Miami’s Love Affair With Crypto Is Souring as Bitcoin Faithful Flock to the City (WSJ)
A year ago, when the annual bitcoin conference opened in Miami, the city was arguably the country’s biggest booster of digital currencies. MiamiCoin traded on a global crypto exchange. The Miami Heat basketball team played at FTX Arena, and cryptocurrency exchange Blockchain.com was preparing to move its headquarters to a splashy office in the city’s Wynwood neighborhood. Today, as Miami prepares to host Bitcoin 2023 on May 18, none of those things is true anymore. Skepticism toward digital currencies has been rising across the U.S. ever since FTX filed for bankruptcy last year and its co-founder, Sam Bankman-Fried, was arrested on fraud and other charges related to the cryptocurrency platform.
US Chamber of Commerce Blasts SEC’s Approach to Ether, Coinbase (The Block)
The U.S. Chamber of Commerce, one of the most influential business advocacy groups in the country, is taking up the banner of digital asset critics of U.S. regulation, and blasting the Securities and Exchange Commission's approach to ether, Coinbase, Kraken and the broader digital asset industry. The association lent its support to Coinbase’s lawsuit against the SEC for a response to a request for crypto-specific rulemaking. Coinbase filed a rare writ of mandamus lawsuit against the SEC last month following up on a request made last summer for new rulemaking specific to digital assets.
Binance.US Explores Ways To Cut Founder Zhao's Majority Stake (Reuters)
Binance.US and Changpeng Zhao, the crypto exchange's founder and majority owner, have been exploring ways to reduce his stake in the company, the Information reported on Thursday, citing two people familiar with the matter. Zhao, who is also the CEO of Binance - the world's biggest crypto exchange, has been trying to sell at least some of his stake since last summer, the report said. In March, the U.S. Commodity Futures Trading Commission (CFTC) sued Binance and its CEO Zhao for operating what the regulator alleged was an "illegal" exchange and a "sham" compliance program.
IRS Working With Ukraine to Track Russian Crypto Sanctions Evaders (Bloomberg)
The IRS criminal investigation division is ramping up collaboration with counterparts overseas in pursuit of sanctions evaders. The agency said it is working with blockchain analytics firm Chainalysis and with Ukrainian investigators to track Russian individuals who might be using cryptocurrency to conceal their assets in the aftermath of Russia’s invasion of Ukraine. The agency is sponsoring Ukrainian investigators’ access to a Chainalysis tool that aides crypto probes. It has also offered both virtual and in-person training sessions on tracing blockchain transactions to Ukrainian law enforcement.
BlockFi Customers Can Be Repaid $300M Held in Custodial Accounts, Judge Says (CoinDesk)
BlockFi custodial wallet users can be returned nearly $300 million, as a New Jersey judge ruled on Thursday May 11 that assets sitting in the wallets belong to clients rather than the estate of the bankrupt crypto lender. Bankruptcy Judge Michael Kaplan ruled against repaying a further $375 million in funds that clients tried to withdraw from BlockFi’s interest-bearing accounts, known as BIA, after the company froze funds last year, as ripples from the collapse of FTX spread through the crypto ecosystem. “The court finds that all digital assets held by the debtors in custodial omnibus wallets are indeed client property, and not property of the bankruptcy estates, subject, of course, to possible avoidance and clawback rights,” Kaplan said, but had less happy news for BIA customers.
Ethereum’s Beacon Chain Suffers Brief Finality Issue, Cause Still Unknown (The Block)
The Ethereum network appears to have suffered a technical issue that, for a temporary period, meant that transaction finality wasn't occurring. The cause of the issue isn't clear as of press time and Ethereum developers say the situation is being investigated. For now, network data and statements from developers indicate that transaction finality -- referring to the state in which transactions can't be changed -- has returned. "Finality has been restored," tweeted Prysmatic Labs co-founder Preston van Loon. "We do not know the root cause yet, but something happened to cause several client implementations to work really hard to keep up with the chain."
Tether Reports $1.48B Profit in Q1, Reveals Bitcoin, Gold Reserves (CoinDesk)
Stablecoin issuer Tether reported $1.48 billion in net profit for the first quarter of the year, double the previous quarter’s result, according to its latest attestation published Wednesday. The company for the first time broke out bitcoin (BTC) and gold holdings detail in its consolidated reserves report. As of March 31, Tether held $1.5 billion of bitcoin on its balance sheet – or about 2% of roughly $80 billion in reserves – and $3.4 billion of gold, or about 4% of reserves. This quarter’s attestation comes after a turbulent period for the $131 billion stablecoin market, when several tokens lost their dollar pegs in a knock-on effect as the U.S. banking crisis hit Circle’s USDC, the second largest dollar-pegged stablecoin. The New York Department of Financial Services also forced fintech firm Paxos to stop issuing the third-largest stablecoin, Binance USD (BUSD), in February, while the U.S. Securities and Exchange Commission (SEC) was reportedly probing the firm for issuing BUSD as unregistered security.
EY Launches Ethereum-Based Carbon Emission Tracking Platform (CoinDesk)
EY, the professional services giant, has started an Ethereum-based platform for enterprises to track their carbon emissions and carbon credit traceability. The EY OpsChain ESG made the announcement at the firm’s Global Blockchain Summit in London. The platform is now available in beta version on the EY Blockchain SaaS platform. The system uses carbon emission tokens developed by standards body the Microsoft-backed InterWork Alliance, part of the Global Blockchain Business Council (GBBC), of which EY is also a member.
BOE Official Says Privacy, Bank Runs a Risk With Digital Pound (Bloomberg)
The Bank of England’s plan for a digital pound faces a daunting list of hurdles to overcome including concerns it could make bank runs worse, erode privacy and distract officials from their primary responsibilities, policy maker Carolyn Wilkins warned. Wilkins, a member of the BOE’s Financial Policy Committee, said that trust in a new central bank digital currency, or CBDC, will be the biggest problem to tackle. The central bank and Treasury are considering whether to launch work on the project dubbed “Britcoin.” “It’s critical that governments and central banks stay focused on the core public policy objectives of a CBDC and take steps to alleviate concerns about mission creep,” Wilkins said Wednesday in the text for a speech at the OMFIF Digital Monetary Institute symposium. “Before any decision to launch is made, they must be confident that they have mitigated financial stability risks.”
Binance Launches ‘Capital Connect’ Platform for VIP Users (The Block)
Crypto exchange Binance has launched a new service platform for VIP users to connect them with investment fund managers. Called Capital Connect, the platform will facilitate connections between eligible users and asset managers. Binance has nine levels of VIP users or high-net-worth customers, and all of them are eligible to join the Capital Connect platform, the company said. There was high demand for such a platform, Catherine Chen, head of Binance VIP and Institutional, told The Block in an exclusive interview. Chen said the exchange had seen a "very rapid growth of the non-trading type of investors in the past 12 months or so" who don't want to trade crypto on their own but are looking to engage with active fund managers to park their capital — and that's how Capital Connect was born.
U.S. Internal Revenue Service Files Claims Worth $44 Billion Against FTX Bankruptcy (CoinDesk)
The United States Internal Revenue Service (IRS) has filed claims worth nearly $44 billion against the estate of bankrupt crypto exchange FTX and its affiliated entities. According to bankruptcy filings dated April 27 and 28, the IRS put forth 45 claims against FTX companies, which include West Realm Shires (the legal entity of FTX.US), Ledger Holdings (the parent company of LedgerX and LedgerPrime) and Blockfolio, among others. The largest of the claims includes a $20.4 billion and a $7.9 billion claim against Alameda Research LLC and two claims totaling $9.5 billion against Alameda Research Holdings Inc. The claims are filed under the classification “Admin Priority”, which could allow the IRS’ claims to take precedence over the claims of other creditors in a bankruptcy case. Bankruptcy documents detailing the $20.4 billion claim against Alameda Research LLC reveal the IRS is claiming about $20 billion in partnership taxes. The remaining amount of the claim includes millions in withheld income taxes and payroll taxes.
PayPal Customers’ Crypto Holdings Near $1 Billion, Mainly Bitcoin and Ether (The Block)
Electronic payments giant PayPal has disclosed it’s "safeguarding" nearly $1 billion in crypto assets despite being a relatively new player in the digital assets market. A filing with the U.S. Securities and Exchange Commission PayPay revealed it is safeguarding $943 million in cryptocurrency. The bulk of the crypto being safeguarded is made up of $499 million in bitcoin and $362 million in ether, the statement said. The reported amount, dated for the period ending March 31, was an increase of $339 million when compared to the previous period which ended at the end of 2022. The increase is likely partly attributed to the price of bitcoin and ether rising in recent months.
Ex-Coinbase Manager Gets 2 Years for Insider Trading (Bloomberg)
A former Coinbase Global Inc. manager was ordered to spend two years in federal prison for trading on confidential information about when the cryptocurrency exchange was going to list new tokens. US District Judge Loretta Preska pointed to 'a massive abuse of Mr. Wahi’s employer’s trust' over 10 months in sentencing him Tuesday in Manhattan. 'It was not just a one-time event.'
Crypto Media Outlet Blockworks Raises $12M at $135M Valuation (CoinDesk)
Crypto media outlet Blockworks has raised $12 million in a funding round led by private equity firm 10T Holdings at a $135 million post-money valuation. The capital will be used to help expand the outlet’s research and data analytics offering, Blockworks Research. “For the past year, we’ve been building Blockworks Research, a powerful investment platform that brings together data, analytics, research, governance, and real-time news,” Blockworks co-founders Jason Yanowitz and Michael Ippolito wrote in an announcement post. “Financial institutions and deeply crypto-native investors rely on Blockworks Research to make better decisions. This investment allows us to double-down on this effort to bring better information to the industry.”
Goldman Sachs, Moody’s and More Join Digital Asset’s Blockchain Network (The Block)
Digital Asset, the financial technology firm co-founded by DRW's Don Wilson, is launching a privacy-enabled blockchain — and some of the biggest names in finance and tech are on board. Goldman Sachs, Moody's, DRW, and Microsoft are among the firms joining the blockchain, dubbed Canton Network. It will be a privacy-enabled interoperable blockchain explicitly designed for institutional assets, according to the release. The other firms involved include BNP Paribas, Broadridge, Cboe Global Markets, Cumberland, Deloitte, Deutsche Börse Group, DRW, Liberty City Ventures, Paxos, Right Pedal LendOS, S&P Global, SBI Digital Asset Holdings, Umbrage, Versana, VERT Capital, Xpansiv, and Zinnia.
Grayscale Files for Ethereum Futures, Bitcoin Composite ETFs (The Block)
Asset manager Grayscale has filed documents with the U.S. Securities and Exchange Commission for three new ETFs that aim to expand its offerings in the digital asset space. The registration statement for the Grayscale Ethereum Futures ETF, Grayscale Global Bitcoin Composite ETF and Grayscale Privacy ETF was sent in conjunction with the creation of Grayscale Funds Trust, a Delaware statutory trust structure, that will allow the firm to independently manage its 1940 Act products. "We are putting the necessary foundations in place so Grayscale can continue creating and managing regulated, future-forward products,” Grayscale CEO Michael Sonnenshein said in a statement.
U.S. Crypto Exchange Bittrex Files for Bankruptcy in Delaware (CoinDesk)
Crypto exchange Bittrex has filed for bankruptcy in the U.S. state of Delaware on Monday, months after announcing it would wind down operations in the country and weeks after being sued by the Securities and Exchange Commission (SEC). The exchange believes it has more than 100,000 creditors, with estimated liabilities and assets both within the $500 million to $1 billion range, according to a court filing shared by Randall Reese of Chapter 11 Dockets, a bankruptcy tracker. Bittrex's U.S. branch has had a rough 2023 so far, laying off 80 people in February and announcing in March that it would end all operations by the end of April. These changes have not affected Bittrex Global, the non-U.S. crypto exchange.
Sam Altman’s Worldcoin Rolls Out App as Token Launch Looms (The Block)
Worldcoin, the eyeball-scanning crypto project co-created by OpenAI’s Sam Altman, today announced the launch of a self-custodial mobile app. The so-called World App gives users a way to manage their World ID, a tool for proving personhood online, alongside a range of cryptocurrencies — including BTC, ETH, DAI, USDC abd Worldcoin’s hotly anticipated token — once it launches. Developed by Tools For Humanity, Worldcoin’s lead software contributor, the launch of the app comes a few months after the unveiling of World ID, the identity protocol that underpins the Worldcoin project. Momentum appears to be building towards the launch of Worldcoin’s token, which it has said previously will go live in the first half of this year. Users can claim their share of the coin by getting scanned by a Worldcoin orb.
FTX's Sam Bankman-Fried Moves to Dismiss Most Criminal Charges Against Him (CoinDesk)
FTX founder Sam Bankman-Fried filed pretrial motions to dismiss a majority of the charges he faces late Monday. Bankman-Fried, who is set to go on trial this fall, faces over a dozen different charges ranging from wire, securities and commodities fraud allegations to bribery claims. The charges were brought across multiple superseding indictments tied to his conduct as former Chief Executive Officer of the Bahamas-based crypto exchange FTX, which collapsed dramatically last November, filing for bankruptcy alongside nearly 100 related firms and subsidiaries.
Coinbase Cuddles Up to UAE Policymakers as Tensions With Us Regulators Grow (The Block)
Crypto exchange Coinbase is bolstering its relationship with regulatory authorities in the United Arab Emirates as it faces mounting challenges back home in the U.S. "There is no doubt that UAE has the potential to be a strategic hub for Coinbase, amplifying our efforts across the world," Coinbase said in a blog post on Sunday. "It further serves as a particularly strategic bridge between Asia and Europe — two of our existing focus international regions to date." Coinbase's executive team, including CEO and co-founder Brian Armstrong, is in the UAE this week for meetings with policymakers, regulators, crypto founders and clients. Armstrong will also provide a keynote address at the inaugural Dubai Fintech Summit. Armstrong admired the UAE for its proactive and progressive regulatory approach to crypto in a tweet, saying the region "deserves a lot of credit for being forward thinking on crypto."
Shaq Seeks to Quash FTX Lawsuit, Saying Summons Papers Were Thrown Toward His Car (Bloomberg)
Shaquille O’Neal is calling foul on the lawyers who chased him for months to serve a lawsuit accusing the basketball legend of duping investors in FTX crypto exchange. Chucking legal documents at the front of O’Neal’s car as he drove quickly through the gates of his Georgia home doesn’t count as properly serving a lawsuit, his attorneys say.
Binance Faces US Probe of Possible Russian Sanctions Violations (Bloomberg)
The Justice Department is investigating whether Binance Holdings Ltd. was used illegally to let Russians skirt US sanctions and move money through the world’s biggest cryptocurrency exchange, according to people familiar with the matter. The inquiry by the Justice Department’s national security division is looking at whether Binance or company officials ran afoul of sanctions related to Russia’s invasion of Ukraine, according to five people familiar with the matter who asked not to be named discussing a confidential investigation.
New York Attorney General Seeks Broader Authority to Police Crypto (WSJ)
New York Attorney General Letitia James is proposing new legislation that would give her office more authority to regulate the increasingly tumultuous cryptocurrency industry. The bill would give the attorney general’s office broader enforcement authority over crypto firms that have operations in the state, while codifying the New York State Department of Financial Services’ authority to license participants in the sector and oversee the state’s digital asset licensing regime. The bill, called the Crypto Regulation, Protection, Transparency and Oversight Act, or CRPTO, will be submitted by Ms. James’s office to the New York State Senate and Assembly for consideration during the 2023 legislative session, which runs through June 8.
Binance Lists PEPE as Meme Coin Market Cap Hits $1 Billion (Decrypt)
The world's largest crypto exchange by volume has just added two more meme coins to the casino. Binance today announced it would list both Pepecoin (PEPE) and Floki Inu (FLOKI) in the platform's so-called innovation zone. To enter, traders must first answer two questions correctly regarding how much money they could lose trading in this zone (more or less than 50%?) and whose fault it would be if they do indeed face a "total loss" of funds. FLOKI has since soared 57% and PEPE has risen another 77%, pushing the frog-inspired token's market capitalization across the $1 billion mark. Still, both coins trade at far less than a penny, at press time.
BNP Paribas Will Link Digital Yuan to Bank Accounts for Promoting CBDC Use (CoinDesk)
French bank BNP Paribas (BNP) is promoting the use of China's digital yuan by linking wallets to bank accounts, the South China Morning Post (SCMP) reported on Friday. BNP Paribas' corporate clients will be able to connect to China's central bank digital currency (CBDC) – or "e-CNY," as it is known – through a connection to the Bank of China's (BOC) system. BOC is one of eight banks authorized to handle China's digital currency business. The system will link clients' "digital yuan wallet to [their] bank accounts" to enable "efficient real-time and convenient" use of the CBDC, BNP said in a statement, according to SCMP's report. The bank will also be exploring the use of the CBDC for smart contracts, supply chain finance and for cross-border payments, it added.
Bitcoin Ordinals Faces New Challenge After Developer Inserts Bug to Throw Out Numbering (The Block)
Ordinals, the system by which digital collectibles are written onto the Bitcoin blockchain, is facing a new challenge after a developer found a way to introduce a bug into the metadata. The problem occurred when a developer known as Supertestnet initiated a transaction that didn’t output a satoshi (the smallest unit of a bitcoin) but was seen as valid in the Ordinals system. As a result, it knocked the numbering system that Ordinals uses for its inscriptions off by one. “It shouldn't be possible to inscribe sats that you don't own, so this is a bug. However, fixing the bug by making [Ordinals] ignore this inscription would change inscription numbers after the curious transaction. I'm honestly not sure what to do!” said Ordinals creator Casey Rodarmor on GitHub.