“At the time of writing, the price of 1 BTC on the Nigerian crypto exchange NairaEX is 17.8 million nairas, equating to a whopping $38,792. This is more than a 60% premium over the current market price of Bitcoin. The recent interest in Bitcoin has also seen Nigeria becoming the leading country for Bitcoin web searches, according to Google Trends.
It comes as the Central Bank of Nigeria has continued to impose limits on ATM cash withdrawalsamid an ongoing effort to accelerate its shift to a cashless society. As of Jan. 9, citizens are only allowed to withdraw a maximum of 20,000 nairas (around $43.50) from cash machines per day, with a weekly limit of 100,000 nairas (roughly $217).
The move also came just days before new naira banknotes went into circulation with the aim of curbing inflation and money laundering. The central bank imposed a deadline of Jan. 24 for Nigerians to exchange their old, higher denomination bank notes for the new currency. The central bank has now extended that deadline to Feb. 10.”
“Twitter is designing a system to permit payments through the social-media platform, and although billionaire owner Elon Musk wants it “first and foremost” to be for fiat currencies, he wants the ability to add cryptocurrencies later, the Financial Times reported Monday.
Dogecoin (DOGE) spiked to its 24-hour high after the news broke.”
“VitaDAO was started in 2021 by Tyler Golato of decentralized biotech protocol Molecule to fund longevity research. According to the organization, it boasts a community of over 9,000 “enthusiasts, researchers and contributors,” and deployed over $3.5 million to projects researching diseases of aging, cellular biology and repairing age-related damage to the body in 2022. Previous investors include Ethereum co-founder Vitalik Buterin.
According to VitaDAO, Pfizer is the first pharmaceutical company to vote on DAO proposals and participate in the incubation and commercialization of VitaDAO projects. Proceeds from the latest round will go toward funding longevity research projects and building out VitaDAO’s first biotech startup, slated to be announced in the first quarter of 2023.
There’s a lot of discussion around ‘is aging a disease?’ A lot of people are of the mindset now that aging and a lot of the diseases of aging … can actually be resolved.”
“The deal between the English soccer league and the NFT-based fantasy sports game allows NFT purchasers to build their own teams and compete in a fantasy version of the competition. The deal will last for four years and is worth a total of 120 million British pounds ($150 million).
Sorare offers a free-to-play competition that allows its 3 million users to compete by collecting soccer players in the form of non-fungible tokens. These NFTs are then submitted into a fantasy team that generate rewards based on real-world performances.
Sorare’s digital cards and innovative online game represent a new way for fans to feel closer to the Premier League whether they are watching in the stadium or from around the world.
The Premier League joins more than 280 global soccer organizations and all 30 Major League Baseball teams on the Paris-based platform. The company raised $680 million in a Series B round with a valuation of $4.3 billion in September.”
“The New York judge overseeing Bankman-Fried’s criminal trial ruled in favor of four separate petitions by a number of news organizations seeking the names of these individuals, who signed onto the bond earlier this month. The ruling is stayed pending a possible appeal until at least Feb. 7.
A slew of media companies, including the Wall Street Journal, Bloomberg and CoinDesk had filed suit to get the court to release the identities of the two people, saying ‘the public’s interest in this matter cannot be overstated.’ Bankman-Fried’s lawyers had argued the possibility of physical threats to the parties were reasons to keep their identities private.”
I present to you my special contribution to increase the randomness of the 🕯️KZG ceremony 🕯️! It's a marble machine retracing the history of #Ethereum. 😁 pic.twitter.com/qjemwmPJNj
Stablecoins are supposed to be redeemable 1:1 for whatever asset that backs them. But there’s no actual legal requirement for stablecoin issuers to hold reserves equal to circulating supply. That’s a problem. When a stablecoin loses its peg there’s a possibility that holders will rush to redeem their coins, resulting in something very similar to a bank run.
We should require stablecoin issuers to maintain 1:1 reserves at banks insured by the Federal Deposit Insurance Corp. Quarterly audits of reserves and real-time reporting on mint-and-burn activity should be mandatory.
Separate Trading and Custody
The market structure where customers have to keep their money with the exchange is fundamentally flawed. You don’t have to know anything about crypto to see why that is not a good idea. Suppose the Nasdaq approached the SEC about being its own custodian. That conversation would never happen.
The problem isn’t just that it’s just too easy to dip your hand into the cookie jar. Even if you are completely honest, there’s still a problem with counterparty risk.
If there’s anything we should learn from the FTX collapse, it’s that assets should be stored until required for trading by external, qualified, regulated and insured custodians. This creates a check and balance for verifying reserve assets under any exchange’s control.
Require Digital-asset Exchanges to be 100% Digital
Disallow direct trading of digital assets with fiat or off-chain assets. This will make all exchanges on-chain auditable, enabling a proof of reserves that actually works. With pure digital exchanges with fiat represented digitally as a regulated stablecoin, we could have proof of reserves for everything in real time.
The last thing you have to solve is the liabilities component. If we fix settlement and clearing to be all digital, we could build a pretty robust and efficient system with compliance baked in. What’s happening today is that exchanges are trying to build a business in a hybrid world because they don’t have any other choice. We can put fiat and securities in digital wrappers as a transition.
Regulate Digital-asset Exchanges’ Use of Omnibus Wallets
Many crypto custodians use omnibus wallets where the funds of multiple clients are commingled under a single address. This makes key management easier for the custodian, and also makes it easier to enable efficient off-chain transactions. The downside is that individual clients no longer have visibility into their transactions or into counterparty risk. It’s also unclear what happens to each customer’s funds in the event of a bankruptcy.
Define Securities for the Digital Era
This is the most cited complaint about the SEC: It is relying on a definition of securities developed in the 1940s to underpin its enforcement efforts. Builders in crypto have honest questions about how the rule applies to them, and they deserve answers.”
“Regulators must work within the framework of the Bank Secrecy Act (BSA). This law lays out a comprehensive framework for AML/CFT – shorthand for anti-money laundering and combating the financing of terrorism rules – built on the foundation of “know your customer,” aka KYC. But stringent KYC within decentralized finance (DeFi) is not only unnecessary, it’s all but impossible.
DeFi platforms do not actually hold user funds, so it’s not clear how KYC is even relevant. Sure, these protocols oversee and approve users’ financial transactions, but DeFi’s non-custodial nature makes it all but impossible to implement effective and responsible KYC policies. For instance, if the SEC were to shut down Uniswap, a popular decentralized exchange, 1,000 developers around the world would simply deploy forks without batting an eye.
Instead of updating existing legislation, Congress should unravel the BSA.
The foundational problem with the BSA is that when it was written large sums of money could only be transmitted through intermediaries. Further, transaction databases were siloed within each intermediary, making them easy to surveil. In this context the BSA is logical and effective.
But blockchain and DeFi have changed the game, enabling the legal exchange of vast sums of money with no intermediary. Such transactions are also permissionless, meaning they require no administrative oversight and are largely anonymous. This contradicts the basic assumptions of the BSA, rendering it largely impractical and unenforceable.
Yet, the BSA’s KYC framework is so ingrained within U.S. regulators’ compliance culture that it has become gospel. But in the real world, guilt until proven innocent has never been an effective means of regulation. KYC is not an end in itself but a means to an end. Preventing money laundering and terror financing need not require a broad brush stroke that kneecaps new business models and stunts innocuous user activity.
The reality is that crypto comes with its own regulatory tool: the blockchain. Rather than siloing transaction databases across multiple financial oversight bodies, the blockchain ledger provides a single consolidated database for all relevant transactions.
Instead of KYC, regulators should shift to KYT, or Know Your Transaction. Given blockchain’s open-source nature, the noncustodial design of most DeFi platforms, and users’ ability to effortlessly spin up multiple addresses, the only way to effectively regulate the space is on the individual transaction level.
After all, it’s not the financial histories of individual users that should concern regulators but the origins of the funds. KYT would institute blockchain review mechanisms that would follow the money and prohibit unsanctioned transactions. KYT could be even more effective than KYC, enabling authorities to monitor the entire transaction database, not just the red-flagged transactions within submitted SARs.
The BSA is considered untouchable, but when the law was first drafted back in 1970, its creators could never have imagined today’s financial reality. It’s time to haul this outdated regulatory mechanism into the 21st century.”
“Most crypto assets do not create a legal relationship between an identifiable “issuer” and the owner of the asset. We would argue crypto assets are not themselves “securities” under current law. (We also argue that characterizing crypto assets as “temporary” securities until extrinsic factors like “sufficient decentralization” cause them to “morph” into non-securities is not supported by current law and would be bad policy if adopted by courts.)
Even if an entity has been deemed the “issuer” of a crypto asset, that entity and the individuals who act as its officers and directors will have to take on responsibilities that will frequently either be of little or no relevance to owners of the crypto asset. This is because, unlike with shares in a company or debt obligations of a company, the value of a digital asset may only be very tangentially related to the issuer’s operations or its financial condition.
Additionally, there are myriad provisions in U.S. securities laws that are at best opaque and at worst nonsensical, when applied to crypto. This includes disclosures for where and how crypto assets would be allowed to trade, how custody rules would be applied, whether a “transfer agent” would be needed (and how that could possible apply), margin rules, settlement rules, broker-dealer rules, investment company and investment advisor rules and many others.
Not only are there numerous practical challenges here in mapping requirements intended for traditional businesses to deemed issuers of crypto assets, there is the larger question of why any company or group of individuals would want to take on these responsibilities when they neither have access to all information relevant to the crypto asset nor are being compensated for taking on these many potential liabilities.
The bottom line is that, without a radical re-imagining of the entirety of our securities laws, it is very difficult to see how most crypto assets can practically function as securities and still keep their intended purpose.
Instead, a solution along the lines of Title III of the Lummis-Gillibrand Responsible Financial Innovation Act would make much more sense. That Title would add a new section to the securities laws that imposes sensible disclosure requirements on those companies that fundraise through the sale of crypto assets without attempting to treat the crypto assets themselves as securities.”
“So why is he so bullish on crypto? “It’s not about crypto,” says Emmer, clarifying that it’s about what crypto is facilitating – the movement towards Web3, or what he prefers to call the “ownership economy.”
That goes to everything I believe in, which is restoring the individual’s right to make his or her decisions about what they want to do in the marketplace. Or who they want to do it with. Or how they want to get that done. And they don’t have to have a middleman. Ultimately, this is about restoring liberty and choice to individuals.
What happens next with congressional legislation is perhaps crypto’s most burning question of 2023 and Emmer is at the tip of the policy spear.
‘I think you’re going to see a lot of bipartisan work to get to the bottom of why the [Securities and Exchange Commission] wasn’t doing his job,‘ he says, referring to the FTX meltdown. ‘What was [Chair] Gary Gensler and company really doing?’ He describes Gensler as “very arrogant” and speaking “from the mountaintop,” and then ‘we find out that they’re working with a fraudster that bilked the people out of billions of dollars … Republicans and Democrats are going to be involved with that.’
We’re going to focus obviously on legislation, and I think it’s going to be to place key guardrails around the industry. Market structure guardrails. Stablecoin guardrails. Things like that.
The roots of the problem, says Emmer, is that Bankman-Fried was incentivized to set up shop in the Bahamas, which let FTX’s execs hide their shenanigans. In other words, the dithering of Congress meant that companies sought refuge in the Bahamas, and when that happens all bets are off. So the trick to preventing a future FTX, argues Emmer, is not smothering regulation, it’s an embrace of transparency and decentralization. ‘What we’re talking about is decentralization,’ says Emmer.
That’s what blockchain and crypto rides on. That’s what it’s all about. Open, permissionless, transparent. Anyone can see what’s going on in the blockchain. It literally is the answer, the antidote, to Sam Bankman-Fraud and all of the scammers that have come before.”
“A court document filed by prosecutors on Friday alleges that Bankman-Fried messaged FTX US General Counsel Ryne Miller on Signal, asking to reconnect and “vet things with each other.”
Prosecutors said Bankman-Fried’s message was a thinly-veiled attempt to “influence [Miller’s] potential testimony,” which they described as “particularly concerning” given Miller’s first-hand knowledge of Bankman-Fried’s conduct around the time of FTX’s collapse.
Federal prosecutors wrote a letter to U.S. District Court Judge Lewis Kaplan on Friday, requesting that he modify the conditions of Sam Bankman-Fried’s bail to include ban on private communications with current and former employees of FTX and Alameda Research. Prosecutors also requested that Judge Kaplan prevent Bankman-Fried from using ‘any encrypted or ephemeral call or messaging application, including but not limited to Signal.'”
“Bitcoin (BTC) is having its best start to the year since 2013. The price of the largest cryptocurrency by market capitalization has jumped 40% this month amid weakness in the U.S. dollar. Bitcoin surged 51% in January 2013.
Bitcoin is up +40% year to date with +35% of those returns occurring during U.S. trading hours. That’s an 85% contribution of the rally associated with U.S.-based investors. We interpret this as a clear signal that U.S. institutions are buyers of bitcoin right now.
Institutions’ bullish positioning is also evident from the renewed premium in bitcoin futures listed on the Chicago Mercantile Exchange.
Bitcoin’s institution-led bullish turnaround might be a good sign for the U.S. equity market, considering the cryptocurrency’s record of bottoming out weeks ahead of the S&P 500.”
“Four senior U.S. officials in the Biden administration published a statement on Friday urging Congress to “step up its efforts” with respect to regulating the cryptocurrency market. The officials wrote that Congress ‘should expand regulators’ powers to prevent misuses of customers’ assets … and to mitigate conflicts of interest.’
Other suggestions for Congress in the statement included strengthening transparency and disclosure requirements for crypto companies, strengthening penalties for violations of illicit-finance rules, and working more closely with international law enforcement partners.
The officials also made suggestions about what Congress should not do in terms of crafting new crypto regulation, including ‘greenlight[ing] mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets.’
Some cryptocurrency entities ignore applicable financial regulations and basic risk controls … In addition, cryptocurrency platforms often mislead consumers, have conflicts of interest, fail to make adequate disclosures, or commit outright fraud.
The White House’s concerns – as well as its recommendations – echo similar remarks made by U.S. regulators, including Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson, who called on Congress earlier this week to expand the CFTC’s authority to conduct due diligence on crypto acquisitions.”
“The new policy will limit the activities of state banks by not allowing them to engage in activities not permitted by national banks unless state legislation allows it. In the Federal Register notice, the statement specifically discusses crypto at length:
The Board has not identified any authority permitting national banks to hold most crypto-assets […] As principal in any amount, and there is no federal statute or rule expressly permitting state banks to hold crypto-assets as principal. Therefore, the Board would presumptively prohibit state member banks from engaging in such activity under section 9(13) of the [Federal Reserve] Act.
The notice also said that state banks have proposed issuing “dollar tokens” — that is, stablecoins — and those banks now will be subject to OCC interpretative letters 1174 and 1179, as are national banks.
The Board generally believes that issuing tokens on open, public, and/or decentralized networks, or similar systems is highly likely to be inconsistent with safe and sound banking practices.
The statement was issued on the same day that the Fed rejected the application of Wyoming’s Custodia Bank for Federal Reserve System membership. The Fed beefed up scrutiny on banks engaging in crypto activities in August 2022, when it issued a letter requiring the banks it oversees to disclose plans that include crypto, with a reminder to ensure adequate risk management.”
“The Aave v3 upgrade will focus on mitigating user risk and improving capital efficiency (High Efficiency Mode) when staking or borrowing correlated assets like stablecoins and liquid staking derivates (LSDs). The upgrade is also focused on gas optimization, with Aave stating that it will reduce gas costs across all functions by 20%-25%.
High Efficiency Mode, also called eMode, allows users to capitalize on the highest borrowing power out of their collateral for correlated assets. Users can now leverage larger amounts of assets like wstETH (wrapped staked ether) and stake it on the Ethereum blockchain for rewards.
The Aave protocol has $4.56 billion in total value locked (TVL), an increase of 23.37% over the past 30 days.”
“Stablecoin legislation will be one of the top priorities for the newly formed U.S. House of Representatives subcommittee on digital assets, financial technology and inclusion. Hill said the committee’s current draft on stablecoins will serve as a model of how it will approach digital asset regulation.
We want to also pursue … a privacy statute federally, which I think is important to a digital future [and] part of the foundation of moving from an analog financial services environment to a more digital environment.
What is critical to the development of crypto in the broader market now is “accurate [and] timely information,” according to Hill, and that depends on developing “definition and expectations,” to better understand what, when and how crypto-related assets are reported.”
“‘People want layer 2 tokens and they see layer 2 adoptions happening,’ said Nick Hotz, vice president of research at the digital-asset management firm Arca, referring to the tokens associated with companion blockchain systems. ‘Optimism is the only way to get good exposure to that theme currently.’ The OP token has surged 140% this year.
After Ethereum completes its EIP-4844 upgrade, also called proto-danksharding, later this year, it will make transaction fees on layer 2s “an order of magnitude cheaper,” Marc Arjoon, Ethereum research associate at CoinShares, wrote in a note. ‘2023 is shaping up to be the year of layer 2s.'”
“For the second time, the U.S. Securities and Exchange Commission (SEC) rejected a joint effort by Ark Investment Management and 21Shares to list a spot bitcoin exchange-traded fund (ETF).
The SEC said the Cboe BZX Exchange – on which the ETF would be listed – had failed to “demonstrate that its proposal is consistent with the requirements” surrounding prevention of fraud and other malevolent practices.“
“ISDA, whose 1,000 members include major banks such as JPMorgan Chase (JPM) and HSBC (HSBC), set out new digital-asset standards and guidance for navigating crypto bankruptcies. The document examines how assets and liabilities can be netted off and how collateral can be enforced when bankruptcies occur, and another paper due in the coming months will look at crypto assets stored with intermediaries.
Recent failures in the crypto market have emphasized the importance of having a clear, consistent contractual framework that spells out the rights and obligations of both parties following a default.”
“Sam Bankman-Fried’s mother, Barbara Fried, “has ignored the requests altogether,” the attorneys say, while “the debtors have not received meaningful engagement or any response from [former chief engineer Nishad] Singh or Mr. Gabriel Bankman-Fried,” Sam’s brother.
FTX, known in bankruptcy proceedings as the Debtor, alleges that Gabriel Bankman-Fried’s lobbying organization, Guarding Against Pandemics, ‘purchased a multimillion-dollar property a few blocks from the United States Capital [sic], which the debtors believe was purchased using misappropriated customer funds.’
Fried’s mother’s political action committee, Mind the Gap, also allegedly received donations from Sam Bankman-Fried and other FTX staffers, and both parents ‘resided in a $16.4 million [Bahamas] house titled in their names, despite understanding that the house was ‘intended to be the company’s property’,’ the filing said.
The FTX founder’s brother, mother and father were his “advisors,” and should be subpoenaed alongside former company executives as the company’s new management seeks to find out what happened to allegedly misappropriated funds, the filing said. Discussions with lawyers for Sam Bankman-Fried’s father, Joseph Bankman, are “ongoing” and were expected to lead to a consensual outcome.”
“StoryCo also revealed its first narrative experience, The Disco Ball, which will be released in 2023. The “immersive and collaborative storytelling experience” invites collaboration from the community to finish the main character’s journey. With a StoryPass non-fungible token (NFT), community members can access pre-release content and solve puzzles, find artifacts and collectively build out the narrative experience.
Founders Justin and J.P. Alanís said in a press release that they’re hopeful bringing Hollywood to Web3 will aid in lowering barriers to entry and foster community around immersive, interactive storytelling.”
“Bitcoin (BTC) could be in position for a big move higher if history is any guide. Bitcoin’s market action since July looks eerily similar to the moves witnessed from late November 2018 to early April 2019.
The leading cryptocurrency by market value has jumped nearly 40% to $23,000 this month. The rally follows a yearlong swoon that knocked 68% off the price followed by prolonged consolidation at the depths of the bear market at around $18,000 and comes as the U.S. Federal Reserve nears the tail end of its liquidity-tightening cycle that roiled risky assets, including cryptocurrencies.
[Further], the seller exhaustion seen last November and the subsequent turn higher are consistent with bitcoin’s record of bottoming out 17 months ahead of the mining reward halving and rallying in the year leading up to the event. The conditions echo those that preceded bitcoin’s bull revival in the second quarter of 2019. Then, the price surged 247% to $13,800 as the Fed’s tightening cycle peaked.
The 2019 rally coincided with a Goldilocks environment of slowing growth and inflation, which caused the Fed to take its foot off the tightening pedal.
All things considered, the path of least resistance for bitcoin appears to be on the higher side. Still, Chen prefers buying ether (ETH).
I believe the potential of ETH to outperform BTC due to the Merge has not been fully realized due to the bear market. I also believe Web3 and DeFi (decentralized finance) will continue to be the greatest source of growth and innovation in the crypto ecosystem. BTC will remain the low-beta safe-haven.”
“Decentralized autonomous organization Index Coop has released an index that offers users diversified liquid-staking assets on the Ethereum network. The Diversified Stakes ETH Index (dsETH) is designed to make it easier for users to distribute their stake across a range of platforms to earn an aggregated return and mitigate the risk of volatility, Index announced Tuesday.
The aim of dsETH is to provide users with a way of earning yield on the most prominent staking services without being completely exposed to one particular protocol. At inception, the product includes Lido’s etETH, Rocket Pool’s rETH and StakeWise’s sETH2.”
“Jeng, a Georgetown University law professor and former regulator for the U.S. Securities and Exchange Commission (SEC), said the U.S. must come up with its own rules if it wants to be the leader in crypto innovation. Getting regulatory clarity for crypto is good for the industry and may also give crypto startups the ‘ability to access banking infrastructure.’
If you want broad adoption of crypto, you need rules of the road, and the U.S. is unfortunately lagging behind.
Whoever is a first mover gets to influence the regulations of the rest of the world.
She said legislation is moving at a quicker pace in other parts of the world. For example, the European Union’s sweeping Markets in Crypto Assets (MiCA) legislation, if adopted, would give its 27 member countries more robust crypto rules. Other jurisdictions, including the U.K., Australia and Hong Kong, are developing and ‘coming out with consultations.'”
“Ethereum research and development firm Flashbots pitched its MEV-Boost middleware as a “public good,” and the software is now used by a majority of the validators that run the network. But recently revealed fundraising plans have opened Flashbots to criticism that it may have exploited community goodwill in order to make a profit.
Although validators and developers aren’t required to use any middleware programs, some, like Flashbots’ MEV-Boost, have become so ubiquitous that they may as well be built into the core protocol.
Hasu, who leads strategy at Flashbots, has at times referred to its MEV-Boost middleware as a “public good,” a term used to designate infrastructure that is built to benefit the wider community. But earlier this month, The Block reported that Flashbots is looking to raise $50 million at a $1 billion valuation. The round is being led by Paradigm, a venture firm where Hasu works as a researcher.
Though it has faced criticism throughout its existence, Flashbots owes much of its growth to its community-centric marketing. But with its reported fundraising efforts, the Flashbots-as-a-public-good pitch is beginning to feel disingenuous.
While they set out to ‘mitigate’ [harmful MEV strategies] by recycling value to validators, etc., I just don’t think it addresses the core issue – that raising money for such an activity feels kind of questionable by relation.”
“Financial advisors for the bankrupt cryptocurrency exchange FTX at last revealed the complete list of the company’s institutional creditors in a court filing late Wednesday. The document shows the names of the companies owed money by FTX, providing an expansive view of entities wrapped up in the exchange’s bankruptcy.
The document—organized alphabetically and well over a hundred pages long—shows just how far the impact of FTX’s collapse extends, listing tech companies from Apple to WeWork, and several media publications such as the Wall Street Journal and CoinDesk. Multiple departments of revenue from numerous states across the U.S. are included in the creditor matrix as well, from Alabama to Wyoming. The credit matrix also outlines the Bahamas Ministry of Finance as a creditor in the bankruptcy case.
The list does not include specific dollar amounts as to what each business in the creditor matrix is owed, nor specified information involving individual customers, over 9.6 million of which were redacted from the document.”
“The co-founders of Gemini-owned non-fungible token (NFT) marketplace Nifty Gateway are stepping down and leaving the crypto exchange to eventually start another company. The move comes amid wider problems and recent layoffs at Gemini.
Duncan Cock Foster said he and his brother would be replaced by vice president of engineering Eddie Ma as technical leader, and director of collector services and growth Tara Harris as non-tech leader. He added that he and Griffin would continue with the company as advisers to ensure continuity.”
“Lawyers for Celsius Network said Tuesday that the bankrupt crypto lender is planning to reinvent itself as a new, publicly traded “recovery corporation” in order to exit the bankruptcy process – something it said could happen in “months.” Kwastaniet told the court that the decision to pursue the formation of a “recovery corporation” came after the company failed to receive any attractive bids for its assets.
Under the newly unveiled plan – which has yet to receive approval from the U.S. Trustee’s Office or other regulators – creditors with locked assets above a certain threshold would receive a token, called the Asset Share Token (AST), that reflects the value of their assets. AST holders would either be able to hold their tokens, which lawyers said would entitle them to dividends over time, or sell them on the open market.
The rest of the platform’s customers, which Celsius’ lawyers estimated would be between 60% to 70% of its customer base, would receive a one-time distribution in liquid crypto.
[The distribution] would be at a discount. We’re not envisioning a full recovery, but it’s a meaningful recovery.
Though Celsius’ proposed solution is different from those that similarly situated firms such as Voyager Digital have pursued, it’s not totally unheard of in the crypto industry. When crypto exchange Bitfinex was hacked in August 2016 by a still-unknown hacker who robbed the exchange of nearly 120,000 bitcoin, it created tokens, called BFX tokens, each representing the dollar value of crypto lost, and allocated them to victims. BFX holders were then either able to redeem the tokens for their dollar value or exchange them for stock in the exchange.”
“Wilshire, a private investment management firm, tapped crypto trading firm FalconX to provide digital asset indexes for its institutional clients. The two firms will work together on a set of single-coin, multicoin and thematic indexes for institutional investors with access to the crypto derivatives market.
Both FalconX and Wilshire say the ultimate value in digital assets will be as a gateway to the tokenization of other assets. FalconX aims to address issues related to market fragmentation, price discovery and unreliable market data.”
“The move will be the first by a private bank to issue shares as ledger-based securities under Swiss law, the company said in a press release. Cité will be partnering with digital assets firm Taurus to issue its tokenized shares as well as manage the smart contract that creates the shares and perform asset servicing of its securities.
The tokens were created using the CMTAT, an open-source smart contract published by the CMTA and specifically dedicated to the tokenization of securities, and recorded on Ethereum.
Taurus, founded in April 2018, obtained a securities license last year from the Swiss Financial Market Supervisory Authority to provide investors and banks the ability to trade a number of assets, including tokenized securities. The company has been involved in the tokenization of 15 companies so far, covering equity, private debt, and structured products from firms in Switzerland as well as Europe.
Digitization of private assets and securities is becoming the new standard in the digital asset industry.
It was important for our bank to be among the first to take advantage of the new possibilities offered by Swiss law for the digitalization of securities by tokenizing our own shares.”
“Even though the European Central Bank has yet to decide whether to issue a central bank digital currency (CBDC), the commission has indicated new laws could be needed to assert a digital euro’s status as legal tender and set anti-money-laundering rules. The bill is set to be published by the commission May 24. It’s up to the European Parliament and governments of countries in the EU to ‘look at the finer points around the use cases of a digital euro and the technology to be used.’
Our legislation will be the framework for a digital euro.
A separate initiative on virtual worlds is due May 3, to be led by EU competition and digital commissioner Margrethe Vestager. Perhaps with an eye on Meta Platforms’ (META) incursion into the sector, two of Vestager’s officials have previously expressed concerns that large companies could come to dominate the metaverse and damage competition.”
“Peirce highlighted that the industry must remember that the underlying technology is about “solving a trust problem” and how people can interact and transact with people they don’t know.
Traditionally, people have looked to centralized intermediaries or government to solve this problem, but technology like cryptography, blockchain and zero-knowledge proofs offer new solutions.
The commissioner also urged “people who believe in crypto’s future” not to wait for regulators to fix problems but instead act to stamp out harmful practices and encourage good behavior within the industry.”
“Finding a decent bathroom amid the chaos and revelry of Mardi Gras can be tricky.
Several perks offered as part of a new Mardi Gras-themed NFT collection coming later this week from New Orleans-based Web3 venture studio NieuxCo include food and drink as well as access to special events, private parties, exclusive performances, and restrooms along the parade route.“
“Genesis’ lawyers – from the New York-based law firm Cleary Gottleib – told bankruptcy court Judge Sean H. Lane at a hearing on Monday they expect to reach an agreement with the creditors by the end of the week. Another lawyer for Genesis, Jane VanLare, told the court that one thing the crypto lender is considering is a sale of itself to generate funds to pay back creditors.
We have a timeline and an approach to get through this case as quickly as possible. We really want to avoid getting involved in a prolonged case with litigation that effectively destroys value that would otherwise be available for the creditors.
According to a declaration filed by Genesis interim CEO Derar Islim, the company has more than $5 billion in liabilities – a sum considerably larger than its assets which, according to a presentation to the court on Monday, include approximately $150 million in unencumbered cash, $500 million in digital assets, $385 million in brokerage accounts and $505 million in outstanding loans to third parties. Also among the assets are large sums owed by its parent company, Digital Currency Group (DCG) – a $575 million loan maturing in May and a $1.1 billion promissory note due in 2032.
“Crypto-focused venture capital firm Pantera Capital, which has about $3.8 billion in assets under management, has summed up its 2023 forecast, and the future is decentralized finance (DeFi).
Looking forward, I think it seems fairly evident that the historical arc of the world’s financial rails will end up as blockchain-based systems using smart contracts. The real questions are how we get there and what needs to happen to get there.
He noted that scalability systems have brought transaction fees on the Ethereum blockchain to under 10 cents. He expects that future upgrades to Ethereum and protocol extensions for layer 2 scalability systems will further push transaction fees down to around 1 cent, which would help decentralized exchanges compete with the larger centralized exchanges.
Krug sees the “end state” of crypto as a world where the ‘average person will have apps on their phone that give them access to DeFi, where they’ll be able to engage in financial transactions without banks/brokers, with lower fees, global liquidity and markets operating 24/7.’
Achieving this end state requires solutions to a number of current problems that break down into two categories: increasing liquidity in DeFi and making DeFi easier to use, particularly for those new to crypto. Regarding liquidity, Krug said it’s important to get more institutional capital into DeFi in the form of more federal- or state-regulated custodians that directly support using Ethereum.”
“Stealth addresses are generated by wallets and muddle public key addresses in order to transact in a private way. To access these private transactions, one must use a special key called the “spending key.” Stealth addresses would provide a mechanism to also add privacy protections to non-fungible tokens (NFT) and Ethereum Name Service (ENS) domain names [in addition to ETH and ERC20s].
Wahrstätter emphasized the need for the stealth address system for the expansion of everyday crypto use: ‘In particular, think of donations or simply payroll checks.’
Stealth addresses have great potential to be used in every transaction in which the interaction between two parties should not be revealed to the public. For example, when I buy a coffee at the supermarket, I might not want the supermarket to know my employer, how much I earn and what I spend it on.
Stealth addresses are yet another, quite straightforward tool to increase the overall privacy in the network.”
“On Jan. 22, the two South American countries announced they are preparing to create a common currency that would run parallel with the Argentine peso and Brazilian real. The move could potentially create the second-largest currency bloc. As the news broke, Armstrong took to Twitter to suggest that BTC would be the “right long-term bet” and wondered whether the two countries would consider it.
Global Macro Investor founder and CEO Raoul Pal opposed the idea. According to Pal, having a national currency that “declines 65% in the down part of the business cycle and rises 10x in the up cycle” is not ideal. The executive pointed out that businesses would have difficulties planning and hedging in this situation.
Several community members supported Pal’s sentiment. According to one Twitter user, the only use case for BTC is a store of value, like gold.
On Dec. 16, a province in Argentina approved legislation to issue a stablecoin pegged to the United States dollar. The token will be available to people over 18 and will be 100% collateralized by the province’s assets.”
“Red Date Technology, the blockchain infrastructure firm that is also leading one of China’s blockchain efforts, launched the Universal Digital Payment Network (UDPN) on Jan. 19 during the World Economic Forum (WEF) 2023 meeting in Davos, Switzerland.
According to its white paper, the UDPN is a distributed ledger technology (DLT) platform that would serve a similar purpose to what the SWIFT network does for banks, except for stablecoins and CBDCs. A Jan. 19 press release states, a “number of global tier 1 banks” are already involved in use case proof of concepts (POCs) to test the network in cross-border transfers and swaps.
No unregulated public-chain crypto-currencies, such as Bitcoin, will be accepted.
Before launching this digital payments system, the company was known for its work on Blockchain-based Service Network (BSN), China’s national blockchain project. In June, Red Date’s CEO, Yifan He, called cryptocurrencies the ‘biggest Ponzi scheme in human history.'”
“The acquisition will help Doodles to tap into new types of content, which Doodles founder Jordan Castro tweeted will include ‘storytelling without constraints & AI (artificial-intelligence) animation generation R&D.’ The deal will also bring Golden Wolf’s business into markets beyond animation, such as fashion and music.
This marks a brand new chapter for Doodles as we continue to expand the franchise. Narrative storytelling, world building and character development will be at the center of everything we do.”
“A new white paper from Orrick, KPMG and Upside Cooperative explores whether a legal structure common to credit unions and rural utilities could help revitalize blockchain and realize the web3 vision of a new digital world.
Credit unions, rural utilities, insurance companies, and agriculture producers often organize as cooperatives. In web3, projects that add cooperatives to their ownership structures could boost participation and reduce regulatory risk while giving users more control of the digital networks they use and a share of the value they create.
Giving users ownership through cooperatives might even provide builders and investors a better return on investment than if they shared ownership with users through tokens alone. This is because the cooperative structure rewards users in proportion to their participation and consequently may provide a stronger incentive than tokens for users to engage with and strengthen digital networks.
The SEC has [also] consistently declined to classify cooperative memberships as securities, enabling cooperatives to distribute ownership to users quickly and easily, while also offering important protections to their members.”
“Since EIP-1559 was implemented, a grand total of 2.8 million ETH has been removed from circulation or roughly $4.6 billion at today’s prices. In just the last seven days, the Ethereum protocol has destroyed more than 16,364 ETH at an estimated rate of 1.62 ETH per minute, according to Ultrasound Money.
This burn mechanism also means that there is more ETH being destroyed than being issued to miners. Supply growth has now dropped to -1.06% per year since EIP 1559. This makes Ethereum more deflationary than Bitcoin, which was heralded as the original sound money.“
“There may be instances where a user wants to demonstrate that their use of Tornado Cash is above board and not related to any illicit activity.
Proof of Innocence is a tool that allows users to prove that their deposits are not from sanctioned or blacklisted addresses. This not only improves the security and trustworthiness of the system, but also helps to protect legitimate users from being associated with illegal activities, without sacrificing their privacy.”
“Blockchain-based fundraising for blockchain-based projects: we get that. What we are overlooking, though, is the potential crypto has to support fundraising and engagement for other, unrelated technologies, and what’s more, it can do so almost anywhere given crypto market structure flexibility.
Imagine this:
A regional bank in Luanda sets up a platform that tokenizes tranches of loans to startups aiming to bring digital efficiency to Angola’s ports, mitigating lender risk by adding liquidity and thus lowering the financing costs.
An incubator in Addis Ababa works with the Ethiopian Ministry for Innovation and Technology to develop an exchange for the trading of equity-like tokens issued by exiting startups with ideas ranging from vertical farms to satellite launch sites.
A venture fund in Accra collaborates with the Ghanaian stock exchange to launch a crypto platform that facilitates token-based fundraising, ICO-style but with official oversight and sufficient disclosure, helping projects from telehealth to e-learning get off the ground and find a market.
More liquid, transparent and innovative markets could kickstart regional development, especially if cross-border investment is allowed, possibly leading to tech initiatives that are global in scale.”
“CoinDesk has identified 196 members of the new Congress – many of whom were just sworn in last week – who took cash from Sam Bankman-Fried or other senior executives at FTX. The names in Congress range from the heights of both chambers, including new Speaker of the House Kevin McCarthy (R-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.), down to a list of recipients new to high-level politics.
CoinDesk reached out to all 196 lawmakers to ask what they would do with the money. Most of the politicians who responded said they handed it over to charities to remove the taint of contributions from executives such as former FTX CEO Bankman-Fried, whose federal fraud charges also include an accusation that he violated campaign-finance laws. Others have revealed they had conversations with the U.S. Department of Justice about setting aside the money until it can be dropped into a fund to compensate FTX victims.
However, the campaigns channeling tainted money to favored charities may not escape the reach of FTX’s bankruptcy case. And even the organizations they give to could be roped in. If, during FTX’s bankruptcy process, the money its executives gave to campaigns (as well as other causes) is deemed “fraudulent conveyances,” the recipients have to give it back to FTX’s estate.
Making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX contributor does not prevent the FTX debtors from seeking recovery. We have received guidance from the Department of Justice that dollars received from FTX executives should be set aside for when a victims’ compensation fund is created in the future.
According to Sabino, the game of hot potato that campaigns play by giving donations to charity is a “political move” that doesn’t magically absolve them from their responsibility to pay back the money.
The law does not care if you gave it to Mother Teresa. And if the money has already been spent? Tough luck. You are still liable. You might go bankrupt yourself.”
“Binance has informed its retail customer base of a potential incoming service disruption that may halt on and off-ramp bank payment transfers. The service disruption will impact users of U.S Dollar-held bank accounts that are looking to buy or sell cryptocurrencies for less than $100,000 via the SWIFT payment system. The disruption will take effect on February 1.
The banking partner involved is Signature Bank, according to a Jan. 21 report by Bloomberg. The bank set the minimum transaction limit of $100,000 in effort to decrease its exposure to the digital asset market, Bloomberg explained.
Binance did however stress that customers would still be able to use their credit or debit card to buy or sell cryptocurrencies, and that payments to or from third-party exchanges would still be processed. The cryptocurrency exchange added that SWIFT-based transfers would remain in operation for non-USD bank transfers, such as the Euro.
Binance is now “actively seeking” a new SWIFT (USD) partner to avoid service disruptions for future bank payment transfers.”
“Bitcoin soared past $22,000, its highest level since mid-September, as the broader cryptocurrency market continued its 2023 rally.
The largest cryptocurrency by market capitalization was recently trading as high as $22,387, up 5.4% over the previous 24 hours, shrugging off the announcement late Thursday that Genesis Global Holdco LLC, the holding company of troubled cryptocurrency lender Genesis Global Capital, had filed for Chapter 11 bankruptcy protection late Thursday. Edward Moya, senior market analyst for foreign exchange market maker Oanda, noted Thursday that investors had priced in Genesis’ looming problems.
BTC has climbed 11% in the past seven days and is up 34% for the year. ETH has jumped 12% over the past week and is up 37% since Dec. 31. Crypto-related stocks also benefited from the rally Friday: Exchange Coinbase (COIN) was recently up 10% while bitcoin miner Marathon Digital Holdings (MARA) surged 9%.
Traditional markets also edged up, with the S&P 500 index up 1.9%, as investors processed a flurry of mixed earnings reports from big banks.
This week’s larger-than-expected decline in the producer price index (PPI) indicated the U.S. Federal Reserve’s monetary hawkishness has been taming inflation, buoying investors. The CME FedWatch tool currently shows that traders see roughly a 97% chance that the Federal Open Market Committee (FOMC) will raise rates by just 25 basis points (0.25 percentage point) at its next meeting in February – slowing from the 50 basis-point hikes in the December meeting.”
“Winklevoss called the lender’s bankruptcy a “crucial step” toward recovering Gemini users’ assets. But he still intends to sue DCG, Silbert and Genesis unless Silbert makes a “fair offer” to Gemini’s creditors.
We have been preparing to take direct legal action against Barry, DCG and others who share responsibility for the fraud that has caused harm to the 340,000+ Earn users and others duped by Genesis and its accomplices.
However, in its voluntary petition for Chapter 11 bankruptcy protection in the Southern District of New York court, Genesis Global Capital disputed some of Gemini’s claims. Genesis pointed out the $900 million loan is the net proceed from the foreclosure of certain assets, and disputes whether the foreclosure satisfied applicable law.”
“A bankruptcy court judge in Delaware has given New York law firm Sullivan & Cromwell the green light to continue representing FTX during its bankruptcy proceedings. The decision, issued on Friday morning by Judge John T. Dorsey, comes despite recent controversy about the white-shoe law firm having potential conflicts of interest.
Late Thursday evening, former FTX attorney Daniel Friedberg – who served as the now-defunct exchange’s chief regulatory officer – filed an unorthodox declaration that contained numerous bombshell allegations of wrongdoing in Sullivan & Cromwell’s previous work with FTX. Disgraced former CEO Sam Bankman-Fried has also questioned Sullivan & Cromwell’s role in the bankruptcy process, making dubious claims in a recent Substack post.
Judge Dorsey, however, was not moved by the mounting concerns over Sullivan & Cromwell’s appointment as debtor’s counsel. He previously dismissed the senators’ letter as “inappropriate” and, on Friday, described Friedberg’s declaration as ‘full of hearsay, innuendo, speculation and rumors. There’s no evidence of any actual conflict here.’
Bromley also attempted to characterize Friedberg – who he described as a member of FTX’s “inner circle” – as a shady character (before his role at FTX, Friedberg was allegedly tied to a massive poker cheating scandal). Bromley described Friedberg’s declaration as nothing more than an “incendiary device” thrown into the bankruptcy process.
If you’re part of the inner circle at FTX – and that would include Mr. Friedberg – then you have concern about the exercise that’s going on … [T[he individuals who were up and running and making the decisions that have brought this company to its knees are rightly concerned that the information that is being provided to authorities could lead back to their doorstep. So if you’re Mr. Bankman-Fried or, frankly, Mr. Friedberg, there’s a concern about what’s going on and what could happen to them.”
“Bitcoiners are cringing at the fact that users of the rival Bitcoin SV (BSV) blockchain can now freeze and confiscate other users’ coins, thanks to the Australian computer scientist Craig Wright’s “blacklist manager.”
The tool allows users to freeze and confiscate BSV coins as long as they provide legal documents proving rightful ownership. This type of transaction is called a “confiscation transaction” and the end result is that miners ‘will receive legal documents ordering the reassignment of misappropriated or lost assets and execute a transaction that transfers ownership.’ Many see this as an affront to the ethos of decentralization and censorship resistance.
It cannot be coincidental that CSW [Craig Steven Wright] claims that billions were stolen from him in the nonsensical pineapple hack, and that he is the only individual in the world trying to get a court to ‘return’ those assets while BSV [is] the only chain in the world implementing confiscation transactions. It is so against the spirit of Bitcoin.”
“Genesis Global Holdco LLC, the parent company of troubled cryptocurrency lender Genesis Global Capital, filed for Chapter 11 bankruptcy protection after being pummeled by two of 2022’s biggest industry collapses. In its filing, Genesis Global Capital, the partner firm to Gemini’s defunct Earn program, estimated more than 100,000 creditors and between $1 billion and $10 billion in liabilities, as well as assets.
Genesis’ other subsidiaries involved in the derivatives and spot trading and custody businesses as well as Genesis Global Trading were not included in the filing and continue client trading operations, according to a press release. In its filing, Genesis Global Capital said it expects that through the restructuring process, there will be money left over to pay unsecured creditors.
The bankruptcy ‘is a crucial step towards us being able to recover your assets,’ Gemini’s Cameron Winklevoss tweeted shortly after the filing was announced.”
“A leading crypto analyst said the market had already priced in the looming bankruptcy filing of crypto brokerage Genesis Global Capitaland other recent industry debacles stemming from the collapse of disgraced crypto exchange FTX.
Most of the negative news should be priced in because Genesis has been in trouble since the end of last year.
Meanwhile, traditional markets continued to stumble this week, with the S&P down 0.7% for the day. The S&P, which has a hefty technology component, is off 2.1% for the past five days, as investors remain fretful about the prospect of recession and big banks kicked off the earnings season with mixed results.”
“The company today launched the Robinhood Wallet, a smartphone app that allows users to swap and transfer crypto, and view owned NFTs. It’s currently being slowly rolled out to over 1 million waitlisted users. The Robinhood Wallet uses Polygon, an Ethereum sidechain, to offer swaps without network fees. It also added support for Ethereum today.
The Robinhood Wallet is a completely different product housed in a separate, standalone app that allows users to have total control over their crypto and provides access to more advanced features, like connecting to decentralized apps and NFT marketplaces.”
“The Bank for International Settlements looked under the hood of decentralized finance (DeFi) in a new working paper and introduced the DeFi stack reference (DSR) model to illustrate the technology’s functionality and risks. The report discussed the integration of DeFi with traditional finance and suggested ways to assess its risks during that integration.
We consider DeFi a relevant development because it harnesses innovative technology that might shape the future financial ecosystem.
‘Algorithmic automation, competitive financial engineering and transparency are of interest well beyond cryptocurrency markets.’ By competitive engineering the authors meant composability, the combining of smart contracts to form complex and unique financial products.”
“Everything is on the table. If there is a path forward on that, then we will not only explore that, we’ll do it.
The decision would come down to whether restarting FTX’s international exchange would recover more for customers than just liquidating assets or selling the platform, Ray said. The FTX token FTT was trading up 33% on Binance on the news.”
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The Disrupt 