South Korean Prosecutor Calls for Crypto Entrepreneur Do Kwon to Face Charges in Home Country (WSJ)
The South Korean prosecutor leading the investigation into crypto entrepreneur Do Kwon said he believes extraditing him to his native country would be the best way to bring justice to victims of the TerraUSD cryptocurrency crash, which wiped out some $40 billion from digital currency markets. South Korea is vying with U.S. prosecutors to extradite Mr. Kwon from Montenegro, where he has been detained since March, and charge him in connection with the failed TerraUSD and Luna cryptocurrencies. Mr. Kwon, who is a South Korean citizen, was the co-founder of Terraform Labs, the company behind the two failed cryptocurrencies.
Coinbase Tries Novel Defense in SEC Fight (WSJ)
With the Securities and Exchange Commission preparing an enforcement action that threatens much of its business, crypto exchange Coinbase is trying a novel defense. It says regulators bear some responsibility for letting the company go public in the first place. Coinbase went public in April 2021 after clearing a six-month review. SEC staff bored into its financial reporting and disclosures as well as the company’s belief that its menu of cryptocurrencies shouldn’t be treated as securities, which the SEC regulates. Coinbase’s lawyers argue that by clearing the review, regulators signaled that they “did not think Coinbase’s core business was unlawful.”
Coinbase Q1 2023 Revenue Beats Estimates As Markets Rebound (Bloomberg)
Coinbase Global Inc. posted a narrower loss and a smaller-than-estimated revenue decline, as the biggest US digital-asset trading platform saw first-quarter results stabilize somewhat during a rebound in cryptocurrency prices. The loss narrowed to about $79 million, from $430 million, in the year-earlier period. It was the fifth consecutive quarterly loss. Revenue fell by about 34% to $772.5 million, though it increased from the fourth quarter, when token prices tumbled amid a series of industry scandals and bankruptcies. The average of estimates compiled by Bloomberg for revenue was about $654 million.
Bitcoin Sales on Cash App Surged to $2.2 Billion in Q1, Block Says (The Block)
Block, formerly known as Square, reported surging sales of bitcoin on its Cash App platform in the first quarter of the year. In an earnings release on Thursday, the company said it sold $2.2 billion worth of bitcoin in the quarter, a 25% year-over-year increase. That's also an increase from $1.8 billion sold in the fourth quarter of last year. Gross profits from bitcoin sales were $50 million, according to the Q1 shareholder letter. "The year-over-year increase in bitcoin revenue and gross profit was driven by an increase in the quantity of bitcoin sold to customers, partially offset by a decrease in the market price of bitcoin compared to the prior-year period," Block said.
Blockchain Association Leaves New York as Federal Regulatory Fight Looms (CoinDesk)
The Blockchain Association, a crypto industry advocacy group, is exiting New York as it gears up to fight against federal regulators’ increasingly stringent restrictions on the cryptocurrency industry. “Blockchain Association is shifting resources out of New York State to focus on federal policy – and we continue to hire and build out our full-time staff in Washington,” Blockchain Association CEO Kristin Smith told CoinDesk through a spokesperson. “Our mission remains the same: to advance the future of crypto in the United States.” The move comes just months after New York Gov. Kathy Hochul signed a law banning certain types of cryptocurrency mining in the Empire State. New York is the first state in the country to ban the activity. It also follows federal regulators’ broader crackdown on the digital assets industry in the wake of centralized cryptocurrency exchange FTX’s multi-billion dollar collapse.
Curve Finance Deploys crvUSD Stablecoin on Ethereum Mainnet (The Block)
The developers of decentralized exchange Curve Finance deployed smart contracts for the decentralized stablecoin crvUSD, marking its release on the Ethereum mainnet. Curve confirmed the deployment and added that the launch is not yet finalized, as a user interface — a frontend to interact with the crvUSD smart contracts — is still under development. "As many have figured out, deployment of crvUSD smart contracts has occurred. This is not finalized yet because the UI also needs to be deployed. Stay tuned," Curve Finance tweeted yesterday at 5:20 p.m. EST. The team created a total of 20 million crvUSD on the mainnet, which can be viewed on the Etherscan blockchain explorer. An address labeled as Curve on Arkham Intelligence took a loan of 1 million crvUSD ($1 million) with 957 Frax Ether ($1.8 million).
RFK Jr. Raises Crypto Taxes, Regulation as Issues in Opening Days of 2024 Presidential Race (CoinDesk)
Robert F. Kennedy Jr., the latest presidential candidate and a member of one of the most famous U.S. political families, raised a number of crypto issues in his newly announced campaign to challenge President Joe Biden. Kennedy – a Democrat, environmental lawyer, son of former U.S. Senator Robert F. Kennedy and nephew to President John F. Kennedy and former Sen. Ted Kennedy – has raised several points about the digital assets industry in the early days of the 2024 presidential contest.
FTX Seeks to Claw Back $3.9 Billion in Cash, Crypto from Genesis (Bloomberg)
FTX Group is seeking to claw back close to $3.9 billion of cash and crypto from bankrupt digital asset lender Genesis Global Capital LLC and a non-bankrupt affiliate, GGC International Ltd. The funds relate to $1.8 billion of loans and $273 million of collateral given to Genesis Global Capital by Alameda Research Ltd., Sam Bankman-Fried’s defunct crypto trading house, shortly before it collapsed into bankruptcy alongside FTX, according to court papers filed Wednesday.
Crypto Firms Find a Way to Bank Without Banks (WSJ)
Regulators’ warnings and a series of bank failures have caused some banks to step away from crypto clients. A handful of middlemen companies are helping keep the nascent industry banked. Intermediary firms store cash on behalf of their clients in their own bank accounts or coordinate with banking partners to get accounts in clients’ names. While indirect banking isn’t unique to crypto, its importance has become more pronounced owing to the limited number of banks willing to work with digital-asset firms.
Mysten Labs’ SUI Activates Mainnet, Entering Competitive Layer 1 Space (The Block)
Sui launched its mainnet, ending a multi-year development process for the newest Layer 1 blockchain in the crypto arena. The network went live according to an update from the project's Discord server that was made at 11:30 UTC, referencing a genesis blob. With the mainnet release, Sui's native asset will shortly be available for trading on various exchanges, such as Binance, OKX, Bybit, and Kucoin. Sui enters a competitive landscape of high-performance Layer 1 blockchains, including Solana, Aptos and Sei. The Sui team asserts that more than 200 decentralized applications, encompassing NFTs, DeFi, social media, and gaming, are set to go live on the network in the coming weeks.
U.S. SEC Changes Its Mind on Officially Labeling Digital Assets (CoinDesk)
The U.S. Securities and Exchange Commission (SEC) took one small step backwards in regulating the crypto sector on Wednesday when it erased what would have been its first formal definition of “digital asset” from its latest hedge fund rule. While the SEC had initially included the definition in its 2022 proposal to overhaul mandatory disclosures for hedge funds, the securities regulator yanked it in the final rule approved by the commissioners. The agency included a footnote to explain itself: “The commission and staff are continuing to consider this term and are not adopting ‘digital assets’ as part of this rule at this time,” the note declared.
Moonpay Pushes Into Retail Space With New Crypto App (The Block)
MoonPay, the Miami-based crypto payments firm, continues to expand its services with the launch of a retail-facing app. The app, which has been in testing with 15,000 early access users since March, is now widely available on Apple and Google app stores, according to an announcement this morning. The app will give users a way to manage multiple crypto wallets and hundreds of different tokens, something MoonPay sees strong demand for among its users, 55% of whom have transacted with three or more wallets. The app is another departure from MoonPay’s core business model of providing on and off-ramp payments infrastructure for consumer-facing businesses in the crypto space. Since late 2021, MoonPay has also been aggressively expanding into the NFT market — with new products including a concierge service for brokering big-ticket purchases and a platform that helps big brands orchestrate their own NFT drops.
BitFlyer USA Fined $1.2M by NYDFS for Not Meeting Cybersecurity Requirements (CoinDesk)
Crypto exchange bitFlyer USA was fined $1.2 million by New York State Department of Financial Services (NYDFS) for failing to meet the state's cybersecurity requirement, the regulator said on Wednesday. The financial regulator said bitFlyer USA failed to meet the state's cybersecurity regulation, despite having a license to operate in New York. However, NYDFS acknowledged bitFlyer USA's efforts to step up its cybersecurity. The exchange presented the regulator with a remediation plan, which aims to make bitFlyer USA compliant with the states cybersecurity laws by the end of the year.
Ex-OpenSea Worker Found Guilty in First NFT Insider-Trading Case (WSJ)
A former employee of NFT marketplace OpenSea was found guilty Wednesday of what federal prosecutors described as the first insider-trading case involving digital tokens, marking a win for the Justice Department in its push to police the crypto industry. A federal jury in New York convicted Nathaniel Chastain of wire fraud and money laundering for using nonpublic information from his employer to trade on nonfungible tokens in 2021. The Manhattan U.S. attorney’s office charged Mr. Chastain in 2022, accusing him of purchasing the NFTs ahead of OpenSea’s featuring them on its home page. Once the NFTs spiked in value after being featured, Mr. Chastain sold them, pocketing tens of thousands of dollars in profit, prosecutors said.
Coinbase Launches International Exchange as Tensions With US Regulators Grow (Bloomberg)
Coinbase Global Inc. is launching an international derivatives exchange for institutional crypto traders outside the US, seeking to diversity its business amid souring relations with American regulators. The new platform, Coinbase International Exchange, will list Bitcoin and Ether perpetual futures starting this week after it received a license last month from the Bermuda Monetary Authority. With the move, Coinbase is entering a market dominated by offshore players, such as Binance, the world’s biggest crypto exchange, and previously FTX before its collapse. The company with roots in San Francisco has been facing mounting legal uncertainty after receiving a Wells Notice from the US Securities and Exchange Commission in March, which signals the agency’s plan to sue it over several business lines.
White House Pushes for Punitive Tax on Crypto Mining (CoinDesk)
U.S. President Joe Biden is looking to impose a punitive tax on crypto mining operations for the “harms they impose on society,” the White House’s Council of Economic Advisers (CEA) said Tuesday in an online post. The administration’s blog entry made the case for a U.S. tax equal to 30% of a mining firm’s energy costs – an unusual industry-specific penalty that could threaten the profits of such businesses. “Currently, crypto mining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate,” according to the CEA’s description of the levy it calls the Digital Asset Mining Energy tax.
Institutionally Focused Crypto Exchange Bullish Working With Market Maker B2C2 in Liquidity Drive (CoinDesk)
Bullish, a technology company that operates institutionally focused digital asset platform trading platform Bullish exchange said it is working with crypto liquidity provider B2C2. The partnership aims to provide trading liquidity to crypto institutions. It is not known how much of B2C2’s trading volume is committed to trading via Bullish. B2C2 is a Japanese crypto market maker and liquidity provider. In December 2020 it was acquired by Japanese financial giant SBI Financial Services in what was seen at the time as the first major financial firm to own a crypto desk.
3AC Founders’ OPNX Exchange Formally Reprimanded by Dubai Crypto Regulator (CoinDesk)
OPNX, a bankruptcy claims exchange set up by the founders of collapsed hedge fund Three Arrows Capital (3AC), has been formally reprimanded by Dubai's crypto regulator for operating an unregulated exchange, according to an official notice. The letter was sent on April 18 to OPNX's Kyle Davies and Su Zhu, who were the founders of 3AC, after two cease-and-desist orders for marketing the exchange to residents of Dubai and the United Arab Emirates were issued by the regulator in February and March. “VARA is continuing to actively monitor the situation and investigate OPNX's activity to assess further corrective measures that may be required to protect the market,” Dubai’s Virtual Assets Regulatory Authority said in a statement.
Balaji Closes Bitcoin Bet With $1.5M in Donations, Including $500K for Bitcoin Core Development (CoinDesk)
Balaji Srinivasan on Tuesday said his $1 million bet on bitcoin (BTC) has been closed out ahead of time, and he has donated $1.5 million ($500,000 more than required) to three different entities as settlement. The former chief technology officer at crypto exchange Coinbase and a former partner at venture capital firm Andreessen Horowitz, Srinivasan in mid-March – shortly after the failures in short order of Silvergate Bank, Signature Bank and Silicon Valley Bank – said he expected a banking crisis to trigger a sizable devaluation of the U.S. dollar, hyperinflation and a surge in bitcoin to $1 million by mid-June. He put up $1 million to back his prediction. "I just burned a million to tell you they're printing trillions," he tweeted Tuesday afternoon. "I spent my own money to send a provably costly signal that there’s something wrong with the economy, and that it's not going to be a 'soft landing' like [Federal Reserve Chair Jerome] Powell promises – but something much worse."
Coinbase Insiders Sued for Dumping Stock, Saving $1 Billion (Bloomberg)
"Coinbase Inc. Chairman and Chief Executive Officer Brian Armstrong, board member Marc Andreessen and other officers avoided more than $1 billion in losses by using inside information to sell stock within days of the cryptocurrency platform’s public listing two years ago, before bad news sent the share price tumbling, according to a lawsuit filed by an investor. The company’s board deployed a so-called direct listing instead of a more typical initial public offering and rapidly sold off $2.9 billion in stock before Coinbase management later revealed ‘material, negative information that destroyed market optimism from the company’s first quarterly earnings release forward,’ according to the complaint unsealed Monday in Delaware Chancery Court."
Gemini Looks to Mediation in Hope of Swift Resolution to Earn Debacle (The Block)
Gemini, the crypto exchange business run by the Winklevoss twins, is hoping mediation will produce a swift resolution to negotiations with Digital Currency Group about returning funds to customers. In an update on April 28, Gemini said that DCG, DCG’s bankrupt lending arm Genesis Global, the Unsecured Creditors Committee (UCC), the Creditor Committee and Gemini itself had “agreed to start a 30-day mediation process to drive to a final resolution as soon as possible,” adding that “an order from Bankruptcy Judge Lane directing the mediation is expected to be entered as early as Monday.” Some 340,000 customers of Gemini Earn, the now-terminated yield generating product, have been stuck in limbo since late last year after DCG’s Genesis Global paused withdrawals in November. Genesis Global later filed for Chapter 11 bankruptcy with more than $3.5 billion owed to creditors. By far the largest claim belonged to Gemini Trust Company, which was owed $766 million in funds that had been lent out through the Gemini Earn program.
Crypto Exchange Poloniex Agrees to $7.6M Fee to Settle Sanctions Violation Charges (CoinDesk)
Poloniex LLC, a U.S. entity previously affiliated with the Poloniex crypto exchange, will remit $7.59 million to settle sanctions violations allegations with the U.S. Treasury Department's Office of Foreign Asset Control (OFAC), the sanctions watchdog said Monday. The platform had nearly 66,000 violations of various sanctions programs, allowing customers from Crimea, Cuba, Iran, Sudan and Syria to trade up to a collective $15 million between January 2014 and November 2019, OFAC said in a press release. While Poloniex launched in January 2014, it did not have a sanctions compliance program in place until May 2015. The compliance program was also not retroactive, allowing customers from sanctioned jurisdictions who were already on the platform to continue using it, a Treasury document said.
a16z Crypto Urges the UK to Consider ‘More Nuanced’ Regulatory Framework (The Block)
A16z crypto is urging the UK to consider a "more nuanced approach" to the regulation of digital assets as the country considers a new framework to govern both trading and lending. "A 'one-size-fits-all' approach to the regulation of cryptoasset transactions would not be consistent with the Treasury’s core design principle of 'same risk, same regulatory outcome,'" the venture capital fund said in a letter to the UK Treasury. It was responding to a consultation paper first published by the UK government in February. Both policymakers and regulators need to develop a "more uniform" understanding of how decentralization works in web3 systems, a16z crypto said.
Justin Sun to Reverse $56M Binance Transfer After CEO Zhao Warns Against Potential SUI Token Grab (CoinDesk)
"Tron founder Justin Sun tweeted on Monday that he has arranged a full refund of a $56 million transfer to exchange platform Binance after a warning from the latter's CEO against a potential token grab of the new SUI token. After the substantial transfer made in trueUSD (TUSD) got flagged by Whale Alert early Monday, Binance CEO Changpeng Zhao took to Twitter to say his platform has warned Sun it will take action if he used any of the funds to buy up large amounts of SUI tokens from Binance's Launchpool. "Binance LaunchPool are meant as air drops for our retail users, not just for a few whales," Zhao said."
U.S. House Will Have Crypto Bill in 2 Months: McHenry (CoinDesk)
The U.S. House Financial Services Committee and House Agriculture Committee will put together legislation to oversee the crypto sector in the "next two months" after holding joint public hearings starting in May, said Rep. Patrick McHenry (R–N.C.), chair of the House Financial Services Committee. When asked whether such a bill could be signed by President Joe Biden in the next 12 months, McHenry told a crowd at CoinDesk's Consensus 2023 event, "yes." The key lawmaker was quick to provide a rider that it's always a challenge to legislate something new into existence.
Former Bridgewater CEO Deputy Joins Crypto Fund BlockTower (Bloomberg)
At a time when Wall Street executives leaving for a crypto gig seems rare, the former CEO deputy and chief operating officer of the investment research department at Bridgewater Associates has joined crypto investment management firm BlockTower Capital. Diana Zhang, 39, has become BlockTower’s first chief operating officer after spending about 15 years at Bridgewater, Ray Dalio’s $150 billion investment-management firm. During Bitcoin’s bull run it was common for Wall Street execs to join crypto startups, but in recent months crypto leaders have been ditching the industry for more stable traditional finance jobs.
While Binance Battles Regulators, Its $9 Billion VC Arm Keeps Growing (The Block)
Now that Binance, the world’s biggest crypto exchange, and its CEO Changpeng Zhao are being sued by the Commodity Futures Trading Commission over unregistered trading activity in the United States, one might expect the business to steer clear of venture investments in the region. But Binance is nothing if not a risk-taker. “It doesn’t really touch Labs in any way that I can think of,” Yibo Ling, chief business officer at Binance, said of U.S. regulatory pressure affecting its Binance Labs venture arm, in a wide-ranging interview with The Block. “It’s not differentially impacting us. If there are good projects anywhere, we’re interested in having a conversation.” As of the first quarter, Binance Labs had amassed $9 billion in assets, up from $7.5 billion in August of last year, according to a spokesperson. Its money is invested in over 200 projects from more than 25 countries in six continents. Of those, 50 have been incubated by Binance Labs.
Mastercard Launches Crypto Credential Service for Cross-Border Transfers (CoinDesk)
The executive in charge of crypto products and blockchain at Mastercard (MA) said the payment processing company is bringing out a service designed to ensure transactions between users’ wallets are verifiable and compliant, beginning with transfers of digital assets between countries. In this first cross-border use case, the Mastercard Crypto Credential service, announced Friday by Raj Dhamodharan from the stage at Consensus 2023, allows wallets to be identified in transactions that are compliant with requirements such as the Financial Action Task Force's (FATF) "travel rule." Mastercard Crypto Credential, a set of common standards for attestation of interactions, uses technology from CipherTrace, the well-known blockchain analytics platform Mastercard agreed to acquire in late 2021.
PayPal Extending Crypto Transfers to More Than 60 Million Venmo Customers (The Block)
Nearly a year after PayPal allowed users to transfer crypto between its platform and other wallets, the company is set to roll out a similar feature for its more than 60 million Venmo customers located in the United States. “Customers will also be able to transfer to a PayPal account and to external wallets and exchanges,” the company said in a statement. External wallets include PayPal customers. In June of last year, PayPal began allowing users to send supported tokens like bitcoin, ether, bitcoin cash and litecoin to external wallets. The move to open the service to tens of millions of Venmo customers starting next month comes at a time when the crypto industry as whole is being confronted with intense scrutiny in the U.S.