Non-government organization Bitcoin Argentina presented a draft bill proposing to regulate the cryptocurrency market in a way that preserves decentralization and strengthens public trust.

The proposed legal framework was pitched by Bitcoin Argentina’s president Ricardo Mihura at LABITCONF 2023 in Argentina’s capital, Buenos Aires on Nov. 10. Bitcoin Argentina previously dismissed the idea that the industry needed to be regulated. However, the Bitcoin advocates now argue it is necessary to not only preserve blockchain but also hold bad actors accountable to the fullest extent of the law.

“We have always rejected attempts to regulate the crypto economy, but this time we set ourselves the goal of giving a positive response, with only two purposes: preserving decentralization and protecting savings and public trust.” Mihura added:

“We cannot close our eyes to the number of dishonest actors and projects that circulate with the blockchain brand.”

The first article of the legal framework focuses on separating cryptocurrency platforms and service providers into three categories to ascertain property rights — decentralized, local centralized or willing to dialogue with authorities, and global centralized.

Platforms that fall under one of the two centralized categories would be allowed to operate freely, but its customers would be granted “the broadest possible judicial protection,” guaranteeing the right to claim damages in the event of a company downfall.

It is understood that Argentina’s judiciary will not intervene on failures from decentralized platforms.

Courts will decide whether or not a cryptocurrency platform is sufficiently decentralized when resolving claims put forward by allegedly injured customers.

Related: Argentina’s central bank halts cryptocurrencies from payment apps

Mihura stressed that imposing an outright ban on cryptocurrencies — which some governments have tried to do — simply wouldn’t work given the global nature of blockchain:

“Not even the United States can effectively prohibit the operation of the unlicensed cryptoeconomy […] Argentina has no possibility of prohibiting its residents from operating in global environments [so] we believe that it does not make sense to propose a top-down ban and we choose to propose the best that the law can offer to its citizens.”

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Several former FTX executives have teamed up to help build a new cryptocurrency exchange in Dubai with a specific focus on what FTX failed to do — secure customer funds.

Ex-FTX lawyer Can Sun is leading the way with Trek Labs, a Dubai-based startup that received a license to offer cryptocurrency services in the region in late October. Backpack Exchange is the name under which Trek Labs will offer those services.

Sun will receive support from ex-FTX employee, Armani Ferrante, who serves as CEO of Trek’s holding company in the British Virgin Islands, according to a Nov. 11 report by the Wall Street Journal. Ferrante also runs Backpack, a cryptocurrency wallet which is integrated in Backpack Exchange.

Sun’s former legal deputy at FTX, Claire Zhang, who is also Ferrante’s wife, is also on Trek’s executive team. However, once Trek raises an investment round, Zhang plans to transition out of the company as she has been working without pay to “help bootstrap the exchange,” WSJ said.

Sun and Ferrante iterated they wanted to use the lessons learned from FTX’s failure to protect customer funds. Backpack’s technology offers a self-custody solution which integrates a multiparty computation (MPC) technique to ensure funds remain secure. MPC typically involves several parties approving a transaction before funds are moved.

It will also enable Backpack customers to verify funds whenever they want, Sun told WSJ:

“In a post-FTX world, you need trust and transparency to create a true alternative to the other players.”

Backpack Exchange is currently in beta and a wider launch will come later this month, the firm said.

Sun was a witness at Bankman-Fried’s recent fraud trial where he revealed that the former FTX CEO turned to him seeking a legal justification as to why FTX’s funds were at Alameda Research. Bankman-Fried was convicted on all seven fraud-related charges.

Related: How long could Sam Bankman-Fried go to jail for? Crypto lawyers weigh in

Sun said he quit as FTX’s general counsel the day after Bankman-Fried told him about the use of customer money.

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“I was not involved with the creation and sale of this or any other NFTs. I have not consented to the use of my code or my name for this purpose,” Luke Dashjr, one of the Bitcoin core developers, tweeted. “Due to the misrepresentation involved and actual buyer confusion, I strongly insist upon 100% of the auction proceeds to be refunded to the buyer.”

Non-fungible tokens have been plagued with forgery, plagiarism, and other copyright issues. As CoinDesk has previously reported, OpenSea said that at one time nearly 80% of the NFTs on its shared storefront were “plagiarized works, fake collections, and spam.”

The auction was hosted on Scarce.City, a new marketplace for Ordinal NFTs. Without identifying the auction winner, Dashjr said that the highest bidder won the NFT for 0.41 BTC or $9600.

Dashjr also said on Twitter that someone – again, not identified – purportedly with Scarce.City reached out to him to “donate” to him 90% of its value. He has been a vocal critic of the Ordinals protocol, telling CoinDesk in a previous statement that it was an “attack” on Bitcoin.

“Ordinals aren’t _just_ a spam attack; they are also an attack on Bitcoin’s fungibility, and if accepted would break at least Lightning and CoinJoin,” he also tweeted in mid-February.

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Finoa, which has been operating under a preliminary crypto custody license since January 2020, also closed a strategic venture round led by new investor Middlegame Ventures and including existing investors Balderton Capital, Coparion, Venture Stars, and Signature Ventures. The size of the investment was not disclosed.

Given the general state of regulatory uncertainty across crypto markets, including the U.S. Securities and Exchange Commission (SEC) recently announced plans to focus specifically on crypto custodians, the seal of approval from BaFin couldn’t come at a better time, said Finoa co-founder Chris May.

“The custody license in particular is a very reassuring message to our customers and differentiates us from many other players in the market,” said May in an interview. “The preliminary regulatory status we have been under since the beginning of 2020 follows the same checkpoints and standards which the SEC followed through on a couple of weeks ago.”

In addition to the custody approval, Finoa received the go-ahead for broker-dealer and prop trading licenses, which allows the firm to trade its own treasury but not against its customers, May pointed out.

Finoa raised a $22 million Series A round back in 2021.

Regarding the undisclosed level of this new funding, May said it wasn’t a major Series B round.
“As part of the license approvals we wanted to strengthen our statutory or regulatory capital,” he said. “Adding some millions to our balance sheet portrays trust to our customers and allows us to leverage the licenses to the fullest.”

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