Day: November 5, 2022

Ethereum is Getting Closed to Being Completely Censored Because of OFAC Regulations

by Blockchain News

The percentage of OFAC-compliant Ethereum blocks being created every day has increased to 73%, which heightens censorship worries in the blockchain ecosystem.

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Following Ethereum framework censorship that posits barriers to the crypto ecosystem’s goal of extremely open and accessible finance, the market has been monitoring Ethereum’s increasing adherence to guidelines set forth by OFAC. As per the development, over 73% of the blocks on the Ethereum network in the past 24 hours have been determined to enforce OFAC compliance.

Following the discovery that 51% of-Ethereum-blocks met OFAC requirements back in October 2022, top crypto media firms published an article on the growing censorship issues. But according to mevWatch data, as of November third, daily block production that complies with OFAC regulations has increased to 73%.

Meanwhile, some OFAC-mandated MEV-Boost relays would censor financial activities. Consequently, to guarantee Ethereum’s neutrality, a non-censoring MEV-Boost relay must be implemented by the network.

Additionally, by removing relays like BloXroute Max Profit, BloxRoute Ethical, Manifold, and Relayooor from their MEV-Boost configuration, Ethereum examiners can lessen their adherence to OFAC regulations.

US Government Agency Enforces Sanctions on Crypto Outlets

Based on the adherence to OFAC, the United States Government agency can apply economic and trade sanctions on crypto outlets. Meanwhile, Tornado Cash and several Ethereum addresses had already been sanctioned by the agency. Furthermore, as of the time of writing this report, 45% of all Ethereum blocks are in full adherence to the OFAC regulations. 

Following the launch of crypto exchanges by UnionBank, one of the biggest multinational banking institutions in the Philippines, in collaboration with the Swiss crypto company Metaco, the adoption of Bitcoin BTC tickers fell by $21,265 while Ethereum accelerated.

This suggests that despite the alleged censorship of the protocol, it is still widely used today.

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President Biden Claims that Musk Purchased a Platform that Promotes Hate Speech

by Blockchain News

United States President Joe Biden has slammed Elon Musk’s purchase of Twitter Inc claiming the social media site was a culprit in spreading false information across the globe. 

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President Biden made this statement in passing during a fundraiser in Chicago earlier this week, as he cautioned contributors about the impact the upcoming elections would have in the years to come.

Recall that Jack Dorsey’s formerly owned media platform Twitter was purchased for $44 billion by Elon Musk, who describes himself as a defender of free expression. However, since the acquisition, Musk has commenced a plan to fire around half the company’s 7,500 personnel after removing the majority of top executives and the board.

Based on the development, the Biden government has already made clear its position in favor of encouraging the censorship of offensive speech and falsehoods on social media sites. Nevertheless, the president emphasized the absence of oversight on Twitter, adding: 

“There are no editors anymore. There are no editors. How do we expect kids to be able to understand what is at stake.”

Musk’s objectives to reform Twitter’s content regulation have alarmed advertisers. These include Pfizer Inc. and General Mills Inc., which say they will for the time being halt their advertising campaign spending on the site while they wait to see how Musk proposes to revamp Twitter.

Civil Rights Groups Begin to Mount Pressure on Twitter’s Advertisers

Furthermore, civil rights organizations are increasing their pressure on advertisers to demand that Musk upholds action to prevent the site from serving as a platform for inciting hate speeches or misinformation.

Musk confirmed earlier this week that reservations regarding content filtering on Twitter had contributed to a considerable loss in sales, as advertisers clamp down on budgets. Meanwhile, he insisted that nothing has been altered with content regulations.

In October after Musk’s acquisition of Twitter reports suggested several ways that Musk, who is one of the most significant crypto influencers globally, might bring more cryptocurrency into twitter.

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Web3 Foundation Claims DOT is a Piece of Software and Not a Security

by Blockchain News

Web3 Foundation, a non-governmental organization headquartered in Zug, Switzerland has released an announcement that they have come to the realization that Polkadot’s native token (DOT) is only software and not a security because it has morphed.

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Their view is consistent with that of the U.S Security and Exchange Commission (SEC).

In a recent press statement made by Web3 Foundation’s Chief Legal Officer, Daniel Schoenberger, the staff of the United States SEC Strategic Hub for Innovation and Financial Technology (FinHub) released a framework for Investment contracts to analyze digital assets. 

The framework suggested that almost all digital assets that are being sold for the purpose of fundraising were initially meant to be a security in the hands of the initial buyer. 

The framework, however, also suggested that there also exists factors that could result in complaints, for example, a complaint that exists when initial digital assets initially offered are sold as a security and to be re-evaluated at a later date. This security therefore no longer exists under federal security laws in the U.S because it has morphed.

Daniel also highlighted that it has been three years since the interaction between Web3 Foundation and SEC. He reiterated that their discussions have been positive and have brought about a deeper understanding of the issues raised by the SEC while seeking solutions to address their concerns.

Web3 Foundation has also developed a workable theory on how token morphing can be adopted for decentralized projects such as Polkadot and other digital assets because aside from being offered for fundraising purposes lacks security-like properties.

The Launch of Polkadot

Polkadot was developed in 2016. The Polkadot is a representation of the vision of the Web3 Foundation founder Dr Gavin Wood to develop a decentralized internet which is known as Web3.

Polkadot is a sharded blockchain, which means it connects multiple chains into a single network, allowing them to process and exchange data in parallel while maintaining strong security guarantees between chains. By parallelizing the workload, Polkadot addresses major issues that have previously tempered with decentralized application development.

In a bid to delve into the digital educational sector, Polkadot recently partnered with edX to promote educational courses. 

The course outline covers blockchain and Polkadot technology fundamentals, as well as the Substrate blockchain framework and the Rust programming language. Users are permitted to try the courses free of charge without prior knowledge or experience.

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OCC Issues Update to Organize a Virtual Innovation Office Hours

by Blockchain News

The Office of the Comptroller of Currency (OCC) in Washington, DC has released an update on how the Fintech solution week will be organized by its representatives.

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According to a newsroom update held by OCC, two days of virtual Innovation Hours will be organized in December 2022 which will begin on the 14th and close by the 15th. The purpose of the meeting will be to stimulate and promote new ideas in the federal banking sector.

Any interested party is expected to register for a session on the 18th of November, 2022. They will be asked to submit any topic that fancies their interest as related to the financial service and the digital ecosystem. The OCC will thereafter follow up with them by providing them with details of the meeting time and dates after accepting their request.

OCC further explained what Office Hours is all about. According to the report, Office Hours are physical meetings that will be organized by staff that are representing the OCC Office of Innovation. 

These meetings are expected to last not more than one hour. The focus of these meetings will be to discuss Fintech solutions in the financial sector, a move that may also engrain crypto and blockchain-related innovations.

New products and services in the financial industry will also be studied. Furthermore, partnerships with other banks and Fintech corporations will also be looked into. 

OCC and the FinTech Industry

The Office Hours being organized by OCC are not the first attempt for them to promote the Fintech economy. In January Michael J.Hsu also gave remarks on “the future of crypto assets and regulation.” 

He believes that in the crypto space, stablecoins play an intermediary between fiat and crypto and act as a medium of exchange within crypto trading platforms. He also believed they play an important role in promoting and supporting fast growth in Decentralized Finance (DeFi).

The OCC announced the launch of the Office of Financial Technology which will begin early next year. According to them, the creation of the office is aimed at bringing innovation to the banking sector. 

Acting Comptroller Michael J. Hsu gave a statement that “the banking sector is changing rapidly and partnerships between banks and the FinTech industry have been forecasted to grow in number and complexity.” 

He further explained that the office will allow us to be more agile and promote responsible innovation, which is in line with our mission.

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Binance Has Enabled Iranians Transact $8 Billion Despite Sanctions

by Blockchain News

Since 2018, crypto exchange Binance has carried out Iranian transactions worth $8 billion despite being slapped with U.S. sanctions, according to Reuters. 

Reportedly, approximately $7.8 billion has flowed between Nobitex, Iran’s largest crypto exchange, and Binance based on data availed by blockchain analytic firm Chainalysis. 

 

Per the report:

“Three-quarters of the Iranian funds that passed through Binance were in a relatively low-profile cryptocurrency called Tron that gives users an option to conceal their identities.”

The U.S. sanctions are meant to cut off Iran from the global financial system. Nevertheless, Nobitex has devised ways to circumvent them because it encourages its users to utilize Tron, a mid-tier token, for anonymous trading. 

 

Industry data indicated that Binance was the largest crypto exchange for Tron trading. Per the report:

“The total volume of Iranian transactions flowing through Binance is far greater than through any other exchange. After Binance, the next most popular exchange for Nobitex users since 2018 was Seychelles-based KuCoin, which processed $820 million in direct and indirect transactions.”

Apart from Tron, the other cryptocurrencies used in Iranian transactions included Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Tether (USDT), and Litecoin (LTC).

 

The report also disclosed that crypto worth $5 billion was transacted between Binance and Iranian exchanges using intermediary layers. 

 

Binance has reiterated in the past that it does not aid illicit funds based on its transaction monitoring tools. Patrick Hillmann, Binance spokesperson, stated:

“Binance uses transaction monitoring and risk assessments to ensure that any illegal funds are tracked, frozen, recovered and/or returned to their rightful owner.”

Meanwhile, Ziya Sadr, an Iranian Bitcoin advocate, was recently arrested by the nation’s security forces, Blockchain.News reported.

 

Sadr’s arrest came amid widespread anti-government protests following the killing of a 22-year-old Iranian woman Mahsa Amini who died in police custody. Iranian authorities arrested at least 35 journalists in connection with the widespread demonstrations.

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HSBC to Issue Digital Bonds to Institutional Investors through Tokenization Platform

by Blockchain News

Multinational banking giant HSBC has revealed plans to issue digital bonds to corporates and financial institutions through its new proprietary tokenization platform called HSBC Orion.

By harnessing the power of distributed ledger technology (DLT), HSBC Orion will enable token-based transactions. As a result, attain digital delivery versus payment.

 

Per the report:

“The platform leverages blockchain technology as a ‘single source of truth,’ whereby asset and settlement tokens sit natively and securely on the platform’s ledger.”

Therefore, HSBC Orion is eyeing the issuance of the first-ever GBP tokenized bond in accordance with Luxembourg law.

 

Once rolled out, HSBC Orion will be expanded to other asset classes and locations.

 

John O’Neill, HSBC’s global head of digital asset strategy, markets, and securities services, pointed out:

“Digital assets are a fast-growing part of financial markets. Our clients are demanding solutions that can deliver the benefits of tokenization within a trusted and secure environment.”

Since tokenization presents opportunities for fixed income like improved operational performance and faster processing, HSBC Orion is deemed a stepping stone towards this objective.

 

O’Neill added:

“We are excited to be meeting this growing need by launching HSBC Orion, our strategic platform for tokenized assets. We plan to use HSBC Orion to facilitate further digital bond issuance and expand its usage to other products in 2023.”

On his part, Zhu Kuang Lee noted that HSBC Orion would offer a secure and trusted backbone when it comes to the issuance of tokenized bonds.

 

The chief digital, data, and innovation officer at HSBC Securities Services, said:

“We believe that tokenization solutions complement and expand HSBC’s best-in-class custody and asset servicing capabilities, and we plan to widen our support for digital assets in 2023.”

Meanwhile, HSBC recently conducted a blockchain-based trade finance transaction between SAIC Motor, a Chinese car manufacturer, and Taajeer Group, the exclusive agent for MG cars in Saudi Arabia, Blockchain.News reported.  

 

HSBC acknowledged the use of DLT had the potential to revamp the trade finance sector by slashing transaction times to less than 24 hours from the present five to ten days.

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Fintech Uala Rolls Out Crypto Trading in Argentina

by Blockchain News

Uala, a fintech company based in Argentina, on Friday launched Bitcoin and Ether trading for its customers in the country.

Andres Rodriguez Ledermann, the Vice President of Wealth Management at Uala, said the new service at first will be rolled out to a few thousand customers. He, however, said the services will be available to all of the firm’s 4.5 million Argentine users in the coming weeks.

Rodriguez said while the company plans to launch the service in Mexico and Colombia where it also operates, regulatory matters need to be analyzed and addressed before such operations.

According to the report, Uala is the first market participant to roll out crypto trading in Argentina since the local central bank in May barred two banks from enabling its users to access crypto.

Rodriguez disclosed that in order for the firm to comply with current regulations in the country, Uala established a special company to offer its crypto service – Uanex, which is based in England and has the Latin American crypto firm Bitso as its crypto liquidity provider.

In early May, the Argentine central bank banned unregulated cryptocurrency transactions in traditional banks. The central bank instituted the ban, saying that digital assets are not regulated in the country.

The announcement came a few days after Argentina’s biggest private bank, Banco Galicia, and the largest 100% digital bank in Argentina, Brubank SAU, started offering digital assets trading services, including Bitcoin, Ether, and USDC stablecoin on their platforms.

The ban means local users had to use centralized crypto exchanges or trade directly through over-the-counter exchanges.

Argentina has been grappling with high inflation and the devaluation of its currency, the peso, for years. In March alone, the country’s monthly inflation rate rose to 6.7%, surpassing forecast data. As a result, locals have begun investing in cryptocurrency to protect their savings from shrinking purchasing power. Some employers also allow to pay up to 20% of an employee’s salary in cryptocurrencies.

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Blockchain Video Game Firm Mythical Games Lays Off 10% Of Workforce

by Blockchain News

Web3 game developer Mythical Games, which recently raised more than $270 million in venture capital has laid off its headcount by 10% as startups attempt to navigate a tough business environment and rush to rein in costs.

Nate Nesbitt, a spokesperson for Mythical Games, talked about the development on Friday and said just like all firms, Mythical has been affected by the economic downturn and has had to reassess and restructure some areas of its business accordingly. The executive then said: “Unfortunately, as a result, we had to make the painful decision to let some of the members of our team go.”

Mythical had about 320 employees, according to data from a LinkedIn profile. The Web3 gaming unicorn has shifted away from traditional corporate structures in recent months, favoring a more decentralized approach. In October, the firm established the Mythical Foundation as part of efforts to decentralize the gaming ecosystem.

The layoffs at a firm that was once valued at $1.25 billion in its latest valuation signal a widespread low interest of the so-called play-to-earn video games, which promise players the opportunity to purchase and sell in-game goods for real-life cash using nonfungible and blockchain tokens.

The job cut announcement comes just one day after three top executives of the Web3 game developer announced their departures from the company on Wednesday.

Co-founder Rudy Koch, Senior Vice President Chris Ko, and Chief Operating Officer and head of games Matt Nutt announced their departures on LinkedIn, sharing details about new upcoming venture opportunities.

Mythical Games is the latest affected tech firm. High-flying startups with record valuations, ambitious expansion plans, and huge hiring goals are currently announcing hiring slowdowns, freezes, and in some cases massive layoffs.

Investors and founders are preparing to navigate what looks like an economic downturn — and perhaps even a recession.

Big tech firms including Meta, Salesforce, Coinbase, and Netflix, among others, have recently announced layoffs in the midst of cost-cutting pressure, rising inflation, bear market, and rising interest rates.

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Seoul Prosecutors Reveal Terra’s Do Kwon is Hiding in Europe

by Blockchain News

The exact location of Do Kwon, the founder, and CEO of the failed stablecoin company Terraform Labs, currently remains a mystery. However, South Korean prosecutors have identified that the wanted crypto fugitive may be in Europe, according to Bloomberg’s report on Friday.

The prosecutor’s office said Do Kwon is currently residing in Europe as his location has been partially discovered. The law enforcement agents said Kwon recently moved to a third country located in Europe—via Dubai.

After the mess regarding the infamous TerraUSD’s collapse, Kwon fled South Korea and moved to Singapore in September. On September 17, South Korean prosecutors unearthed more details about Kwon’s movement, saying that the crypto developer had left Singapore and flown to Dubai likely as a stopover to destinations unknown. Now they are more certain that Kwon’s current residence is in Europe, as law enforcement continues digging for his precise location.

Besides efforts to trace Kwon’s location, the South Korean prosecutor’s office on Friday said they have obtained evidence indicating that Kwon had once ordered an employee to manipulate the price of Luna Classic (LUNC).

Price Manipulation Evidence

The prosecution office said they have obtained a “conversation history” in which “CEO Kwon specifically ordered price manipulation.”

During the last bull market, the price action of Terra’s LUNC, formerly Terra (LUNA), was undoubtedly one of the cryptocurrencies with the best performance.

According to data from crypto price and information data platform CoinGecko, LUNA surged in value by over 2,800% from $4.18 in late May 2021 to its all-time high of $119.18 on April 5 2022, before its dramatic collapse on April 30.

In early September, the Seoul Southern District Prosecutors’ Office issued an arrest warrant for Kwon and five others on charges of violating the country’s financial laws. The prosecutors issued various charges against Kwon and others including fraud and tax evasion. Kwon was believed to be in Singapore at that time as police said he was no longer in South Korea.

Later that month, Interpol issued a “red notice” for the search and arrest of Kwon. The move came after South Korean authorities had requested assistance from the global police agency to trace Kwon’s whereabouts earlier that month.

Kwon and his firm faced investigations by South Korea’s government after the value of his cryptocurrencies, Luna and TerraUSD, plummeted and contributed to a $300 billion crash across the crypto economy in May. The plunge caused massive losses among investors and led to calls for an inquiry into Kwon and his firm after allegations of fraud and tax evasion.

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IRS is Developing ‘Hundreds’ of Crypto Cases Amid Upcoming Tax Season

by Blockchain News

According to a report from Bloomberg Law, Division Chief Jim said the United States Internal Revenue Service (IRS) criminal investigation division is developing hundreds of cases involving crypto, and many of the cases are to be made public soon.

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The cases are part of the IRS ramping up a plan for the upcoming tax season. In addition, the cases entail sectors around “off-ramping” transactions – a situation where digital assets are exchanged for fiat currency, as well as individuals receiving crypto as payment and not reporting.

This report comes after United States District Judge Paul G. Gardephe granted the IRS  permission to issue ‘’John Doe’’ summons on M.Y. Safra Bank to release information about customers who may have failed to remit taxes received from conducting crypto transactions.

IRS Commissioner Charles P. Rettig stated,  “The government’s ability to obtain third-party information about individuals who have failed to report their digital asset income remains an important tool for tax evasion.” Charles added that the John Doe summons is a step in the right direction toward ensuring that everyone pays their taxes according to what they earn.

Precisely, Gardephe asked SFOX, a complete crypto dealer that provides crypto services for institutional investors, to produce information about its customers who use M.Y. Safra Bank to make cryptocurrency payments.

The IRS recently created a new category dubbed “Digital Assets” for the different categorizations of assets that are tied to the emerging blockchain industry. The regulator defined Digital Assets as any representations of value that are recorded on a cryptographically secure distributed ledger or any similar technology.

 

Per the draft bill, investors in the US will be able to see if and how they are supposed to report their digital assets, which include crypto coins and Non-Fungible Tokens (NFTs).

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Bitcoin (BTC) $ 27,575.39 1.76%
Ethereum (ETH) $ 1,665.57 3.57%
Litecoin (LTC) $ 66.04 2.47%
Bitcoin Cash (BCH) $ 241.91 0.59%