The Disrupt Weekend

As we look ahead to 2023, what crypto needs is applications that will encourage user adoption and pave the way for Web2’s transition to Web3. Given the development of key infrastructure in 2022, the opportunities for decentralized applications have greatly expanded, positioning 2023 as the year we will witness the actualization of dapp potential. And so, in 2023, we will see developers shift their focus away from building out infrastructure offerings and instead turn to the application layer.

Advancing Gaming

While blockchain gives users an upper hand when it comes to gaming, especially in terms of ownership, there is ample opportunity for developers to create applications that enhance the performance of those games. In Web2, the gaming skins industry alone is worth $50 billion, but players don’t actually own the assets outside of the games in which they are used.

The current Web3 gaming market is characterized by play-to-earn games. Play-to-earn allows players to make money as they play, opening up the opportunity for more individuals than ever to earn a living from gaming. At the same time, with the large amounts of investments into the blockchain gaming industry (more than $3 billion in 2022), we will see increasingly higher-quality gaming projects.

Enhancing Identity

Blockchain enables the creation of portable digital identities (DID), which allow users to effortlessly transfer information and assets across different networks and chains. Today, this technology empowers individuals by allowing them to truly own their own data and retain privacy while still meeting know-your-customer (KYC) and anti-money laundering (AML) requirements demanded by both Web2 and Web3 platforms.

Utilizing infrastructure now at their disposal, developers can build decentralized applications (dapp) that help users seamlessly move across different platforms while retaining sovereignty of their information and identities. The new wave of Web3 users will have DIDs and everything they offer at their fingertips.

Reimagining Web2

Many Web2 apps already have millions in both daily active users (DAU). By adding crypto and Web3 functionalities to these in-demand Web2 apps, developers can use decentralization and tokenization as avenues for increased growth and monetization.”

See Also: Forget CBDCs, Here’s Where the Biden Administration Needs to Focus in 2023
See Also: 2023: The Year DAOs Follow the Law?

Often, the blockchain community is portrayed as part of the problem, but this is largely a misrepresentation. This technology may actually assist in the global transition necessary for a sustainable future.

Today, prominent companies rush to declare that they are launching various programs to address sustainability. However, it is common for these businesses to hide behind opaque metrics and somewhat more interpretive goals. A lack of transparent oversight or explicit standards exacerbates this (eg. “greenwashing”).

With new green credentials, blockchain networks can be put to good use by improving tracking and verifiably proving emissions of a given organization or supply chain. Due to their inherent immutability, accountability and transparency, blockchain can track carbon balances and other environmental measures, holding to account companies that proclaim to be sustainable.

For example, implementing smart contracts can automate the process of tracking how much carbon is produced at every step of a business’s operations. This information could then be reported to various monitoring services and relayed to the public. The verifiable, cryptographically enforced nature of this data will guarantee that it cannot be falsified or obfuscated in any way.

Incidentally, that same cryptography will also protect the privacy of the company’s reporting. Thanks to zero-knowledge (ZK) technology, unfalsifiable proofs can be generated that confirm the underlying information without revealing it. In basic terms, a company could provide evidence that it met various energy usage or carbon emission standards without disclosing the underlying data – a current blocker to company transparency when reporting details on emissions producing activities.

Another way environmentally friendly blockchains can become a sustainability solution is through the tokenization and digital distribution of digital environmental assets. A recent example is the accelerated development of the carbon credit market. Even electrical grids can be managed via blockchains and smart contracts.

Blockchain’s role in helping the environment can go far beyond energy footprints and carbon credits as well. We expect to see an increasing number of sustainability-focused systems launching in 2023.”

See Also: The Next Step in the Evolution of Web3: Regenerative Finance

“Every new chain or rollup is a monolithic chain in itself with its own independent languages and design structures. The result? An asynchronous Web3 ecosystem. This is why we need something like Hop protocol to “hop” between rollup chains. If Web3 is after mainstream adoption, we need to say bye to this constant network switching. People don’t want to deal with fragmented, asynchronous chains.

If cross-chain bridges were one-off band-aid fixes, then modular rollups are beginning to pave the way for a more comprehensive solution. Today, most chains are pursuing their own modular strategies. Optimism, Arbitrum and Starknet differ on the execution layer, but they share the same settlement, consensus and data availability layers by outsourcing them to the Ethereum mainnet. Metis and Celestia are chains that opt for their own data availability layers, while still using Ethereum as their settlement and consensus layers. StarkEx-based validium chains such as Immutable X or perform something similar, by running their own relatively centralized data availability committees.

What if these chains share a standardized open source library of code, rather than the siloed chain/rollup system of today? That’s where Optimism’s OP Stack comes in: a set of modular, foundational lego bricks for building more expressive and precise rollup chains on Ethereum. OP Stack is a set of standardized, open source modules that can be assembled to build a custom chain – what Optimism calls “OP-chains” – to serve any specific blockchain use-case. Modules are bits of data any developer can plug into the OP Stack to create an L2, L3 or L4.

With OP Stack, you won’t be tied into one particular proof system or technology. Devs have the ability to pop modules in and out of the different execution, consensus, settlement and data availability layers of a chain, just like switching APIs. dYdX chose to leave Ethereum for a Cosmos appchain, because they desired greater modularity over the consensus layer of their chain. OP Stack solves this.

Maybe an Optimistic rollup wants to revamp itself into a ZK-rollup. No problem! Just switch out its fraud proof module for a validity proof module on the settlement layer. Maybe a chain wants to use Celestia for its data availability layer? No problem! Swap out Ethereum for Celestia as a data availability layer. Want to swap out the EVM for an alternate virtual machine like FuelVM on the execution layer? Swapping out the execution layer on a running chain is hard, but that’s a technical possibility with OP Stack.

Bedrock is the first implementation of the OP Stack, a collection of modules that Optimism uses. Bedrock uses the Ethereum Virtual Machine as the execution layer to make it EVM-equivalent. And more crazy forks are coming. 0xPARC built a Game Boy rollup by swapping out Bedrock’s execution engine with a Game Boy emulator. And it’s all on-chain. 🤯

All OP-chains can enjoy atomic cross-chain composability as long as OP-chains voluntarily opt into the same shared sequencer set, the sole entity that produces blocks on every OP-chain. Eventually, any user on Ethereum can send a transaction from any end of the ecosystem to one another. No more network switching or bridging! That vision gives birth to Optimism’s emergent structure of a “Superchain”, where hundreds/thousands of OP-chains will be fully interoperable on Optimism and connected by the same technical fabric.

Launching rollups will be no harder than spinning up an ERC20 token, speeding up the rate of Web3 experimentation and innovation.”

See Also: Exploring the Benefits and Challenges of the Livepeer Decentralized Live Video Streaming Network

“Rough market conditions largely became the standard for much of the year, but that didn’t stop crypto from many incredible technological achievements.

Improvements in the decentralized finance (DeFi) sector like the protocol Compound’s version (v)3 and the march of the zero-knowledge (ZK) ecosystem continued regardless. Institutional adoption of crypto has also occurred at a rapid pace, with Disney, Starbucks, Adidas and many other household brands quietly embracing blockchain. Large banks have also shown increasing interest in the sector: Fidelity launched a crypto service for investors, BlackRock partnered with Coinbase to bring its institutional clients crypto access and Goldman Sachs is creating a crypto data service.

One industry highlight this year was the Ethereum Merge in September, where the blockchain transitioned from proof-of-work to proof-of-stake, reducing Ethereum’s energy usage by an incredible 99.9%. Secondly, many amazing engineers continued to build through this bear market, and some of the strongest projects came out of it.

Another benefit for the industry, though rough in the moment, was the lessons learned from each of the disasters that 2022 brought. Many projects – and even entire categories in crypto – have shown their resiliency in light of these events. If crypto has proven anything through its existence, though, it has proven that it can survive unfavorable times. Because of this, the industry will enter 2023 with a level of strength and durability that 2022 has given it.”

“Crypto today is taking its first steps toward establishing institutions to promote systemic stability.

First, no single entity should supply or control the use of funds in the context of bailouts. It must be a consortium endeavor. Positioning any single entity – including Binance – as the crypto industry’s lender of last resort fails to reduce systemic risk and creates a host of new problems.

If an entity functioning as the lender of last resort in the crypto industry were a participant in such a complex interdependent network, a myriad of conflicts of interest would arise. For example, they could wield funds as anticompetitive weapons or use access to proprietary information to their own private benefit.

The obvious problem with a bailout fund that bails out each entity with sufficient systemic risk is that it’s too easy for firms to be careless with risk management and then turn to the fund for ex post relief. In order for crypto to have any hope of solving this same problem, the cost to individual project teams of needing bailouts must be severe.

Schemes for such punishments haven’t yet been developed, but could include a subset of the consortium members assuming immediate control over the project or taking board seats. Overall, the messaging from the lender(s) of last resort to the management of failed crypto firms must be swift and severe: We’ll help save your creditors and ensure you avoid collapse, but you are not going to enjoy it and your reputation will be severely damaged.

Letting any single entity, especially a crypto industry competitor, assume this role will ultimately increase crypto’s systemic risk and leave the industry vulnerable to yet another FTX-style collapse that hampers the industry’s growth and adoption.”

17 December

VC funding has been shifting away from centralized crypto services such as lenders and exchanges, while companies involved with expanding Web 3 have seen an increase in investment. During the third quarter of 2022, VCs invested an estimated $1.5 billion into Web3-based companies.

Web 3 is one area that investors have deployed a lot more money over the last six months.

By the second half of next year, the firm said in its report it expects to see an increase in disclosures from crypto platforms, as well as the possibility of regulatory clarity, which could ultimately give crypto investors “a little more confidence.”

According to PitchBook’s latest report on third-quarter emerging technologies, by 2027 Web3-based content platforms will bring in an estimated $39 billion in revenue, versus the $3.4 billion in revenue that is expected to be earned by the end of 2022.”

See Also: Crypto Trading Firm Amber Group Raises $300M Series C After FTX Contagion
See Also: Bitcoin Few Weeks Away From Its First Weekly Chart ‘Death Cross’

Mazars, the auditing firm working with Binance and other crypto exchanges on proof-of-reserves statements, has paused all work for crypto clients.Mazars has indicated that they will temporarily pause their work with all of their crypto clients globally, which include, KuCoin and Binance.’

Mazars said in an emailed statement that it had only paused its work for crypto firms relating to proof-of-reserves reports.

This is due to concerns regarding the way these reports are understood by the public. [The] proof-of reserve reports do not constitute either an assurance or an audit opinion on subject matter. Instead they report limited findings based on the agreed procedures performed on the subject matter at a historical point in time.

The accounting firm performed a proof-of-reserves assessment of Binance earlier this month, finding its bitcoin reserves were overcollateralized. The link to the report on Mazars’ website no longer works. Crypto exchanges came under pressure to provide proof of reserves in the wake of the of collapse of FTX. Binance coin (BNB) fell after the announcement. It has lost about 5% in the past 24 hours.”

The committee, which is the primary global standard setter for the prudential regulation of banks, suggested that a bank’s exposure to certain crypto assets must not exceed 2% and should generally be lower than 1%. These particular assets are tokenized traditional assets including non-fungible tokens, stablecoins and unbacked crypto assets that don’t meet classification conditions.

Meanwhile, those assets that do meet the criteria ‘are subject to capital requirements based on the risk weights of underlying exposures as set out in the existing Basel Framework.’

Today’s endorsement by the GHOS (Group of Central Bank Governors and Heads of Supervision) marks an important milestone in developing a global regulatory baseline for mitigating risks to banks from crypto assets.”

See Also: US Rings Crypto Warning Bell That Regulators Say Only Congress Can Silence
See Also: EU Rules for Distributed Ledger Financial Trading Finalized Ahead of March Pilot

These units include LedgerX, which also did business as FTX US Derivatives, FTX Japan, FTX Europe and Embed Business. Most of these entities were acquired by FTX relatively recently, meaning they operated largely independently of their global parent.

FTX has already received “dozens of unsolicited” – more than 100 – bids for the companies, the filing said. If the sales are approved, interested parties could bid for the different units, the filing said, suggesting possible bid dates for the various entities ranging from February to March. Preliminary bid dates stretch from mid-January to early February.

FTX wants to sell these units quickly, the filing said. Many have had their operating licenses suspended since FTX itself filed for bankruptcy. Approving these sales would benefit FTX’s creditors, the filing said.”

See Also: Three Arrows Capital Estimated Its Assets at Around $1B in July: Report

“According to data from OpenSea, at time of writing, the collection’s trading volume is 900 ETH, or about $1.08 million. Its floor price is about 0.19 ETH, or about $230 – more than double the original price of $99. Some tokens are selling for much higher prices. The one-of-ones, the rarest of the NFTs, which comprise 2.4% of the 45,000 unit collection (roughly 1,000), are selling for as much as 6 ETH.

According to data from Dune Analytics, nearly 13,000 users minted 3.5 tokens upon the release of the collection. Additionally, 115 customers purchased 45 NFTs, which is the minimum number of tokens that guarantees a ticket to a dinner with Trump; 17 people purchased 100 NFTs, which, according to the Trump Trading Card site, was the maximum quantity allowed to mint.”

16 December

Maker will deploy four vaults to fund investments in real-world assets (RWA), originated by BlockTower and issued on-chain through Centrifuge. Deep in a bear market, at the end of a year’s worth of stomach turning headlines, this milestone cements the role of RWA in DeFi.

This stands to be the largest on-chain investment in real-world assets to date, with Maker providing $150m of senior capital and BlockTower providing $70m of junior capital. It also marks the first institutional credit fund to bring their collateralized lending operations on-chain.

As the first protocol to bring real-world assets on-chain, we’ve always believed RWAs are the key to stable yields in DeFi.

By tapping into productive assets in the real-world, DeFi users and protocols get exposure to cash flows that are uncorrelated to crypto market volatility.

For Maker, it means onboarding BlockTower as a professional asset manager that can provide access to multiple and diversified asset classes, which in turn increases the resilience of its stablecoin DAI. For BlockTower Credit, it means sourcing funding from an unbiased global currency and putting it to productive use.”

See Also: MakerDAO and GnosisDAO join forces to launch the DAO-to-DAO strategic alliance
See Also: Aztec Network secures $100 million in Series B funding led by a16z
See Also: Protocol Developer Archblock Aims to Bring US Community Banks to DeFi Through Partnership

“Binance, the largest crypto exchange by volume traded, is not the next FTX, according a report from CryptoQuant. CryptoQuant points out that Binance differs from FTX-Alameda in how “clean” the reserves are, or, to put it another way, how they’re not reliant on the exchange’s proprietary token, BNB.

The Seoul-based analytics firm points to on-chain data to support claims made in a recent audit that Binance is overcollateralized. While withdrawals have increased, they are small compared with the exchange’s overall reserves.”

“On Tuesday evening, Bankman-Fried was processed at Bahamas’ sole penitentiary, Fox Hill Prison, following his bail hearing. Since then, he’s remained in the prison’s sick bay, undergoing assessment of health and risk of self-harm. Such assessments determine—typically in two days—to which section of the prison an inmate will be transferred. Cleare insisted that Bankman-Fried is being treated like any other inmate at the 1,000-person correctional facility.

He isn’t getting any special treatment.

A 2021 report by the U.S. State Department found conditions at Fox Hill prison to pose “significant human rights issues.” The report cited extreme overcrowding, poor nutrition, and inadequate sanitation. Most of the prison’s cells, which measure six feet by ten feet and house up to six inmates, have no mattresses or toilets. Inmates often sleep on the ground and use buckets to dispose of human waste.

Bankman-Fried will remain incarcerated at Fox Hill until February 8th, the date of his next court appearance.”

See Also: SBF’s legal battle still has “a lot to play out,” according to legal commentators

The edition of 45,000 NFTs features the former president in various fantasy costumes and poses. The tokens, minted on Polygon, cost $99 and can be purchased with ether (ETH) or in fiat currency.

Collectors who purchase one of the digital trading cards will be automatically entered into a “sweepstakes” to receive experiences with Trump, including a zoom call, a dinner in Miami or a cocktail hour at Mar-a-Lago. The trading cards will have rarity traits from one-of-ones to ‘2, 5, 7, or 10 copies. No Trump Digital Trading Card will have more than 20 copies in existence.'”

See Also: Web3 Community Platform Console Launches Beta to Fix ‘Broken’ Social Networks
See Also: Jack Dorsey Gives Decentralized Social Network Nostr 14 BTC in Funding
See Also: Big Time and other Web3 games take home the gold at the inaugural GAM3 awards
See Also: Why a Payload of NFTs Was Just Sent to the International Space Station

“The top Republican on the House Financial Services Committee wants the U.S. Treasury Department to delay implementing the crypto tax provisions in last year’s Infrastructure Investment and Jobs Act until there is further clarity around who’s covered by the bill.

At issue is the definition of a “broker” for tax reporting purposes. When the legislation – then known as the Bipartisan Infrastructure Bill – was introduced last year, industry participants warned the definition of a “broker” was overly broad, and could force entities such as miners and crypto wallet manufacturers to abide by tax reporting rules they physically would not be able to meet.

These questions and concerns must be addressed to ensure taxpayers have clear direction on the forthcoming requirements.

The Treasury Department has not issued formal guidance addressing this provision, but has said in letters to lawmakers that it would not include certain groups, such as miners.”

See Also: SEC approves 9 more WisdomTree ‘blockchain-enabled’ funds
See Also: New York Banking Regulator Sets Crypto Guidelines in Wake of FTX

“The United Nations High Commissioner for Refugees (UNHCR), a UN agency mandated to aid and protect refugees, is launching a blockchain solution to distribute cash to Ukrainians affected by the ongoing Russian invasion.

To participate, users need to download Vibrant, a Stellar-based non-custodial mobile digital wallet that provides a secure place to hold and transport funds in USDC. Recipients can then choose to convert the received USDC to U.S. dollars, euros, or local currency and withdraw their funds at hundreds of thousands of MoneyGram locations around the globe.

For fleeing Ukrainians, and primarily for those whose banks are inaccessible, this pilot project providing humanitarian assistance using a digital wallet, will serve as a possible lifeline for survival.

Last year, the Stellar Development Foundation (SDF) also announced that the Stellar blockchain will be used to pilot an electronic version of the hryvnia, the national currency of Ukraine.”

15 December

The partnership between the payments firm and MetaMask developer ConsenSys is intended to enable users to select their PayPal accounts as a payment option to buy ether (ETH) from within the MetaMask app. The offering is designed to facilitate seamless purchases and transfers of ether from PayPal to MetaMask.

This integration with PayPal will allow our U.S. users to not just buy crypto seamlessly through MetaMask, but also to easily explore the Web3 ecosystem.

Select U.S. customers can access the new offering beginning today as PayPal works to roll out the service to the rest of its U.S. customers over the next few weeks.”

See Also: PayPal has become an episode of Black Mirror: Elon Musk
See Also: Crypto Lending Platform Maple Finance Unveils Major Overhaul, Stops Lending on Solana

“For over a month, Binance CEO Chanpeng Zhao (“CZ”), like other exchange leaders, has been on a quest to convince users that his product is wholly different from FTX.

Like FTX, though, Binance is largely unregulated, and not everyone is buying CZ’s repeated assurances of propriety. Over the past week, a shoddy audit of the exchange’s reserves – followed by news of criminal investigations into Binance executives – alarmed users enough to catalyze record withdrawals from the platform.

While Binance appears to be weathering the storm so far (there are no glaring signs that the exchange has misappropriated user funds FTX-style), recent events have drawn attention to the fact that Binance, which exists beyond the scope of regulators and tracks customer holdings on its own servers rather than on public blockchains, asks for a tremendous amount of trust from its users in order to operate.

Coinbase, Kraken, Binance.US and other jurisdiction-specific Binance platforms make routine accounting disclosures and face strict oversight from regulators. The main Binance platform, however, isn’t subject to the same regulatory scrutiny as its peers. As such, it can offer relatively low fees along with products that it would be unable to run in the U.S. and many other countries – like sophisticated derivative contracts and margin trading facilities that allow users to borrow money in order to make bigger, riskier bets.

As a consequence of Binance’s regulation dodging, though, the platform’s users need to trust Binance’s word on whether their money is where it purports to be.

Despite Binance’s opaqueness, users continue to rely on the platform. The largest crypto exchange offers users the ability to trade more kinds of tokens, with higher liquidity and lower fees, than virtually any other platform – centralized or decentralized. It also offers strategies that are inaccessible, in many jurisdictions, to anyone other than licensed investors.

Unlike FTX, Binance “[doesn’t] allow a lot of crazy, weird margining” features like cross-margining, said Siemer.
And then, says Siemer, there’s the fact that Binance “doesn’t have an Alameda.”
While it’s technically possible that Binance is using or loaning out user funds behind the scenes, there’s no sister firm like Alameda to which Binance would have obviously funneled money.

While one can find some differences between Binance and FTX, it’s impossible to know what’s really going on at Binance behind the scenes. CZ, for his part, seems acutely aware of the fact that his exchange will live or die based on the trust of its users. In a world of centralization and lax regulations – perception is everything.”

See Also: Binance CEO Changpeng ‘CZ’ Zhao Warns Staff of Turbulent Times

“Brown and other lawmakers in the hearing settled into the lanes the parties have established in the wake of FTX: condemnation and suspicion of cryptocurrencies from Democrats, and an insistence from Republicans that the technology isn’t to blame. But the hearing did little to signal what they might do about the industry next year, when crypto legislation is expected to really get rolling.

The chairman hinted that one priority may be going after the structure of the big crypto firms, which routinely combines exchange, lending, custody and investing functions all under the same roof in ways that would be outlawed in the more closely regulated U.S. financial industry.

If we are going to learn from FTX’s meltdown, we must look closely at the risks from conflicts at crypto platforms that combine multiple functions.”

See Also: Binance Deliberately Caused FTX Collapse: Kevin O’Leary

Charges filed over the past two days make clear that the U.S. government is treating Bankman-Fried as the ambitious and calculating criminal that he is, not as merely a bumbling tech wunderkind who made some bad bets. A laundry list of incredibly serious civil and criminal charges have come from three U.S. agencies.

The charges are comprehensive, and the theory of the case presented is unambiguous – all of the agencies claim that Sam Bankman-Fried knowingly and with significant forethought committed fraud on a scale only comparable to history’s most elaborate cons.

The SEC supervises securities, and its charges focus on Bankman-Fried’s fraud against equity investors rather than against customers. Those charges will almost certainly result in huge fines and Bankman-Fried’s being barred from the financial industry. The CFTC basically oversees market structure, and the agency’s charges are focused on Bankman-Fried’s core crime: the commingling of depositor funds between FTX and the hedge fund Alameda Research. These are also civil charges that would mainly lead to monetary penalties.

What we really care about are the criminal charges, filed by the U.S. Department of Justice in the Southern District of New York. They are unbelievably extensive and serious, with wire fraud, conspiracy and money laundering making up just three of the eight total charges. The charging documents are reportedly vague on purpose, to give prosecutors leeway to assemble a case and specific allegations as their investigation progresses.

Partly because of that vagary, there have been varied estimates of the jail time Sam Bankman-Fried might face. But the litany of criminal charges seems to affirm previous estimates that he could, at least in theory, be in prison for the rest of his life.

He could get off easier if he is offered and chooses to accept a plea deal from prosecutors, but even such a deal would almost certainly involve many years of prison time. A plea deal would normally be quite likely, but there are two headwinds here. First, Bankman-Fried appears to be in a self-induced state of delusion; specifically, he seems to think he really did nothing wrong. That may lead him to pursue a jury trial instead of a deal.

But there’s also no guarantee that Justice will offer a plea deal. It’s common for even very serious crimes, but public outrage about FTX has been so intense that the Biden administration could conceivably push for a high-profile prosecution to appease a furious public.”

See Also: FTX Bankruptcy Court Is Warned Against Granting Bahamas ‘Dangerous’ IT Access
See Also: Justice Department Charges Nine in Crypto Ponzi Schemes

If it becomes law, the Digital Asset Anti-Money Laundering Act will bring know-your-customer (KYC) rules to crypto participants such as wallet providers and miners and prohibit financial institutions from transacting with digital asset mixers, which are tools designed to obscure the origin of funds.

The act would also allow the Financial Crimes Enforcement Network (FinCEN) to implement a proposed rule requiring institutions to report certain transactions involving unhosted wallets.”

See Also: New OECD report takes lessons from crypto winter, faults ‘financial engineering’

“The U.S. Federal Reserve on Wednesday raised interest rates by 50 basis points (0.5 percentage point) as it continues to slow the economy and moderate price increases. The decision brings the federal funds target range to 4.25%-4.5%, the highest level in 15 years.

Fed Chair Jerome Powell has signaled that the terminal rate – the peak rate for the current hiking cycle, expected sometime next year – will likely be over 5%. The most important decision is no longer the speed,’ Powell said, but rather for how long the Fed needs to stay restrictive until inflation comes down significantly, which he said will ‘be some time.’

Inflation as measured by the consumer price index (CPI) continues to slow on a yearly basis: November’s CPI report showed that inflation rose 7.1%, down from 7.7% in October.”

See Also: As Bitcoin, Stock Investors Cheer US Inflation Slowdown, One Macro Expert Calls for Caution
See Also: Citi Says Crypto Market Leverage, Open Interest Are Historically Low

A First Look at Illuvium

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 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


FTX Founder Sam Bankman-Fried Arrested

FTX's Sam Bankman-Fried is arrested in Bahamas, charges pending in U.S. -  MarketWatch

U.S. authorities filed criminal charges against Bankman-Fried, and The Bahamas intends to extradite him once U.S. officials request it. The nation expects the U.S. to request The Bahamas extradite Bankman-Fried in short order.

As a result of the notification received and the material provided therewith, it was deemed appropriate for the Attorney General to seek SBF’s arrest and hold him in custody pursuant to our nation’s Extradition Act. At such time as a formal request for extradition is made, The Bahamas intends to process it promptly, pursuant to Bahamian law and its treaty obligations with the United States.

A tweet from the U.S. Attorney’s Office for the Southern District of New York confirmed that prosecutors in the U.S. indicted Bankman-Fried, though the indictment remains under seal.

In the Bahamas’ statement, Bahamas Prime Minister Philip Davis said the country would continue pursuing its own investigation into FTX’s collapse, alongside the U.S.’s criminal charges.

Bankman-Fried was set to testify virtually before the House Financial Services Committee about the exchange’s collapse on Tuesday. Spokespeople for both the Chair and Ranking Member did not immediately return requests for comment.”

13 December

“The demise of FTX is a story as old as financial markets and does not reflect a failure of blockchain technology, but the lack of regulation around the “point of trust” – where money is exchanged on the promise of a future return, Goldman Sachs (GS) said in a research report Friday.

Despite the crises of 2022, Goldman says cryptocurrencies are likely to flourish, and the key to their success depends on rulemakers correctly identifying what to regulate. In crypto, it’s “the point of trust, not the trustless blockchains themselves,” Goldman said. Once the financial features of digital assets are sorted out, regulators should not interfere with the blockchains themselves, the bank added.

Goldman notes that decentralized financial (DeFi) lending systems, in which financial applications are carried out on a blockchain, don’t pose the same counterparty risk as traditional banks. In DeFi lending, collateral is visible to all members of the pool and is automatically liquidated if the value approaches the value of the loan. Collateral can be retrieved without the need for court proceedings or at a discount to the loan, by using smart contracts.

This resolves the question of trust, the very thing regulation to safeguard investors would be intended for.”

See Also: SEC Chair Gary Gensler Must Testify Before Congress, Says Rep. Tom Emmer
See Also: How Crypto Can Repair Its Reputation in Washington

U.S prosecutors are considering criminal charges against crypto exchange Binance and individual executives, including founder and CEO Changpeng Zhao, Reuters reported, citing two people. Other prosecutors believe that more evidence needs to be gathered before a criminal case can be filed, causing a split within the Department of Justice.

The Department of Justice has also discussed possible plea deals with Binance’s lawyers, the report added. Binance refuted the Reuters article in a statement.

Prosecutors in the U.S. Attorney’s Office in Seattle began investigating Binance in 2018 after a spate of cases that saw criminals use Binance to transfer illicit funds.”

See Also: Former SEC Regulator: Binance’s Proof of Reserves Audit ‘How I Define Red Flag’

FTX’s new leadership is “working around the clock” to find and secure the defunct crypto exchange’s assets, its new CEO will tell U.S. lawmakers on Tuesday, according to published remarks released Monday.

In his remarks, Ray again denounced FTX’s former leadership as being inexperienced, repeating comments from FTX’s bankruptcy filings that he had never seen anything quite like the company’s recordkeeping and asset management failings.

Although our investigation is ongoing and detailed findings will have to await its conclusion, the FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets.

In the document, Ray said FTX’s lack of security controls, allowing Alameda to borrow FTX’s funds “without any effective limits,” commingling of assets and the lack of documentation, “reliable financial statements” and independent governance are just some of the issues he identified.

A substantial portion of FTX’s assets remain missing, misappropriated or not readily available. In the absence of cooperation from responsible parties or any appropriate system to track and protect crypto assets, we are continuing our painstaking forensic efforts to account for all of the assets.

For the first time, Ray provided some explanation as to why FTX US filed for bankruptcy alongside the rest of the company.

Questions have been raised as to why all of the FTX Group companies were included in the Chapter 11 filing, particularly FTX US. The answer is because FTX US was not operated independently of”

See Also: 10 Questions for FTX CEO John J. Ray III From a Securities Lawyer

“There has been huge anxiety, particularly among crypto types, about when and whether Bankman-Fried will be brought to justice. Despite clear signs of fraud, he does not seem to have been detained by law enforcement. He remains in the Bahamas, giving interviews intended to obfuscate his actions and distract from the continuing drumbeat of grisly financial discoveries.

The most paranoid observers (and the seemingly delusional Bankman-Fried himself) might suspect this to be light treatment, the fruit of his years of currying favor with U.S. leaders. But it’s more likely the delay is just part of the slow-grinding legal process. The U.S. Department of Justice has requested an independent probe of the case, and former federal prosecutor Renato Mariotti told CNBC that “it sure looks like there’s a chargeable fraud case here.”

And Bankman-Fried’s potential punishment is no small potatoes. He could be sentenced to life in prison, former Commodity Futures Trading Commission trial lawyer Braden Perry told CNBC. That’s according to U.S. sentencing guidelines, and taking into account the number of victims and the size of the apparent fraud at FTX and its closely related trading shop Alameda Research. The CNBC report goes into gratifying detail about exactly what books are likely to be thrown at Bankman-Fried, and how hard.

The bad news is that those sentencing guidelines are often “bent” to give softer penalties to white-collar criminals. That’s based on the implicit belief, still widespread in the U.S. court system, that things like financial fraud and embezzlement aren’t “real” crimes. Bankman-Fried’s youth, combined with his ongoing scheme to paint himself as an incompetent buffoon, could also elicit undeserved mercy from a court. It will take real and sustained public and political pressure to make sure that Bankman-Fried gets what’s coming to him.”

See Also: FTT investors’ claims to be investigated for securities laws violations
See Also: Former top SEC crypto regulator hired by Caroline Ellison

“At this point, the crypto industry has more or less resigned itself to the fact that a garden-variety ICO likely satisfies all of the limbs of the Howey Test, a foundational set of standards to determine what is a security. I expect the outcome of the Ripple litigation will only confirm that.

However, there is another economic reality that needs to be considered: today, it is abundantly clear crypto is never going away. For all the precedents discussing “economic reality,” the more material fact is that there are hundreds of millions of crypto users around the globe, and that number is growing exponentially, and many are Americans.

Telling next-generation crypto projects that the only path to compliance is to “come in and register” or drop dead is like trying to take a Ford Model T into space. Crypto’s basic mode of operation is by self-custody and directly peer-to-peer transactions over the Internet, not via paper forms signed with wet ink and mailed to a transfer agent or broker-dealer. There are no national securities exchanges which support crypto asset trading. The SEC won’t even approve a regulated exchange-trade fund (ETF), despite many proposals and much market demand. The list goes on.

It’s pretty clear that a huge class of investors doesn’t want what the SEC’s selling. In fact, they want the opposite. Millions of digital natives use trustless smart contracts daily for loans and other financial beasties, or grant and purchase assets like fractional royalty cash flows. They do so in an instant, from anywhere in the world, with anyone in the world, on handheld supercomputers smaller than a chocolate bar. Very soon they will do so with the assistance of artificial intelligence (AI). Investors will literally have superhuman abilities at their fingertips.

For the last six years, crypto has accepted the economic realities of a Depression-era regulatory scheme. The only question for America, at this juncture, is whether we want to back off from that regime just a little bit so we can nurture and supervise these new crypto companies right here at home – or persist, and drive them offshore. The old ways are finished, whether Congress likes it or not.

“Over the month of November, as the FTX contagion rippled through the system, crypto’s market cap lost 15%. Yet, BTC.D oscillated between 40.0% and 40.9%. It can’t possibly be telling us that sentiment is flat. Has BTC.D lost its role as a sentiment gauge? That would imply that BTC has lost its role as the “safe” crypto asset.

The strange behavior of BTC.D during the recent turmoil tells us that the market composition has changed. Bitcoin is still the anchor asset, by a wide margin, but the volatility of its protagonism is weakening. This is a sign of a maturing asset class. That this should become apparent during one of the industry’s darkest times is cause for hope.”

See Also: Bitcoin Lightning Network to be used in fiat transfers between EU and Africa
See Also: Crypto spam bots go silent as Musk promises to prosecute scammers

“The USDD stablecoin, championed by Tron’s founder Justin Sun and managed by Tron’s decentralized autonomous organization (DAO), fell to slightly below 97 U.S. cents early Monday, hitting the lowest since June 22.

USDD’s prolonged de-pegging is accompanied by a steady increase in the stablecoin’s dominance rate in the USDD/3CRV liquidity pool based on the decentralized exchange Curve. The heavy imbalance suggests users are increasingly swapping USDD for the pool’s other components – DAI, USDC and USDT.

In an attempt to calm market nerves, Justin Sun announced on Twitter that he is deploying more capital to defend USDD.”

The Disrupt Weekend

“U.S. prosecutors in Manhattan are examining the possibility that Mr. Bankman-Fried steered the prices of two interlinked currencies, TerraUSD and Luna, to benefit the entities he controlled, including FTX and Alameda Research.

TerraUSD lost its peg to the U.S. dollar in May after Terraform Labs flooded the market with Luna tokens to prop up the 1:1 UST-to-dollar peg. According to the Times, that drastic action was prompted by a torrent of sell orders for TerraUSD, which an unnamed source said came from FTX. At the same time, FTX had shorted the price of Luna, in an apparent attempt to yield “a fat profit.”

The investigation into Bankman-Fried’s potential involvement with TerraLuna is in its early stages.”

See Also: Sam Bankman-Fried’s Alameda Research Secretly Funded Crypto Media Site The Block and Its CEO

Goldman Sachs (GS), one of the world’s largest investment banks, is looking to spend tens of millions of dollars on crypto firms whose valuations have been hit after the implosion of FTX, Reuters reported on Tuesday. Goldman sees an increased need for trustworthy players in the industry, which the bank see as an opportunity.

We do see some really interesting opportunities, priced much more sensibly.”

See Also: Signature Bank to Reduce Crypto-Tied Deposits by as Much as $10 Billion
See Also: Grayscale, in the Spotlight as GBTC Discount Widens, Says DeFi Fund Now Trading
See Also: Bernstein Says Saving Grayscale Will Come at a Cost for Digital Currency Group

Ethereum developers determined on Thursday that the network’s next hard fork, called “Shanghai,” will have a target release time frame of March 2023. This upgrade will include code known as EIP 4895 that will allow Beacon Chain staked ether (ETH) withdrawals.

Developers also agreed to address the implementation of the “EVM Object Format” (EOF) in Shanghai, which is a collection of EIPs that essentially upgrade the Ethereum Virtual Machine. Developers also agreed to a second hard fork sometime in the fall of 2023 that would address another significant scaling upgrade – proto-danksharding, also known as EIP 4844.

Now that the full scope of what will be included in Shanghai is mostly settled, Ethereum developers will go ahead and work on testing the code. Developers are aiming to launch a new public testnet for Shanghai around Dec.15-16.”

In a strongly worded letter sent Tuesday, Representative Ritchie Torres (D-NY) called upon the Government Accountability Office (GAO) to conduct an independent review of the SEC’s actions—or lack thereof—in the months leading up to FTX’s implosion last month.

The letter specifically singled out SEC chair Gary Gensler for claiming exclusive regulatory dominion over crypto exchanges, while simultaneously failing to meaningfully regulate them.

If the SEC has the authority Mr. Gensler claims, why did he fail to uncover the largest crypto Ponzi scheme in US history? One cannot have it both ways, asserting authority while avoiding accountability.

The letter minced no words in claiming that Gensler is therefore ‘singularly responsible for the regulatory failures surrounding the collapse of FTX.'”

“In an exchange with YouTuber Coffeezilla, the former CEO disclosed that client funds weren’t segregated as promised. It turns out, there wasn’t much differentiation – at the very least during the final days the exchange was in business, Bankman-Fried admitted.

Thanks to skillful questioning by Coffeezilla, we know there were instead “omnibus” wallets and that spot and derivatives traders were essentially assuming the same level of risk.

At the time, we wanted to treat customers equally. That effectively meant that there was, you know, if you want to put it this way, like fungibility created‘ between the exchange’s spot and derivatives business lines. For Coffeezilla, this looks like a smoking gun that fraud was committed.

According to recent reporting, Alameda had an unclosable leveraged account on FTX. Almost by definition, if it was in the red and in debt and there was a wallet that commingled funds, Alameda was also partially funded by some FTX customers without their knowledge or consent.

There would be a “chargeable fraud case” if spot assets weren’t backed 1:1 as promised, or were used as collateral for loans or other purposes, Renato Mariotti, a former federal prosecutor, told CNBC. Bankman-Fried has said previously that “dollars” on the exchange and hedge fund were “generally fungible,” being used to reportedly fund personal loans to emloyees and make venture deals. Now, too, did he admit client funds were “effectively” interchange – at least in the final hours.

Bankman-Fried appears to have been deceptive from the beginning. FTX was an improperly organized firm at its founding. Customer assets were always precariously placed. And we know this now because of SBF’s own description of its end.”

See Also: Why Isn’t Sam Bankman-Fried Behind Bars?
See Also: Bankman-Fried Is a ‘Master of Deflection,’ Securities Lawyer Says
See Also: Knockoff Lotions, Weight Loss Drugs, Chinese News Sites: Inside Alameda’s Investment Portfolio

“With the Stax, Ledger was hoping to develop a more stylish and functional device than the previous Nano S – which looks more like a USB thumb drive – and one that can win mass adoption by crypto users. The wallet is a credit card-sized device with embedded magnets so that multiple devices can easily be stacked. The outside is a wraparound e-ink display that can show transaction details and even NFTs. The Ledger Stax will retail for $279.

We wanted to do something that is more fun and fits with where culture is going.

The Ledger Stax will be available in the first quarter of 2023 with pre-ordering available on It uses secure USB-C to connect to the Ledger Live app on a laptop, and Bluetooth to connect to the mobile app on a smartphone. It will also utilize the upcoming wallet extension Ledger Connect to connect to Web3 apps.”

The marketplace aims to streamline access to decentralized applications for users and developers. Oftentimes, Web3 products are fragmented, meaning dapps are scattered across different websites and protocols, which can reduce users’ trust when using blockchain technologies.

Alchemy said that while its app store is centralized it’s not a monetized product, and aims to provide free access to Web3-curious users and developers. Last week, Coinbase halted mobile non-fungible token (NFT) transfers due to Apple’s app store demanding 30% of the gas fees associated with transfers.”

See Also: Aave Acquires NFT Mobile Game Sonar for Lens Social Media Integration

Starbucks on Thursday launched a beta test of its highly anticipated Odyssey program, which combines customer loyalty rewards with non-fungible token (NFT) collecting and other gamified elements.

The popular coffee chain opened the Web3 extension to its Starbucks Rewards program to a “small group of waitlist members,” allowing them to engage in interactive “Journeys” that earn “Journey Stamps” in the form of Polygon-based NFTs. In addition, users also get “Odyssey Points” that will open access to new benefits and experiences in the future, including virtual espresso martini-making classes, exclusive events and trips to Starbucks roasteries and coffee farms.

Starbucks Odyssey is an experience, surrounded by a digital community, where members can come together, interact, and share their love of coffee. Web2 brands are awakening to the opportunity for a clear use case of the blockchain. And it exists in the form of next-generation loyalty – we have a word for that, we call it experiential loyalty.”

“On Wednesday, Apple Inc. made an announcement that might sound minor: It will now offer end-to-end encryption for most material its users backup on its iCloud storage service.

Until now, most materials on iCloud could be accessed by Apple under duress, such as when a search warrant or other court order forced them. But the new encrypted storage system will render the legal debate moot: law enforcement and intelligence agencies will not be able to subpoena or otherwise compel Apple to hand over user data, because Apple will simply not have the technological ability to comply.

The move towards end-to-end encryption should in turn help normalize online financial privacy, a major agenda item for the cryptocurrency industry. Crypto privacy has been under mounting attack in cases such as the sanctioning of Tornado Cash.

The new Apple systems will benefit crypto more directly in two other ways. First, they will have some direct impact on the security of things like crypto keys and wallets. Whether through negligence or truly bad judgment, some crypto users have been known to store their security keys in iCloud backups. That makes them vulnerable to both hackers and, in one notorious instance, the FBI – but with Apple’s new encryption that risk will be massively reduced.

The final notable upside for crypto is that Apple’s new system will introduce a huge new user base to security practices and interface features also widespread in crypto. It will be the first time many users are asked to manage their own personal encryption keys, without a centralized recovery process. It’s not dissimilar to how non-custodial crypto apps and protocols require users to keep track of private keys to “be their own bank.”

To mitigate this downside, Apple will also introduce a process known as “social recovery” to a mass audience, according to the Washington Post. An encrypted iCloud user can name another person who will have to participate if they ever lose their encryption key. Social recovery or other “multi-signature” backup schemes are becoming more widespread in crypto as a solution to the risk of key loss.

The most influential digital hardware and software maker on the planet, in short, is making a strong stand for the idea that real digital privacy should be allowed to exist, [while] hundreds of thousands of users are about to be introduced to private key management.”

3 December

The DOJ, which was already looking into the fall of Sam Bankman-Fried’s global crypto enterprise, now wants a bankruptcy court to appoint an independent examiner to probe potential wrongdoing that may have led to the collapse.

An examiner could – and should – investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct and mismanagement by the Debtors.

There is a substantial basis to believe that CEO Bankman-Fried along with other managers mismanaged the company or engaged in fraudulent conduct.

An examination would be preferred to an investigation because the former can be made public, which ‘is especially important because of the wider implications that FTX’s collapse may have for the crypto industry.’ In the same filing, the FTX collapse was described as the ‘fastest big corporate failure in American history.'”

See Also: Dems and Reps join forces to pressure SBF to testify before Congress
See Also: Maxine Waters Thanks SBF for Being ‘Candid’ About FTX Collapse

“The self-custody platform acquired by Celsius over a year ago was put on the block following the lender’s bankruptcy filing in July. Celsius acquired GK8 in November 2021 for $115 million.

Galaxy’s aim with the acquisition is to expand its prime brokerage offering. Around 40 people would be joining Galaxy’s team, including blockchain engineers and cryptographers.”

See Also: FTX Japan Plans to Restart Local Customer Withdrawals
See Also: Thai VC fund acquires troubled exchange Zipmex for $100M: Report

The online crypto community has discovered a new artificial intelligence (AI)-powered chatbot that can either be used to warn developers of smart contracts vulnerabilities or teach hackers how to exploit them. ChatGPT, a chatbot tool built by AI research company OpenAI, was released on Nov. 30 and was designed to interact “in a conversational way” with the ability to answer follow-up questions and even admit mistakes, according to the company.

The co-founder of smart contract auditing firm Zellic asked ChatGPT to help find an exploit, presenting a piece of smart contract code. The bot responded by noting the contract had a reentrancy vulnerability where an exploiter could repeatedly withdraw the funds from the contract and provided an example of how to fix the issue. Twitter user devtooligan shared a screenshot of ChatGPT, which provided the exact code needed to fix a Solidity smart contract vulnerability commenting:

Mind-blown. We’re all gonna be out of a job.”

On a DEX it is virtually impossible to inconspicuously commingle funds (as the FTX centralized exchange appears to have done). That’s driven lots of new interest to some of the earliest decentralized players.

DeFi is hardly a magic salve for crypto’s multi-billion-dollar woes. Protocols can get hacked, duped, drained and worse, costing their users massive aggregate losses. In contrast with the “black boxes” of centralized exchanges, though, DEXs operate according to their open-source code. DEXs have on-chain assets that are open for all to see – so long as one knows where to look.

That’s easier said than done, however. Drift Protocol, GMX and Perpetual Protocol have [now] commissioned asset dashboards on data site Nansen that showcase the health of their respective exchanges. Among the information included in the dashboards are token allocations and debts owed by the protocols. Their efforts are the on-chain equivalent of the “proof of reserves” movement sweeping across centralized exchanges.

At the same time, many decentralized protocols are readying their defenses against an expected regulatory onslaught. Their fear is that financial regulators, already spooked by FTX’s apparent misdeeds, will want to regulate DeFi, too.

A lot of us raised concerns about how DeFi derivatives platforms do not have a strong voice.’ David Lu said GMX, Drift, Perpetual Protocol as well as dYdX are pooling their efforts to have a larger collective clout.”

See Also: Avalanche-Based DEX Trader Joe to Soon Deploy on Ethereum Scaling System Arbitrum

“Liquidators for Three Arrows Capital have seized $35.6 million from the collapsed crypto hedge fund’s bank accounts in Singapore, three months after getting the nod from that country’s High Court to begin probing the firm’s assets in the country. Liquidators have also recovered $2.8 million from forced redemptions of investments, as well as an unspecified number of crypto tokens and non-fungible tokens (NFTs).

Liquidators’ task of hunting down and preserving Three Arrows’ remaining assets so that they can be returned to investors isn’t an easy one, and the hedge fund’s founders Kyle Davies and Su Zhu haven’t made it any easier, according to Teneo, which said both men have been uncooperative since the summer.

Su and Davies claim to be in Dubai and Bali, respectively – and liquidators point out that both places are ‘jurisdictions known for difficulties in enforcing foreign court orders.’ When liquidators gained access to the fund’s Singapore office, ‘most physical documents, servers and hard drives had been removed,’ according to the documents published Friday. Lawyers for Su and Davies have failed to provide a complete set of financial records.

Liquidators also addressed the status of the $50 million, 500-ton superyacht – christened the Much Wow – Su and Davies purchased before their company collapsed. According to the presentation, liquidators confirmed that Su and Davies made payments for the yacht directly from the company’s coffers. When that money dried up, the contract to purchase Much Wow was terminated by the ship’s builder Sanlorenzo, and the yacht was put back on the market.”

See Also: Legal team for 3AC liquidators blast founders for shifting blame to FTX, media blitz amid bankruptcy
See Also: S. Korean Judge Dismisses Arrest Warrant for Terra Co-Founder Shin

With the integration, users will be able to access a feature that lets them drag and drop media files into the browser, which writes a smart contract and uploads the file into a blockchain, turning the files into NFTs.

Now, our users will be able to create NFTs instantly and simply with no platform usage fees, encouraging more people to explore the burgeoning NFT industry.”

See Also: Firefox dev Mozilla goes all-in on metaverse, acquires Active Replica