Circle Says $1 Billion in Cash Serves as Buffer While Market Share Declines (Bloomberg)
Circle Internet Financial is counting on a more than $1 billion cash cushion to help weather fresh competition from non-crypto companies such as PayPal Holdings Inc. while it seeks to stem a deepening decline in the market share of the second-largest stablecoin. The amount of Circle’s USD Coin in circulation has plunged to about $26 billion from $45 billion at the beginning of the year. Tether, the biggest stablecoin, has grown during the same period. The decline is being partly driven by a decision about a year ago by the world’s biggest crypto exchange, Binance, to pull back from using USD Coin to drive usage of its own token, Jeremy Allaire, chief executive officer of Circle, said in an interview with Bloomberg News.
Bittrex to Pay $24 Million Penalty Over SEC Crypto Allegations (Bloomberg)
Bankrupt crypto exchange operator Bittrex Inc. and its non-US affiliate will pay $24 million to settle allegations that they for years shirked Securities and Exchange Commission rules by offering services to US clients without registering with the agency. The SEC in April alleged that Bittrex acted as an unregistered securities exchange, broker and clearing agency from 2017 through 2022 as it brought in at least $1.3 billion in revenue. At the time, the agency also sued co-founder William Shihara and the global affiliate Bittrex Global GmbH, both of which were part of Thursday’s settlement announcement.
DCG Asks Court to Dismiss Gemini’s ‘PR Campaign Wrapped in Lawsuit' (The Block)
Digital Currency Group filed a motion seeking the dismissal of crypto exchange Gemini's lawsuit against the firm and its founder Barry Silbert, describing the July suit as "a continuation of the Winklevoss's year-long Twitter-based character assassination." Gemini, which was founded by twin brothers Cameron and Tyler Winklevoss, sued Silbert and DCG over the money DCG-subsidiary Genesis owes the crypto exchange's clients. Prior to the credit crisis that swept crypto in 2022, Genesis and Gemini entered into a business relationship in which the latter firm provided its Earn clients' funds to the former firm to generate a yield. That provided Gemini clients with a juicy yield until Genesis paused withdrawals and stopped processing redemption requests in the wake of FTX's bankruptcy.
FTX Fires Back at Creditors 'Willing to Gamble Estate Assets on Higher Returns' (CoinDesk)
Administrators of bankrupt crypto exchange FTX fired back in a Wednesday court filing at a creditors' panel for criticizing the estate's reorganization plan. The feud casts a shadow on the immediate future of negotiations taking place between stakeholders on a restructuring plan that is supposed to help recoup the roughly $8.1 billion FTX owes customers. Disagreements emerged after a draft reorganization plan was submitted on July 31 by FTX’s new management team under CEO John Ray III. That same day, the official committee of unsecured creditors alleged the plan had ignored the its suggestions without "a single call or meeting" to discuss the terms of plan.
Aragon Mulled Sale of Crypto Project, Leaked Screenshot Shows (CoinDesk)
The Aragon Association, one of the biggest crypto projects building tools to support decentralized governance, is trying to get out of its own governance pickle. After months of pressure from activist investors eyeing its $180 million treasury, Swiss-based Aragon in June explored “selling the project” to an undisclosed bidder for an unknown price, according to a screenshot of a conversation between an employee of the investment firm Arca and other activists. The screenshot is part of a 24-page investigative report on Aragon Association written by crypto trading firm Patagon Management LLC. On Wednesday, a message linking to the report was sent by an anonymous Ethereum address to Ivan Fartunov, head of partnerships at Aragon, via a public Ethereum transaction.
Coinbase Officially Launches Base Blockchain in Milestone for a Public Company (CoinDesk)
Coinbase (COIN), the large publicly traded U.S. crypto exchange, said its new Base blockchain has gone live, heralding the start of a new era of public companies running their own distributed networks. Base was already live for testing by developers, but Coinbase officials said it would be open to the public as of 12 p.m. ET on Wednesday, and that time has now passed. The new business push for Coinbase, which has one of the most closely followed crypto stocks, could ultimately allow the company to garner fees from running its own blockchain, in addition to a potentially even more lucrative stream of revenue from applications built atop it, executives say.
SEC Seeks to Appeal Ruling That Ripple XRP Isn't a Security (Bloomberg)
The US Securities and Exchange Commission said it intends to challenge a federal judge’s ruling that Ripple Labs Inc.’s XRP token isn’t a security when sold to the general public. US District Judge Analisa Torres in New York last month said the crypto firm’s sales of XRP to sophisticated investors met the test for an investment contract under federal securities law because those buyers 'would have understood that Ripple was pitching a speculative value proposition for XRP with potential profits.' But the judge said that didn’t apply to programmatic investors, meaning the broader public buying crypto on exchanges.
PayPal’s New Stablecoin Draws Harsh Rebuke From Maxine Waters (Bloomberg)
Maxine Waters, the top Democrat on the House Financial Services Committee, criticized PayPal Holdings Inc.’s launch this week of a stablecoin in the absence of US regulation for that corner of the cryptocurrency world. 'I am deeply concerned that PayPal has chosen to launch its own stablecoin while there is still no federal framework for regulation, oversight, and enforcement of these assets,” Waters said in a statement Wednesday.
NGO Calls on SEC to Reject Spot Bitcoin ETF Applications (The Block)
The Securities and Exchange Commission should turn down a slew of recent spot bitcoin exchange-traded fund applications over concerns about possible investor harm, according to letters filed by nonprofit organization Better Markets. The crypto industry has seen $2 trillion in losses, several enforcement actions, bankruptcies, lawsuits and criminal prosecutions, Stephen Hall, Better Markets’ legal director and securities specialist, said in a statement on Wednesday.
Top Crypto Execs Confident SEC Will Approve Spot Bitcoin ETFs (Decrypt)
All eyes are on the Securities and Exchange Commission (SEC) as it mulls a number of applications for a spot Bitcoin exchange traded fund (ETF), and two leading names in crypto are now publicly predicting that the agency will eventually give them a green light. Mike Novogratz, CEO of crypto investment manager Galaxy Digital, claimed this week that such a financial product will launch within the next four to six months, citing inside sources.
Federal Reserve Increases Oversight of Banking Crypto Ties (The Block)
The Federal Reserve announced new guardrails on Tuesday to strengthen its supervision of banks involved in crypto and stablecoin activity. Called the "Novel Activities Supervision Program," the central bank will enhance the supervision of all banking organizations it oversees, focusing on crypto, distributed ledger technology, as well as “technology-driven partnerships with nonbanks to deliver financial services to customers.”
UK Updates Plans for Systemic Stablecoin Regime (The Block)
The UK Treasury released a consultation response, updating proposals for a regulatory regime for systemic stablecoins. The framework released Tuesday agreed on co-supervision arrangements, with the Bank of England leading on prudential matters, ensuring the stability of financial systems. The Financial Conduct Authority would oversee conduct. Other relevant bodies like the BoE's Prudential Regulation Authority and Payment Systems Regulator would also be involved in the collaborative approach.
Private Equity Giant David Rubenstein Makes the Case for Bitcoin (CoinDesk)
Billionaire private equity titan David Rubenstein believes Bitcoin (BTC) is here to stay thanks to growing institutional interest as evidenced by BlackRock’s application for a spot bitcoin ETF, as well as general global demand for a form of money that can’t be controlled by governments. “A lot of people around the world want to be able to trade in a currency that their government can’t know what they have and they want to be able to move it around rightly or wrongly and so I don’t think bitcoin is going away,” he said during an appearance on Bloomberg TV Tuesday.
China Sprints Ahead in Race to Modernize Global Money Flows (Bloomberg)
A new platform to expand the reach of China’s digital yuan and other central bank digital currencies is moving closer to reality, raising eyebrows among some defenders of a system long dominated by the dollar. The Beijing-backed digital prototype for sending money around the world without relying on US banks is advancing so quickly that some European and American observers now view it as an emerging challenger to dollar-denominated payments in global finance.
Ex-FTX Executive Salame Talking to Prosecutors About Plea Deal (Bloomberg)
Ryan Salame, the former co-chief executive of FTX Digital Markets, is in negotiations with federal prosecutors to plead guilty to criminal charges following the implosion of the cryptocurrency exchange, according to people familiar with the case. The Republican megadonor may enter a plea as soon as next month to offenses including campaign finance law violations, according to the people, who asked not to be identified because the discussions aren’t public. It is unclear whether he will enter into a cooperation agreement with prosecutors and testify against FTX co-founder Sam Bankman-Fried.
PayPal Launches a Stablecoin in Latest Crypto Payments Push (Bloomberg)
PayPal Holdings Inc. is rolling out a stablecoin, the first by a large financial company and a potentially significant boost to the sluggish adoption of digital tokens for payments. PayPal USD (PYUSD) is issued by Paxos Trust Co. and fully backed by US dollar deposits, short-term Treasuries and similar cash equivalents, the San Jose, California-based payments company said on Monday. It’s pegged to the dollar and will be gradually available to PayPal’s customers in the US.
Rep. McHenry Pushes for Stablecoin Bill Following PayPal Move (The Block)
House Financial Services Committee Chair Patrick T. McHenry, R-N.C., underscored the need to pass legislation to regulate stablecoins following PayPal’s move on Monday to launch its own. “This announcement is a clear signal that stablecoins—if issued under a clear regulatory framework—hold promise as a pillar of our 21st century payments system,” McHenry said on Monday in a statement. "We are currently at a crossroads to keep America at the forefront of digital asset innovation. Congress is making significant, bipartisan progress on legislation to ensure the U.S. leads the financial system of the future. We must finish the job," McHenry added.
MakerDAO’s Spark Offers 8% Yield on DAI, Blocks VPN Use on Front End (The Block)
MakerDAO increased the yield on DAI, the third-largest stablecoin, from 3% to 8%, — positioning it as one of the highest rates currently provided by a major stablecoin issuer. In line with the recent yield changes, on-chain data revealed a significant transaction from an individual wallet. A single crypto participant transferred 14.32 million DAI into MakerDAO, likely to benefit from the 8% yield. This savings yield is offered through MakerDAO’s lending platform, Spark.
Crypto Exchange Bitstamp In Talks to Raise Funds for Expansion, CEO Says (Bloomberg)
Bitstamp, one of the oldest crypto exchanges, is in talks to raise fresh funding, according to Jean-Baptiste Graftieaux, global chief executive officer of the platform. Bitstamp started the fundraising process in late June, with Galaxy Digital Holdings acting as an adviser, according to a spokesperson. The exchange plans to use the funds for operations, including launching derivatives trading in Europe next year and expanding the number of markets it serves in Asia, as well its operations in the U.K., the spokesperson said.
Haun Ventures Has More Than Half of the $1.5 Billion It Raised Left to Deploy (The Block)
Haun Ventures, the eponymous investment firm founded by former federal prosecutor Katie Haun, has deployed about 40% of the $1.5 billion it raised last year, according to a source familiar with the situation. Haun, who previously co-led a16z's crypto investment arm with Chris Dixon, left Sand Hill Road's storied capital allocator in 2022 to launch her own venture capital firm to back companies operating in the cryptocurrency and web3 space. At the time of the launch, the firm planned to dedicate about a third of the funds raised to early-stage startups with the remaining capital dedicated to an "acceleration fund," as Wired reported at the time.
Coinbase Seeks to Toss SEC Suit, Citing Ripple Crypto Ruling (Bloomberg)
Coinbase Global Inc. asked a judge to dismiss a Securities and Exchange Commission lawsuit against it, pointing to a recent decision by another judge who ruled that Ripple Labs’ XRP was not a security when sold on exchanges. Coinbase, the largest US crypto exchange, filed its motion to dismiss Friday in federal court in Manhattan, arguing the SEC has no authority over its activities. “The SEC has violated due process, abused its discretion, and abandoned its own earlier interpretations of the securities laws,” Coinbase said.
Tether and Bitfinex Class-Action Lawsuit Dismissed by SDNY (The Block)
U.S. District Court for the Southern District of New York Chief Judge Laura Taylor dismissed a class action lawsuit against Tether and Bitfinex filed by Matthew Anderson and Shawn Dolifka — citing a lack of "plausible allegations of injury" — according to the stablecoin issuer. Anderson's and Dolifka's complaint centered around allegations that Tether's statements regarding its stablecoin, USDT, being backed one-to-one by the U.S. dollar were false. "The entirety of the class action complaint being dismissed at this very early stage of the proceedings punctuate the fact that plaintiffs’ claims were void of any legal merit," the stablecoin issuer wrote in an official blog post.
Silbert’s Crypto Empire DCG Faces NY Attorney General Probe Over Genesis Ties (Bloomberg)
Barry Silbert’s crypto empire, Digital Currency Group, is facing another probe into its financial dealings with subsidiary Genesis Global Capital — this time by New York state’s top law enforcement officer, according to two people familiar with the investigation. In recent months, New York Attorney General Letitia James’s office has requested information from former executives of Genesis, a cryptocurrency lender that filed for bankruptcy in January, said the people, who asked not to be identified because the inquiry had not been made public. Former Genesis chief risk officer, Michael Patchen, was questioned recently, one of the people said.
Curve Offering $1.85 Million Bounty for Exploiter’s Identity (And Conviction) (The Block)
Curve is offering a $1.85 million bounty to anyone who can accurately identify the DeFi protocol's exploiter in a way that leads to definitive legal repercussions. "The deadline for the voluntary return of funds in the Curve exploit passed at 0800 UTC," Curve publicly wrote in an Ethereum transaction's input data, adding: "We now extend the bounty to the public, and offer a reward valued at 10% of remaining exploited funds (currently $1.85M USD) to the person who is able to identify the exploiter in a way that leads to a conviction in the courts.
OPNX Exchange Touted by Three Arrows Founders Bids for Ailing Crypto Lender Hodlnaut (Bloomberg)
A digital-asset exchange linked to the founders of failed hedge fund Three Arrows Capital is seeking to take control of ailing crypto lender Hodlnaut, whose restructuring is being overseen by a court in Singapore. The exchange, OPNX, has offered to inject the equivalent of $30 million in FLEX digital tokens into Hodlnaut to fund a partial creditor payout to finalize claims, according to a person familiar with the matter who asked not to be identified discussing private information, and a term sheet seen by Bloomberg News.