CFTC Files Lawsuit Against Decentralized Autonomous Organization (The Block)
"In a first, the Commodity Futures Trading Commission (CFTC) has sued a decentralized autonomous organization, including the holders of governance tokens. The CFTC unveiled late Thursday a $250,000 penalty and settlement with bZeroX, LLC and its founders, Kyle Kistner and Tom Bean. The two oversaw the development of the bZx protocol, a protocol for decentralized lending and other activities. The bZx protocol drew headlines in 2020 after suffering code exploits, resulting in the loss of hundreds of thousands of dollars with of crypto."
Coinbase Tested Group to Speculate on Crypto (WSJ)
"Coinbase Global Inc. has been searching for new ways to make money. One business it flirted with was controversial: using its own money to speculate on cryptocurrencies. Last year, Coinbase—which operates a large cryptocurrency exchange that handles bitcoin and other digital coins—hired at least four senior Wall Street traders and launched a group to generate profit, in part, by using the company’s cash to trade and 'stake,' or lock up, cryptocurrencies, according to people close to the matter. The activity was described as “proprietary” trading by the people at the company"
Celsius Network Might Be Planning to Turn Its Debt Into Crypto ‘IOU’ Tokens (CoinDesk)
"Bankrupt crypto lender Celsius Network appears to be considering a plan to turn its debt into crypto 'IOU' ('I Owe You') tokens. Celsius filed for Chapter 11 bankruptcy protection in July, a month after halting withdrawals because of a liquidity crisis it blamed on 'extreme market conditions.' Subsequent bankruptcy proceedings in the Southern District of New York have revealed the depths of Celsius’ financial troubles: The lender owes 500,000 creditors nearly $5 billion."
INX Debuts Trading Platform for SEC-Registered Security Tokens and Cryptocurrencies (CoinDesk)
"The INX Digital Company has created a platform intended to allow trading of Securities and Exchange Commission-registered security tokens along with various cryptocurrencies. Dubbed INX One, the product will be open to both retail and institutional investors, and will also include services for issuers seeking to raise capital via a security token offering."
Ethereum Coin Mixer Tornado Cash Is Back on GitHub (Decrypt)
"Ethereum coin mixer Tornado Cash is now back on software hosting website GitHub. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) last month blacklisted Tornado Cash, which allows users to anonymously send and receive Ethereum. American citizens are now banned from interacting with the app, which pools together transactions to obscure their origins. GitHub, a website which allows developers to share code, removed the tool’s code from its platform within hours of the OFAC announcement."
Nasdaq Starts Crypto Custody Service for Institutional Clients (CoinDesk)
"Nasdaq (NDAQ), the second-largest U.S. stock market operator, is starting a cryptocurrency custody service as it aims to cash in on the demand from institutional crypto investors, according to a press release on Tuesday. The company has hired Ira Auerbach, who previously ran prime brokerage services at Gemini, as the head of its digital assets unit, the release said."
FTX in Talks to Raise up to $1 Billion at Valuation of About $32 Billion, In-Line With Prior Round (CNBC)
"Sam Bankman-Fried’s crypto conglomerate FTX is in talks with investors to raise up to $1 billion in new funding that would keep the company’s valuation at roughly $32 billion, according to people with knowledge of the discussions. Negotiations are ongoing and the terms could change, said the sources, who asked not to be named because the talks are confidential. Coindesk previously reported on a coming investment at flat valuation, following FTX’s last capital raise in January. Existing investors include Singapore’s Temasek, SoftBank’s Vision Fund 2 and Tiger Global."
EU Finalizes Legal Text for Landmark Crypto Regulations Under MiCA (CoinDesk)
"The European Union has finalized the full text of its landmark Markets in Crypto Assets (MiCA) legislation. Officially, the text is still open to comments, but sources briefed on the talks have told CoinDesk that it is, in practice, finalized. A leaked draft of the bill dated Sept. 20 and verified by CoinDesk urges EU enforcers to take a 'substance over form' approach to the law, meaning its provisions could even apply to some assets categorized as non-fungible tokens (NFT)."
CEO of Crypto Exchange Kraken Steps Down (WSJ)
"Jesse Powell, an early bitcoin backer and co-founder of the cryptocurrency exchange Kraken, plans to step down from his role as chief executive, the company said on Wednesday. Dave Ripley, the current chief operating officer, will succeed Mr. Powell. Kraken’s largest shareholder, Mr. Powell will remain on the board as chairman. He plans to stay active in the company, spending his time on product development and industry advocacy."
Helium Founders, T-Mobile Launch Crypto-Powered 5G Mobile Service (Decrypt)
"Crypto-fueled wireless network Helium will soon be able to introduce its mobile 5G vision to many more users. Today, Helium network founder Nova Labs announced that it has partnered with T-Mobile to create a new 5G wireless service called Helium Mobile. Helium Mobile will be a mobile virtual network operator (MVNO) service and will tap both the T-Mobile and Helium networks for customers in the United States. Set to launch in the first quarter of 2023, the service will rely both on T-Mobile’s nationwide 5G network and Helium's user-operated 5G nodes."
House Stablecoin Bill Would Put Two-Year Ban on Terra-Like Coins (Bloomberg)
"Legislation to regulate stablecoins that’s being drafted in the House would place a two-year ban on coins similar to TerraUSD, the algorithmic stablecoin that collapsed earlier this year. Under the latest version of the bill, it would be illegal to issue or create new 'endogenously collateralized stablecoins,' according to a copy obtained by Bloomberg. The definition would kick in for stablecoins marketed as being able to be converted, redeemed or repurchased for a fixed amount of monetary value, and that rely solely on the value of another digital asset from the same creator to maintain their fixed price."
Binance and FTX Make Top Bids for Bankrupt Lender Voyager (WSJ)
"Crypto exchanges FTX and Binance have made the leading bids for the assets of bankrupt crypto-lender Voyager Digital Ltd., according to people familiar with the matter, but neither bid has been accepted yet. The current bid from Binance is about $50 million, slightly higher than the competing bid from FTX, according to the people. Voyager, founded in 2019, operated a crypto lending platform that took in customer deposits, paid them interest and lent out the assets to other parties. It went public via a reverse merger in 2019. At the stock’s peak in 2021, the company’s market capitalization was $3.9 billion."
Crypto Needs ‘Global Regulatory Framework,' IMF Says (CoinDesk)
"The International Monetary Fund (IMF) has called on financial regulators around the world to come together to develop a 'global regulatory framework' for crypto assets. In a blog post published on Tuesday, Aditya Narain and Marina Moretti – the deputy director and assistant director, respectively, of the IMF’s Monetary and Capital Markets department – wrote that a global framework would 'bring order to the markets, help instill consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue.'"
Stablecoin Issuer Tether Ordered to Produce Documents Showing Backing of USDT (CoinDesk)
"Tether has been ordered by a U.S. Judge in New York to produce financial records relating to the backing of USDT as part of a lawsuit that alleges Tether conspired to issue USDT as part of a campaign to inflate the price of bitcoin. The order requires Tether to produce 'general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements', as well as records of any trades or transfers of cryptocurrency or other stablecoins by Tether including information about the timing of the trades."
Trading App Robinhood Markets Adds USDC to Its Crypto Lineup (CoinDesk)
"Online broker Robinhood Markets (HOOD) added Circle’s USDC stablecoin to its crypto offerings for retail traders Tuesday. The company added in a tweet the offering will also be available on Wednesday for transfer on Polygon and Ethereum networks. 'The inclusion of USDC on Robinhood is a clear signal that the platform is setting its sights abroad where the usage of stablecoins is more popular and useful for investors,' Bryan Hernandez, president and co-founder of decentralized-finance (DeFi) app Structure, told CoinDesk."
Crypto Market Maker Wintermute Hacked for $160 Million (The Block)
"Crypto market making firm Wintermute has been hacked for $160 million but the firm remains solvent, according to founder and CEO Evgeny Gaevoy. Gaevoy said today on Twitter that the money was related to its DeFi operations and that it's centralized exchange and over-the-counter offerings were not affected. 'We are solvent with twice over that amount in equity left,' Gaevoy said. 'If you have a MM agreement with Wintermute, your funds are safe. There will be a disruption in our services today and potentially for next few days and will get back to normal after.'"
SEC Claims All of Ethereum Falls Under US Jurisdiction (Decrypt)
"When the SEC filed a federal lawsuit Monday against crypto influencer Ian Balina for his failure to register a cryptocurrency as a security before launching a 2018 initial coin offering (ICO), everything at first appeared run-of-the-mill: the SEC has, for years, filed civil suits against individuals and organizations for rolling out unregistered ICOs. Eagle-eyed observers then read a little further into the fine print. In a bold and potentially unprecedented move buried in the lawsuit’s 69th paragraph, the SEC today claimed it had the right to sue Balina not only because his case concerns transactions made in the United States, but also because, essentially, the entire Ethereum network falls under the US government’s purview."
Alameda to Repay $200 Million to Bankrupt Lender Voyager (The Block)
"Trading firm Alameda Research will repay some $200 million in loans to Voyager Digital, the bankrupt crypto lender. Alameda will repay 6,553 in bitcoin (roughly $128 million) and 51,204 in ether (roughly $70 million) in principal and loan fees, as well as smaller amounts in seven other tokens, according to a court filing last night. The loans are due to be repaid by Sept. 30, the filing said."
South Korea Asks Interpol to Issue Red Notice for Do Kwon (The Block)
"South Korean prosecutors have reportedly asked Interpol, an international organization that facilitates police cooperation and crime control between countries, to issue a red notice against Do Kwon. The Financial Times reported the news on Monday, stating that Kwon, the co-founder of crypto firm Terraform Labs, is allegedly refusing to co-operate with a probe into the $40 billion implosion of the tokens terraUSD and luna."
ICO Promoter Ian Balina Charged With Violating Federal Securities Laws (CoinDesk)
"Crypto promoter Ian Balina has been charged with violating U.S. securities laws for his role in promoting – and later reselling – tokens connected to a 2018 initial coin offering (ICO). In a complaint filed Monday in the Western District of Texas’s Austin Division, the U.S. Securities and Exchange Commission (SEC) said Balina promoted an unregistered securities offering for SPRK tokens between April and July of 2018, and did not disclose that he was paid by the Cayman Islands-based issuer, Sparkster Ltd., to do so."
U.S. SEC’s Crypto Guidelines Push up Costs for Lenders, Disrupting Projects (Reuters)
"Banks' cryptocurrency projects have been upended by U.S. Securities and Exchange Commission (SEC) accounting guidance that would make it too capital-intensive for lenders to hold crypto tokens on behalf of clients, according to more than half a dozen people with knowledge of the matter. A slew of lenders including U.S. Bancorp (USB.N), Goldman Sachs Group Inc , JPMorgan Chase & Co , BNY Mellon , Wells Fargo & Co , Deutsche Bank (DBKGn.DE), BNP Paribas (BNPP.PA) and State Street Corp (STT.N) offer or are working on crypto products and services for clients in a bid to tap in to the $1 trillion crypto market, according to their public statements and media reports. But on March 31, the SEC said public companies that hold crypto assets on behalf of clients or others must account for them as liabilities on their balance sheets due to their technological, legal and regulatory risks"
Crypto Exchange Coinbase Could Earn $1.2B in Revenue Next Year From Higher Interest Rates, JPMorgan Says (CoinDesk)
"Crypto exchange Coinbase Global (COIN) may be able to generate $1.2 billion of additional interest income-driven revenue in 2023 given the increases in short-term interest rates, JPMorgan analyst Ken Worthington told clients in a note earlier this week. Coinbase’s joint venture with USDC issuer Circle alone could contribute about $700 million of incremental revenue, JPMorgan estimates. The two firms formed a joint venture in 2018 called the CENTRE Consortium, which included a revenue share on interest income from USDC reserves."
Grayscale Files for Rights to ETHPoW Tokens After the Merge (The Block)
"Grayscale Investments has the rights to Ethereum Proof of Work tokens as a result of The Merge, and may or may not distribute them to holders in the form of a cash disbursal, the asset manager said in a Securities and Exchange Commission filing on Friday. ETHPoW, a fork of the proof of work Ethereum chain, went live on Thursday when Ethereum shifted to proof of stake. As a result of the fork, the Grayscale Ethereum Trust and the Grayscale Digital Large Cap Fund received the rights to ETHPoW tokens. The former received the rights to approximately 4 million, while the latter holds rights to approximately 41,000 ETHPoW tokens."
ECB Picks Amazon, Nexi, 3 More to Prototype Digital Euro Apps (CoinDesk)
"The European Central Bank chose five organizations to help develop user interfaces for a potential digital euro, it said Friday. The organizations include Amazon, the world's largest e-commerce company by market capitalization, and the European Payments Initiative, a group of 31 banks and credit institutions. The other participants, selected from 54 applicants because they met 'specific capabilities' required to test a range of uses, are Spanish multinational CaixaBank, French payments platform Worldline and Italian payments-focused bank Nexi, the ECB said."
Do Kwon Says He Is “Not on the Run,” Cooperating With Authorities (The Block)
"Terraform Labs founder Do Kwon said on Saturday he is not trying to evade any relevant authorities. 'I am not 'on the run' or anything similar - [from] any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide,' Do Kwon said in a tweet thread, responding to reports that Singaporean police officials have said the South Korea-native is not currently in the city-state nation."