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Crypto: Coinbase backs lawsuit against Treasury Department, Skybridge sells FTX stake

Yahoo Finance's Jennifer Schonberger joins the Live show to detail the latest crypto news.

Video transcript

RACHELLE AKUFFO: The risk-on trade is here today, and that includes crypto. Bitcoin on track for its largest one-day percentage move since June. Now the move in Bitcoin helping lift shares of companies involved in the crypto space, including, of course, Coinbase, which is now getting into the legal battle against the government. Jen Schonberger has all the details. Jen, what can you tell us?

JENNIFER SCHONBERGER: Good afternoon, Rachelle. That's right. Crypto exchange Coinbase funding a lawsuit in which six plaintiffs are suing the US Department of Treasury for sanctioning crypto mixer Tornado Cash and asking that it be removed from the US sanctions list. The plaintiffs argue that the sanctions exceed Treasury's authority, remove privacy and security options for crypto users, and stifle innovation.

Coinbase CEO Brian Armstrong wrote in a blog post, quote, "Treasury went much further and took the unprecedented step of sanctioning an entire technology instead of specific individuals." He went on to say, there are legitimate uses for mixers. And as a result of these sanctions, many innocent users now have their funds trapped and have lost access to a critical privacy tool.

Now one plaintiff, a senior security risk analyst at Coinbase, used the service to anonymize donations to Ukraine out of fear his address would be targeted by Russian hacking groups. Treasury sanctioned major crypto mixing service Tornado Cash in August on grounds that it is used by North Korean hackers, which use stolen funds to finance its nuclear weapons program.

Cyber criminals have laundered more than $7 billion in crypto using Tornado Cash since 2018, according to the Treasury. And crypto mixing services are used to cover up the transparency of crypto transactions by essentially shoveling together batches of hundreds to thousands of transactions. Guys.

RACHELLE AKUFFO: I mean, that is tough when you can't tell exactly whether it's being used for nefarious things or not. And obviously, another story happening in the crypto space. You have Sam Bankman-Fried and FTX spending again. So what's the latest there?

JENNIFER SCHONBERGER: Yeah, Rachelle, Same Bankman-Fried to the rescue again, this time investing 30-- for taking a 30% stake in Anthony Scaramucci's SkyBridge Capital. This money, $40 million of this money expected to be invested in cryptocurrencies to be held on the balance sheet. This coming just a couple of months after SkyBridge suspended redemptions in one of its funds, this fund having invested in Bitcoin, Ethereum, and other digital assets during the height of the bull market.

And I should note that Sam and Anthony aren't strangers. The two of them have teamed up on salt conferences held across the country, one and in the Bahamas this past spring. So certainly, Sam Bankman-Fried showing that he is, again, the white knight here, coming in and saving the crypto industry. Of course, another one of those high profile investments that he made earlier this year, or FTX Ventures made, was in the crypto lender, BlockFi. Rachelle.