Important events
Jul 252023
Sam Altman’s Worldcoin Blockchain ID Verification Project Goes Live
- CEO of OpenAI, Sam Altman, has launched the native token of his blockchain ID verification project, Worldcoin.
- The project was met with some controversy over its gathering of individuals’ iris scan data – which is more unique than fingerprints.
- The WLD token however is not available to US customers due to regulatory concerns.
Sam Altman, the CEO of OpenAI which created ChatGPT, has launched his much-discussed crypto project ‘Worldcoin’ with the release of its native token – WLD. The project, which has been the subject of some amount of controversy, uses biometric iris scans to create an identity verification protocol based on the layer 2 Ethereum blockchain, Optimism.
Many were quick to point out the security concerns surrounding soliciting iris scans (which are an even more unique aspect of one’s identity than their fingerprints) to a private company. Those who gave their iris scans to Worldcoin were compensated in BTC. The WLD token however will not be available to users in the US, reportedly due to a lack of regulatory clarity. Regardless, the Worldcoin verification service will soon be available in 35 different cities. Time will tell whether its WLD token will see a hype-fueled lift.
(About Sam Altman)
Sam Altman is an American entrepreneur, investor, and the CEO of OpenAI. Born on April 22, 1985, in Chicago, Illinois, Altman is best known for his involvement with Y Combinator, one of the most prominent startup accelerators in the world. Altman joined Y Combinator in 2011 and became its president in 2014. Under his leadership, Y Combinator has nurtured and funded numerous successful startups, including Dropbox, Airbnb, Reddit, DoorDash, and many others. Beyond his work at Y Combinator, Altman is a respected figure in the tech and startup community.
TechCrunch / Wikimedia Commons
Jul 202023
NASDAQ Puts its Plans for Crypto Custody on Hold Due to Regulatory Pressure
- Nasdaq has halted its plans to create infrastructure for crypto custody services.
- The operator of the Nasdaq stock exchange said the move was due to regulatory uncertainty.
- The crypto community is also waiting to see whether the SEC will appeal the landmark ruling that Ripple is not a security.
After first announcing plans in September last year to create a crypto custody service, Nasdaq have now u-turned and revealed that it has been put on hold. The operator of the Nasdaq stock exchange had said that it needed to consider the evolving regulatory environment in the US, with no indication of when the plans might resume. It’s a fairly significant development, as the exchange would be the host of BlackRock’s potential spot Bitcoin ETF.
It’s not good news for the renewed push for institutional adoption of crypto, despite Ripple’s recent court victory over the Securities and Exchange Commission (SEC). It’s unknown whether the SEC will appeal the decision, but pressure is mounting on the regulator to create a framework specific to the digital assets industry – which it so far has refused to do.
(About Nasdaq)
NASDAQ, an acronym for the National Association of Securities Dealers Automated Quotations, is one of the world's most prominent electronic stock exchanges. Established in 1971, NASDAQ is headquartered in New York City, United States. It operates as a marketplace for buying and selling stocks, primarily focusing on technology, telecommunications, biotechnology, and other innovative industries. Unlike traditional stock exchanges, NASDAQ operates electronically, relying on a computerized system to match buyers and sellers. This technology-driven approach allows for faster and more efficient transactions, leading to increased liquidity and transparency. As a result, NASDAQ has gained a reputation for being at the forefront of innovation in the financial markets.
Shubham Dhage / Unsplash
Jul 052023
Bitcoin Resurgence Causes Exchange Inflows, Binance Offices Searched
- Crypto traders are increasingly opting to use centralized exchanges rather than decentralized ones.
- Bitcoin has been enjoying a rally over the past month and managed to break through the $31,000 resistance level.
- The offices of Binance Australia were also searched by local regulators on Tuesday.
In recent weeks, Bitcoin has been enjoying something of a resurgence. The price of BTC has risen by 13.5% over the past month alone, and it has broken through the $31,000 resistance level several times in the past few weeks. It would seem that this excitement is also causing increased inflows to centralized crypto exchanges. More specifically, crypto traders are increasingly opting to use centralized exchanges such as Binance rather than decentralized exchanges such as Uniswap.
Speaking of Binance, the Australian offices of the world’s largest crypto exchange by volume were searched on Tuesday by the local regulatory body. It probably has something to do with the canceling of the Australian exchange’s derivatives license earlier this year. Binance, however, has said that it’s focussed on being fully compliant in the region and has cooperated with relevant regulatory bodies.
(About Binance)
Binance is a prominent and highly popular cryptocurrency exchange that provides a platform for individuals and institutions to trade various cryptocurrencies. Founded in 2017 by Changpeng Zhao (better known as "CZ"), Binance quickly gained traction and became the largest and most influential exchange in the cryptocurrency market. Binance has also developed its own native cryptocurrency called Binance Coin (BNB). BNB serves multiple purposes within the Binance ecosystem, including reduced trading fees, participation in token sales on the Binance Launchpad platform, and to power its own blockchain known as BNB Chain.
Illustration by TradingView
Jun 212023
TOTAL: Fidelity Rumored to Follow BlackRock in Filing for a Spot Bitcoin ETF
- After BlackRock filed for a spot BTC, Fidelity is now rumored to be pursuing the same strategy.
- Fidelity has already been involved in crypto investment for many years, but this would be a major advancement of their crypto stance.
- If Fidelity was granted permission for a spot Bitcoin ETF, it would be a major endorsement of the crypto market’s future.
After BlackRock announced their efforts to open what would be the first-ever approved spot Bitcoin ETF, investment giant Fidelity is now rumored to be doing the same. It’s also rumored that the firm is seeking to purchase crypto asset manager Grayscale, in a major push further into the crypto space.
It’s far from Fidelity’s first foray into the sphere, having operated BTC miners for almost 10 years, and having launched a digital asset-focused branch of the firm called Fidelity Digital Assets in 2018. If Fidelity, as the fourth-largest asset manager in the world, were to be successful in its application for a spot Bitcoin ETF, it would be a major endorsement of the sector and would prove that institutional-interest in crypto has not been defeated by falling crypto prices.
(About Fidelity)
Fidelity Investments, commonly known as Fidelity, is a prominent and well-established American multinational financial services corporation. The company operates as an investment manager, providing a wide range of financial products and services to individual and institutional investors. Founded in 1946 by Edward C. Johnson II, Fidelity has grown into one of the largest and most respected investment groups in the world. It is headquartered in Boston, Massachusetts, and serves clients globally. The company operates through various subsidiaries, including Fidelity Brokerage Services, Fidelity Investments Institutional Services, and Fidelity International Limited.
Illustration by TradingView
Jun 192023
BLK: BlackRock Pushes For Bitcoin ETF in Move Further Into Crypto
- BlackRock, one of the world’s largest asset managers, has applied for a spot Bitcoin ETF.
- It would be the first of its kind to be approved by the SEC, and BlackRock could be powerful enough to ensure it does.
- Even if not approved, it’s a solid indication that institutional investors are still interested in the sector.
In a much needed institutional endorsement of the crypto space, BlackRock is filing to open a spot Bitcoin ETF – which would become the first of its kind to be approved by regulators in the US. It’s peculiar time to apply for such an ETF, given that the Securities and Exchange Commission’s (SEC) recent lawsuits against Binance and Coinbase have caused increased regulatory scrutiny to be applied to the sector.
BlackRock already has a spot Bitcoin trust for institutional clients which began being offered last year, so it’s far from the firm’s first foray into cryptocurrency. Whether the ETF will receive approval however, is not yet known – as the SEC has already declined applications for similar ETFs made by Grayscale and other crypto companies. BlackRock however is a force to be reckoned with in the financial world, and its CEO Larry Fink has a great deal of political influence.
Even if not approved, many investors will consider the filing proof of the fact that major institutional groups are still very much interested in the crypto sector despite its volatility.
(About BlackRock)
BlackRock is a global investment management corporation headquartered in New York City. Founded in 1988, it has grown to become the world's largest asset manager, with over $10 trillion in assets under management as of 2021. The company offers a wide range of financial services to institutional and individual clients worldwide. BlackRock's primary business revolves around investment management, providing a diverse array of investment products and solutions. It manages portfolios across various asset classes, including equities, fixed income, alternatives, and multi-asset strategies. The company serves a broad client base, which includes pension funds, endowments, foundations, governments, financial institutions, and individual investors.
Shubham Dhage / Unsplash
Jun 152023
Bittrex To Begin Allowing User Withdrawals After Bankruptcy
- Bittrex’s US has been granted a court order to allow user withdrawals after its bankruptcy in May.
- The US government opposed the ruling, and says it is still owed a large amount of money due to the exchange’s regulatory breaches.
- The exchange is also still battling a lawsuit by the SEC for allegedly operating an unregistered securities exchange.
After crypto exchange Bittrex filed for bankruptcy in May, a court ruling has been announced meaning that the company’s US arm will resume users withdrawals – after having paused them amid the proceedings. The US government, which opposed the ruling, claims that it is still owed millions of dollars worth in fines for what it perceives to be violations of its financial regulations.
When disclosing its assets in May, Bittrex announced that it held roughly $3m worth of user funds, both in fiat currency and crypto. The news will most likely be welcomed with open arms by ex-users of the platform, as their deposits have become available more quickly than other recent crypto bankruptcies such as that of Celsius in 2022.
The battle for Bittrex however, is far from over – with both ex-CEO Bill Shihara and the exchange itself also facing allegations for being an unregistered securities exchange through a lawsuit by the Securities and Exchange Commission (SEC). Binance and Coinbase are also embroiled in their own recently filed SEC lawsuits which could prove definitive in determining the regulatory landscape in the years ahead.
(About Bittrex)
Bittrex was a US-based cryptocurrency exchange that allowed users to buy, sell, and trade a wide range of digital assets. Founded in 2014, Bittrex grew quickly in popularity and became one of the largest crypto exchanges in the US. The platform offered access to hundreds of cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. The exchange faced some criticism for its high fees and occasional downtime during peak trading periods – and in May 2023 the exchange filed for bankruptcy, just weeks after being sued by the US Securities and Exchange Commission.
Bittrex
Jun 062023
Users of Atomic Wallet Have Over $35m Stolen in Apparent Hack
- Atomic Wallet users have fallen victim to a hack which has resulted in more than $35m worth of assets being stolen.
- Security firm, Least Authority, said in 2021 that it believed the wallet service was not sufficiently secure.
- $1m worth of stolen funds were recovered, and Atomic says it is still investigating the cause of the hack.
Centralized crypto wallet Atomic Wallet has seemingly fallen victim to a security flaw, which has seen more than $35m worth of user deposits to be stolen. The hack has been acknowledged by the company, with its cause still reportedly being investigated. Crypto exploits seem to be back in full swing this year, with 73 individual hacks taking place in Q1 of 2023 alone – compared to 25 the same quarter a year prior.
According to Atomic Wallet, less than 1% of the company’s users have been affected by the exploit. However, large numbers of users took to Twitter to describe that their funds (in the form of Bitcoin, Ethereum, Tether, Doge and more) had gone missing. $1m worth of funds was managed to be recovered, despite some experts saying that this actually further compromises the platform’s security.
For now, the way in which the attack took place is still unknown, but the company had actually been made aware of certain security flaws in the wallet two years ago. Crypto security firm Least Authority reported in February 2021 that it did not consider Atomic Wallet’s infrastructure secure enough to protect user assets. The largest amount lost by a single victim was $8m worth of USDT.
(About Atomic Wallet)
Atomic Wallet is a multi-currency cryptocurrency wallet that provides users with a platform to manage their digital assets. Launched in 2018, Atomic Wallet has gained popularity for its comprehensive features, making it a popular choice among cryptocurrency enthusiasts. One of the key features of Atomic Wallet is its support for a wide range of cryptocurrencies. Users can securely store, manage, and exchange various digital assets, including Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and many others, all within a single wallet interface.
Illustration by TradingView
May 312023
Bankrupt Crypto Lender Genesis Wants SEC Lawsuit To Be Dropped
- Failed crypto lender Genesis has stated that it will seek SEC charges against it to be dropped.
- The charges related to the platform’s “Earn” service, which the SEC has described as having offered unregistered securities.
- SEC head Gary Gensler is also coming under increasing scrutiny for his heavy handed approach to crypto regulation.
Failed crypto lender Genesis is seeking the dismissal of a lawsuit brought against it by the Securities and Exchange Commission in January, which argued that the platform’s popular “Earn” service offered unregistered securities. Genesis filed for Chapter 11 bankruptcy in January this year, partly as a result of the collapse of FTX which occurred in November last year.
Gemini has fought its corner, claiming that its Earn service offered loans – not securities. The company’s founder, Tyler Winklevoss, described the charge as a “parking ticket” in January, and said he looked forward to fighting the charge.
The Winklevoss twins are far from the only ones who think SEC chair Gary Gensler’s approach to crypto regulation is overly heavy handed. Gensler appeared in front of the House Financial Services Committee last month to justify his approach to crypto regulation – with some republican representatives drafting proposals to remove him as head of the regulatory body.
With regulation a central topic relating to the future of crypto prices, Gensler’s approach has been described by many to be hindering investment in the sector in the US. Coinbase has similarly criticized the SEC for its lack of clear guidance, so perhaps these concerns will work in favor of Genesis as it seeks its lawsuit to be dropped.
(About Genesis)
Genesis was a prominent crypto company which was founded in 2013 by Brendan O'Connor and Marco Streng. Genesis became a leading lender for digital assets before its bankruptcy in January 2023. One of Genesis' core offerings was its cryptocurrency lending platform. Through this platform, individuals and institutions could borrow and lend various cryptocurrencies, including Bitcoin, Ethereum, and other altcoins. The lending service allowed clients to earn interest on their crypto holdings or utilize borrowed funds for various purposes, such as margin trading or capital investments. Today however, the service still owes more than $3.4bn to its 50 largest creditors alone.
Illustration by TradingView
May 242023
Ledger’s New Backup Service Faces Backlash for Allowing Government Access to Funds
- Ledger’s ‘Recover’ service has come under scrutiny for allowing governments access to user funds if deemed necessary.
- The service, which costs $9.99 per month, allows users to recover backups of secret-key recovery phrases.
- Ledger’s CEO, Éric Larchevêque, said that while the concerns are valid, the change is unlikely to impact the vast majority of users.
Popular hardware wallet, Ledger, has landed itself in some hot water with its new ‘Recover’ service, intended to make access to funds less dependent on remembering private keys. It would seem that a side product of the service was allowing governments to subpoena access to the funds held on Ledger devices which subscribe to it.
The ability for governments to access funds if required has been acknowledged by Ledger’s CEO, although he somewhat downplayed its importance – saying that governments usually only subpoena access to funds for serious crimes such as drug smuggling and terrorism.
However the ability for it to happen was enough to cause controversy throughout the crypto world, with many users saying that it contradicts Ledger’s principles of self-custody. Some users even went so far as to post pictures their Ledger wallets set alight in protest. Ledger however remains one of the most popular hardware wallets in the world of crypto, alongside alternatives such as Trezor.
The rollout of Ledger's 'Recover' service has now been paused while the company seeks to address user concerns.
(About Ledger)
Ledger is a prominent brand in the cryptocurrency industry known for its hardware wallets. A hardware wallet is a physical device designed to securely store private keys and enable cryptocurrency transactions offline, providing an extra layer of protection against online threats such as hacking and malware. Ledger offers a range of hardware wallets, with the most popular being the Ledger Nano S and Ledger Nano X. These devices are small, portable, and equipped with a secure element chip that stores private keys and executes cryptographic operations. They support a wide variety of cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and many others.
Ledger
May 152023
Animoca Brands Reports its Token Reserves Have Dropped 36% in a Year
- Metaverse gaming brand, Animoca brands reported that its token reserves have taken a blow since last year.
- The company said it was valued at $5.6bn in September last year, despite falling crypto prices in 2022.
- As a company heavily involved in the NFT space, it may be suffering from massively reduced NFT trading volumes.
Animoca Brands has reported that its token reserves have taken a major blow over the past year. The metaverse gaming brand reported that two weeks ago the value of its reserves sat at $2.8bn, which marks a 36% decrease from its total reserves the same time last year.
The news comes despite the crypto market’s partial recovery this year. In terms of assets, the Hong Kong-based company stated that it holds $3.4bn worth, but that some of these assets are not fully liquid. The company’s ‘liquid assets’ reportedly stand at just $566m.
The non-fungible angle
Animoca said that it was valued at $5.6bn in September last year, but as a company heavily invested in the NFT space – it has likely also suffered from decreasing NFT trading volumes noted since last year.
Last week, weekly NFT trading volume could be seen to have plummeted by over 83% compared to the same week a year prior. That might be what caused the company to drop its metaverse fund target down to $600m. Although as a brand at the forefront of metaverse and NFT gaming, Animoca will likely be amongst the first to recover if the GameFi market returns to its previous highs. Animoca has also stated that it will release its business highlights for 2022 at some point this year.
(About Animoca Brands)
Animoca Brands is a global company that specializes in blockchain, gamification, and artificial intelligence. Founded in 2014, Animoca Brands has emerged as a leading player in the digital entertainment industry, focusing on mobile games, collectibles, and non-fungible tokens (NFTs). The company has a diverse portfolio of products that includes both original IP-based games and licensed games featuring popular characters and brands. Their games cover various genres, including racing, sports, puzzle, and simulation, catering to a wide range of audiences. Animoca has a strong presence in the NFT space, and they are integrated into many of their games – allowing players to own and trade virtual assets securely.
Animocabrands
May 102023
Crypto Exchange Bittrex Files For Bankruptcy After Run-In With SEC
- Bittrex has gone bankrupt, just weeks after being sued by the SEC for failing to register as a securities exchange.
- The exchange had already signaled that it was struggling, by laying off 80 employees earlier this year.
- Its US exchange operations had already been stopped last month – which the exchange said was due to a lack of regulatory clarity.
US-based crypto exchange Bittrex has filed for bankruptcy, just weeks after it was announced that the exchange was being sued by the Securities and Exchange Commision (SEC). As one of the largest crypto exchanges in the US, its assets and liabilities are both believed to lie in the range of $500m to $1bn, and the company is believed to have over 100,000 creditors. The SEC had sued the US branch for failing to register and a securities exchange.
Bittrex already let go of 80 of its employees earlier this year, and Bittrex has now joined a large list of crypto lenders and exchanges – including FTX and Celsius – to file for bankruptcy as a result of plummeting crypto prices. The exchange has promised that its customers will have their crypto deposits 100% reimbursed.
Was the writing on the wall?
Bittrex had actually already ceased its US exchange operations last month as a result of the SEC lawsuit. The exchange had said that the lack of regulatory clarity is simply too great for crypto exchanges to operate safely in the US. It’s a sentiment being echoed by various US based crypto exchanges including Coinbase. Chair of the SEC, Gary Gensler, has also been coming under increasing scrutiny from government officials for his unpredictable approach to crypto regulation.
(About Bittrex)
Bittrex was a US-based cryptocurrency exchange that allowed users to buy, sell, and trade a wide range of digital assets. Founded in 2014, Bittrex grew quickly in popularity and became one of the largest crypto exchanges in the US. The platform offered access to hundreds of cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. The exchange faced some criticism for its high fees and occasional downtime during peak trading periods – and in May 2023 the exchange filed for bankruptcy, just weeks after being sued by the US Securities and Exchange Commission.
Jp Valery / Unsplash
Apr 252023
Do Kwon’s Lawyers Insist that SEC Charges Against Him Are Dropped
- Lawyers for Do Kwon, creator of the Terra ecosystem, are seeking his SEC charges to be dismissed.
- The SEC has accused Kwon of securities fraud for his sale of Terra’s native tokens.
- The SEC’s regulatory approach to crypto is coming under increasing scrutiny by US government officials.
Do Kwon’s lawyers have insisted that the charges brought against him by the Securities and Exchange Commision (SEC) be dropped regarding his role in the multi billion collapse of the Terra ecosystem last year. The collapse is widely cited as being a key factor in the almost trillion dollar sell off which was seen in the crypto market in mid 2022.
Since the collapse, Kwon had been unlocatable by authorities, despite saying that he was “not on the run”. Kwon was arrested and incarcerated in Montenegro whilst allegedly attempting to board a flight for Dubai with falsified documents. It’s not clear what Do Kwon’s fate will be, but the governments of both South Korea and the US are seeking his extradition. His legal team is also arguing that he is not a flight risk and should be released on bail.
What are the charges?
Do Kwon has been charged with securities fraud for his sale of the LUNA and UST tokens of the Terra blockchain. Kwon’s lawyers, however, claimed that the SEC has failed to prove its jurisdiction in the matter – with their reasoning being that the tokens were not exclusively available in the US.
Kwon’s defense has also argued that the tokens did not constitute securities which would require registration with the SEC. It’s a sentiment being echoed not just by the crypto community – but by other US government officials. The case is made even more compelling by the fact that South Korean regulators have ruled LUNA to not be a security. Although Terra co-founder, Daniel Shin, was formally charged with violations of capital markets laws by South Korean officials today.
Last week, SEC chairman Gary Gensler was summoned by the House Financial Services Committee to defend his current enforcement strategy for crypto. During the hearing, he refused to state whether he considered ETH to be a security, despite the asset having been actively traded for almost a decade.
Whether Kwon’s defense is successful in having the charges dismissed, there is now growing sentiment amongst the US government that the SEC’s unclear approach to crypto could be hindering entrepreneurship in the country – and could drive US crypto companies elsewhere. The debate around how to regulate and classify digital assets is ongoing, and it remains to be seen how it will evolve in the coming years.
(Who’s Do Kwon?)
Do Kwon is a South Korean entrepreneur and the co-founder of Terra, a blockchain ecosystem which collapsed in 2022. Kwon holds a degree in Computer Science from the University of Washington and began his career as a software engineer at Microsoft. After leaving Microsoft, Kwon co-founded Anyfi Networks, a company that developed wireless mesh networking technology for smart homes. In 2018, Kwon co-founded Terra with fellow South Korean entrepreneur, Daniel Shin. The two aimed to create a stable cryptocurrency that could be used for everyday transactions, particularly in emerging markets. However, since the multibillion dollar failure of the network, he has been under investigation for his role in its collapse.
Illustration by TradingView
Apr 172023
SEC’s Comments Raise Concerns for Crypto’s Decentralized Exchanges
- The SEC has sought to clarify that decentralized crypto exchanges are subject to the same rules as centralized ones.
- The SEC is aiming to retain regulatory jurisdiction over the space, but is losing ground in its battle against Ripple.
- US regulatory bodies (SEC and CFTC) are also in disagreement over how certain cryptocurrencies can be categorized.
On Friday, the Securities and Exchange Commission (SEC) convened to reestablish their belief that decentralized crypto exchanges (DEXes) should be subject to the same regulation and centralized ones. This represents an expansion of the original definition, and has not been made without some controversy.
Many in the crypto community have criticized the approach, and consider regulation of decentralized exchanges to be both impractical and outside the jurisdiction of the regulator. Even some senior members of the SEC itself have said that Gary Gensler's (head of the SEC) recent campaign against DeFi has overstepped the mark.
Others however have advocated for increased regulation of the space to protect users and help increase its adoption. Gensler would seem to be flexing the body’s authority once again – saying to crypto users to “make no mistake” that DEXes are under the jurisdiction of the SEC.
Is the SEC’s jurisdiction slipping?
In Recent months, the SEC’s authority over the crypto world has been somewhat undermined – which might explain the motivation for Gensler’s recent comments.
Aside from tension between the SEC and the Commodities and Futures Trading Commission (CFTC) regarding which jurisdiction crypto falls under, the regulator is also losing ground in its battle with Ripple regarding its alleged status as a security. Ripple investors are fairly certain that the cryptocurrency will prevail and win the lawsuit which has been ongoing since 2020 – prompting a 35% price gain over the past month.
What happens now?
It’s not known for certain how these comments will affect DEXes yet, or what regulatory ramping up they might be intended to warn the space of. It could mean the decentralized exchanges like Uniswap or SushiSwap might be made responsible for providing reports surrounding their activity and policing who is able to use the applications.
Although with no centralized body in charge of running the platform, it's difficult to see who could even be held accountable if the required changes are not implemented.
(About decentralized exchanges)
Decentralized crypto exchanges (DEXs) are a type of cryptocurrency exchange that operates in a decentralized manner, meaning that they do not rely on a central authority or intermediary to facilitate transactions between buyers and sellers. Instead, DEXs use blockchain technology and smart contracts to allow users to trade cryptocurrencies directly with each other. This eliminates the need for a central authority to control the exchange, making DEXs more secure and resistant to hacks and manipulation. Some popular DEXs include Uniswap, PancakeSwap, and SushiSwap.
Illustration by TradingView
Mar 072023
Kraken Prepares to Launch Crypto Bank Despite Uncertain Regulatory Landscape
- Kraken is reportedly about to launch its own crypto bank, expected sometime this year.
- The move comes after Kraken was ordered to cease offering staking services by the SEC.
- Coinbase has cut ties with Silvergate crypto bank amid concerns surrounding how it is capitalized.
Kraken has been coming under regulatory fire recently, specifically by the Securities and Exchange Commission. It had to cease offering its crypto staking services after the regulatory body deemed them to be unregistered securities. However, the third largest crypto exchange in the world hasn’t let that discourage it from its plans, as it prepares to move into perhaps an even more contentious space in the world of crypto.
The next step
The Wyoming-based crypto bank, named Kraken Finance, is set to launch sometime this year, after already being granted the required approval. Kraken has become the first crypto company to receive a US state banking charter, and seems to have taken the ban on its staking offerings in its stride. A spokesman for the exchange said that its staking services represented a tiny portion of its revenue.
Uncertain times
Chair of the SEC, Gary Gensler, has said that everyone in the space should be “on notice”, as the regulatory body ramps up its oversight of the industry. And having already paid $30m in fines to the regulator, Kraken is acutely aware of this ramping up. With the collapse of FTX also still fresh in the minds of regulators, some believe it’s an ill-advised time to launch a crypto bank.
The current state of prominent crypto bank Silvergate doesn’t bode well for the launch of a crypto bank either, with its share price plummeting by 63% over the past week amid concerns over its capitalization. Major crypto companies such as Coinbase have also been distancing themselves from the bank. Whether Kraken’s new venture will share the same fate, remains to be seen.
Kraken
Mar 022023
High-Level FTX Exec Pleads Guilty to Criminal Charges
- Nishad Singh, a former high-level FTX executive has pleaded guilty to charges.
- Singh joins a list of members of Sam Bankman-Fried‘s former inner-circle to turn against him.
- Sam Bankman-Fried is due to appear in court for his trial in October this year.
As the saga of Sam Bankman-Fried’s FTX continues, a growing number of his inner circle have begun to admit to wrongdoing in the exchange’s collapse. The most recent of which is the former head of engineering – Nishad Singh. The move comes less than a month after Singh reportedly met with prosecutors in order to arrange a plea deal.
What’s Singh been accused of?
Singh pleaded guilty to wire fraud, violating campaign finance laws and money laundering. He also said that he was aware that funds were being mismanaged by FTX in the middle of 2022, and that he was “unbelievably sorry” for his role in what happened. Filing also showed that Singh had withdrawn $6m from the exchange for his own personal use sometime in 2022. He joins a growing list of high-level FTX executives to turn against ex-CEO Sam Bankman-Fried –who has pleaded not guilty to charges against him.
In light of the case against FTX, trading platform Robinhood (in which SBF owned over half a billion dollars worth of shares) has been subpoenaed to appear in court to give information surrounding its crypto offerings. The platform said that if certain determinations are made by the SEC, it could render the platform unable to continue trading for some time.
What’s next for SBF?
Sam Bankman-Fried is due to appear in court for his trial in October this year, facing charges for money laundering, wire fraud and more recently, defrauding the US through unlawful political contributions. In other crypto bankruptcy news, the former clients of bankrupt crypto lender Voyager have voted 97% in favor of a restructuring plan which would involve Binance purchasing its assets for over $1bn. Although that’s a deal which has also drawn the attention of regulators.
astro kabir / Unsplash
Feb 202023
SEC Charges Do Kwon for Terra Collapse: The End of the Saga?
- The SEC has charged Terra co-founder Do Kwon with fraud and selling unregistered securities.
- They’ve also accused his company TerraForm Labs of manipulating the price of UST in May 2021.
- The charges could further the SEC’s argument that some stablecoins are securities.
The collapse of the Terra ecosystem was one of the most disastrous crypto events in the history of the industry. The depegging of the network’s UST stablecoin caused at least a $40bn sell off, and for many – their faith in the sector took a significant beating. And now, official regulatory bodies have motioned to take action against both TerraForm Labs, and its co-founder Do Kwon.
What has Do Kwon been accused of?
Since the collapse of Terra, Do Know has repeatedly denied speculation that he is “on the run” although he has not divulged where he is currently located. Law enforcement officials apparently have reason to believe that he’s residing in Serbia. More importantly however, the SEC has accused Kwon of selling securities which were not registered with the regulator and fraud. They’ve also accused him of misleading investors about the stability of the protocol’s stablecoin UST – which was algorithmically pegged to the USD through a DeFi mechanism involving its other token LUNA.
Perhaps even more damningly, the regulator has also accused both Kwon and his company of profiting from the token’s earlier decline in May 2021, by purchasing large amounts of UST after it depegged from the dollar, before working with an unnamed trading firm to restore its peg. They’ve also been accused of transferring 10,000 BTC from company accounts to a Swiss bank account after the collapse of the ecosystem. They’re quite substantial accusations, and could have ripple effects throughout the crypto industry if TerraForm Labs and Kwon are found guilty of them.
The first one to fall
The charges are more important than one might think. Terra’s collapse was in many ways the first domino to fall of several significant crypto collapses in late 2022. These include crypto hedge fund Three Arrows Capital, lending platform Celsius and more recently – the downfall of major exchange FTX. The crypto world has also become increasingly concerned with the prospect of the SEC considering stablecoins to be securities. And with the regulator also reportedly soon moving to sue Paxos for issuing Binance’s BUSD stablecoin – recent developments certainly haven't quelled these fears.
Terra
Feb 082023
Genesis strikes a hopeful deal
A new deal means there may be hope for users of Gemini Earn yet.- A deal has been reached between Genesis and its main creditor Gemini, which could help users of Gemini Earn (who have been unable to withdraw assets since November) recover their funds.
- Genesis had been threatened with legal action by the Winklevoss twins, who are the controllers of Gemini, for failing to repay a $900m loan that it took from the company. The demand had caused Genesis to file for bankruptcy less than a month ago.
- The new plan will involve Genesis exchanging over $1bn in debt into preferable stock options, but Gemini will also have to contribute up to $100m towards repaying users of its Earn program. Could this be what’s needed to finally pay back those users?
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Jan 202023
Just another bankruptcy
Genesis has had its fair share of problems recently, and yesterday it all came to a head.- Crypto lender Genesis has filed for Chapter 11 bankruptcy, becoming another victim of the collapse of FTX in November last year. The filing states that the company had over 100k creditors, of which the top 50 were owed more than $3.4bn collectively, despite only having around $150m in cash on hand.
- The company’s lending unit suspended user withdrawals in November, as a portion of its funds were tied up in FTX which filed for bankruptcy in the same month. Some $900m worth of assets deposited by users of the platform is now locked, with little indication of when (if ever) it will be returned to them.
- Cameron Winklevoss has also threatened Genesis parent company, Digital Currency Group, with legal action – claiming that DCG’s failure to repay a $900m loan to crypto exchange Gemini (which Winklevoss co-founded) endangers the funds of its users. It’s just the latest domino to topple amid the crypto liquidity crisis.
Jan 162023
The bulls are back
2023 continues to show the crypto market more love than 2022, with the industry’s total market cap looking hopeful.- The crypto market showed some strong signs of recovery last week – returning to levels not seen since before the collapse of FTX. The total market cap of the space added $140bn last week, with Bitcoin and Ethereum rallying by 22% and 20% respectively over the same period.
- Bitcoin’s rally was caused in part due to anticipation for the upcoming Consumer Price Index (CPI) data released by the Fed, which is expected to show inflation to be cooling off. It’ll take more than a small increase to reach the prices of last year however, as BTC is still down 51% YoY.
- Solana in particular had a week to remember, returning to the top 10 cryptocurrencies by market cap with a 60% increase last week. It’s believed the rally was fueled by the release of a new memecoin on the Solana network called BONK.
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Jan 042023
The Genesis of a lawsuit
Crypto broker Genesis has been hit by a class action lawsuit. What’s crypto without a bit of a legal battle?- Three users of Gemini Earn, a yield-farming platform, are suing crypto broker Genesis in a class action lawsuit which alleges that the company was attempting to hide its insolvency. As Gemini’s primary partner, withdrawals from Earn stopped when Genesis encountered liquidity issues in November.
- The plaintiffs state that Genesis parent, DCG, purchased the company’s debt which allegedly breached its contract with Gemini. Another class action was also filed against Gemini in December, which alleged it was offering unregistered securities to its users.
- Co-founder of Gemini, Cameron Winklevoss, also accused DCG of “stalling tactics” in its freezing of $900m which is reportedly owed to users of Gemini. The broker might need to find a solution quickly or face even more pressure from its creditors.
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