Crypto Roundup for March 3, 2023
By djKUPO | Blockchain in Paradise
Coinbase, Galaxy, Paxos Stop Accepting Transfers Via Silvergate Network (Bloomberg)
"Less than four months after the collapse of the FTX exchange, crypto companies are again finding themselves assessing exposure to an embattled partner and cutting ties preemptively to avoid contagion. This time, the counterparty is Silvergate Capital Corp., the bank behind a widely used payments network that facilitates the real-time transfer of money between crypto firms."
FTX Has ‘Massive Shortfall’ in Assets, Say Bankruptcy Lawyers (CoinDesk)
"FTX.com has a “massive shortfall” in assets, according to a press release detailing a presentation filed in the bankrupt crypto exchange’s Chapter 11 case on Thursday. Using the latest spot prices, $2.2 billion of total assets have been identified in the wallets of the accounts associated with FTX.com, of which only $694 million constitute the most liquid “Category A Assets” that include fiat, stablecoins, bitcoin or ether. Other assets include $385 million of customer receivables, and significant claims against FTX sister company Alameda Research and related parties. The presentation also shows a $9.3 billion net borrowing by Alameda from the FTX.com wallets and accounts."
Senators Demand Info From Binance and U.S. Arm, Cite ‘Eerily Similar’ FTX Structure Claims (The Block)
"Three U.S. senators want more information from Binance and its U.S. subsidiary after raising questions about the parallels that might exist around the commingling that occurred between the failed FTX exchange and its sister trading firm Alameda Research. The "assertion that Binance.US is fully independent is eerily similar to claims Sam Bankman-Fried made regarding the distinction between FTX US and FTX – claims that appear to be false,” Sens. Elizabeth Warren, D-Mass., Chris van Hollen, D-Md., and Roger Marshall, R-Kan. wrote in a letter sent to Binance on Wednesday, demanding more information on Binance and Binance.US operations."
Near Protocol Starts ‘Blockchain Operating System’ to Focus on User Experience (CoinDesk)
"Layer 1 blockchain network Near Protocol has launched a product-first operating system that developers can build into and users can interact on as a single platform, Illia Polosukhin, Near’s co-founder, announced at the ETHDenver industry conference. The platform is intended to act as a common layer for browsing and discovering Web 3 products including crypto exchanges, non-fungible token (NFT) galleries and social networks, according to Polosukhin. The framework will be compatible with all blockchains (currently supporting Near Protocol and Ethereum Virtual Machine chains) and Near will act as the common entry point, said Polusukhin, in an interview with CoinDesk."
U.S. Lawmakers Argue SEC Accounting Policy Undermines Safe Crypto Custody (CoinDesk)
"Two Republican lawmakers who have been central to the U.S. Congress’ ongoing efforts toward regulating crypto are questioning government policies controlling how financial firms handle their accounting for cryptocurrency. U.S. Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee, and Sen. Cynthia Lummis (R-Wyo.), who has authored crypto legislation, sent a letter to several banking agencies on Thursday asking how they’re dealing with a controversial bulletin from the Securities and Exchange Commission that advised financial institutions they should maintain customers’ crypto holdings on their own balance sheets."
Crypto Companies Behind Tether Used Falsified Documents and Shell Companies to Get Bank Accounts (WSJ)
"In late 2018, the companies behind the most widely traded cryptocurrency were struggling to maintain their access to the global banking system. Some of their backers turned to shadowy intermediaries, falsified documents and shell companies to get back in, documents show. One of those intermediaries, a major tether trader in China, was trying to “circumvent the banking system by providing fake sales invoices and contracts for each deposit and withdrawal,” Stephen Moore, one of the owners of Tether Holdings Ltd., said in an email viewed by The Wall Street Journal."
Coinbase CEO Defends Staking, Calls for US to Create ‘Clear Rule Book' (The Block)
"The U.S. is behind on getting its regulatory act together while the rest of the world embraces crypto, according to Coinbase CEO Brian Armstrong. The executive, in an interview on Bloomberg TV, also defended Coinbase's staking product as not being a security and reiterated that the company is prepared to defend that in court if necessary, though they prefer to work collaboratively with regulators. He also noted that crypto isn't going anywhere."
Silvergate Stock Plunges as Bank Says It May Face DOJ, Congressional and Bank Regulator Inquiries (CoinDesk)
"Silvergate Bank announced it would delay the filing of its annual report on Wednesday, sending its stock price plunging over 10% in after-hours trading. The crypto-friendly bank has said it would have to delay the filing of its annual 10-K report for the 2022 fiscal year, and would need more than an additional two weeks to complete it. "The Company is currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the Company," the filing said. Silvergate's accounting firm is also requesting further information, as are its independent auditors."
Hosts of Bankless Podcast Raising $35M Crypto Venture Fund (CoinDesk)
"The hosts of popular crypto podcast and newsletter Bankless are reportedly raising a $35 million venture capital fund to invest in seed-stage Web3 companies. Show hosts David Hoffman and Ryan Sean Adams are to be general partners in the fund, said Ben Lakoff, also a GP. The trio comprise the fund’s investment committee, Lakoff told CoinDesk. The fund, planned as a separate legal entity from the Bankless podcast, will nonetheless share its brand and likely enjoy the clout of one of the better-known content platforms in crypto media. One venture capital source told CoinDesk the combo of platform and investing arm would mean “incredible deal flow” for the nascent VC."
Robinhood Rolls Out Wallet to iOS Customers Globally (The Block)
"Robinhood Wallet, which supports both the Polygon and Ethereum networks, is now available to all iOS customers worldwide. The self-custody wallet, which had a waitlist of over 1 million users, can connect to a range of decentralized applications, Robinhood said in a blog post. Tokens currently supported include COMP, MATIC, SHIB, SOL, UNI and USDC, and users can also view and store NFTs on both Ethereum and Polygon."
Crypto Exchange Kraken Ends Some Transactions With Signature (Bloomberg)
"The digital-asset trading platform Kraken will no longer be using Signature Bank for some key financial transactions, making it the latest exchange to pull back from a major crypto bank. Non-corporate clients won’t be able to make dollar deposits or withdrawals using Signature, according to an email reviewed by Bloomberg that was sent to customers on Wednesday. The deposits will be phased out on March 15, while the withdrawals will end March 31. Kraken did not immediately respond to a request for comment."
Goldman’s Digital-Asset Team Open to Hiring as it Rolls Out Blockchain Platform (Bloomberg)
"Goldman Sachs Group Inc.’s digital-asset team signaled it’s open to bolstering staff strength and flagged the potential for blockchain technology to improve the functioning of markets such as private equity. In an interview, the team’s global head Mathew McDermott said the bank remains 'hugely supportive' of exploring blockchain applications and that the digital-asset division will hire 'as appropriate' this year."
Bankman-Fried’s Inner Circle Continues to Crumble With Singh Guilty Plea (Bloomberg)
"Former FTX engineering chief Nishad Singh pleaded guilty to fraud as part of a cooperation deal with prosecutors, the third member of the collapsed cryptocurrency exchange’s inner circle to flip against co-founder Sam Bankman-Fried. Singh said at a hearing on Tuesday that he was 'unbelievably sorry for my role in this and the harm it caused.' He admitted he knew for months that Alameda Research, the exchange’s trading arm, was borrowing billions of dollars in funds from FTX without customers’ knowledge."
Crypto Options Exchange Deribit To Offer Bitcoin Volatility Futures (CoinDesk)
"Deribit, the world's largest crypto options exchange by volume, will soon launch bitcoin (BTC) volatility futures, offering digital asset investors a simpler way than options to hedge against market volatility. Futures tied to Deribit's forward-looking bitcoin volatility index (DVOL) will be available to Deribit under the ticker BTCDVOL from the end of March, the exchange's chief commercial officer, Luuk Strijers, told CoinDesk on Wednesday."
Jane Street Wallet May Have Been Linked to UST Depeg (The Block)
"The wallet associated with last year's TerraUSD (UST) depeg might belong to trading firm Jane Street, Wintermute Head of Research Igor Igamberdiev said in Twitter thread on Tuesday. Based on transaction analysis, Igamberdiev said there is a "good chance" the wallet is related to Jane Street. Clearpool announced on May 3 of last year that Jane Street borrowed 25 million USDC from BlockTower using its permissioned lending pool — based on this, he identified three addresses belonging to the trading firm; one was of particular interest, dubbed Wallet A."
Visa's Crypto Strategy Remains Intact Despite Crypto Winter (CoinDesk)
"U.S. payments giant Visa (V) remains committed to investing in the crypto sector and supporting the technology despite recent failures in the industry, the company said Tuesday. Reuters reported earlier Tuesday that Visa is “slamming the brakes” on new partnerships with crypto-related firms as the industry is facing renewed scrutiny after the collapse of once-popular crypto exchange FTX. A Visa spokesperson told CoinDesk that isn’t the case."
FTX Co-Founder Nishad Singh Pleads Guilty to Fraud Charges (WSJ)
"FTX co-founder and former director of engineering Nishad Singh pleaded guilty to fraud charges and agreed to cooperate against his former boss, Sam Bankman-Fried, making him the third person in the FTX founder’s orbit to do so. Mr. Singh, 27 years old, pleaded guilty to six criminal counts, including conspiring to commit securities and commodities fraud, during a hearing Tuesday in federal court in Manhattan. “I’m unbelievably sorry for my role in all of this and the harm that it has caused,” he told U.S. District Judge Lewis Kaplan."
Crypto Conglomerate Digital Currency Group Reports Loss of $1.1B in ‘Challenging’ 2022 (CoinDesk)
"Cryptocurrency conglomerate Digital Currency Group (DCG) reported a loss of $1.1 billion last year as the firm struggled with plunging crypto prices and the restructuring of its lending platform, Genesis. “In addition to the negative impact of [bitcoin] and crypto asset price declines, last year’s results reflect the impact of the Three Arrows Capital (TAC) default upon Genesis,” DCG said in its fourth-quarter investor report. DCG is the parent company of CoinDesk."
Coinbase to Halt Trading of Binance USD for Not Meeting Listing Standards (The Block)
"Coinbase will suspend trading of Binance USD (BUSD) on March 13 at around noon EST. The crypto exchange said the decision was based on its most recent review of the stablecoin, which Paxos recently stopped issuing following an order from a New York regulator. "Our determination to suspend trading for BUSD is based on our own internal monitoring and review processes," a Coinbase spokesperson told The Block. "When reviewing BUSD, we determined that it no longer met our listing standards and will be suspended.""
SEC Served Subpoena to Robinhood Shortly After FTX Debacle (The Block)
"The U.S. Securities and Exchange Commission subpoenaed trading app and brokerage Robinhood over its cryptocurrency services, the company disclosed in an annual financial filing posted on Monday. The high-profile fintech company also acknowledged that SEC legal action could lead to it ceasing digital asset trades on its platform, as part of its required listing of risks to its business. “To the extent that the SEC or a court determines that any cryptocurrencies supported by our platform are securities, that determination could prevent us from continuing to facilitate trading of those cryptocurrencies (including ceasing support for such cryptocurrencies on our platform),” Robinhood said."
Binance Bites Back Against Forbes Report Claiming Transfer of $1.8 Billion in Client Collateral (The Block)
"Binance denied using client assets without consent after a Forbes report said the crypto exchange moved "$1.8 billion of collateral meant to back its customers' stablecoins." Forbes said Binance put the assets to "other undisclosed uses" and did so without informing their customers. The report cited blockchain data from August to early December. "The on-chain transactions identified relate to internal wallet management," a Binance spokesperson told The Block. "While Binance has previously acknowledged that wallet management processes for Binance-pegged token collateral have not always been flawless, at no time was the collateralization of user assets affected. Processes for managing our collateral wallets have been fixed on a longer-term basis and this is verifiable on-chain.""
Voyager Agrees to Reserve $445M After Suit From Alameda Research (The Block)
"Defunct crypto lender Voyager Digital agreed to reserve $445 million after the firm was sued by bankrupt trading firm Alameda Research for loan repayments, according to a new court filing. Lawyers filed a motion on Monday to allow the Voyager debtors to enter into a stipulation with the FTX debtors, along with the official unsecured creditors committees in each bankruptcy case. The parties agreed to participate in non-binding mediation and establish a framework for the litigation of remaining disputes, potentially smoothing the way for FTX and Alameda Research to reclaim assets. The deal is the latest crypto bankruptcy development from last year's assortment of failures to underscore how intertwined some of the largest digital asset firms are."
IMF Wants More Regulations for Private Cryptocurrencies (Bloomberg)
"The Financial Stability Board, International Monetary Fund and Bank for International Settlements are committed to presenting a foundation for the regulation of private cryptocurrencies, IMF Managing Director Kristalina Georgieva said. 'In that world of private issuances, there has to be more regulation,' Georgieva said on the sidelines of the G-20 meeting on Saturday."
Texas’ Objections to Voyager Sale to Binance.US Cites Connections to Binance Holdings (Bloomberg)
"Texas officials are doubling down on their objection to a proposed deal between bankrupt crypto exchange Voyager Digital Ltd. and Binance.US, according to documents filed in New York bankruptcy court on Friday. In a follow up to an earlier objection, lawyers representing the Texas State Securities Board and the Texas Department of Banking cited 'inadequate' disclosures around the Binance.US terms of use as an area of concern. It’s the latest in a string of protests from US-based regulators opposing Voyager’s plan to sell assets to Binance.US in a transaction previously valued at $1 billion."
Solana Validators to Make Second Restart Attempt as Transaction Freeze Drags On (CoinDesk)
"The Solana network’s deep freeze continued Saturday as validators were preparing a second restart attempt that they hoped would restore service to users of the blockchain. By evening New York time, validators running Solana’s infrastructure had long since concluded that the best way to right the chain would be to synchronize a restart and fork the chain. A first attempt was abandoned when validators realized they picked the wrong point at which to restart, further lengthening the delay."
Hedge Fund Titan Tapiero Turns Attention to New Crypto PE Venture, Halts 10T Fundraising (The Block)
"10T Holdings, the crypto investment firm helmed by hedge fund titan Dan Tapiero since early 2021, won't do any further fundraising as his attention turns to new crypto private equity venture 1RoundTable (1RT) Partners. "10T has three funds and there will not be any more new 10T funds," Tapiero said in an interview, confirming the launch of 1RT. He said the new venture ultimately represents the evolution of 10T Holdings."
Lido Finance Reports Largest Ever Daily Stake Inflow With More Than 150,000 ETH Staked (The Block)
"Lido Finance said Saturday that it saw the largest daily stake inflow ever on the protocol, with over 150,000 ether worth almost $240 million staked. "Upon reaching this number, a curious (but important) protocol safety feature called Staking Rate Limit was activated," Lido said on Twitter, adding the limit "affects all parties who may try to mint stETH, regardless of approach.""