In addition to Rossi’s lawsuit against Akridge, the Blockchain Association also recently filed a lawsuit against the IRS over new cryptocurrency reporting rules. Meanwhile, Montenegro approved Terraform Labs co-founder Do Kwon’s extradition to the US for trial, and Malaysian regulators ordered crypto exchange Bybit to cease operations in the country due to its unregistered status.
Lawsuit Filed Against Solana Co-Founder Over Staking Rewards
Stephen Akridge, co-founder of Solana and former principal engineer at Solana Labs, is facing legal action from his ex-wife Elisa Rossi. She claims that he secretly profited from her Solana (SOL) tokens through staking rewards.The lawsuit was filed in San Francisco’s Superior Court on Dec. 24, and alleges that Akridge earned millions of dollars in staking rewards from tokens she believes are hers, without her knowledge.
According to Rossi, their divorce agreement in March divided their SOL token holdings, but she claims Akridge leveraged her lack of expertise in cryptocurrencies to keep control of the tokens. According to the lawsuit, Akridge allegedly granted Rossi access to three wallets containing the tokens but continued staking them under his own control. This allowed him to earn rewards until Rossi uncovered the scheme in May of 2024.
Stephen Akridge
Although the exact number of SOL tokens and the amount that was allegedly taken was not revealed, the complaint indicates the sum exceeds $25,000. Over the past year, Solana’s value surged, and also hit an all-time high of $263, fueled by its role in popular crypto trends like meme coins.
Solana price action over the past year (Source: CoinMarketCap)
Rossi claims she repeatedly contacted Akridge between May and December about the staking rewards. However, she alleges that Akridge dismissed her concerns and even taunted her by reportedly stating, “Good luck getting those staking rewards from me.”
Akridge currently serves as CEO of the cybersecurity company Cyber Grant, and has not commented on the situation.
Blockchain Association Sues IRS
Elisa Rossi’s lawsuit was not the only crypto-related legal action that was filed recently. The Blockchain Association and the Texas Blockchain Council filed a lawsuit against the United States Internal Revenue Service (IRS) in response to new cryptocurrency reporting regulations.
The rules were announced on Dec. 27, and require brokers, including decentralized exchanges (DEXs) and platforms facilitating digital asset transactions, to report gross proceeds and taxpayer information starting in 2027. This is a major expansion of the existing reporting requirements to include decentralized finance (DeFi) platforms and smart contract-based exchanges.
Kristin Smith, CEO of the Blockchain Association, stated in a Dec. 28 post that the lawsuit challenges the IRS’ new regulations as unconstitutional and a violation of the Administrative Procedure Act.
Under the new rules, DeFi platforms that have control or influence over transaction processes could be classified as brokers, making them subject to very strict reporting obligations. The Blockchain Association criticized the regulations, and argued that they impose unlawful compliance burdens on software developers building front-end trading infrastructure. The organization also warned that these requirements could stifle innovation and push blockchain technology offshore.
The move raised some privacy concerns for DeFi users, and some legal experts even labeled the IRS’ actions an infringement on individuals’ rights. Marisa Coppel, Head of Legal at the Blockchain Association, argued that the rules could undermine the growing decentralized technology ecosystem and force innovators to relocate outside the United States.
The controversy happened in the wake of other high-profile legal actions targeting blockchain developers, like the conviction of Tornado Cash developer Alex Pertsev, who was sentenced to over five years for money laundering. Critics see this as part of a broader pattern of regulatory overreach affecting the crypto industry.
The IRS estimates that the new regulations will impact between 650 and 875 DeFi brokers and up to 2.6 million US taxpayers. Brokers will need to begin collecting the required data in 2026, with reporting mandated from 2027. For now, the Blockchain Association vowed to continue its fight against what it deems misguided rulemaking.
Do Kwon’s Extradition to the US Approved
Meanwhile, Montenegro’s Minister of Justice, Bojan Božović, approved the extradition of Terraform Labs co-founder Do Kwon to the United States. This decision was made after the dismissal of Kwon’s appeal by Montenegro’s Constitutional Court. Simultaneously, the Ministry of Justice rejected South Korea’s request to extradite Kwon as the majority of legal criteria supported the United States’ case.
Kwon faces charges in both the US and South Korea, and has been at the center of a long and contentious extradition process that saw many decisions being reversed. Initially, Montenegro’s High Court of Podgorica approved Kwon’s extradition in November of 2023 but left the final decision on the receiving country to the justice minister. In May of 2024, Kwon’s legal team successfully appealed the decision and pushed the case to Montenegro’s highest court.
Do Kwon
In August of 2024, Montenegro’s Appellate Court upheld a lower court ruling to extradite Kwon to South Korea. However, in September, the case was sent back to the justice minister after officials determined that Kwon met the conditions for extradition to either country. A decision favoring the United States was initially reached in October, but it was also delayed due to a final appeal by Kwon’s legal team.
With the Constitutional Court rejecting Kwon’s appeal and the Ministry of Justice confirming the US as the receiving jurisdiction, this decision likely finally brings an end to the legal proceedings. Kwon now faces trial in the United States for charges related to his activities at Terraform Labs.
Bybit Ordered to Exit Malaysia
Malaysia’s Securities Commission (SC) directed crypto exchange Bybit to stop its operations in the country due to its status as an unregistered digital asset exchange (DAX). The regulator ordered Bybit to disable its website, mobile applications, and any digital platforms accessible to Malaysian users in 14 business days starting Dec. 11. Additionally, Bybit was also instructed to stop any advertisements targeting Malaysian investors and to shut down its Telegram support group for local users. By Dec. 27, the SC confirmed that Bybit complied with all of the directives.
The enforcement action is part of the growing scrutiny of cryptocurrency platforms in Malaysia. The SC placed a lot of emphasis on the importance of operating as a Recognised Market Operator (RMO) under the Capital Markets and Services Act 2007, and warned that unregistered entities expose investors to risks like money laundering and fraud. The commission urged Malaysian investors to only engage with licensed platforms that meet regulatory requirements designed to protect users.
Bybit’s exit from Malaysia happened shortly after the exchange announced it would halt operations in France due to increased regulatory oversight. Beginning Jan. 8 of 2025, Bybit will suspend withdrawal and custody services for French users.
Malaysia ramped up its efforts to regulate the crypto industry and combat related crimes. In June 2024, the Inland Revenue Board launched “Ops Token,” targeting tax evasion through crypto trading. More recently, on Dec. 23, the SC added Web3 wallet service Atomic Wallet to its list of prohibited financial companies for operating without registration.
This article was originally Posted on Coinpaper.com
