affiliated terror groups Palestinian Islamic Jihad and Hezbollah.

In addition, the lawmakers have asked for a full accounting of crypto-assets linked to Hamas that have been blocked and forfeited to the US government.

After the accounting, the lawmakers propose that those funds be made available to Israel to “offset the cost of additional spending packages” on Israel’s defence.

Montenegro court rejects LUNA co-founder’s appeal

A High Court in Podgorica, capital of Montenegro, has  an appeal against a four-month prison sentence handed down to Do Kwon, co-founder and former CEO of Terraform Labs.

In June, as covered by ����žž, the 32-year-old creator of the LUNA blockchain and TerraUSD stablecoin was convicted of possessing forged identity documents.

He had travelled to Montenegro from Singapore to escape an extradition request from his native South Korea, where he is wanted for a range of fraud and unregistered securities offences.

Han Chang-Joon, former CFO of Terraform Labs, also travelled with Do Kwon and was charged with and convicted of the same offence.

The High Court found that the two appeals were “unfounded” and that the lower courts had convicted both men “correctly”.

“The imposed punishments are adequate to the gravity of the committed crime and the personality of the defendants as perpetrators,” the court said in a statement.

The failure of the appeal will have little impact in terms of Do Kwon’s prison time, as he has already spent more than four months in custody during his appeal.

However, the big question is where he will go next: will it be South Korea or will it be the US, where the Securities and Exchange Commission (SEC) has also filed charges against him?

In the US, the SEC has  that Do Kwon receive summary judgment, i.e. a verdict without jury trial, because his alleged fraud is so obvious.

In the words of the SEC, Do Kwon’s violations of US securities laws are “clear, undisputed, and overwhelming”.