Crypto Roundup for February 10, 2023
By djKUPO | Blockchain in Paradise
Kraken to Shut US Crypto-Staking Service, Pay $30M Fine in SEC Settlement (CoinDesk)
"Crypto exchange Kraken will “immediately” end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities, the U.S. agency announced Thursday. Payward Ventures, Inc. and Payward Trading Ltd., the registered companies that make up Kraken, will end staking services and programs, the SEC said. The programs offered the general public access to staking services since at least 2019."
Stablecoin Issuer Paxos Is Being Investigated by New York Regulator (CoinDesk)
"The New York Department of Financial Services (NYDFS) is investigating stablecoin issuer Paxos, CoinDesk has learned. The full scope of the investigation is unclear. Paxos’ stablecoins include the Pax dollar (USDP) and Binance USD (BUSD), a Binance-branded stablecoin offered through a white-label service. A NYDFS spokesperson said the agency could not comment on ongoing investigations. Paxos has been in the news recently over rumors the U.S. Office of the Comptroller of the Currency – a federal bank regulator – may ask it to withdraw its application for a full banking charter. Paxos has denied these rumors."
SEC Intensifies Crypto Enforcement With Exchange Settlement (WSJ)
"The Securities and Exchange Commission escalated its enforcement campaign against the cryptocurrency industry Thursday with a settlement that could imperil a lucrative activity for other major crypto firms. On Thursday, Payward Inc.’s Kraken platform agreed to stop offering so-called crypto staking services in the U.S. and pay $30 million in penalties to the SEC. Staking allows investors to earn a yield by temporarily handing their crypto tokens over to either an intermediary or a cryptocurrency network."
SEC Commissioner Peirce Publicly Rebukes Her Agency, Gensler on Crypto Regulation (CNBC)
"Hester Peirce of the Securities and Exchange Commission publicly rebuked her agency’s crypto enforcement, calling it “paternalistic and lazy” and asking if a “hostile” regulator is the best solution for the industry. Peirce, who was appointed to her post as commissioner by President Donald Trump in 2018, wrote in a statement on Thursday that she disagreed with the SEC’s assertion that the shutdown of crypto exchange Kraken’s staking program was a “win for investors.”"
Three Arrows Capital Founders Launch Exchange Where You Can Trade 3AC Bankruptcy Claims (CoinDesk)
"Zhu Su and Kyle Davies, the founders of failed crypto hedge fund Three Arrows Capital (3AC), have teamed with the co-founders of crypto exchange CoinFlex on the creation of Open Exchange, touting it as the "world's first public market place for crypto claims trading and derivatives." Noting a $20 billion market of claimants "desperately searching" for resolution to money lost at bankrupt crypto firms including FTX, Voyager Digital, Celsius Network, CoinDesk sister company Genesis, BlockFi, Mt. Gox and 3AC itself, Open Exchange promises the ability to monetize claims by providing a marketplace for their trading."
Coinbase's CEO Cites 'Rumors' the SEC May Ban Crypto Staking for Retail Customers (CoinDesk)
"Coinbase CEO Brian Armstrong says he's heard rumors the U.S. Securities and Exchange Commission would like to ban retail investors from engaging in cryptocurrency staking, the income-generating technique at the core of running blockchains including Ethereum. "I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen," he tweeted Wednesday."
Crypto Exchange Kraken Faces SEC Probe Over Unregistered Securities (Bloomberg)
"Kraken, one of the world’s largest cryptocurrency exchanges, is embroiled in a probe by a top US financial regulator over whether it broke securities rules related to certain offerings to American clients, according to a person with knowledge of the matter. The Securities and Exchange Commission probe into whether Kraken offered unregistered securities is at an advanced stage and could lead to a settlement in coming days, said the person, who asked not to be identified discussing a case that hasn’t been made public. It wasn’t immediately clear which tokens or offerings are drawing scrutiny."
Deutsche Bank’s Asset Management Arm Eyes Crypto Investments (Bloomberg)
"Deutsche Bank AG’s asset management arm is in talks to invest in two German cryptocurrency firms as part of efforts to revive growth, according to people familiar with the matter. DWS Group, led by Chief Executive Officer Stefan Hoops, has held talks about buying a minority stake in Deutsche Digital Assets, a Frankfurt-based provider of crypto exchange-traded products, the people said, declining to be named discussing private information. Another potential target is Tradias, the market-making firm owned by Bankhaus Scheich, they said."
Paradigm Shift as Crypto VC Firm Names General Partners for First Time (The Block)
"Crypto investment firm Paradigm, one of most established and active players in the space, named general partners for the first time with the promotion of Charlie Noyes and Dan Robinson. The company, which listed the changes on its website, had not previously had any investors with the title. The co-founders of Paradigm, Fred Ehrsam and Matt Huang, hold the titles of managing partner, while the rest of the investing team were either investment partners or associates."
Dubai Clarifies Rules for Crypto Companies (Decrypt)
"The government of Dubai’s stated goal of becoming a financial technology center was boosted Wednesday when its Virtual Assets Regulatory Authority (VARA) released its 2023 rulebook for regulating cryptocurrency. The regulatory authority says any entity in the Emirate that issues virtual assets must comply with the rulebook, beginning with applying for a license to operate in Dubai."
SEC Directs Examiners To Focus on How US Broker-Dealers Are Pitching Crypto (CoinDesk)
"U.S. broker-dealers and investment advisers that deal in crypto will get extra scrutiny from Securities and Exchange Commission examiners this year, according to the agency’s annual examination priorities announced Tuesday. The SEC-registered investment firms offering or advising about cryptocurrencies will be a focus, and the regulator will make sure the companies “followed their respective standards of care when making recommendations, referrals, or providing investment advice,” according to a statement."
Binance Signals That a Full Audit for Crypto’s Biggest Exchange Remains Some Way Off (Bloomberg)
"Binance Holdings Ltd., operator of the world’s largest digital-asset exchange, indicated a full audit of its assets and liabilities is some way off amid calls for more transparency following the collapse of rival FTX. The company’s goal is to hire an auditor for the whole balance sheet but big accountants are still learning about the crypto sector, which lacks agreed standards for challenges like price volatility, Binance’s Asia-Pacific head Leon Foong said."
SEC Warns That Retirement Accounts’ Crypto Stakes May Be Unregistered Securities (CoinDesk)
"The U.S. Securities and Exchange Commission (SEC) again made its case Tuesday that crypto assets are often unregistered securities being traded on unregistered exchanges, issuing an investor alert warning that people should be wary of crypto in individual retirement accounts (IRA). Self-directed IRAs sometimes offer crypto investments, the SEC said, and those “may be securities that are offered without SEC registration or a valid exemption from registration, and may not be accompanied by complete or accurate information to aid investors in making informed decisions.”"
Former Coinbase Product Manager Pleads Guilty to Criminal Charges in Landmark Case (The Block)
"A former Coinbase product manager pleaded guilty on Tuesday to wire fraud charges in a criminal case brought against him. The Justice Department indicted Ishan Wahi in July, alongside his brother and friend, in connection with an insider trading scheme to front-run listings of new tokens on Coinbase. Wahi entered guilty pleas for two counts of conspiracy to commit wire fraud, with sentencing to take place on May 10. He faces up to 40 years in prison under sentencing guidelines, but is likely to receive a more lenient punishment due to his cooperation."
DCG Is Selling Holdings in Several Grayscale Trusts: Financial Times
"Digital Currency Group (DCG) has started selling holdings in several investment vehicles run by its subsidiary and digital assets manager Grayscale at a steep discount, according to a Financial Times report citing U.S. securities filings. Grayscale operates the Grayscale Bitcoin Trust (GBTC), which has $10 billion-plus in assets under management and was late last year trading at a record discount to net asset value, although that discount has fluctuated recently. Grayscale, Genesis and CoinDesk share the same parent company in DCG."
Crypto Exchange Binance to Suspend US Dollar Bank Transfers This Week (CoinDesk)
"Crypto exchange Binance is temporarily suspending U.S. dollar bank transfers starting on Wednesday, the company confirmed to CoinDesk on Monday. "We are temporarily suspending USD bank transfers as of February 8th," a Binance spokesperson said, noting just 0.01% of monthly active users use USD bank transfers. "Affected customers are being notified directly." "In the interim, all other methods of buying and selling crypto remain unaffected, including bank transfer using one of the other fiat currencies supported by Binance (including euros), buying and selling crypto via credit card, debit card, Google Pay and Apple Pay and via our Binance P2P marketplace," the spokesperson added."
Genesis, Gemini and DCG Reach Agreement in Bankruptcy Court (The Block)
"Genesis, its parent Digital Currency Group, Gemini and other creditors have reached a bankruptcy agreement to recover assets. Sean O’Neal, a lawyer representing the debtors, said the sides agreed in principle and were working to finish the term sheet, with plans to file that as early as tonight or Tuesday. The deal involves Genesis Global Capital, DCG, two ad hoc creditor groups, including those representing more than $2 billion dollars in claims against GGC, and Gemini Trust Company, he said."
BAYC Creator Yuga Labs Settles Trademark Infringement Lawsuit (The Block)
"Yuga Labs, the creator of blue chip NFT project Bored Ape Yacht Club, said that it has settled a legal dispute regarding the involvement of Thomas Lehman in a marketplace selling “counterfeit” versions of the company's flagship collection. Yuga Labs filed a trademark lawsuit in June, accusing Ryder Ripps and Jeremy Cahen of copying the company's NFT collections and devaluing the original Bored Ape products. The pair denied the allegations and filed a counterclaim."
Digital Bank Revolut to Offer Crypto Staking (CoinDesk)
"Digital banking service Revolut is starting to offer crypto staking to customers in the U.K. and European Economic Area (EEA), according to an emailed announcement. Revolut, which has around 25 million customers worldwide, the vast majority of whom are in the U.K. and the European Economic Area (EEA), is rolling out the service this week, AltFi reported Monday. At first, the London-based fintech will support staking of the tokens of Polkadot (DOT), Tezos (XTZ), Cardano (ADA) and Ethereum (ETH). Yields on the assets reach up to 11.65%, though these are variable, Revolut said in its email on Tuesday."
Independent FTX Examiner Could Cost Crypto Exchange $100M, Court Told (CoinDesk)
"Bankruptcy court Judge John Dorsey declined to rule definitively on whether to appoint an independent examiner into the FTX bankruptcy case. The U.S. government argued that statute called for the judge to demand such an examination while FTX said a probe would represent a costly duplication. After expressing concerns the examiner’s work could be expensive and delay approval of a Chapter 11 reorganization plan, Dorsey said he hoped the issue could be resolved between the two sides ahead of a further hearing on Wednesday."
a16z Votes Against Proposal to Deploy Latest Uniswap Iteration on Bnb Chain (The Block)
"A proposal to deploy the latest version of decentralized exchange Uniswap on the BNB Chain passed an early temperature check, and a full governance vote on the Uniswap DAO is bringing the heavy hitters out to bat. OxPlasma Labs put forward the proposal to deploy Uniswap V3 on BNB Chain, using the Wormhole bridge for the deployment. A16z put its considerable UNI holdings to use by voting against it. The VC firm has significant skin in the game, as does Jump Crypto — pitting two of the space's most active VCs against each other. Voting will conclude on Feb. 10."
FTX Debtors Want Political Donations Returned by End of the Month (The Block)
"Troubled crypto exchange FTX is asking political figures and groups to return donations linked to former CEO Sam Bankman-Fried and other FTX executives by the end of February. FTX is sending confidential notices to political figures, political action groups and other recipients of contributions and payments, the exchange said. The crypto exchange filed for bankruptcy protection in November. The FTX debtors are reviewing $93 million in political donations made between March 2020 and November 2022, according to court documents filed in January. Bankman-Fried has pleaded not guilty to breaking campaign finance laws, among other charges, in a separate criminal case."
Bernstein: Ethereum Activity Has Picked Up, With Shanghai Upgrade the Next Big Catalyst (CoinDesk)
"Ethereum has witnessed much healthier on-chain activity recently, with improved interest in non-fungible-tokens (NFT) led by the launch of a mini-game by Yuga Labs, Bernstein said in a research report Monday. Daily fees on the blockchain have more than doubled since the start of the year from around $2 million to $4 million-$6 million, the report said. Ether (ETH) has gained around 35% in value. Bernstein notes that ether inflation has remained negative for over two weeks, with the expectation of further deflation with more on-chain activity and demand."
Crypto VC Firm Pantera Loses Co-CIO Joey Krug (CoinDesk)
Crypto-focused venture capital and investment giant Pantera Capital has reorganized its leadership with the departure of co-Chief Investment Officer Joey Krug and the formation of an executive management committee, according to a letter sent out to limited partners on Friday. Krug joined Pantera in 2017 to help manage the Liquid Token Fund. On a recent investor call, he revealed that the fund had lost 80% during 2022, taking a 23% hit in November alone in the aftermath of collapsed crypto exchange FTX. The letter didn’t specify why Krug was leaving.
Ray Dalio Still Doesn’t Like Bitcoin but Thinks Inflation-Beating Coin Could Work (The Block)
"Ray Dalio, the billionaire hedge fund investor and founder of Bridgewater Associates, has long been critical of excess money printing and written detailed explainers on the value of money. He still doesn't like Bitcoin, though."It's not going to be an effective money. It's not an effective store hold of wealth. It's not an effective medium of exchange," Dalio said Thursday on CNBC, pointing to the cryptocurrency's high volatility and arguing that it "has no relation to anything." "But we are in a world in which money as we know it is in jeopardy.""
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