17 November

The lending arm of crypto investment bank Genesis Global Trading is temporarily suspending redemptions and new loan originations in the wake of FTX’s collapse. Islim told the participants on the call that Genesis is exploring solutions for the lending unit, including finding a source of fresh liquidity. He said Genesis intends to detail its plan to clients next week.

Genesis Trading, which acts as Genesis Global Capital’s broker/dealer, is independently capitalized and operated separately from that lending unit, Islim said. He added that Genesis’ trading and custody services remain fully operational. Genesis Global Capital, serves an institutional client base and had $2.8 billion in total active loans as of the end of the third quarter of 2022.

This decision impacts the lending business at Genesis and does not affect Genesis’s trading or custody businesses. Importantly, this decision has no impact on the business operations of DCG and our other wholly owned subsidiaries.

Last week, Genesis disclosed that its derivatives unit had about $175 million in locked funds in its FTX trading account. As a result, DCG opted to strengthen Genesis’ balance sheet with an equity infusion of $140 million. Genesis suffered major losses earlier this year due to the failure of hedge fund Three Arrows Capital (3AC).”

Prominent crypto market maker B2C2 has offered to purchase loans from the suddenly-struggling crypto financial firm Genesis.

Throughout the current crypto market turmoil, B2C2 has provided critical liquidity and support to our global client base. The company is in a position to support the wider market by offering to work with Genesis and their counterparties to novate existing loans at Genesis Global Capital to B2C2. Loans will have to fall within our established risk management framework to qualify.”

See Also: Grayscale Declares ‘Business as Usual’ Despite Sister Company Genesis Global Capital Suspending Withdrawals
See Also: Crypto Exchange Gemini Suffers $485M Rush of Outflows Amid Contagion Fears
See Also: Circle Reveals FTX Exposure, Says USDC Conversions on Binance Have Hurt Projections
See Also: Temasek Prepares to Write Off Up to $300M Invested in FTX: Bloomberg
See Also: FTX bankruptcy freezes millions worth of crypto company funds

Rep. Tom Emmer, a co-chair of the congressional blockchain caucus, was chosen for a leadership role in the next Congress and is bullish on digital assets in the wake of FTX. Emmer, elected as the incoming whip who will organize Republican members of the House for legislative votes, cautioned against making too much of the situation with FTX.

He said do-gooders shouldn’t be allowed to ‘rush in and put a huge wet blanket of regulation atop this industry just because something didn’t go right.’

We need to use the stage that is Congress to promote all of you beyond the walls of the Capitol. People need to understand more out there that they shouldn’t be afraid of this. You are here to stay. You are going to continue to grow. You do not get growth without taking risk.”

See Also: US Sen. Gillibrand Says a Last-Ditch Stablecoin Bill May Still Emerge This Year
See Also: Top House Committee to Hold Hearing Into FTX Collapse
See Also: Republicans Secure US House Majority, Will Shift Path for Crypto Bills

Decentralized-finance (DeFi) protocol MakerDAO said it can now handle “near-instant” transactions and faster withdrawals across the Ethereum blockchain and layer 2 networks for its $6 billion stablecoin, DAI. The new infrastructure called Maker Teleport enables users to send and withdraw DAI by circumventing the Ethereum blockchain’s base layer.

Maker Teleport reduces fees and settlement time for transferring DAI from between Ethereum and layer 2 networks. Maker Teleport is now available on Ethereum scaling networks Arbitrum and Osmosis.

MakerDAO is one of the biggest players in DeFi, and it also issues the largest decentralized stablecoin, DAI. Recently, it has invested a part of its $8 billion reserve into traditional assets such as U.S. Treasurys and corporate bonds, and decided to break up its organization structure into smaller units.”

Ethereum development firm Matter Labs has raised a monster $200 million to support the launch of its zkSync V2 rollup network. Alongside its funding announcement, Matter Labs pledged to file its core software under an MIT Open Source license by the end of 2022, meaning third parties will be allowed to view, use and augment zkSync’s code.

The new funding brings the total amount raised by the firm to $458 million – a large sum, even in the wild world of crypto, that Matter hopes will put it on solid footing in the deeply competitive Ethereum scaling race. So far, Newcomb says that over 150 projects – including major decentralized finance platforms like Uniswap and Aave – have committed to launching on zkSync.

Other companies in addition to Matter Labs, like the research-oriented Scroll platform and the Ethereum juggernaut Polygon, are progressing on their own ZK-rollup platforms. Together, these firms represent the first cohort of a new class of so-called zkEVMS – ZK rollups which, unlike past applications of the technology, will be able to support virtually any program that runs on Ethereum.”

See Also: StarkWare Deploys StarkNet Crypto Token on Ethereum Blockchain

“The U.K.’s Law Commission is looking at how Decentralized Autonomous Organizations (DAOs) should be treated under the legal system.

The probe will look into issues like the relationship between DAOs and corporations; the status of investors and token holders; the legal liability of open-source code developers; and the ways in which DAOs tackle money laundering, file annual reports and pay taxes, the commission said.

DAOs are said to offer multiple benefits to market participants… yet their legal and regulatory status is unclear. Our work will aim to build consensus on the best ways of describing the constituent elements of DAOs and to highlight ways in which the law of England and Wales might foster their development.”

“Digital assets extended losses on Wednesday after the crypto financial firm Genesis Global Capital announced that it was temporarily suspending redemptions and new loan originations.

We don’t expect any sharp drops or selling pressure due to contagion fears alone since the bulk of the move is likely to be priced in already. At this point, any new development will result in temporary drops, but we don’t expect investors to be shocked by more FTX-related ramifications either. That being said, recovery from these lows may need time, both in terms of market capitalization and general sentiment.

Will Tamplin, a senior analyst at technical research firm Fairlead Strategies, said that if bitcoin can’t get back above its long-term support near $18,300 by Sunday’s weekly close, ‘a major breakdown would be confirmed in a bearish message from the market, which would increase risk to next support near $13,900.’

While FTX’s collapse and its ramifications for the broader crypto industry are a serious blow, it won’t scare away institutional investment from entering the market, according to Sheraz Ahmed, managing partner of Storm Partners. Once all the stakeholders directly and indirectly affected by the fall of FTX absorb the losses, ‘we could see institutions swoop in at the lows with their heavy pockets.’

See Also: Have Crypto Markets Reached Bottom?
See Also: Tim Draper still positive on $250K Bitcoin price prediction in 2023

“FTX Digital Markets, the Bahamas arm of the now-defunct crypto exchange, has filed for Chapter 15 bankruptcy proceedings in the Southern District of New York. The procedure is intended to allow for an orderly wind-up of cross-border enterprises so that funds can be returned to creditors as fully as possible – potentially including the site’s many regular users.

The pleadings essentially argue that U.S. courts should recognize the Bahamas legal proceedings, allowing other legal claims by creditors to be paused. Under the U.S. bankruptcy code, other parties have three weeks to object before the court makes its decision.

As the U.S. business winds up, data from secondary markets suggest that creditors can expect to receive only 8-12 cents on the dollar for their claims on the collapsed company.”

See Also: Bahamian Liquidators Say FTX Wasn’t Authorized to File for Bankruptcy in the US
See Also: US Crypto Investors Sue FTX’s Sam Bankman-Fried, Company’s Celebrity Endorsers

“Former FTX CEO Sam Bankman-Fried continues to tweet and comment frequently about what led to FTX’s collapse, but his replacement as CEO is having none of it. John Ray’s statement on Twitter stressed that SBF no longer speaks on behalf of the exchange and affiliated companies.

Mr. Bankman-Fried has no ongoing role at @FTX_Official, FTX US, or Alameda Research Ltd. and does not speak on their behalf.

Legal experts say Bankman-Fried’s tweets are likely to be a liability in court cases that may result from FTX’s collapse.”

See Also: Sam Bankman-Fried updates investors: ‘We got overconfident and careless,’ claims $13B leverage

“The Federal Deposit Insurance Corporation (FDIC) decided to prioritize five key policies this year, which include evaluating the risks of crypto assets to the banking system. Gruenberg acknowledged the accelerated interest in crypto despite a bear market while confirming FDIC’s intent to better understand the crypto risks with the help of banks:

The FDIC will continue to work with our supervised banks to ensure that any crypto-asset-related activities that they engage in are permissible banking activities that can be conducted in a safe and sound manner and in compliance with existing laws and regulations.”

16 November

The collapse of FTX and Alameda Research impacts the centralized finance (CeFi) part of the crypto industry the most, Bernstein said in a research report Monday. Part of the crypto ecosystem is exposed to this event, but it is not the entire industry, the report added. The decentralized finance (DeFi) ecosystem and blockchain-based applications, ‘gain from this fragility, subject to some regulatory boundaries and negotiations.’

Bernstein says there needs to be a distinction made between the centralized custodial players in crypto, namely the exchanges, custodians, and crypto banks, as this is where regulation is coming. This will involve rules around maintaining reserves and uniform accounting for custodial firms, the broker said. Governments and regulators may also increase their scrutiny of offshore exchanges, where regulations are lighter, it added.

Echoing comments made by Wall Street rival Citi in a report last week, Bernstein says that decentralized exchanges (DEXs) continue to see traction, especially after the failure of FTX.”

See Also: DeFi Protocols Are Winning Users as Centralized Crypto Exchanges Suffer Ether Outflows

The Securities Commission of the Bahamas, where FTX is headquartered, has approved the liquidation of FTX’s assets. Kevin Cambridge and Peter Greaves of Big Four accounting firm PricewaterhouseCoopers (PwC) have now been approved by the court as joint provisional liquidators.

A provisional liquidator does not distribute assets to creditors but instead is put in place to preserve the firm’s assets prior to a court hearing into a firm’s bankruptcy filing. The Commission will be liaising with “other supervisory authorities” to get to the bottom of the FTX’s historic collapse.”

See Also: FTX’s New Leadership Is in Touch With Regulators, May Have Over 1M Creditors, New Filings Say
See Also: Thousands petition for congressional investigation of alleged Gensler–SBF links

Crypto lender BlockFi is preparing a potential bankruptcy filing because of its “significant exposure” to bankrupt crypto exchange FTX, the Wall Street Journal reported on Tuesday.

The lender denied rumors that a majority of its assets were held at FTX, but did acknowledge on Monday that in addition to having deposits on the platform, it had an undrawn line of credit from FTX and obligations that FTX owed it.”

See Also: Liquid Global Halts Withdrawals as FTX Contagion Continues

At their peak last November, decentralized finance (DeFi) applications stored more than $10 billion on the Solana network, its popularity being led by high-flying proponents including Sam Bankman-Fried, Multicoin Capital, Sino Global Capital and other venture funds. A year later, the total value locked (TVL) has dropped to just over $300 million with FTX filing Chapter 11 bankruptcy proceedings and facing prosecution, Multicoin and Sino Global reporting multimillion-dollar losses and the Solana Foundation itself losing “tens of millions.”

Lending and borrowing platform Solend took the biggest hit both in percentage and value terms. It held over $280 million on Nov. 2 and now holds under $30 million. Data show a vast amount of stablecoins, wrapped bitcoin tokens and Solana-based tokens have left the protocol.

Solana has undoubtedly taken a massive blow. Restless and unpredictable as it may be, it will eventually reveal the true worth of projects and token.”

The small recovery comes as U.S. stocks were buoyed by fresh data from the Labor Department’s Producer Price Index report on Tuesday showing a decline in the cost of goods excluding food and energy. This, experts say, could mean inflation is finally being brought under control.

Quantum Economics CEO Mati Greenspan told Decrypt that ‘inflation data does seem to be turning, which is really positive for asset prices.'”

A group of major banks and the Federal Reserve Bank of New York have started to test the use of digital tokens representing digital dollars to improve how central bank money is settled between institutions. Citigroup (C), HSBC (HSBC), BNY Mellon (BK) and Wells Fargo (WFC) are among the banks taking part, along with payments giant Mastercard (MA).

The 12-week proof-of-concept pilot program will explore the use of a platform known as the regulated liability network, or RLN, whereby banks issue tokens that represent customers’ deposits that are settled on a central bank reserve on a shared distributed ledger.”

See Also: USDC Stablecoin Issuer Circle Says Businesses Can Accept Apple Pay

The European Union could ban banks and crypto providers from dealing in privacy-enhancing coins such as zcash, monero and dash under a leaked draft of a money laundering bill obtained by CoinDesk.

Credit institutions, financial institutions and crypto-asset service providers shall be prohibited from keeping …anonymity-enhancing coins.

Under the Czech plans, crypto asset providers would be obliged to verify customers’ identity even for occasional transactions of under 1,000 euros ($1,040), and to probe the nature and purpose of the business for larger payments. That would make rules more onerous than for other kinds of firms such as banks, where due diligence rules only kick in for larger payments, apparently due to fears that crypto payments can easily be broken up into smaller chunks.

The bill would represent the latest in a regulatory onslaught against online anonymity – which has legitimate purposes, but which regulators also worry can be used to process criminal funds, bust sanctions, or raise money for terrorists and other pariahs.”

See Also: The ‘SBF Bill’: What’s in the Crypto Legislation Backed by FTX’s Founder

All 19 of the congressional candidates backed by the crypto industry’s most widely supported political action committee, GMI PAC Inc., won their races last week, sending 16 new members to the House and Senate.

The millions in campaign spending from this group is at least partially responsible for a large number of relatively young and crypto-friendly additions to Congress. But that positive performance is also at least somewhat eclipsed by the FTX meltdown. Former FTX CEO Sam Bankman-Fried was a top contributor to GMI.

Bankman-Fried contributed $2 million in January, and GMI’s relationship with him was limited to his interest in GMI’s mission at the time of his contribution. As with all contributors, Bankman-Fried had no involvement in decision making about the PAC’s activities or which candidates the PAC supported.

The implosion of his crypto empire and the devastation wrought on other companies and the real-people users of FTX will likely shape how Congress views digital assets in the coming session. Whether crypto goodwill will remain for those GMI and its affiliated PACs helped into office will immediately be tested. Congressional hearings will likely question what happened with FTX, and the new lawmakers will have to consider appropriate legislation in what could be the most important year yet for the industry on Capitol Hill.”

See Also: Meaning of FTX Fall Depends on One’s Politics, US Senate Hearing Shows

Aftermath Of The FTX Collapse In The Markets

15 November

Binance CEO Changpeng “CZ” Zhao says that his exchange is setting up a recovery fund to help rebuild the industry. Tron founder Justin Sun said that Tron, Huobi Global and Poloniex will support Binance in its initiative.

To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify.

In remarks made Monday at the B20 Summit in Indonesia, CZ said he wanted the industry, as well as regulators, to take responsibility for cleaning up its act.”

See Also: CrossTower revises new offer for Voyager’s assets after FTX’s bankruptcy
See Also: Binance to Be ‘Guinea Pig’ for Vitalik Buterin’s Proof-of-Reserves Protocol: CZ
See Also: Crypto Lender BlockFi Updates Users on Platform, FTX Exposure
See Also: Payments company Curve bids for BlockFi’s 87,000 credit card customers
See Also: Crypto.com CEO Dismisses Speculation of Financial Trouble, Says FTX Exposure Is Minimal

With many commentators mistakenly equating one person’s record-breaking fraud with the failings of the entire crypto space, we have seen two very unexpected voices speaking out in defense of cryptocurrencies.

The first comes from Deutsche Bank which notes, ‘this second “crypto winter” will be a net positive because the FTX collapse will edge the crypto ecosystem closer to the established financial sector.‘ Specifically, the DB analyst writes that the FTX crash spotlighted well-known structural issues in the crypto ecosystem: ‘insufficient reserves, conflict of interest, a lack of regulation and transparency, and unreliable data.’

A more surprising defense of crypto came from JPMorgan crypto analyst Steven Alexopoulos:

While this is certainly a major short-term setback, we see the widely publicized collapse of FTX as potentially dramatically accelerating the timeline to which crypto-related regulation will be ushered in. In fact, we see the establishment of a regulatory framework as the needed catalyst to massively ramp the institutional adoption of crypto.

Moreover, while the news of the collapse of FTX is empowering crypto skeptics, we would point out that all of the recent collapses in the crypto ecosystem have been from centralized players and not from decentralized protocols.”

See Also: After Bitcoin’s Worst Week in 5 Months, Here’s What Crypto Analysts Are Saying

The shockwaves from FTX’s historic collapse are still being felt across the industry today, but some industry segments, like DeFi, are actually doing better because of it.

Trading volumes on decentralized exchanges (DEXs) hit a whopping $32 billion over the last seven days. The lion’s share of the volume comes from Uniswap, which accounts for $20.9 billion of the trades. Smaller DeFi platforms also benefited. On Friday, 1Inch network, an aggregation platform for various DEXs, tweeted gains across all of its protocols.

The rising popularity of decentralized exchanges over the last week is not surprising considering the biggest horror stories of the industry’s ongoing liquidity crunch—dubbed “crypto winter”—have all followed a similar pattern. Lenders like Hodlnaut, Vauld, Celsius, and Singaporean exchange Zipmex all suspended customer crypto withdrawals because of “recent market conditions,” a term which is a bit of a euphemism for “not having the liquidity to meet outstanding redemption requests.” All of them are bankrupt now.

So, how can consumers avoid the obvious risks of custodying their crypto with a centralized exchange? To DeFi fans, the answer is obvious: enter decentralized exchanges. If there’s one silver lining to the terrible liquidity crises blowing up across the industry, it’s that crypto appears to be returning to first principles. After all, centralized interventions were the very reason crypto was created in the first place.

The Solana Foundation said Monday it has tens of millions of dollars in cryptocurrencies stranded on FTX – as well as 3.24 million common stock shares in Sam Bankman-Fried’s bankrupt crypto exchange. The Foundation said it held 134.54 million SRM tokens and 3.43 million FTT tokens on FTX when withdrawals went dark on Nov. 6. Those assets are worth $29.3 million and $4.4 million, respectively, at current market prices; they were worth around $107 million and $83 million one day before the freeze.

Those holdings point to deep financial ties between Solana and FTX, which created the FTT token and held court over Serum, an on-chain crypto exchange that Bankman-Fried created and which was at the center of much of Solana-based decentralized finance (DeFi).

FTX’s collapse last week continues to reverberate through Solana, perhaps most acutely through its severe sell pressure on the price of SOL, which is down 57% in a week. But FTX’s role in managing infrastructure critical to Solana DeFi has caused a crisis for individual protocols, too.

Many trading projects on Solana used wrapped assets called “Sollet assets” as stand-ins for bitcoin, ether and other non-native cryptocurrencies. FTX was believed to be the issuer and backer of these assets; its collapse has sent them into a spiral and shouldered a handful of protocols with bad debt.

Bankman-Fried’s exchange and trading firm had purchased a total of 58,086,686 SOL tokens from the Foundation and sister entity Solana Labs from August 2020 onwards, the blog post said. The Foundation said it is unclear what will happen to those assets during bankruptcy proceedings.

See Also: Sam Bankman-Fried’s Unceremonious Exit Leaves ‘Alameda Gap’ in Crypto Markets

“Hacken investigated blockchain transactions and found that the looter tried to send tether (USDT) stablecoin on the Tron blockchain multiple times unsuccessfully because they didn’t have enough TRX, the Tron network’s native token, in the wallet to pay for transaction fees. So the looter used their verified personal account on crypto exchange Kraken to send 500 TRX to the compromised wallet address to cover the transaction.

Because of Kraken’s “know-your-customer” or KYC measures, the exchange had information on who owns the personal wallet the TRX was sent from, revealing the identity behind the exploit.

We know the identity of the user.

A Kraken spokesperson said that the exchange is ‘in contact with law enforcement, and has frozen Kraken account access to certain funds we suspect to be associated with ‘fraud, negligence or misconduct’ related to FTX.’ Percoco added he was told that FTX or the exchange’s founder and former chief executive, Sam Bankman-Fried, will release an official statement.

Budorin said that the exploit demonstrated that the way FTX managed its cold wallets was “very poor.””

See Also: FTX Hacker Panicked, Still Holds $339M in Ether, Cryptos: Arkham Intelligence
See Also: Paxos Ordered by US Officials to Freeze $19M in Crypto Tied to FTX

“In the aftermath of crypto exchange FTX’s fall from grace, U.S. Treasury Secretary Janet Yellen said the industry needs ‘very careful regulation. It shows the weaknesses of this entire sector,’ Yellen said referring to the collapse of Sam Bankman-Fried’s multibillion dollar enterprise.

Congressman and crypto skeptic Brad Sherman says he will work with his colleagues at the House of Representatives to ‘examine options for federal legislation.‘”

See Also: Health of FTX’s US Derivatives Arm Owed to Oversight, Says CFTC Chief Behnam
See Also: There Was No Cause to Add FTX to Investor Alert List Before Collapse, Singapore’s MAS Says

Alameda Research used prior knowledge of tokens that were scheduled to be listed on FTX to buy them ahead of the public announcements and then sold them for a profit, according to an analysis from crypto compliance firm Argus. Between the start of 2021 and March of this year, Alameda held $60 million worth of 18 different tokens that were eventually listed on FTX.

What we see is they’ve basically almost always in the month leading up to it bought into a position that they previously didn’t.

If the allegations against Alameda Research prove to be true, it will mean the company was frontrunning exchange listings on a bigger scale than either the ex-OpenSea or ex-Coinbase managers who’ve already been charged.”

See Also: Manhattan US Attorney’s Office Opens Probe Into FTX Collapse: Reuters

“Bitcoin Cash (BCH) could be legal tender in Saint Kitts and Nevis by next March, its prime minister said at a conference on Saturday. A statement by the government cited issues of financial safety and security of citizens as needing to be ironed out.

Our nation has always been forward thinking nation and a leader in exploring new industries. The crypto revolution has the potential to bring enormous benefits and business opportunities.

The island chain would join countries such as El Salvador and the Central African Republic that have state backing for using crypto as a means of payment.

“The .Swoosh platform is billed as the epicenter for Nike’s digital efforts around Web3. It’s designed to spotlight the brand’s NFTs and virtual apparel initiatives, including future ways for customers to become co-creators and share in digital product royalties.

Nike will use the platform as a hub to launch virtual apparel like t-shirts and sneakers for avatars that can be used within Web3 games. It will also utilize Web3 tech to allow users to unlock real-world benefits, such as exclusive physical apparel or chats with pro athletes.

Nike’s NFT apparel will be minted on Polygon, an Ethereum sidechain network, whereas the previous Nike and RTFKT drops have all been launched via the Ethereum mainnet. The company plans to gradually let new users into the closed platform through the end of the year, ahead of a first NFT drop in January 2023.”

See Also: Inaugural Gam3 Awards to honor the best Web3 games of 2022

The Disrupt Weekend

“Gary Gensler blew it again. After his agency failed to warn investors about Terra and Celsius—whose collapses this spring sparked a trillion-dollar investor wipeout—the Securities and Exchange Commission chair allowed an even bigger debacle to unfold right under his nose.

Cop-on-the-beat Gensler not only failed to spot the crime—he appeared set to go along with a legislative strategy that would have given SBF a regulatory moat and made him king of the U.S. crypto market.

According to Washington insiders, the reason behind SBF’s decision this summer to obtain control over BlockFi was to benefit from the troubled crypto lender’s recent settlement with the SEC—basically extending the amnesty BlockFi had received to FTX. Meanwhile, FTX’s recent tie-up with securities exchange IEX (of Flash Boys fame) would also help SBF’s empire come under the U.S. regulatory umbrella. All of this would clear FTX to have the U.S. market to itself as the company lobbied for legislation that could have torpedoed competitors like Binance as well as the emerging DeFi sector.

This appears to be what prominent House member Tom Emmer (R-Minn.) was referring to when he tweeted on Thursday that ‘@GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly.’

Gensler, a former campaign finance chair for Hillary Clinton, is of course not the only prominent Democrat who may have been willing to flex his influence on behalf of FTX. SBF, you may recall, was one of the biggest donors to President Joe Biden, while his parents—both Stanford law professors—have ties to the party. His mother, Barbara Fried, leads a group called Mind the Gap that helps raise Silicon Valley cash for Democrats, while his father, Joseph Bankman, drafted tax legislation for the powerful Sen. Elizabeth Warren (D-Mass). It’s not a stretch to imagine SBF sought to exploit these political ties to his benefit.

At a time when Gensler is already shrieking for more money and power to address the latest crypto crisis, this would be a good time for skeptics to ask why he failed to stop FTX in the first place—and if anyone else in high places had a role in enabling this debacle.”

“The collapse of FTX, already one of the most spectacular disasters in financial history, worsened as hundreds of millions of dollars were drained from the cryptocurrency exchange hours after it filed for bankruptcy.

More than $600 million was siphoned from FTX’s crypto wallets late Friday. Soon after, FTX stated in its official Telegram channel that it had been compromised, instructing users not to install any new upgrades and to delete all FTX apps.

FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans.

Many FTX wallet holders reported $0 balances in their FTX.com and FTX US wallets. FTX’s API appeared to be down, which could account for this. According to on-chain data, various Ethereum tokens as well as Solana and Binance Smart Chain tokens exited FTX’s official wallets and moved to decentralized exchanges like 1inch. Both FTX and FTX US appear to be affected.

Suspicions – which are conjecture at this point – circulated online about whether, rather than an outside attack, someone inside the company might’ve been responsible. The simultaneous and sophisticated hacks of FTX and FTX US are indicative of a potential inside job.”

See Also: Tether Blacklists Mysterious FTX Wallets as Account Drainer Liquidates MATIC, LINK, AVAX Holdings
See Also: Binance, Huobi Block FTT Deposits After $400M Worth of Tokens Unexpectedly Released
See Also: Bankman-Fried’s Cabal of Roommates in the Bahamas Ran His Crypto Empire – and Dated
See Also: FTX Owes Miami $16.5M For Arena Sponsorship Cancellation

A team at the jurisdiction’s Financial Crimes Investigation Branch are “working closely” with the Bahamas Securities Commission to investigate if any criminal misconduct occurred, an official notice on Sunday said.

The Securities Commission of the Bahamas had already suspended FTX’s registration and ordered assets tied to the exchange frozen on Thursday. FTX is also under investigation by the U.S. Securities and Exchange Commission and the Justice Department.”

See Also: Sam Bankman-Fried is ‘under supervision’ in Bahamas, looking to flee to Dubai

Serum is a pillar of Solana’s DeFi infrastructure: it’s the trading ecosystem’s primary central limit order book. Sam Bankman-Fried once called Project Serum, an on-chain crypto exchange that he created, the “truly, fully trustless” backbone of decentralized finance (DeFi) on the Solana blockchain. But trust in the fallen FTX chief’s once-mighty crypto liquidity engine has suddenly run dry.

On Saturday, DeFi protocols across the Solana ecosystem began unplugging from Serum for fear that they didn’t know who wielded control – a concern fueled by the late-Friday hack at FTX. The developers once associated with Serum have gone silent. Meanwhile, the protocol’s dependence on Bankman-Fried and his bankrupt companies Alameda and FTX loomed large.

The true power over Serum rested with FTX Group, which continues to hold the program update authority keys. There’s of course Serum’s not-so-secret ties to Bankman-Fried. But only his employees have the keys that control the protocol, two developers said.

The hack shows that someone malevolent has access to private keys at FTX. That would allow the hacker to rug the entire protocol. At this point things have gotten so crazy that anything is on the table.

Serum was nominally governed by the vote of a community of holders of the project’s SRM token. But apart from voting on token grants, Serum’s so-called decentralized autonomous organization (DAO) had little actual authority over the protocol. [Further], a small cadre of Alameda employees collectively decided how the Serum wallet would vote. It’s a sham that survives on backroom deals.’

FTX was heavily invested in the success of Serum. According to the Financial Times, Bankman-Fried’s exchange held $2.2 billion in SRM tokens as of earlier this week.

Despite its sluggish popularity and connections to Bankman-Fried, Serum isn’t the kind of project that Solana DeFi can walk away from and forget. Protocols that have been optimized for Serum still rely on it to function.

The community’s slapdash effort to wrest Serum from FTX Group skirts around a less heroic notion: few made much ado about the not so decentralized exchange’s many entanglements before this week’s dumpster fire began.”

“David Chaum, creator of the Bitcoin predecessor eCash and, more recently, the elixxir cryptocurrency, believes the democratic world can have a version of CBDCs that protects privacy. The concept, based on Chaum’s blind signature technique, has been outlined in a joint research paper. The project will be developed under the auspices of the Bank of International Settlements’ (BIS) Innovation Hub.

According to Morten Bech, head of the BIS Innovation Hub Swiss Centre, the project allows to avoid trade-offs between cyber resilience, scalability and user privacy.The system will also be scalable as it will be using an architecture that is compatible with, but not based on, distributed ledger technology.

It really becomes a choice: Are we going to have a kind of protection we are entitled to and that distinguishes us as a human rights-based democracy, or we basically are going to have the same thing as in China.

The eCash 2.0 model has two tiers when it comes to issuing central bank digital money: a central bank does it via commercial banks, which onboard users. To get some CBDC on their digital wallets, users need to request it from banks with which they already have accounts. Banks perform know your customer diligence and send a specific authentication code to the central bank so that money can be issued.

A central bank holds a blockchain-based ledger of all the valid coin identifiers, Yaksetig said, so no one can forge new coins, but transactions between wallets are not recorded on a blockchain. ‘There is no record of transactions whatsoever.’ However, users can voluntarily give up the privacy of their coins if they want law enforcement to trace stolen funds. For this, a user would need to reveal his unique cryptographic key to, say, the police, and then the police can see when these stolen coins are being spent.

12 November

John Jay Ray III, who led disgraced energy titan Enron through rocky bankruptcy proceedings and a slew of settlements in the early-mid 2000s, has taken over as CEO at beleaguered crypto exchange FTX. Samuel Bankman-Fried resigned the same day as the company’s bankruptcy filing, Friday morning.

Ray has garnered a reputation for having something of a Midas touch with troubled companies. Previously, the turnaround titan served as a chief restructuring officer and plan administrator in high-profile bankruptcy cases involving prominent companies Overseas Shipholding Group and Nortel Networks. During his time at Enron, Ray spearheaded efforts to put more than $20 billion back into the hands of bamboozled investors. He also earned a reputation for standing up to Wall Street and its interests.

FTX’s executive shuffle comes as the firm faces mounting legal troubles, including a joint investigation into its mismanagement of users funds led by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

It appears that the crypto industry is having a bit of an ‘Enron’ moment. We believe that similar to post-Enron, individuals and institutions will move capital away from less regulated, less transparent exchanges and towards those which have built heavily compliant, regulated and transparent operations.”

See Also: FTX Files for Bankruptcy Protection in US; CEO Bankman-Fried Resigns
See Also: Here’s What FTX and Alameda Now Hold on Public Ethereum Wallets
See Also: Scaramucci Says Investment Firm SkyBridge Is Exploring Buying Back Equity From FTX
See Also: FTX US Temporarily Froze Crypto Withdrawals, Adding to Chaos of Bankruptcy Proceedings

Ether’s net supply increase has turned negative for the first time since Merge. The leading smart contract blockchain is now burning more ether than what’s being minted.

The negative inflation rate means ether’s net supply has declined by 5,598 since Ethereum transitioned to a proof-of-stake (PoS) consensus mechanism of verifying transactions from a proof-of-work (PoW) mechanism on Sept. 15. Ether’s supply would have increased by nearly 670,000 had Ethereum continued to use the PoW mechanism.

Ether’s annualized inflation rate crashed from over 3.5% to nearly zero following the Merge. On Wednesday, more than 5,000 ETH was burned, the highest single-day tally since June, according to Etherscan. More than 13,000 ETH have been burned in the past three days alone.”

See Also: Cosmos Blockchain Founder Jae Kwon Opposes Proposed Changes to ATOM Token

“Cryptocurrencies have historically rebounded to new heights following each calamity. What doesn’t wipe out blockchain and other crypto ventures makes them stronger as new fortified iterations of themselves.

The tenets of supply and demand remain in bitcoin and post-Merge ether’s favor. The volume of each is limited and the public, increasingly including institutional investors, remains robust. But price direction among other cryptocurrencies is uncertain, subject to many different factors including protocols’ ability to execute on their strategies and engage the public.

Separately, an improving economy, a more settled socio-political landscape and clearer crypto regulation in some combination would likely buoy markets. A fresh debacle and sudden economic reversal from the current encouraging signs would likely lead to a downturn and renewed doubts about crypto’s future. Bitcoin and ether’s respective $20,000 and $1,300 support levels of a week ago will now likely represent resistance.

The final verdict will depend on the individual’s time horizon. Contagion effects are still working their way through markets, not to mention the looming overhang of government regulation. Bitcoin and ether’s core principles remain unchanged. As such, recent turmoil may represent a unique opportunity for bullish investors, albeit not without additional challenges.”

See Also: Bitcoin Slides Anew After FTX Bankruptcy Filing
See Also: Solana Volatility Returns After FTX Bankruptcy, but What Comes Next?

United States senators Debbie Stabenow and John Boozman have doubled down on their commitment to publishing a final version of the Digital Commodities Consumer Protection Act 2022 (DCCPA) in the wake of FTX’s shocking collapse.

The events that have transpired this week reinforce the clear need for greater federal oversight of the digital asset industry.

If the DCCPA passes into law, it would grant the Commodity Futures Trading Commission (CFTC) — one of the two U.S. market regulators — an extension of regulatory powers over the sector. The senators did not disclose additional details as to what stage the DCCPA is at and when the bill will be published for the Senate to review.”

See Also: FTX Collapse Sparks Response From US Lawmakers
See Also: FTX Withdraws US CFTC Derivatives Clearing Plan: Bloomberg
See Also: FTX Crisis an ‘Opportunity’ for US to Clarify Crypto Regulations: Coinbase CEO
See Also: SEC Commissioner Hester Peirce: FTX’s Collapse Could Finally Be ‘Catalyst’ for Regulation

“Crypto investor Digital Currency Group is giving an equity infusion of $140 million to Genesis Global Trading, a company within its portfolio. Genesis said this week that its derivatives business has about $175 million in locked funds in its FTX trading account.

While the operation of our lending and trading businesses has not been impacted by recent market events, Genesis has taken steps to strengthen its balance sheet with an additional equity infusion of $140M from our parent company, Digital Currency Group.”

See Also: Bankrupt Crypto Lender Voyager Reopens Bidding Process Following FTX’s Collapse
See Also: California Finance Regulator Revokes BlockFi’s Lending License
See Also: Crypto Bank Silvergate Capital Surges on Lack of FTX Exposure
See Also: Crypto.com Preliminary Audit Shows 20% of Its Assets Are in Shiba Inu Coin
See Also: MakerDAO Risk Core Unit makes urgent parameter change request in light of recent market events
See Also: Miami HEAT Arena Cuts Ties with FTX, Removes Logos

MetaMask users can now bridge across multiple blockchain networks using MetaMask Bridges, which aggregates different blockchain bridges in one place, ConsenSys announced on Nov. 9. MetaMask Bridges supports major blockchains compatible with the Ethereum Virtual Machine (EVM), including Ethereum, Avalanche, BNB Smart Chain and Polygon.

There are a ton of different bridges out there, each supporting various networks and tokens. MetaMask Bridges has curated the bridges that we think are the most decentralized and secure, and out of those will recommend the best one for the user’s specific route.

MetaMask Bridges picks the bridge with the best price by default, but users can also see time estimates and pick the fastest one if they prefer.”

See Also: StarkWare Launches Nonprofit Foundation to Fuel StarkNet Ecosystem

In a filing with the U.S. Treasury Department Financial Crimes Enforcement Network or FinCEN, Twitter has applied to become a money service business. The application says Twitter plans to conduct money services in the United States and several of its international territories.”

11 November

The consumer price index (CPI) rose 0.4% in October, far slower than expectations for 0.6%, the U.S. Labor Department reported on Thursday. The annual pace slowed to just 7.7% versus estimates for 8%, and down from 8.2% in September. Core CPI – which strips out food and energy – rose 0.3% in October, slower than expectations for 0.5% and falling from September’s 0.6%. On an annualized basis, core CPI was up 6.3% in October slower than expectations for a 6.5% rise and falling from 6.6% in September.

Bitcoin (BTC) – which plunged to a new two-year low of $15,554 on Wednesday thanks to the FTX blowup – gained a quick $1,500, or about 10%, in the minutes after the report. At press time it is trading at $17,750.

While bitcoin is having only a modest rally, equity futures are soaring on thoughts the inflation slowdown might mean the Fed’s tightening cycle could be over sooner than previously feared. Nasdaq futures are higher by just shy of 4% and S&P 500 futures are ahead 3%. Bond markets are in rally mode as well, with the 10-year Treasury yield down a big 21 basis points to 3.93%.”

“Sam Bankman-Fried has had discussions with several investors including Tron founder Justin Sun, rival crypto exchange OKX and a number of investment funds as he looks to raise $9.4 billion for FTX. Per the report, SBF is looking to raise about $1 billion from Sun, another $1 billion from OKX and $2 billion from a group of investment funds.

Also on Thursday, FTX announced an agreement with Tron to establish a special facility to allow holders of TRX, BTT, JST, SUN and HT to swap assets on a 1:1 basis to external wallets.”

See Also: SBF Warns FTX Investors of Bankruptcy Without More Cash: Bloomberg
See Also: FTX May Be Looking to Kraken for Help—But Jesse Powell Says There Are ‘Red Flags’
See Also: Tron’s TRX Jumps 140% Amid 1:1 FTX Redemption of Tron-Based Tokens
See Also: FTX Token FTT Heads Toward Zero After Liquidity Crisis, Botched Binance Deal

“The Wall Street Journal reported Thursday that FTX had placed billions of dollars worth of customer funds on risky bets, with some suspecting customer funds were used to help bolster Alameda.

Using customers’ investments to support Alameda Research is a serious problem and could amount to claims for fraudulent breach of trust.

FTX was literally stealing customer funds.

The exchange’s terms of service states that none of the crypto in customer accounts are ‘the property of, or shall or may be loaned to, FTX Trading,’ and that the platform ‘does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading.’ In other words, FTX cannot use the funds for purposes other than just holding them on customers’ behalf.

The distinction made in the terms of service will be particularly important if the company ends up facing insolvency, Nyman said. With Binance backing out of a buyout and Alameda winding down services, FTX could file for bankruptcy in Antigua and Barbuda, where it was incorporated.

Because the terms of service specify that customer funds do not belong to FTX, those funds cannot be used to pay back creditors or other stakeholders in the event of insolvency. Beyond any civil actions taken by FTX users who cannot access their funds, misappropriation of customer funds could lead to criminal charges. The U.S. Department of Justice is already investigating FTX.”

See Also: FTX Used Customer Funds Among Other Assets to Prop Up Alameda Research in May: Reuters
See Also: Crypto Platforms Use ‘Toxic Combination’ of Trading User Funds Without Disclosure: SEC Chair Gary Gensler
See Also: Most of FTX’s Legal and Compliance Team Quit: Report

The U.S. Department of Justice is looking into crypto exchange FTX after its apparent collapse, the Wall Street Journal reported Wednesday. The U.S. Securities and Exchange Commission and Commodity Futures Trading Commission are also investigating whether FTX had correctly handled its clients’ funds, Bloomberg reported earlier Wednesday.

Binance announced Tuesday it would acquire FTX, but said Wednesday that it would not, citing concerns about FTX’s books, which is an issue investigators may look into. The statement also cited news reports about “mishandled customer funds and alleged US agency investigations” as reasons for pulling out of the deal.

The issues are beyond our control or ability to help.”

See Also: FTX Assets Frozen by Bahamian Regulator
See Also: Tether Freezes $46M of USDT Held by FTX Following Law-Enforcement Request
See Also: US Justice Department, Regulators Contacted Binance on FTX Talks: Source

“White House Press Secretary Karine Jean-Pierre told reporters during a press briefing on Thursday that the Biden administration is ‘aware of the recent developments on [FTX] and will continue to monitor the situation.’

The administration has consistently maintained that, without proper oversight of cryptocurrencies, they risk harming everyday Americans. The most recent news further underscores these concerns and highlights why prudent regulation of cryptocurrencies is indeed needed.”

See Also: CFTC Commissioner Calls on Congress to Act After FTX Debacle
See Also: Crypto Conglomerates Require ‘Urgent Regulatory Attention,’ European Watchdogs Say
See Also: Crack Down on US Crypto Firms Over FTX Crisis ‘Makes No Sense’: Coinbase CEO
See Also: Republican lawmaker claims SEC chair was coordinating with FTX ‘to obtain regulatory monopoly’
See Also: With FTX Bloodied, Rival in US Regulatory Fight Adds Another Knife

Chainlink Labs offered its Proof of Reserve product as a solution to future trust issues in the crypto exchange market on Nov. 10. Chainlink argued that its product provides an “out-of-the-box” solution that exchanges can implement immediately.

The product uses Chainlink nodes connected to both the exchange’s API and its vault addresses, and the nodes are connected to a Proof of Reserve smart contract. The contract can be queried by any other account on the network to determine whether the exchange’s crypto assets are equal to its liabilities. Chainlink Labs sees this as a simple solution to the problem of trust in exchanges.

Proof of Reserve (PoR) is useful for for verifying centralized exchange asset reserves, off-chain bank account balances, cross-chain collateral, real-world asset reserves, and much more.”

See Also: Crypto Exchanges Scramble to Compile ‘Proof of Reserves’ as FTX Contagion Grips Markets
See Also: Binance shares wallet addresses and activity after proof-of-reserve pledge
See Also: OKX, Kucoin say proof of reserves will be ready in a month
See Also: Crypto.com commits to proof-of-reserves after halting certain deposits and withdrawals

“Venture capital giant Sequoia Capital reassured investors the firm remained largely unaffected by the unraveling of crypto exchange giant FTX and wider decline in digital asset markets even as it marked its investment down to zero.

In a note to limited partners, Sequoia says it invested just over $200 million in FTX via two funds. Sequoia said the exposure it has to FTX is limited, and whatever money it has lost has been offset by billions of dollars in gains.

The $150 million loss is offset by the approximately $7.5 billion in realized and unrealized gains in the same fund, so the fund remains in good shape.

We are in the business of taking risk. Some investments will surprise to the upside, and some will surprise to the downside. We do not take this responsibility lightly and do extensive research and thorough due diligence on every investment we make.

FTX’s investors include Softbank, Temasek Holdings, the Ontario Teachers’ Pension Plan, Race Capital, and Lightspeed Venture Partners, among others.”

See Also: Who Still Has Exposure to FTX?
See Also: Michael Novogratz Tells CNBC He Does Not Expect to Recover $77M Exposure Linked to FTX
See Also: Crypto Bank Silvergate’s Stock Defended By Analysts Amidst FTX Concerns

“FTX CEO Sam Bankman-Fried promised to use “every penny” his crypto exchange has to repay users ahead of investors, apologizing for his “f**k up” in a tweet thread Thursday.

The 30-year-old former billionaire took to Twitter to say Alameda Research – his empire’s once mighty crypto quant shop and market maker – would go dark “one way or another.” Of FTX, his upstart derivatives exchange that became the crypto industry’s darling, he said it will “embrace radical transparency” – if it continues operating at all.

See Also: Alameda, In Eye of Crypto Storm, Takes $37M of Wrapped Bitcoin Off FTX.US Exchange
See Also: Crypto Fund Alameda’s Ethereum Wallet Holdings Slumped 50% Since October
See Also: Alameda Research, FTX Ventures Websites Go Dark

“A record 31 million of the Solana blockhain’s SOL tokens were unstaked Thursday from the blockchain’s security mechanism, a day after crypto analysts warned that some investors might be seeking to redeem their holdings. But the price of SOL surged in digital-asset markets after the Solana Foundation, which supports development on the blockchain, said it would postpone a plan to unstake some 28.5 million tokens.

A total of 63 million SOL was previously ready to be unstaked at the conclusion of the Solana blockchain’s “epoch 370” staking lockup period. The foundation had tweeted late Wednesday that about 28.5 million SOL tokens scheduled to be unstaked had been re-staked due to a policy change of cloud service provider Hetzner on Nov. 2.”

9 November

“The FTX’s exchange token, FTT, went into freefall Tuesday even after the company got a lifeline from larger rival Binance – as fears mounted over the crypto trading firm Alameda Research’s financial woes, fueling what appeared to be contagion driving down prices broadly across digital asset markets.

Both Alameda and FTX are part of the billionaire Sam Bankman-Fried’s now-fast-dwindling crypto empire. FTT fell to $4, down more than 80% over the past 24 hours. SOL, the native token of the Solana blockchain, fell to $21 from $30.

Broader crypto markets, which mounted a short-lived recovery after the bailout announcement, quickly lost steam and turned sharply lower. The CoinDesk Market Index (CMI), which tracks 162 cryptocurrencies, fell 8% in the last 24 hours. Bitcoin (BTC), the largest cryptocurrency by market capitalization, tumbled to $17,114 on the Bitstamp exchange, a 23-month low. The BTC price recovered somewhat to $18,400 but was still down 12% on the day.

CoinDesk reported last week that Alameda Research’s balance sheet is loaded with highly illiquid FTT tokens, and is also a big holder of SOL tokens. Investors fear that the giant Binance exchange’s bailout of FTX might not extend to Alameda, which is a significant market maker and lender in the crypto space, and that Alameda might face margin calls and be forced to fire-sell assets from its balance sheet to raise liquidity.

Alameda’s rout could spell trouble for the broader crypto industry, including lenders exposed to the trading firm and to crypto ecosystems which Alameda and FTX have been heavily invested.

Assuming Alameda doesn’t survive, there could be a good deal of pain, particularly for the Solana ecosystem — in which they were deeply involved — and any institutions that had lent to Alameda.”

See Also: Crypto Markets Take a Wild Ride Following Surprise Binance/FTX Deal
See Also: These Four Key Charts Shed Light on the FTX Exchange’s Spectacular Collapse

The venture capital arm of cryptocurrency exchange FTX has been a prominent investor in some of the biggest names in the crypto ecosystem. With Binance’s possible acquisition of its rival FTX, questions swirl around what will happen to these investments.

Among the biggest names in which FTX Ventures invested were Bored Ape Yacht Club creator Yuga Labs, USDC stablecoin issuer Circle, layer 1 blockchains Near Protocol and Sui, crypto lender BlockFi and two different funding rounds for the Aptos blockchain.

FTX has been linked closely with the embattled BlockFi. The U.S. arm of FTX gave the strained lender a $400 million credit line. In September, FTX Ventures agreed to buy 30% of SkyBridge Capital for an undisclosed amount after the investment firm was dinged by the bear market.

The FTX turmoil could also cause more headaches for investors in the cryptocurrency exchange, particularly the already weakened Tiger Global Management and SoftBank Vision Fund. Chase Coleman’s Tiger Global hedge fund participated in a $420 million round for FTX in October 2021.”

See Also: Abracadabra’s MIM Stablecoin Briefly Lost Dollar Peg as FTX’s FTT Token Tanked
See Also: Alameda Thanked for ‘Prompt Response’ in Transferring $37M of BitDAO Tokens

Crypto exchange FTX has halted all non-fiat customer withdrawals. The halt highlights the deteriorating condition of the exchange. Reuters reported FTX saw withdrawals totaling $6 billion in the past several days.

Any transfers besides fiat are halted.

It appears customers can still withdraw their assets to fiat, although opting for the fiat option could see the funds take up to five business days for settlement.”

See Also: FTX’s Bitcoin Balance Plunges to Just One

Regulators across the world have the power to block major mergers if they fear they would limit market choice, and also have strict laws against anti-competitive behavior. Binance is the world’s largest crypto exchange by volume, while FTX is within the top five.

In the U.S., antitrust laws such as the Sherman Act outlaw direct competitors from acting to protect each other. CZ said that he had stepped in to protect users after FTX, faced with a “significant liquidity crunch” had asked for help. That suggests an illegal agreement, Schrepel says.

This [deal is] a textbook horizontal merger of the sort that the antitrust laws in the U.S. and internationally are meant to address. I think that the apparent hope they have that excluding the U.S. exchanges from the deal is going to save their deal from antitrust scrutiny is very short sighted. These are global markets.

While the Twitter announcements from Binance and FTX on Tuesday made the deal look all but done, Kressin said it’s likely just the start of a months-long legal process that could potentially result in federal regulators attempting to block the acquisition. Kressin added that Binance’s Chinese origins (though the exchange has long pushed back against being labeled as a “Chinese company”) could result in an extra layer of scrutiny for the deal.

They’re likely going to have to file [premerger notifications] with the merger enforcement authorities in a lot of different jurisdictions. I think it’s likely that this would go to the DOJ, and the DOJ would be looking at the deal and deciding whether they want to sue under the U.S. antitrust laws to block a transaction.”

Binance CEO Changpeng Zhao said on Tuesday that his exchange would soon introduce “Merkle-tree proof of reserves,” in the interest of “full transparency.”

Banks run on fractional reserves. Crypto exchanges should not.

Jeremy Nau, Director of Digital Assets at Armanino, has already offered to implement a proof of reserves system on Binance’s behalf, using Merkle-tree proofs. The firm already provides a similar service for Kraken, which it says possesses assets exceeding 100% of its liabilities.”

“The U.S. Treasury Department is “redesignating” Tornado Cash as a sanctioned entity, overtly alleging that North Korea has used the crypto mixing service to support its weapons of mass destruction (WMD) program.

OFAC also published a new frequently-asked-question to address longstanding questions about who, exactly, was being added to its Specially-Designated Nationals (SDN) list. Much of the crypto industry has argued that Tornado Cash and its wallet addresses are software, not a person or entity, and so OFAC should not be able to designate the mixer as a sanctioned entity. In its new FAQ, Treasury pushed back against this argument, saying an entity could be “a partnership, association … or other organization.”

Tornado Cash is an entity under the definition created by the executive orders overseeing sanctions, OFAC said. The organizational structure includes both Tornado Cash’s founders and developers, as well as the decentralized autonomous organization (DAO) that votes on new features.

Tornado Cash uses computer code known as ‘smart contracts’ to implement its governance structure, provide mixing services, offer financial incentives for users, increase its user base, and facilitate the financial gain of its users and developers.

The watchdog noted that Tornado Cash’s founders, DAO members and users were not sanctioned ‘at this time.’

“NTT Docomo, Japan’s largest mobile-phone network, pledged to invest up to 600 billion yen ($4 billion) into Web3 infrastructure.

The company will collaborate with Astar Foundation, the developer of the public blockchain Astar Network, and Accenture to speed up Web3 adoption. They will set up a consortium that allows individuals and corporations to utilize tokens for governance.

Japan’s Web3 policy has been given by a jumpstart this year by politicians keen to do away with red tape and a customarily slow decision-making process. A Web3 policy office now exists under the Ministry of Economy, Trade and Industry (METI). Last week, the country’s digital ministry announced it would create a decentralized autonomous organization (DAO) to explore Web3 technology.”

See Also: Wintermute-Backed DEX Bebop Launches on Polygon


FTX Agrees to Sell Itself to Rival Binance Amid Liquidity Scare

CDCROP: CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee (Alex Wong/Getty Images)

Binance agreed to buy rival cryptocurrency exchange FTX, a stunning outcome that followed days of speculation – spurred by a CoinDesk article on Nov. 2 – that FTX and corporate sibling Alameda Research faced a liquidity crisis.

We have come to an agreement on a strategic transaction with Binance for FTX.com (pending DD etc.)

Binance CEO Changpeng “CZ” Zhao also took to Twitter to confirm the deal, saying the two exchanges signed a non-binding letter of intent. Bankman-Fried and Zhao both said that a full due diligence process would be underway in the next couple of days.

Investors had withdrawn significant money from FTX, withdrawing bitcoin (BTC) en masse over the last 24 hours, cutting the balance there from about 20,000 bitcoins to just one on Tuesday morning, according to data from Coinglass.

On the news, FTX’s FTT token rallied 20% to $17.50 from about $14.50. Binance’s BNB token jumped 8% from $326 to $355. The price of bitcoin also pared its losses after the takeover was announced.”

See Also: FTX’s Bitcoin Balance Plunges to Just One
See Also: FTX Token Plummets on Withdrawal Concerns, as Contagion Hits Broader Crypto Markets
See Also: BitDAO Community Asks Alameda for Proof of Funds After BIT’s Sudden 20% Drop
See Also: Abracadabra’s MIM Stablecoin Briefly Lost Dollar Peg as FTX’s FTT Token Tanked

8 November

“With weekly stablecoin outflows topping $451 million, investors appear to be taking their tokens off FTX just as Binance dumps its FTT.

Hot on the heels of Binance CEO Changpeng “CZ” Zhao declaring that Binance is liquidating its stash of FTX’s native exchange token FTT, mass withdrawals from FTX have accelerated, with weekly stablecoin outflows from FTX reaching a whopping $451 million. Conversely, Binance has seen net inflows of more than $411 million over the same period. In additional transactions, around $94 million worth of cryptocurrencies, including about $73.9 million in Ethereum, was sent from FTX to crypto lending firm Nexo.

This mass exiting of tokens from the FTX exchange comes amid reports that Alameda Research, the trading firm founded by Sam Bankman-Fried, held as much as $5.8 billion in the exchange’s native FTT token—$3.66 billion in “unlocked FTT” and $2.16 billion in “FTT collateral.”

Given such large exposure to FTT, some have speculated that this could mean a liquidity crisis for Alameda should the markets move against FTT. Shortly after these reports hit the market, CZ took to Twitter to announce that he would be offloading the firm’s FTT holdings.”

See Also: FTX CEO Sam Bankman-Fried Denies Insolvency Rumors as Binance Liquidates FTT Token
See Also: Solana Falls and Speculation Centers on Links to Sam Bankman-Fried’s FTX, Alameda

“Ethereum Co-Founder Vitalik Buterin published a technical infographic Friday sharing the updated roadmap for planned upgrades to the network. It includes an addition to the verge—a new milestone for the merge—and the creation of a new stage called the scourge, to name a few.

The scourge aims to ensure that transactions are neutral and centralization is avoided. This may also include in-protocol pre-confirmations and frontrunning protections. The scourge also includes PBS, or Proposer Builder Separation, which is the idea that constructing and proposing blocks in a blockchain should be delegated to different entities to increase network security and prevent MEV-related attacks.

The goal of the scourge is to ensure reliable and fair credibly neutral transaction inclusion [and] solve MEV issues.

Beyond the scourge, Buterin emphasized the addition of “single-slot finality” as a part of the second stage of the merge. Single-slot finality is the idea that Ethereum could be engineered to take just a single “slot” to finalize a block instead of the current time of roughly 64-95 slots.”

“The Polygon blockchain has emerged as the leading gateway for moving Web2 consumers to Web3, Bernstein said in a research report Friday. The system has been chosen by Starbucks (SBUX), NuBank, Reddit, DraftKings (DKNG), Robinhood Markets (HOOD) and Facebook parent Meta Platforms’ (META) Instagram.

This has put Polygon in the unique position to be the Web3 on-ramp for millions of users.

Polygon’s native cryptocurrency, MATIC, rallied 30% in two days last week after Meta said it would introduce a toolkit allowing Instagram users to mint and sell Polygon-powered non-fungible-tokens (NFTs).”

See Also: Crypto hits the main stage at Web Summit in front of record crowds

Republicans are increasingly confident they will take control of the U.S. Congress and it could be bullish for crypto, according to some analysts and traders.

If the Republicans win the House or both chambers, that should be positive for risky assets, especially cryptos. A Republican sweep would be most bullish for Treasurys and put pressure on the dollar. It won’t be a long-lasting trend as a Republican sweep increases the odds that debt ceiling talks could provide unwanted pressure on every risky asset.

A win by the Republican Party would be considered positive for crypto on two different fronts. First, a split leadership is considered to be positive for the markets as the fear of legislation through reconciliation dissipates, and there will be more debate on fiscal policy moving forward. The second positive would be that we have seen many bills on crypto regulation stall out over the last 12 months. The change in leadership in Congress and Senate could lead to more cooperation and coordination between the parties providing a more conducive atmosphere to get some legislation passed.”

“OpenSea appears to have taken a position in the NFT royalties debate — launching a new “on-chain” tool helping creators enforce royalties.

It’s clear that many creators want the ability to enforce fees on-chain; and fundamentally, we believe that the choice should be theirs to make — it shouldn’t be a decision made for them by marketplaces.

Finzer described the tool as a “simple code snippet,” which allows creators to enforce royalties on new and future NFT collection smart contracts and existing upgradeable smart contracts. The code will also restrict NFT sales to only marketplaces that enforce creator fees.

“Crypto startup LBRY violated securities laws by selling its native LBC tokens without registering with the U.S. Securities and Exchange Commission (SEC), a New Hampshire judge ruled on Monday. LBRY [had] pushed back, claiming that the SEC did not give it fair notice that its sale of LBC was subject to securities laws, thus violating the company’s right to due process.

No reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice.

LBRY founder Jeremy Kauffman has long maintained that the outcome of the case could have sweeping implications for the wider crypto industry. Kauffman said the facts in LBRY’s case would “basically apply to every company” in the crypto industry.

Much like LBRY, Ripple Labs’ defense has hinged on its claim that its native token XRP is not a security, and that, by failing to provide clarity on whether XRP was a security, the SEC did not provide fair notice that Ripple Labs’ conduct was unlawful.”

UK bank Santander is set to block real-time payments to crypto exchanges next year. [Until then], from November 15 onwards, payments to cryptocurrency exchanges using mobile and online banking will be limited to £1,000 per transaction with a total limit of £3,000.

We want to do everything we can to protect our customers and we feel that limiting payments to cryptocurrency exchanges is the best way to make sure your money stays safe..

Santander’s policy seems to be in line with the FCA’s cautious recent approach to crypto. Santander isn’t exactly unique among the British High Street banks in taking a prohibitive approach to crypto transfers. Almost half—47 percent—of the UK’s major banks do not support cryptocurrency.

But not all UK banks are pulling back from crypto. Neobank Revolut, which has been operating in the UK since 2015, recently launched a card that allows users to pay in crypto for their goods and services.”

See Also: Crypto Exchange Gemini Expands to 5 More European Countries
See Also: CBDCs May Need Global Regulation, EU Commissioner Says

“The coins were found at an address in Georgia connected with James Zhong. Zhong pleaded guilty to committing wire fraud in 2012.

Zhong manipulated Silk Road’s withdrawal system by triggering 140 transactions in rapid succession, fooling the system into crediting several external wallets with the bitcoin, according to the Justice Department. The bitcoin was valued at $3.36 billion at the time it was discovered.

The Silk Road was an illegal marketplace on the darknet that operated between 2011 and 2013 and that primarily used bitcoin as a method of payment. The site collapsed following the arrest of its operator, Ross Ulbricht, who is serving a double life sentence and 40 years in prison.”

The Disrupt Weekend

“There are currently a large number of (optimistic and ZK) rollup projects, at various stages of development. One pattern that is common to almost all of them is the use of temporary training wheels: while a project’s tech is still immature, the project launches early anyway to allow the ecosystem to start forming, but instead of relying fully on its fraud proofs or ZK proofs, there is some kind of multisig that has the ability to force a particular outcome in case there are bugs in the code.

This post proposes a simple milestone-based schema to help us categorize rollups into three different stages, depending on how heavily they rely on their training wheels.

Stage 0: Full Training Wheels

  • On-chain
  • Rollup full node
  • The operator cannot freeze or steal users’ assets by censoring users
  • No active fraud proof or validity proof

Stage 1: Limited Training Wheels

  • Must be a running fraud proof or validity proof scheme
  • There can exist a multisig-based override mechanism – a quorum-blocking group to prevent the multisig from acting must be outside the organization

Stage 2: No Training Wheels

  • There must not be any group of actors that can, even unanimously, post a state root other than the output of the code”

See Also: Application-Specific Rollups
See Also: Polygon Working to Become ‘True Layer 2’

“There are plenty of reasons to bet on Ethereum, but quantifying its present and future value isn’t always so straight forward. We tapped the folks from investment firm Archetype to break down their detailed model for valuing Ethereum and dig into showcasing the model’s most conservative and bullish takes on where the network is headed.

ETH is currently sitting at ~$1500 as of writing. Archetype’s base case provides a 10x return by 2030 if the model holds true.

This base case price projection is strictly based off cash flows from Ethereum’s core business of selling secure blockspace for the range of applications built on top of it. When we factor in a monetary premium, which accrues when ETH has an increasing amount of demand for it across different mechanisms (think ETH locked in DeFi, ETH burn rate, ETH staking, ETH used for NFT purchases, etc.), the numbers start to scale to substantially higher numbers.

Today, we are announcing “Kevlar”, a tool that makes Metamask, or any RPC-based wallet, completely trustless! Kevlar first runs a light client to quickly sync with the beacon chain and then starts a local RPC proxy that you can add to your wallet.

Currently most wallets rely on trusted full nodes which makes them extremely centralized. Kevlar lets you run a light-client-based RPC proxy on your device that can be added to any RPC-based wallet. Now every RPC call made by your wallet is verified using Merkle Inclusion proofs.”

Binance’s CEO, responding to a CoinDesk scoop about trading firm Alameda Research’s balance sheet, tweeted Sunday that he will sell the remaining FTT tokens held on his books that he took on as part of his exit from Alameda sister company FTX last year.

As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books.

CZ said Binance’s sale would be executed in a way that “minimizes market impact” and could take “a few months to complete.” Blockchain explorer Etherscan showed an address moving 23 million FTT (worth approximately $530 million) to a Binance exchange wallet Saturday afternoon.”

“In his latest blog post titled “Pure Evil,” Arthur Hayes, ex-CEO of crypto derivatives platform BitMEX, argued that banks may limit the impact of the CBDC “horror story.”

I believe that the apathy of the majority will allow governments to easily take away our physical cash and replace it with CBDCs, ushering in a utopia (or dystopia) of financial surveillance.

But, we have an unlikely ally that I believe will impede the government’s ability to implement the most effective CBDC architecture for controlling the general populace — and that ally is the domestic commercial banks.

The bank regulator is suddenly saying we’re going to compete against the banks now.

Hayes, meanwhile, flagged Bitcoin as a safe haven still available for those already opposed to any form of zero-cash economy — but not for long. Buying BTC will become increasingly difficult, or perhaps outright impossible, once CBDCs are implemented.

This window won’t last forever. Capital controls are coming, and when all money is digital and certain transactions are not allowed, the ability to purchase Bitcoin will quickly vanish.”