14 December

FTX founder and former CEO Sam Bankman-Fried will be remanded into custody after a Bahamas judge ruled he should be denied bail on Tuesday. Bankman-Fried told the judge he would not waive his right to fight the extradition effort, suggesting he may seek to remain in the Bahamas.

Magistrate Judge Joyann Ferguson-Pratt ordered that there be an extradition hearing next year, on Feb. 8, 2023, at 10:00 a.m. ET. Bankman-Fried’s attorneys asked that he be released on a $250,000 bail, arguing he needed to be able to regularly take medication, including Zyrtec, an over-the-counter allergy medication, and keep to his vegan diet.

A grand jury in the U.S. indicted Bankman-Fried last Friday and an arrest warrant was executed Monday. The U.S. Attorney’s Office for the Southern District of New York unsealed the indictment earlier on Tuesday, announcing that officials were charging the former FTX CEO with wire fraud, conspiracy to commit money laundering and campaign violation allegations, among others.

This morning, we unsealed an eight-count indictment charging Samuel Bankman-Fried, FTX’s founder, with a series of interrelated fraud schemes that contributed to FTX’s collapse.

In addition to the U.S. Department of Justice, the SEC and CFTC sued Bankman-Fried Tuesday on various securities and commodities fraud charges. Government officials in the Bahamas are pursuing their own civil and criminal investigations into Bankman-Fried and FTX.”

See Also: FTX Founder Sam Bankman-Fried Formally Charged With Conspiracy, Fraud in US Court
See Also: US SEC Charges Sam Bankman-Fried for Defrauding FTX Investors
See Also: CFTC Sues Sam Bankman-Fried, Alameda Research for Fraud

“John Ray III, FTX’s replacement CEO now steering the company through bankruptcy, told lawmakers on Tuesday that misdeeds inside the crypto giant weren’t like the sophisticated, highly orchestrated crimes he encountered when taking apart Enron two decades ago.

This is really old-fashioned embezzlement. This is just taking money from customers and using it for your own purpose. Not sophisticated at all.

Ray said the dysfunction at FTX was longstanding. There was no independent board and no coherent record keeping. Despite repeated public assurances from Bankman-Fried, the distinctions between crypto exchange FTX US and its international sibling were no more than superficial.

What we’re seeing now is that the crypto assets for both FTX.com and for FTX US were housed in the same database. This is not something that happened overnight or within the course of a week, [describing] absolutely no internal controls, whatsoever.

Ray confirmed that money, including customer funds, flowed freely between FTX and Bankman-Fried’s trading firm, Alameda Research. He said recent efforts have recovered more than a billion in crypto assets so far for creditors, though the company may have lost more than $7 billion. Ray agreed with lawmaker suggestions that Bankman-Fried and others had already undermined the U.S. bankruptcy process when they aided authorities in The Bahamas to grab a considerable share of remaining FTX assets.

What we don’t know is whether or not the founders could have taken crypto and put it in a cold wallet that we just don’t have awareness of. And if they did, hopefully we can trace that.

Committee Chair Maxine Waters (D-Calif.) exhibited frustration against the law enforcement authorities’ timing, which robbed her of a chance to question Bankman-Fried at the hearing. ‘Unfortunately, the timing of his arrest denies the public the opportunity to get the answers they deserve.’

The panel’s ranking Republican, Rep. Patrick McHenry (R-N.C.), who will lead the committee in the next congressional session, hewed to his party’s common argument on the FTX case:

We have to separate out the bad actions of an individual from the good created by an industry and an innovation.”

See Also: Bahamas Regulators Slam New FTX Chief For ‘Key Misstatements’
See Also: FTX’s Bahamas Liquidators Seek to Exclude Over $200M Worth of Luxury Properties From Liquidation
See Also: $1.6B FTX International Customers Group Hires Law Firm to Create Official Bankruptcy Committee

Behemoth crypto exchange Binance has seen massive withdrawals in the past week and—on Tuesday—the highest amount of one-day withdrawals since June. While Binance is currently seeing a high volume of withdrawals, the exchange still holds roughly $58.9 billion in assets at time of writing, most of which are in Binance’s stablecoin BUSD, the stablecoin Tether, Bitcoin, and Ethereum.

Binance’s international arm saw over $8.78 billion leave its exchange and $5.1 billion in incoming funds, meaning the exchange faced a net outflow of roughly $3.66 billion. While such data only refers to Binance’s Ethereum and ERC-20 token movements, approximately 63% of Binance’s portfolio is on Ethereum and the outflows are much larger compared to other crypto exchanges over the same period.

In response to the outflow news, Binance CEO Changpeng “CZ” Zhao said that it’s just ‘business as usual. I actually think it is a good idea to ‘stress test withdrawals’ on each CEX on a rotating basis.

Binance’s exchange token, BNB, is the fourth-largest cryptocurrency by market capitalization and is down about 2% in the past 24 hours, and down 8% in the past two weeks. Early Tuesday morning, Zhao explained that USDC withdrawals on Binance US had been temporarily paused due to a token swap issue where the exchange was unable to convert funds due to a New York bank—the liquidity provider for the swap—being closed. The withdrawals have since resumed.”

See Also: Binance’s CZ Welcomes ‘Stress Test’ as Exchange Resumes USDC Withdrawals
See Also: Justin Sun Looks to Calm Crypto Market Fear as BNB Falls 8%, Withdrawals Continue on Binance

“On an annual basis, the CPI rose 7.1%, the U.S. Labor Department reported Tuesday, below the 7.3% projected.

The November CPI release is the final major economic report of 2022 and the last key input the FOMC will see before as this week’s meeting kicks off Tuesday. The two-day session is set to conclude on Wednesday with a statement due out at 2 p.m. ET and a fresh “Summary of Economic Projections.” Powell will speak following the FOMC’s rate hike decision, at 2:30 p.m. ET on Wednesday.

Tuesday’s CPI release along with Wednesday’s FOMC meeting will undoubtedly set the tone for financial markets as we head into next year.”

See Also: Crypto Market’s Near-Apocalypse in 2022 Turns Zombie Tokens Into Dead Coins

“Following “recent events in the crypto market,” Canada’s securities regulator is clamping down on crypto firms.

Crypto platforms applying for registration in Canada will have to agree to tighter rules in the country, including a ban on margin and leverage trading. Firms will also have to hold the assets of Canadian clients separately from their proprietary business, according to expanded terms outlined by the Canadian Securities Administrators (CSA) on Monday.”

See Also: Algorand Rises After Italy Selects Blockchain Protocol for Digital Guarantees Platform

A spokesperson for the global watchdog told the Financial Times it is set to lay out a new set of international rules governing cryptocurrencies in early 2023, which would then be implemented by local governments.

In terms of specific areas of focus, Dietrich Domanski Secretary General of the FSB said there may be regulations governing where there is “a combination of different activities that are traditionally separate.” He said the new framework may include rules to “clarify governance arrangements and ensure transparency” and to “safeguard” customer funds in the case of a “run,” where consumers rush to withdraw their funds all at once.”

“Ledger and Merlin, a decentralized finance (DeFi) portfolio tracker, announced their new partnership on Dec. 13 to bring live DeFi performance analytics to Ledger Live users. The newly integrated DeFi tracker connects over 1,000 DeFi protocols across ten blockchain networks. Users will have access to performance metrics and profits and losses reports, along with aggregated reports of gas spent and calculated yields.

Additionally, the new feature from Merlin will allow investors to claim liquidity provider fees and rewards straight from the interface without the need to exit the platform.”

See Also: ConsenSys launches zkEVM private beta testnet
See Also: MetaMask Institutional, Cobo and Gnosis DAO team up for soulbound token project

A new report suggests that Apple is planning to open up its ecosystem—a move that may benefit apps built around NFTs and possibly expand the ability to make mobile crypto payments. The changes are being made in response to the European Union’s Digital Markets Act, which requires tech companies to fully comply with restrictions by 2024. Apple is reportedly aiming to launch the feature in its iOS 17 software update, which is expected to launch next fall.

According to the report, the rollout of support for external apps from third-party sources and marketplaces will initially begin only in Europe to comply with the new law. However, the functionality could be expanded to other territories depending on whether those countries adopt similar regulations.

The company is still weighing whether to allow third-party apps to use their own payments infrastructure, Bloomberg claims, rather than force developers to route payments through Apple’s own payments setup. That particular shift, if implemented, could make it much easier to spend cryptocurrency through iPhone and iPad apps.

The reported changes come amid growing pushback to Apple’s closed ecosystem, which not only philosophically clashes with Web3’s decentralized ethos but also has led to restrictions around the ways that apps can utilize NFT assets. NFT purchases are also subject to Apple’s 30% fee—a potentially impossible limitation to enforce on secondary market sales. iOS apps for marketplaces like OpenSea and Magic Eden only allow users to browse NFTs, not buy or sell them through the app.

Apple’s reported upcoming plans to open up its ecosystem could benefit NFT and crypto apps that are currently limited or hobbled by App Store requirements. Such apps could then be installed via external sources and not be reliant on Apple’s strict policies, although Bloomberg reports that Apple may institute additional “security requirements” for outside apps.”

See Also: Gaming blockchain Oasys’ SEGA and Ubisoft-validated mainnet goes live

U.S. House Committee Holds Hearing on FTX Collapse