FTX Employees Found Alameda’s Secret Backdoor Months Before Collapse (WSJ)
Months before the collapse of FTX, some of its U.S.-based employees discovered the so-called backdoor that Alameda Research allegedly used to withdraw billions of dollars of customer funds from the cryptocurrency exchange, people familiar with the matter said. The employees who made the discovery reported it to the boss of their division, who discussed it with one of FTX founder Sam Bankman-Fried’s lieutenants, some of the people said.
Sam Bankman-Fried, Other FTX Execs Committed Financial Crimes, Co-Founder Wang Testifies (CoinDesk)
FTX’s Sam Bankman-Fried committed financial crimes, co-founder Gary Wang said after taking the stand late Thursday. Wang, the fourth witness called by the U.S. Department of Justice in Bankman-Fried’s trial, said he committed wire fraud, securities fraud and commodities fraud alongside Bankman-Fried and Caroline Ellison, who ran Bankman-Fried's Alameda Research hedge fund, and former FTX executive Nishad Singh. (Wang, Ellison and Singh all pleaded guilty to charges shortly after Bankman-Fried was arrested.)
Crypto Wallet Maker Ledger to Lay Off 12% of Staff (Bloomberg)
Ledger, a company making hardware “wallets” for crypto investors, will lay off 12% of its workforce as it conserves resources to weather a protracted industry downturn. ‘Macroeconomic headwinds are limiting our ability to generate revenue,’ Ledger’s Chief Executive and Chairman Pascal Gauthier, said in an email sent to staff on Thursday. ‘We must continue to make decisions for the longevity of the business.’
JPMorgan Says Ethereum Has Become ‘More Centralized’ With Staking Surge (The Block)
Ethereum's recent staking growth has led to more centralization of the network and declining staking yield, according to JPMorgan. "The rise in Ethereum staking since the Merge and Shanghai upgrades has come at a cost as the Ethereum network became more centralized and as the overall staking yield declined," JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a note on Thursday.
Sui Foundation Reallocates 117 Million SUI From External Market Makers to Support Growth Initiatives (The Block)
In effort to fuel additional growth, Sui Foundation announced it will reallocate 117 million of its native token ($51 million) and then funnel them "into a variety of channels," the organization said in a statement. This represents 13.6% of its circulating supply and 1% of its total supply. Because the sui tokens have already been released, the redistribution will not affect the circulating supply. Since the Layer 1 blockchain launched on mainnet in May, the price of sui has plummeted to $0.44 after trading initially at $1.40 in May, according to CoinGecko.
Current Laws Sufficient to Charge Sam Bankman-Fried for Alleged Fraud: DOJ (The Block)
U.S. prosecutors reiterated Wednesday that the existing legal framework is sufficient to charge Sam Bankman-Fried for fraud-related violations. In a Wednesday filing, the Department of Justice dismissed Bankman-Fried’s claims that “the apparent absence of relevant law or guidance bears directly on whether the alleged use of customer deposits would constitute misappropriation as opposed to a permissible business practice.”
Resy and Eater Co-founder Raises $24M for Blackbird, a Restaurant Loyalty Platform (TechCrunch)
Blackbird Labs, a hospitality tech company whose platform helps restaurants stay in touch with guests and incentivize them to dine out more frequently, today announced that it raised $24 million in a Series A round led by Andreessen Horowitz with participation from QED, Union Square Ventures, Shine, Variant and others, as well as restaurant groups Quality Branded, Rustic Canyon Group, Soulva and Brooks Reitz. Founder and CEO Ben Leventhal says that the proceeds, which bring Blackbird’s total raised to $35 million, will be put toward helping Blackbird scale its operations.
US Crypto Legislation Could Stall Amid Republican Leadership Drama (The Block)
Rep. Patrick T. McHenry's shift to temporarily cover one of the most powerful U.S. leadership seats could waste precious time needed to move cryptocurrency bills closer across the finish line. McHenry, who took over the position of Speaker of the House on Tuesday with a deafening gavel bang, could hold the spot for a week — or much longer. He doesn't seem to have even wanted the post to begin with, preferring to lead the House Financial Services Committee in getting bills, including crypto, out the gate.
Another Polygon Co-founder Steps Away From Duties (The Block)
Polygon co-founder Jaynti Kanani has decided to step away from his full-time duties helping to lead the company he helped start in 2017. "After kickstarting Polygon in 2017, around 6 months back, I decided to step back from the day-to-day grind," he posted on X to make the announcement. "I'll be focusing on new adventures while still cheering and contributing to Polygon from the sidelines."
SEC’s Motion to Appeal Loss in Ripple Case Is Denied (CoinDesk)
A federal judge has rejected the U.S. Securities and Exchange Commission’s bid to appeal its ground-shaking loss against Ripple, the crypto company associated with the XRP token. XRP’s price rallied about 5% on the news. District Judge Analisa Torres said in a brief ruling Tuesday that the SEC had failed to meet its burden under the law to show that there were controlling questions of law or that there are substantial grounds for differences of opinion.
Ex-Celsius CEO Mashinsky’s Fraud Trial Set for September 2024 (Bloomberg)
The criminal trial of former Celsius Network Ltd. Chief Executive Officer Alex Mashinsky has been scheduled for Sept. 17, 2024. Mashinsky was charged in July with securities fraud, commodities fraud, wire fraud and conspiracy to manipulate the value of the Celsius token. His firm collapsed into bankruptcy last year with more than $1 billion in debt.
Central Bank Group Unveils Data Project Mapping Crypto Transfers (CoinDesk)
A new decentralized finance data platform could underpin future regulation of crypto market actors, according to a study released by the Bank for International Settlements (BIS) Wednesday. Project Atlas has initially been used to map out significant international flows between crypto exchanges, said a proof-of-concept report issued jointly with the Dutch and German central banks.
Ethereum Layer 2 StarkWare Delays First Token Unlocks to April 2024 (The Block)
Ethereum Layer 2 developer StarkWare has delayed the first unlocks of its native StarkNet (STRK) token by over five months. The new unlock date has been pushed to Apr. 15, 2024, from the previously scheduled date of Nov. 29, 2023, according to a transaction in one of the StarkWare token locking mechanism contracts carried out on Sunday, Etherscan shows.
Crypto-Friendly Congressman McHenry Temporarily Takes Over U.S. House (CoinDesk)
Crypto-friendly Rep. Patrick McHenry (R-N.C.) has landed in the driver’s seat of the U.S. House of Representatives just as legislation to establish digital-asset regulations nears a finish line there. While House Republicans seek a permanent replacement for their just-ousted Speaker of the House Kevin McCarthy (R-Calif.), McHenry will serve as McCarthy’s temporary replacement. The chairman of the House Financial Services Committee has been hard at work since last year on a number of crypto bills, and having McHenry in a leadership role over the entire House can’t hurt their progress.
Ether Futures ETFs From Proshares, VanEck and Others Go Live (The Block)
Multiple exchange-traded funds that target the performance of ether futures have gone live. These are the first ETFs ever to launch that are based on ether futures, almost two years after the launch of the first bitcoin futures ETF. ProShares, which debuted the first U.S. bitcoin futures ETF, has launched the ProShares Ether Strategy ETF, along with two others that offer a blend of bitcoin and ether.
Crypto Investment Firm Deus X Capital Launches With $1B in Assets (CoinDesk)
Deus X Capital, a family office backed investment firm, launched today with Tim Grant as CEO, the company said in a statement. The company begins with $1 billion of assets, including existing investments and capital to be deployed in private equity, venture capital and fund allocation opportunities in the digital asset, blockchain, fintech and institutional capital markets sectors.
IMF Paper Proposes Framework to Assess Systemic Risk From Crypto Assets (The Block)
An International Monetary Fund (IMF) paper has proposed a framework for "understanding and tracking systemic risks stemming from crypto assets." The framework sets out tools to assist policymakers and regulatory authorities in containing potential risks from the crypto sector. The IMF paper, called Assessing Macrofinancial Risks from Crypto Assets, emphasized the importance of integrating these tools into existing regulatory and systemic risk assessment processes.
CFTC Chair Rostin Behnam Turns His Focus to Getting Ahead of DeFi (The Block)
Commodity Futures Trading Commission Chair Rostin Behnam honed in on the need to oversee decentralized finance in a speech on Monday, comparing the situation to “unlicensed physicians.” Behnam’s prepared remarks at the Futures Industry Association Expo in Chicago, come about a month after the agency said it settled charges against DeFi protocols Opyn, ZeroEx, and Deridex over registration violations.
UBS Taps Ethereum to Pilot Tokenized Money Market Fund (The Block)
UBS Asset Management, one of the world's largest fund houses, has launched its first "live pilot" of a tokenized money market fund on the Ethereum blockchain. The pilot allows UBS Asset Management to test various fund activities on-chain, including subscriptions and redemptions, the firm said Monday. UBS has utilized its in-house tokenization service, UBS Tokenize, to launch the pilot of the fund.
Three Arrows Capital Co-founder Zhu Arrested in Singapore Airport, Sentenced Four Months in Prison (TechCrunch)
The liquidators behind Three Arrows Capital (3AC), the now-defunct crypto hedge fund, shared that the firm’s co-founder Su Zhu was arrested in Singapore at the Changi Airport while trying to leave the country. Teneo, a financial advisory firm controlling the liquidation and management of affairs for the defunct crypto hedge fund, said it got a “committal order” against Zhu after he failed to comply with court orders to cooperate with the liquidation investigation. The order sentenced Zhu to four months in prison, according to a statement.
Coinbase Obtains Payment License in Singapore (CoinDesk)
Crypto exchange Coinbase has obtained a payment institution license from the Monetary Authority of Singapore. This license will enable the exchange to expand its "provision of digital payment token services to both individuals and institutions in Singapore," the company said in a blog on Monday. Coinbase received in-principal approval as a payments institution license holder from Singapore last year.
Vitalik Buterin Contemplates Ethereum Staking Changes in Blog Post (The Block)
Vitalik Buterin, co-founder of Ethereum, has shared a blog post outlining his opinion on adding certain protocols to Ethereum’s code versus keeping them “on top” of the blockchain. The protocols Buterin discussed include account abstraction protocol ERC-4337, ZK-EVMs, private mempools, code precompiles, and liquid staking. Buterin came out more strongly in favor of ‘enshrining’ some protocols to Ethereum’s code, like ERC-4337, than others, like private mempools, but concludes that each presents “a complicated tradeoff” that will “continue to evolve over time.”
Ex-SoftBank Executive Sets Up Stablecoin to Dodge High Inflation (Bloomberg)
Akshay Naheta, a former SoftBank Group Corp. executive who steered some of the firm’s biggest deals, is launching a new company in Abu Dhabi focusing on stablecoin technology. The 42-year-old financier has set up DTR within the emirate’s international financial free zone and will partner on the project with Hong Kong-based DRAM Trust, which has ties to several high-net-worth individuals. They’re looking to capitalize on a stablecoin market that analysts at Bernstein estimate will grow more than 20-fold to $2.8 trillion in five years.
Here's the Sam Bankman-Fried Trial Schedule (CoinDesk)
Sam Bankman-Fried's trial is scheduled to start on Oct. 3, but the actual opening arguments are projected to begin a day later, a newly released court trial calendar shows. The document, posted to the public court docket on Thursday, shows that while most of October and the first week of November are dedicated to the trial, the court will not be in session between Oct. 20 and Oct. 25. Nov. 3 will also be a day off, as will Oct. 9 and Nov. 10 – both of which are public holidays.