30 June

The liquidation of crypto hedge fund Three Arrows Capital was ordered by a British Virgin Islands court on Monday. Partners from New York-based Teneo Restructuring have been called in to handle the insolvency.

Crypto brokerage Voyager Digital (VOYG.TO) issued a default notice to 3AC this week after the fund failed to make required payments on loans of 15,250 bitcoins and $350 million in USDC. 3AC has been an active investor in the digital asset industry in recent years with investments across non-fungible tokens, decentralized finance, layer 1 blockchain firms and crypto companies.”

“MakerDAO is currently voting on a proposal aimed at helping it weather the bear market and utilize untapped reserves by investing 500 million Dai (DAI) stablecoins into a combination of United States treasuries and bonds.

This proposal represents a major step for MakerDAO, as it signals its intent to extend beyond the crypto realm and earn yield from traditional “safe” financial investments with its flagship DAI. Once an option is chosen, European wholesale lender Monetalis will provide MakerDAO access to the financial instruments it wants.

As TradFi is seeing interest rate increase due to the FED. Maker protocol working with TradFi to take advantage of the high interest would be able to strengthen its revenue model.”

“A Wednesday meeting secured a final deal on anti-money laundering legislation for crypto transfers and largely overturned a proposal from the EU Parliament to impose laundering checks on all payments to private wallets.

The final proposals will mean customer identity needs to be verified for even the smallest crypto transfers, if it’s between two regulated digital wallet providers – but payments to unhosted private wallets will largely be left out of laundering checks.

It strikes the right balance in mitigating risks for fighting money laundering in the crypto sector without preventing innovation and overburdening businesses.”

See Also: US Infrastructure Law’s Reporting Requirements for Crypto Brokers Likely to Face Delay
See Also: Governments May Restrict Foreign Access to Their CBDCs, Riksbank Official Says

“The scaling solution allows developers to launch application-specific blockchains on the Polygon network. Avail can be deployed on any Ethereum Virtual Machine (EVM)-compatible blockchain.

The new product would allow developers to access blockchain data “off-chain,” meaning they would not need to continually check data from the network for an application deployed on Polygon. Applications built on Avail would give developers the ability to update, fork and change how their blockchains handle execution.

This is critical for [decentralized finance] and game developers that may need to patch bugs, experiment with execution or just reduce their dependencies on external chains.”

See Also: Polkadot Chief Gavin Wood Announces Blockchain Governance Upgrade

Private and publicly listed crypto miners owe up to $4 billion in debt used to finance the construction of gargantuan facilities across North America. As the value of the miners’ output dramatically falls along with the price of bitcoin (BTC), they have to make tough decisions about how to survive – including selling off hard-earned coins and equipment.

Bitcoin mining revenue in dollar-denominated terms per kilowatt hour (kWh) has more than halved since the start of the year. Miners that borrowed money to finance their expansion plans are now having to make tough decisions. Many of those loans are underwater today and borrowers need significant revenues beyond the financing to remain current.

Older machine models are becoming unprofitable and turned off – the hashrate decreased by 11% between June 12 and June 27. Miners have been selling bitcoin to exchanges at record paces. In May, bitcoin miners sold over 100% of their monthly production, compared to 30% between January and April.

In due course, we’ll see some defaulted loans, unclaimed miners, and acquisition targets.

Miners’ difficulties in paying their installments engender risk for the overall ecosystem, as they leave lenders exposed to defaults. According to Van Huis, lenders BlockFi and NYDIG have given out “horrible credit” that miners will have a hard time repaying given current market conditions.

Industry sources agreed the industry will consolidate in the coming months as weaker players are forced to offload assets.”

29 June

“The crypto custody firm is enrolling customers a few months ahead of Ethereum’s planned transition to a proof-of-stake mechanism. The transition to PoS, which is intended to be faster and more energy efficient than PoW, is expected to occur in August.

Rewards for validators are expected to double to about 8% or 9% after the Merge as transaction priority fees currently paid to miners start to be distributed to validators.

Institutional staking is definitely a win for institutional investors. [Ethereum] is the biggest network to do proof-of-stake, and having it bank-supported legitimizes [staking] as a real alternative to proof of work.”

See Also: Ledger Live Adds Yield Earning Capability via Alkemi Earn

The bank reiterated its view that blockchain technology delivers the most significant evolution of software since the internet, adding that the emerging ecosystem of Web3 applications has the ‘potential to transform every industry.’

Client engagement continues to grow and focus remains on the rapid development and disruptive nature of blockchain technology.

Participants said regulatory clarity is critical for institutional and corporate engagement, which could ultimately speed up real-world use and result in mainstream adoption as consumer confidence in the sector increases. It was a consensus view that institutional investors and corporates are preparing to enter the digital assets ecosystem, but remain on the sidelines until a comprehensive regulatory framework is established.”

See Also: Crypto more popular than mutual funds among millennials, survey shows

“The State Duma, the lower house of the Russian legislature, has passed a bill on the taxation of digital assets that exempts their sale from value-added tax (VAT) in the Russian Federation. In addition, the bill established income tax rates of 13% for Russian exchanges on the first 5 million rubles (currently about U$93,000) of the taxable base annually, 15% on amounts above that limit and 15% across the board for foreign exchange operators. The current tax rate for companies is 20%.

The government noted in the bill that a separate tax procedure for digital assets is key to the creation of an effective and competitive digital economy. Russia has tempered its skeptical stance on cryptocurrency as the country has increasingly felt the pressure of Western economic sanctions.

I think all self-respecting states will have a national digital currency within three years. […] We should be ready as soon as possible. Plus, this will settle the issue of being blocked from SWIFT, because this integration will make SWIFT unnecessary.”

“The crypto industry was “brought to its knees” in recent weeks by an “old-fashioned Madoff-style Ponzi scheme” wrapped in a trade that was similar to the positions that sunk Long Term Capital Management (LTCM), research firm FSInsight said in a report Friday.

Madoff in this scenario would be the founders of 3AC, Su Zhu and Kyle Davies, who used their reputation to ‘recklessly borrow from just about every institutional lender in the business,’ resulting in pain for some high-profile firms in the industry, including Voyager Digital, Babel Finance and BlockFi. Bernie Madoff was an American financier who ran the largest Ponzi scheme in U.S. history.

Given the size of the exposure that companies like Voyager Digital and BlockFi had to the fund, it appears that the vast majority of 3AC’s assets were bought with debt and its collateralization ratio was quite small. It is likely that Zhu and Davies were simply ‘using borrowed funds to repay interest on loans issued by lenders, while ‘cooking their books’ to show massive returns on capital.’

As asset prices collapsed and margin calls were triggered, 3AC could no longer hold its “daisy chain of leverage together,” which caused illiquidity issues across the whole crypto lending market. The overleveraged nature of this arbitrage trade is similar to the types of trades that were the “death knell” for Long Term Capital Management.”

See Also: CoinFLEX Says Roger Ver Owes It $47M USDC as Spat Turns Public

“U.S. SEC Chair Gary Gensler has reiterated his claim that bitcoin (BTC) is a commodity. His interpretation is partially rooted in precedent and, one would hope, reality.

Some, like bitcoin, and that’s the only one, Jim, I’m going to say because I’m not going to talk about any one of these tokens [that] my predecessors and others have said [are] a commodity.

The government’s stamp of approval seems to separate BTC from “crypto,” but decentralization is a path.”

See Also: Community reacts after SEC’s Gensler affirms BTC’s commodity status

Post-merge MEV Reward Structure

28 June

Grayscale Investments said Monday it would work with market-making heavyweights Jane Street and Virtu Financial as authorized participants should its Grayscale Bitcoin Trust (GBTC) garner SEC approval to be converted into an ETF. “Authorized participants” are specialized traders that can create and redeem shares of an ETF.

A decision on Grayscale’s ETF application is due on or before July 6, and the heavy betting is that the SEC will deny the proposal. Nevertheless, CEO Michael Sonnenshein this morning reiterated his company’s “unequivocal” commitment to converting GBTC from a trust to a spot ETF.

Additionally, Grayscale earlier this month hired high-powered attorney and former Obama administration official Donald B. Verrilli to assist in those efforts, and has made little secret of its intent to take the SEC to court should the agency deny the ETF application.”

See Also: Grayscale reports 99% of SEC comment letters support spot Bitcoin ETF

“The first and most obvious indication of a bear market is when the spot price of Bitcoin (BTC) falls below the 200-day MA and an even more extreme scenario, the 200-week MA. Glassnode also demonstrated that falling below 0.5 the Mayer Multiple (MM) is an exceedingly rare occasion that hasn’t happened since 2015.

Only 84 out of 4160 trading days (2%) have recorded a closing MM value below 0.5. For the first time in history, the 2021-22 cycle has recorded a lower MM value (0.487) than the previous cycle’s low (0.511).

[Further], Glassnode said instances when spot prices trade below the realized price are uncommon, noting that this is only the third time this has happened in the last six years and the fifth time it’s happened since Bitcoin’s launch in 2009.

Spot prices are currently trading at an 11.3% discount to the realized price, signifying that the average market participant is now underwater on their position.

In the midst of this, Bitcoin and Ethereum have both traded below their previous cycle ATHs which is a first in history.

Factoring in all the negative metrics, Glassnode assesses that the market is in the midst of a capitulation event. Miners have started selling their stacks, which is another indicator that capitulation has taken place. Such events often signify the bottom price range of a cycle.

See Also: Recession Fears Halt Crypto Bounce
See Also: Crypto Hedge Funds, Traders Short Tether After UST’s Implosion: Report

Voyager Digital has issued a notice of default to Three Arrows Capital (3AC) after the beleaguered hedge fund failed to make the required payments on its loans of 15,250 bitcoins and $350 million in USDC, worth about $670 million at current prices.

Voyager also announced it has drawn down $75 million of the emergency $200 million cash and USDC credit line provided by Alameda Ventures. As of Monday morning, the company has $137 million of cash and crypto assets on hand.”

See Also: Morgan Creek Is Trying to Counter FTX’s BlockFi Bailout, Leaked Call Shows
See Also: Robinhood Shares Spike on Report FTX May Be Seeking to Acquire It
See Also: Solana’s Biggest DeFi Lender Almost Got Rekt. Then Binance Stepped In

“Arbitrum and Optimism sit 4th and 5th when it comes to fees earned by all Layer 1 and 2 networks — behind only Ethereum, BSC, and Bitcoin. [A significant] source of revenue for rollups is MEV. Increasingly a key differentiator between L2s, each rollup platform’s approach to MEV has significant implications for the future value accrual of its native token.

Optimism is taking what’s known as an “offensive” approach to MEV. Rooted in the belief that MEV is fundamental to blockchain and attempts to remove it are futile, Optimism will eventually incorporate what is known as MEV auctions (MEVA).

MEVA seeks to isolate and redirect the revenue generated by MEV by auctioning off the right to extract it to the highest bidder. Optimism plans to allocate the revenue it earns via MEVA to funding public goods via retroactive public goods funding. In doing so, the L2 believes it will be able to create a self-sustaining ecosystem that, in the long run, will provide more value to all its stakeholders.

Arbitrum on the other hand, is taking a “defensive” approach to MEV, which is grounded in the idea that MEV is a tax on users. Rather than seeking to capture and re-allocate it, Arbitrum focuses on minimizing MEV within its system.

To do this, the Arbitrum network will implement what is known as Fair Ordering or Fair Sequencing, wherein all transactions in a batch are processed based on the order in which they are received. In doing so, Arbitrum intends to reduce the amount of MEV extracted, thereby making the rollup less expensive and more attractive to users and builders.

Offensive MEV provides an L2 with a stream of revenue that can be used to directly accrue value to its native token. While Optimism’s MEV revenue will at first be used entirely to fund public goods, a portion — or even all — can eventually be allocated to tokenholders through either a traditional single-sided staking pool, or through the decentralization of the sequencer (more on that later). In being used to fund public goods, MEV may help an L2 token indirectly accrue more value through improving the overall health and long-term sustainability of its ecosystem.

While defensive MEV deprives a rollup of a source of revenue that can be used to directly accrue value to its native token or bolster its ecosystem, it may indirectly improve the value of an L2 token. Users may be more inclined to transact on a network in which MEV does not run as rampant, bolstering its adoption and network effects.

Although it is very unlikely L2 tokens will be net-deflationary — or have the same monetary premium as ETH — they may still trade with an “index premium,” as they represent the broadest way to gain exposure to their respective ecosystems.”

“While blockchain primarily deals with things like data integrity and immutability — making sure that information data that sits on a blockchain is of high quality — AI uses data that is stored efficiently to provide meaningful and timely insights that researchers, analysts and developers can act on. People are only now beginning to realize the need for high-quality data to train an engine.

AI can help us to not just make the right decisions through a specific situation, but it can also provide predictive heads-up as it gets more trained and intelligent. However, blockchain as a framework is quite capable of being an information highway.”

See Also: The Intelligent Crypto Thesis

“Ripps first began minting his RR/BAYC NFTs on May 13 on Foundation, and after Yuga sent him an initial DMCA takedown claim, it quickly rescinded the claim when Ripps fought it. OpenSea, the largest NFT marketplace, has since removed Ripps’s collection because of “a claim of intellectual property infringement,” but not before it saw nearly $3.5 million in total volume traded.

This is no mere monkey business… These actions are calculated, intentional, and willful with the stated purpose of causing actual and monetary harm to Yuga Labs and to the holders of authentic Bored Ape Yacht Club NFTs.”

See Also: Anonymous vows to bring Do Kwon’s ‘crimes’ to light

25 June

The Wall Street firm is seeking $2 billion in commitments from investors to buy distressed assets at steep discounts if the crypto lender goes bankrupt. Citigroup and Akin Gump have both recommended Celsius file for bankruptcy, according to people familiar with the matter.

The assets, most likely cryptocurrencies having to be sold on the cheap, would then likely be managed by participants in the fundraising push. Goldman Sachs appears to be gauging interest and soliciting commitments from Web3 crypto funds, funds specializing in distressed assets and traditional financial institutions with ample cash on hand.

Celsius had more than $8 billion lent out to clients and $12 billion in assets under management as of May of this year.”

See Also: FTX in Talks to Acquire Part of BlockFi: Report
See Also: Celsius Network hires advisers ahead of potential bankruptcy: Report

A key metric known in crypto markets as the “Grayscale discount” is narrowing, possibly a sign of optimism on the part of some traders as the deadline approaches for the U.S. SEC to rule on a proposal to convert the Grayscale Bitcoin Trust – the world’s largest cryptocurrency fund – into an exchange-traded fund.

GBTC shares were recently trading at a discount of 29% to bitcoin’s price, according to data from Skew. That’s down from 34% last week.

In traditional markets, stocks rallied after a University of Michigan survey showed that consumers tempered their expectations for future inflation compared with the prior reading.”

See Also: Grayscale Bitcoin Trust’s ‘GBTC Discount’ Narrows With ETF Decision on Horizon
See Also: Bitcoin gives ‘encouraging signs’ — Watch these BTC price levels next
See Also: Bitcoin miner ‘capitulation event’ may have already happened — Research

“Coinbase Derivatives Exchange, formerly known as FairX, is launching its first crypto derivatives product this month, hoping to attract more retail traders. The futures exchange, which is regulated by the CFTC, will launch its derivatives product, Nano Bitcoin futures (BIT), on June 27.

At 1/100th of the size of a Bitcoin, it requires less upfront capital than traditional futures products and creates a real opportunity for significant expansion of retail participation in US regulated crypto futures markets.

Coinbase said it’s also awaiting regulatory approval on its own futures commission merchant (FCM) license to offer margined futures contracts.”

See Also: Moody’s Downgrades Coinbase’s Debt on Profitability Concerns

THORChain allows users to trade bitcoin (BTC) for any other supported asset without the use of bridges or wrapped assets. The protocol currently supports swaps between seven major ecosystems: bitcoin, ether (ETH), binance coins (BNB), dogecoin (DOGE), litecoin (LTC), bitcoin cash (BCH) and rune (RUNE). Support for cosmos (ATOM) and avalanche (AVAX) is expected shortly.

Developers said the protocol’s focus after the mainnet launch would be on integrating with more decentralized exchanges (DEX) and exchange aggregators.”

24 June

“The analogy for me is the dot-com boom when $5 trillion was wiped off values. A lot of companies went, but the technology didn’t go away. Those that survived—the Amazons and the eBays—turned out to be the dominant players.

The Deputy Governor added that no matter what happens to cryptocurrencies in the coming months, he expects ‘crypto technology and finance to continue. It has the possibility of huge efficiencies and changes in market structure.’

Mark Cuban recently joined the discussion as well, saying that ‘companies that were sustained by cheap, easy money—but didn’t have valid business prospects—will disappear.

See Also: MATIC Jumps as Polygon Introduces Improved Privacy for DAOs

“The government-owned bank’s Institute of Research and Expertise entertained the idea in a report titled “Global Payments Under the Sanctions: Current State and Perspectives” that says the Ministry of Finance must create a framework for how Russian companies under sanctions can use cryptocurrencies.

Gold can be a useful tool to compensate for the loss of most of Russia’s export revenue, the authors say. The metal can also serve as backing for a “golden ruble” stablecoin. The stablecoin would be used exclusively for settling import and export transactions, not for payment inside Russia, it says.

Americans won’t have any means to block operations with the crypto-golden ruble because the price will be tied to the price of gold on the global market.

One drawback: The stablecoin will need to exist for seven to 10 years before it establishes a track record as a reliable cryptocurrency, the authors note.

The authors also suggest increasing collaboration with China, India and other BRICS countries, Brazil and South Africa, including the creation of a blockchain-based settlement system.”

Powell said that the U.S. central bank plans to recommend to Congress how to advance a potential central bank digital currency (CBDC).

It’s something we really need to explore as a country. It’s a very important potential financial innovation that will affect all Americans. Our plan is to work on both the policy side and the technological side in coming years and come to Congress with a recommendation at some point.

One question around CBDCs is do we want a private stablecoin to wind up being the digital dollar? I think the answer is no. If we’re going to have a digital dollar, it should be government-guaranteed money, not private money.”

Cryptocurrency broker Voyager Digital reduced its daily withdrawal limit to $10,000 from $25,000.

Voyager shares (VOYG) plunged by more than 60% Wednesday after the company said it had an aggregated exposure of $720 million to Three Arrows Capital.”

See Also: CoinFLEX Pauses Withdrawals Amid ‘Extreme Market Conditions’ and Counterparty Uncertainty

“Solana Labs has announced an Android-based software kit for developing mobile Web3 apps. The firm will also release its own smartphone called Saga, which will be released in 2023. Solana Mobile Stack (SMS) is an open-source software kit designed to enable the development of native Android apps built around the Solana blockchain.

Another new feature called Seed Vault is a software custody solution that keeps private keys and seed phrases (essentially the passwords that unlock crypto funds) and other sensitive information secure on an Android device. Lastly, SMS includes Solana Pay for Android, which enables mobile payments via the platform. Solana Labs will also launch a new Solana dapp Store.”

See Also: NHL Partners With Sweet to Offer Digital Collectibles, NFTs

23 June

“As part of a new series of connect-to-consumer initiatives developed this year, Shopify will allow merchants to connect with fans and drive sales by creating exclusive merchandise for tokenholders. The feature serves as a gateway between NFT communities and consumer brands on the platform.

In addition, vendors can partner with other brands for upcoming NFT drops and team up with Shopify’s merchandising partners to develop premium products. Furthermore, vendors can mint custom NFTs on popular blockchains like Ethereum (ETH), Polygon (MATIC), Solana (SOL) and Flow (FLOW). Afterward, they can list and sell them right from their store.

See Also: EBay Acquires NFT Marketplace KnownOrigin for Undisclosed Amount
See Also: Meta set to begin testing NFTs on Instagram Stories with Spark AR
See Also: Ledger Launches NFT Marketplace and Services Platform for Enterprises

Voyager Digital (VOYG) shares fell more than 60% after the crypto broker disclosed its exposure to hedge fund Three Arrows Capital (3AC) and said it may issue a “notice of default” to the crypto fund if it fails to make a loan repayment. Voyager’s exposure to 3AC consists of 15,250 bitcoins ($370 million) and $350 million USDC, the company said in a statement Wednesday.

Failure by 3AC to repay either requested amount by these specified dates will constitute an event of default. Voyager intends to pursue recovery from 3AC and is in discussions with the Company’s advisors regarding the legal remedies available. The Company is unable to assess at this point the amount it will be able to recover from 3AC.

Wall Street analysts have turned cautious on Voyager, and are opting to steer clear of purchasing shares until there’s more clarity. BTIG analyst Mark Palmer downgraded the firm’s recommendation on Voyager shares to neutral from buy.

The 3AC exposure raises survivability questions for VOYG.”

See Also: SEC’s Hester Peirce opposes crypto bailouts — SBF didn’t get the memo

“During a hearing before the Senate Banking Committee on Wednesday, Powell said that a soft landing “is going to be very challenging,” and that a recession is “certainly a possibility.” Powell said the Fed will continue to raise interest rates until it sees a clear sign that inflation is cooling down.

We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential that we restore price stability. Financial conditions have already priced in additional rate increases, but we need to go ahead and have them.

Digital finance products, in some ways, are quite similar to products that have existed in the banking system or the capital markets, but they’re just not regulated the same way. So we need to do that.”

See Also: US Fed Evaluating SEC’s Position on Digital Assets Custody, Powell Says
See Also: Digital Dollar Would Secure Greenback as Global Reserve Currency, Lawmaker Argues
See Also: Chainalysis Launches 24/7 Hotline for Crypto Crime Victims

“Meta, Microsoft, Nvidia, Unity, Sony, and 30 other companies are coming together to build the infrastructure for an interoperable metaverse. The forum will focus on pragmatic, action-based projects and open-source tooling to accelerate the adoption of metaverse standards, while also developing consistent terminology and deployment guidelines.

One of the goals of the forum is to ensure that one company does not dominate the development of the metaverse, similar to how the development of the World Wide Web was led by multiple stakeholders.

Industry leaders have stated that the potential of the metaverse will be best realized if it is built on a foundation of open standards.”

“Cryptocurrency exchange dYdX announced Wednesday that it is launching a standalone blockchain in a bid to decentralize the platform. The layer 1 blockchain will become the home of the DYDX token. The chain, which will introduce the fourth version of the dYdX platform, will be built in the Cosmos blockchain ecosystem. dYdX noted that having a standalone chain on Cosmos would provide the platform with extra flexibility around fees and features.

Compared with most decentralized exchanges, which use automated market makers (AMMs) and liquidity pools to fill orders, dYdX will continue to use a traditional order book model with the new version of its platform. DYdX has long maintained that order books, which directly match buyers to sellers, are better suited to handle institution-sized transactions.”

See Also: Introducing Oasis Earn

BAYC Investigation (Recommended watch)

22 June

Bitcoin investment firm NYDIG and professional services giant Deloitte said they will work together to help businesses of different sizes incorporate digital assets into their operations. Deloitte’s clients include 90% of the Fortune 500 companies as well as 7,000 private firms.

The two formed a strategic alliance that will help NYDIG expand its client base by offering bitcoin products in banking, consumer loyalty, rewards programs and employee benefits to the consultancy’s customers while strengthening Deloitte’s digital asset offerings.

The future of financial services will center around the use of digital assets, and we are focused on advising our clients on ways to engage in a regulated and compliant way.”

See Also: Bank of Israel experiments with central bank digital currency smart contracts and privacy

This weekend, Bankman-Fried discussed the “responsibility” he feels to bail out crypto firms in crisis. He repeated the sentiment on Twitter, where he said the principal concern is mitigating retail losses, disclosing risks and preventing bad debts from spreading across the sector.

Today, FTX supplied the struggling crypto lender BlockFi with $250 million in credit. Last week, Bankman-Fried’s trading outfit Alameda Research bailed out crypto broker Voyager Digital. Of course, these lifelines aren’t simply altruistic, but also a way for FTX to expand.

Bankman-Fried is a self-proclaimed “effective altruist,” or capitalist who believes in earning as much as possible to give as much back. It’s unclear whether his actions now fall in the former or latter camps: Perhaps he’s intervening today to profit tomorrow.

Crypto is supposed to be guided by certain core principles including financial transparency and free markets. Perhaps the most important is the idea that autonomous code, not humans, should determine winners and losers in markets – ensuring that everyone plays by the same rules. So is there a moral hazard in Bankman-Fried stepping in?

Today, the firms that seem at the greatest risk of default are those that are primarily reproducing the worst aspects of the legacy financial system – all without consumer protections. Celsius and Three Arrows were taking risky bets with client funds. And centralized exchanges are black boxes. If crypto learns anything from the ongoing market reckoning, let it be that its only real hope in breaking away from the convoluted, easily corrupted legacy financial system is in real decentralization.

Progressive politicians of JP Morgan’s day were driven to create the Fed in part after witnessing Morgan and his peers’ influence in the economy. Despite his altruistic intentions, the Pujo Committee feared that Morgan could influence markets for his own gain.

For his part, Bankman-Fried is amenable to working with regulators. He’s said he’d spend upward of $1 billion in political contributions in part to earn officials’ ears. Changes need to be made, especially if crypto’s largest players are just going to create a worse banking system.

But the real change, challenges and opportunities of the crypto industry will happen at the protocol level – not directed by any one person.”

See Also: BlockFi Receives $250M Credit Facility From FTX
See Also: Celsius Up 50% Amid GameStop-Style Short Squeeze Attempt
See Also: ‘Enormous Outflows’ From Largest Bitcoin ETF May Have Triggered BTC Crash

Uniswap Labs said Tuesday it has acquired NFT marketplace aggregator Genie in a push to support trading of non-fungible tokens “soon.”

NFTs will be integrated into our products, starting with the Uniswap web app, where soon you’ll be able to buy and sell NFTs across all major marketplaces. We’ll also integrate NFTs into our developer APIs and widgets, making Uniswap a comprehensive platform for users and builders in web3.”

See Also: Ethereum Sepolia testnet Beacon Chain launched and ready for trial merge

A video released by investigative YouTuber Philip Rusnack, known as Philion, has revived the debate over whether Yuga Labs’ flagship Bored Ape Yacht Club (BAYC) nonfungible token (NFT) collection employs racist imagery and white supremacist esotericism. In the hour-long video released Monday on YouTube, Rusnack laid out his case, claiming that BAYC is “one massive alt-right inside joke.”

There is a point at which these similarities are no longer coincidences.

Mark Pitcavage, a senior research fellow at the Anti-Defamation League’s (ADL) Center on Extremism — who is often cited as an extremism expert — said in a February interview with Input that he saw no correlation between the logo and the Totenkopf.

Ripps has faced allegations that his complied research is a publicity tactic to sell his own BAYC derivative NFT collection called RR/BAYC, featuring over 6,000 NFTs based on the original collection.

The partnership allows DeFi liquidity providers to earn interest using USDC stablecoins via Tower Fund Capital, a SEC-Reg D private lender for real estate investment loans with a $140 million debt fund.

I think the timing is great given the unfolding of centralized applications where the transparency was not there. TrueFi, Maple and Goldfinch are also showcasing with Tower Fund these opportunities to be lending into real estate with full transparency, showing that DeFi capital can be allocated to specific opportunities in a way that is no longer a black box.

It’s just the latest in a series of tie-ups for Teller exploring real world assets and traditional financial services offerings, such as insurance products, to provide DeFi with an alternative to simply earning yield on cryptocurrency.”

“Twitter’s board, according to an SEC filing today, is unanimously asking shareholders at an upcoming special meeting to approve Elon Musk’s $44 billion bid to acquire the social media giant. Board members said in the Securities and Exchange Commission filing that the proposed takeover is ‘advisable and in the best interests of Twitter and its stockholders.’

If completed, the buyout could become a major milestone for crypto. In the months following Musk’s April offer, the billionaire has emphasized that integrating payment services—possibly Dogecoin—with the platform is one of three “critical areas” he intends to prioritize once taking the company private. Musk has repeatedly stated that he intends for Twitter to enable payments in both fiat and crypto.”

Crypto TA

21 June

The U.K. government will not implement its proposed version of a controversial rule requiring all senders of funds to private crypto wallets to collect identification details of recipients. Based on the feedback received, the Treasury does not think it would make sense to create a data collection rule for unhosted, or private, wallets.

Instead of requiring the collection of beneficiary and originator information for all unhosted wallet transfers, cryptoasset businesses will only be expected to collect this information for transactions identified as posing an elevated risk of illicit finance.”

BnkToTheFuture co-founder Simon Dixon has proposed a recovery plan similar to the solution offered to Bitfinex after its Bitcoin hack in August 2016 – allowing customers to be compensated for their losses through tokens tied to the platform’s recovery.

I believe traditional finance will not have a timely solution for Celsius as we saw in the past with Mt. Gox that still remains unresolved 10 years later. I believe that this can only be solved with a solution using financial innovation like we did with Bitfinex that was resolved within 9 months and worked out very well for depositors.

Rather than pursuing liquidation proceedings, Bitfinex instead came up with an innovative recovery plan, which involved “promises to repay” in the form of BFX tokens to customers, representing the value of the money lost in the hack. These tokens were tradable on the open market or could be held later for future repayment of $1 per token, and effectively allowed customers to speculate on the company’s recovery.

However, there’s also an unofficial community-led recovery plan which appears to be gaining traction on Twitter under the hashtag #CELShortSqueeze. The movement is attempting to force short-sellers of the Celsius token to cover their short positions by purposefully driving up the price of the CEL token through the mass purchase and withdrawals of the CEL token from various exchanges.”

See Also: Babel Finance Reaches Debt Agreement With Counterparties After Withdrawal Freeze
See Also: Hong Kong’s Hoo.com Expects to Re-Open Some Token Withdrawals Today; Finblox Takes Steps to Address Liquidity

Investors exited bitcoin (BTC) positions worth a record $7.3 billion over the past few days, amounting to the biggest U.S. dollar denominated losses in the asset’s history. Approximately 555,000 BTC have changed hands between prices of $18,000 and $23,000. In broader futures markets, bitcoin futures racked up some $436 million in liquidations over the past three days.

Such liquidations could have contributed to bitcoin falling to under $20,000 over the weekend. Bitcoin fell to as low as $18,319 a coin while its market capitalization slumped to about $350 billion, a 73% decline from its November all-time high. Bitcoin saw resistance at $21,000 on Monday morning after a relief rally.

Glassnode analysts said data at current price levels suggested a market bottom. ‘We can see that as prices hit the $17,000 lows [Sunday], just 49% of the $BTC supply was in profit. Historical bear markets have bottomed and consolidated with between 40% and 50% of supply in profit.’

However, traders remain cautious with some stating that macroeconomic conditions must improve and the Fed’s aggressive approach to monetary policy should subside before crypto markets see a bottom.”

See Also: Bitcoin futures enter backwardation for the first time in a year
See Also: ProShares Launches First ETF to Short Bitcoin

“Layer-2 scaling solution Synthetix recently collaborated with liquidity provider Curve Finance to create Curve pools for sETH/ETH, sBTC/BTC, & sUSD/3CRV, allowing investors to cheaply convert synths such as sETH to Ether (ETH).

Synthetix created a buzz across the crypto ecosystem after witnessing a sudden increase in trading activities and an unprecedented comeback of its in-house token, SNX, during an unforgiving bear market. The protocol racked up over $1.02 million in trading fees — overshadowing Bitcoin’s (BTC) daily performance by five times.”

See Also: Bancor pauses impermanent loss protection citing ‘hostile’ market conditions

ETH2: Mev-boost for Validators

The Disrupt Weekend

  1. Obol Network – Distributed Validator Technology (DVT)
  2. LI.FI – L2 Bridge & DEX aggregator aggregator
  3. Voltz – Internet Rate Swap AMM
  4. Tracer – Derivatives Meta-Protocol
  5. Blocknative – Real-Time Infrastructure for the Pre-Chain Layer
  6. Euler – Governance-Minimized Money Market
  7. Aztec Network – Privacy-focused Layer 2
  8. Disco.xyz – The Off-Chain Internet

Users of Solana-based borrowing and lending service Solend voted Sunday to force a takeover of the protocol’s largest account: a “whale” whose “extremely large margin position” was getting, according to Solend contributors, dangerously close to a catastrophic on-chain liquidation cliff.

The unprecedented governance vote will grant Solend Labs “emergency powers” to liquidate the whale’s vulnerable assets (around $20 million in SOL) via over-the-counter (OTC) trades. Solend Labs said on-chain liquidation of the whale’s position “could cause chaos” in Solana’s DeFi markets.

But it also usurps entirely the smart contract–coded protocol Solend programmatically follows for every other borrower liquidation.”

See Also: Voyager Digital Secures Loans From Alameda to Safeguard Its Assets

See Also: SBF: Three Arrows Crisis ‘Couldn’t Have Happened’ with Transparent On-Chain DeFi
See Also: BIS to launch market intelligence platform amid stablecoin, DeFi collapse
See Also: How Crypto Lender Celsius Overheated

A blockchain transaction that contributed to the collapse of Terra’s UST stablecoin has been linked by a South Korean analysis firm to the ecosystem’s chief developer, Terraform Labs. Uppsala, in its report, did not venture to provide a possible motive or rationale for the transaction, and officials with Terraform Labs did not reply to requests for comment. The findings have been shared with legal authorities in South Korea.

Blockchain data shows Wallet A swapped over 85 million UST for another dollar-linked stablecoin, USDC, on May 7 – just minutes after Terraform removed over 150 million UST from a liquidity pool on the lending platform Curve in a planned move. Prices of UST fell under $1 almost immediately following these trades, which Uppsala said was a result of the lower liquidity on the Curve pool. Meanwhile, Wallet A’s newly-acquired USDC was sent to Coinbase.

It means that Terraform Labs or LFG made a financial transaction that caused Terra to collapse on its own.”

See Also: Convicted Felon Anna Sorokin is Launching an NFT Collection

“Crypto has actually gone through multiple boom/bust cycles in its relatively short existence; in the last cycle the price of Bitcoin fell 85% from its peak, before rising ~20x in the next cycle. All along the way there have been skeptics calling cryptocurrency a ‘scam’ and ‘dangerous’.

The price of Bitcoin is now down ~70% from its most recent peak. And, almost on cue, the crypto grave-dancers (like Bill Gates) are now insisting that they were right for predicting its demise. If history is any guide, this is pretty foolish. As 99Bitcoins.com tracks, there have been (at least) 453 declarations of the death of Bitcoin since 2010.

The fact that a technology attracts manic boom/bust capital is no reflection on the technology itself. It is a reflection on the market’s tendency towards irrationality. This was the case with bicycles and the Internet. And it will most likely be the case with crypto.

There will be plenty of crypto businesses, and many tokens themselves, that will (and should) go bust. But there are still plenty of great projects and great ideas out there– most notably, the fundamental idea of having a decentralized financial system.

Our traditional financial system, dominated by clueless politicians and out of touch central bankers, has been a total disaster. It is responsible for the record-high debt and record-high inflation which are disrupting the lives of literally billions of people.

Given these conditions, the decentralized financial system that cryptocurrency represents makes more sense than ever. And the fact that Bitcoin is going through another ‘down phase’ in the market cycle bears absolutely no relevance to its value whatsoever.

History is almost invariably on the side of innovation. And there’s still an abundance of innovation in crypto.”

See Also: Crypto Market Tumbles as Bitcoin Breaks Previous Cycle’s Highs

Loss harvesting, also known as tax-loss harvesting or tax-loss selling is an investment strategy where investors either sell, swap, spend or even gift an asset that has fallen into the red — also known as making a “disposal” — allowing them to “realize a loss.” Investors typically do it in the final weeks of the tax year. In the crypto world, a loss can be realized by converting it to fiat or just trading for another crypto token on the exchange.

Most people are familiar with the concept of tax on gains. But, what they’re not doing is realizing that they can recognize that loss on their tax return to then offset against gains.”

18 June

“Bitcoin (BTC) has tumbled 23% since Sunday, heading for its worst weekly performance since May 2021. As of press time the largest cryptocurrency was changing hands just around $20,500. The price has declined 56% year-to-date.”

“Beleaguered cryptocurrency fund Three Arrows Capital (3AC) confirmed Friday it had suffered heavy losses in the recent market downturn and said it had hired legal and financial advisors to figure a way out. 3AC is exploring options including asset sales and a rescue by another firm and hopes to reach a settlement with creditors, Davies said.

The fund had over $3 billion worth of cryptocurrencies under management as of April. Davies added that 3AC was working on quantifying its losses and valuing its illiquid assets, which include many venture-capital investments in crypto startups.

We are committed to working things out and finding an equitable solution for all our constituents. The Terra-Luna situation caught us very much off guard.

Law firm Solitaire LLP, which is advising 3AC, told the WSJ that it was keeping Singapore’s financial regulator, the Monetary Authority of Singapore, apprised of 3AC’s recent developments.”

See Also: Genesis Trading Mitigated Losses With a ‘Large Counterparty,’ CEO Says

“Caisse de dépôt et placement du Québec, a major Canadian pension fund, and the New York-based WestCap Group led Celsius’ oversubscribed $750 million Series B funding round last year, which raised the firm’s valuation to $3.5 billion. However, neither of them is reportedly willing to provide additional funds to Celsius.

Investors are willing to either stand back, or let another company try to buy Celsius. Another possible option on the table is to simply let the business restructure; earlier this week, Celsius reportedly hired restructuring attorneys.

There was more risk in this than fully appreciated.

Securities regulators in five states have opened investigations into Celsius’ decision to freeze withdrawals.”

See Also: Lido Finance Warns Leverage Is a ‘Hell of a Drug’
See Also: Maker cuts off exposure to Aave’s stETH supply as fallout from Celsius continues

Hong Kong-based crypto lender Babel Finance has suspended withdrawals and redemptions. ‘Babel Finance is facing unusual liquidity pressures,’ the statement reads, before alluding to major fluctuations in the market and ‘conductive risk events‘ among institutional market participants.

At the end of 2021, Babel Finance had an outstanding loan balance of over $3 billion, up from $2 billion the previous February. It averaged $800 million in monthly derivatives trading volume and had structured and traded over $20 billion in options products.

On Thursday, rival staking platform Finblox made a similar decision, restricting withdrawals to $1,500 per month due to its connection with Three Arrows Capital.”

Immutable said the fund will collaborate with crypto and gaming investors including BITKRAFT, Animoca, Arrington Capital, Double Peak, Airtree, King River Capital and GameStop. Immutable Ventures has invested in Web3 companies and NFT startups including Starkware, Stardust, PlanetQuest and Topology.

Earlier this year, GameStop partnered with Immutable X for the launch of its NFT marketplace. Some of the names already building on Immutable include GameStop, TikTok, Opensea, Ember Sword and more.”