Day: February 9, 2023

SEC to Keep Close Watch on Crypto Brokers and Advisers

by Blockchain News

This year, cryptocurrency brokers and financial advisors that provide or provide advice regarding cryptocurrencies will be brought within the jurisdiction of the United States Securities and Exchange Commission (SEC).

In a statement released on February 7, the Division of Examinations of the Securities and Exchange Commission (SEC) outlined its priorities for the year 2023. The statement suggested that brokers and advisers dealing in cryptocurrency will need to exercise increased caution when offering, selling, or providing recommendations regarding digital assets.

It was said that SEC-registered brokers and advisors would be extensively monitored to see whether or not they followed their “respective standards of care” while offering financial advice, making recommendations, or referring clients to other professionals.

The Securities and Exchange Commission will also investigate whether or not these organizations “routinely” evaluate and update their processes in order to guarantee that they adhere to “compliance, transparency, and risk management policies.”

This announcement was very similar to the priorities that were released by the SEC in 2022; however, it appears that this year the regulator is placing more emphasis on the standards of care and practices by brokers rather than their consideration of the unique risks presented by “emerging financial technologies,” which was highlighted in 2022.

The most recent statement was issued after a report indicated that the SEC has been examining registered investment advisors that may be delivering digital asset custody to their customers without necessary credentials. The article was published almost two weeks after the most recent statement.

According to a report from Reuters, the investigation being conducted by the SEC has apparently been ongoing for a number of months but has been elevated to the top of the priority list after the failure of the cryptocurrency exchange FTX.

The Investment Advisers Act of 1940 stipulates that in order for investment advice businesses to be eligible to provide custody services to customers, the firms must also comply with the custodial precautions that are outlined in that act.

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South Korean Officials Confirm They Sent Team to Serbia to Find Do Kwon

by Blockchain News

Do Kwon, the controversial inventor of the now-defunct Terra ecosystem, is the subject of an escalated manhunt, with reports indicating that South Korean authorities have confirmed they have dispatched at least two personnel to Serbia in an effort to locate him.

According to a story that was published on the 7th of February by Bloomberg, the prosecutor’s office in Seoul said that the rumors “aren’t fake” about members of its team venturing out to the Balkan state in order to locate Kwon.

It would seem that at least two state officials traveled, one from the office of the prosecutor, and the other from the Ministry of Justice in South Korea.

Chosun Media, a magazine located in South Korea, said on December 11 that they had been notified by a state intelligence officer that Kwon had established a base of operations in Serbia.

There is no extradition treaty in place between South Korea and Serbia at the present time.

According to a recent opinion post written by Minso Kim for the Chosun Media outlet in South Korea, Kwon most likely found Serbia to be an excellent place to hide out as a result of the factors described above.

Kwon, however, has had his passport revoked by South Korea, which may make it more difficult for him to travel in the future.

Since South Korean prosecutors filed an arrest order against Kwon on September 14, he has been suspected of evading capture ever since. Kwon has rejected the allegations made against him throughout the month of October.

The failed entrepreneur, who is now 31 years old, has also been charged of violating regulations governing capital markets.

It is well knowledge that Kwon is a frequent tweeter; yet, he spent over two months without tweeting or retweeting a single message, which has led some people to wonder what the controversial figure has been up to in that time.

However, Kwon recently gave a response to an accusatory tweet that was directed at him, in which he said that he has never taken anybody else’s money and has never participated in any “hidden cashouts.”

Kwon has, up to this point, denied any misconduct.

The de-peg of the algorithmic stablecoin known as TerraClassicUSD (USTC), which caused the collapse of the Terra ecosystem, was one of the contributing factors. Terra Classic (LUNC) was intimately connected to the stablecoin, with the latter also approaching 100% of its value.

There was an estimated loss of value of sixty billion dollars brought on by the environment.

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Digital Currency Group Sells Shares in Subsidiary’s Crypto Funds

by Blockchain News

The cryptocurrency conglomerate known as Digital Currency Group (DCG) is apparently getting ready to generate cash and maintain its liquidity by selling its assets in cryptocurrency funds that are managed by a subsidiary of the company known as Grayscale Investments.

According to a report that was published on February 7 by the Financial Times, which cited United States securities filings, DCG sold approximately one quarter of its shares in Grayscale’s Ether (ETH)-based fund for approximately $8 per share, despite the fact that each share held a claim to nearly double that amount in ETH. The filings were cited in the report.

In addition to this, it is said to have sold down small share parcels in Grayscale’s Litecoin (LTC), Bitcoin Cash (BCH), and Ethereum Classic (ETC)-based trusts. This is in addition to its Digital Large Cap Fund, which is a single fund that invests in Bitcoin (BTC), Ether, Polygon (MATIC), Solana (SOL), and Cardano (ADA).

The response that DCG gave when queried about the share sales was that “it is just part of our regular portfolio rebalancing.”

In spite of this declaration, there are others who feel that Barry Silbert’s DCG might be heading for some kind of financial difficulty.

Another of its companies, the cryptocurrency lending business Genesis Global Capital, filed a bankruptcy petition on January 19 and is reported to owe its creditors more than $3 billion.

Companies controlled by DCG have been significantly impacted by the contagion that has resulted from FTX’s downfall. Over the last several weeks, these companies have been forced to let go of over 500 people.

However, DCG has taken a number of actions to maintain liquidity in 2023, such as informing its shareholders in a letter dated January 17 that it would be discontinuing its quarterly dividend payments as it seeks to improve its balance sheets. This was one of the many initiatives that DCG has done.

After stating that it had received offers for the cryptocurrency media outlet CoinDesk that were greater than $200 million, DCG has reportedly sought the assistance of the financial advisory firm Lazard in order to assist it in weighing up options to sell CoinDesk, which is another of its subsidiaries.

According to the company’s website, DCG’s venture capital portfolio includes about 200 crypto-related startups, some of which include Grayscale, Genesis, and CoinDesk. Additionally, DCG has interest in a number of other businesses, such as the cryptocurrency exchange Luno and the advising company Foundry.

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Voyager Digital Subpoenas FTX Executives

by Blockchain News

Subpoenas demanding information have been issued on former FTX CEO Sam Bankman-Fried and other FTX and Alameda Research officials by attorneys representing insolvent crypto broker Voyager Digital.

According to the filing made on February 6, the subpoenas have a very broad reach, and the attorneys for Voyager are asking for copies of all documents and communication that may have taken place between FTX businesses and the Securities and Exchange Commission or the Department of Justice.

In addition to a large number of additional papers, the attorneys have demanded information about the loan portfolio held by Alameda and Voyager, as well as FTX’s financial status both before and after the company filed for bankruptcy on November 11.

The other executives who were ordered to deliver the needed material by February 17 include a former CEO of Alameda named Caroline Ellison, the co-founder of FTX named Gary Wang, and FTX’s head of product named Ramnik Arora. Each of these people was issued with a subpoena.

Voyager and Alameda have extensive financial relationships, and Alameda is now attempting to recoup the $446 million that it has already given back to Voyager. It asserted in a document that was submitted on the 30th of January that since it had repaid Voyager inside the first ninety days after filing for its own bankruptcy, it had the legal right to “claw back” the monies for the benefit of its creditors.

After Alameda made a bid for Voyager’s assets that it was unable to honor, which cost Voyager $100 million and rendered Alameda’s claim subordinate to those of its other creditors, Voyager responded by claiming that its creditors had suffered “substantial harm” as a result of Alameda’s actions. Voyager made this claim in its lawsuit against Alameda.

In the meanwhile, according to a story published on February 7 by Law360, United States bankruptcy judge Michael Wiles said that he would be appointing a fee examiner to look into the professional costs associated with Voyager’s Chapter 11 case.

Wiles is said to have claimed that the professional fees expended inside the bankruptcy process were larger than he anticipated, and the rationale that was presented by the U.S. Trustee had apparently persuaded him that a fee examiner would be advantageous.

Wiles did observe, however, that an examiner may wind up costing the estate more than it would be able to save in other professional expenses, and he suggested putting a ceiling on the examiner’s own fees in order to prevent this from happening.

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The UK is a step closer to launching a central bank digital currency

by Blockchain News

After the publication of a consultation document that explains the planned digital pound, which the general public has dubbed “Britcoin,” the United Kingdom is one step closer to creating a central bank digital currency (CBDC).

The Bank of England (BoE) and the United Kingdom Treasury both contributed to the publication of the 116-page consultation document on February 7th. In addition to that, a technology working paper that delves into the technical as well as economic design issues was published.

CBDCs such as the digital pound may co-exist in what the authors of the article believe to be a “mixed payments economy,” despite the increase of privately-issued stablecoins over the last few years, according to the findings of the paper.

“The digital pound does not need to be the predominate form of money in order to accomplish its public policy aims in the same way that cash coexists alongside private money. It is possible that the digital pound will coexist with other types of currency, such as stablecoins.

Although the Bank of England (BoE) and the Treasury Department (Treasury) have expressed optimism that a digital version of the pound would be introduced by 2025 “at the earliest,” they are not yet one hundred percent positive that this will really occur.

According to the report, “The Bank and HM Treasury assess it is likely to be necessary in the UK to have a digital pound,” however there is currently no decision that can be made to adopt such a currency.

According to the paper, the primary objective behind the launch of the digital pound is to “promote innovation, choice, and efficiency in domestic payments” and to ensure that the money issued by the central bank of the United Kingdom continues to serve as “an anchor for confidence and safety” in the monetary system of the country.

“For the digital pound to play the role that cash plays in anchoring the monetary system, it needs to be usable and sufficient adopted by households and businesses,” this quote from the Financial Times reads. “For the digital pound to play the role that cash plays in anchoring the monetary system, it needs to be usable and sufficient adopted by households and businesses.”

Users will have access to e-GBP after they have established a connection to an API that is managed by the private sector and that, in turn, links to the core ledger.

Additional programmability capabilities, including as smart contracts and atomic swaps, which make it possible for assets to be moved across networks, will be made available.

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Guarantors of Sam Bankman-Fried’s Bail Bond signed off

by Blockchain News

For the time being, neither of the two guarantors who endorsed a portion of Sam Bankman-250 Fried’s million dollar bail bond will have their identities revealed to the public.

A court has also decided against an arrangement that would have allowed Bankman-Fried to use certain messaging applications. This decision was made by the judge.

On February 7, at the very last minute, the attorneys for Bankman Fried submitted an appeal to stop the publishing of the identities of the guarantors. The appeal did not include any further grounds against the disclosure; nonetheless, it will delay the enforcement of the order until February 14 in order to permit an application for a second stay of execution.

Following the judgement that took place on January 30 in which United States District Judge Lewis Kaplan approved a combined petition from eight prominent media sites seeking to unseal the guarantors’ identities, it was anticipated that the appeal would be filed.

Given the unprecedented nature of the situation, Kaplan pointed out that it was quite possible that his ruling would be challenged in court.

He stated that the arguments made by Bankman-lawyers Fried’s that guarantors “would face similar intrusions” as Bankman-parents Fried’s lacked merit given that the size of their individual bonds was much smaller, at $200,000 and $500,000. He said that Bankman-lawyers Fried’s had no right to make those arguments.

Joseph Bankman and Barbara Fried, Bankman Fried’s parents, were the other two parties that signed off on the bond. The bond was approved by all four parties.

In addition, the court said that the guarantors had freely signed individual bonds in a “well publicized criminal procedure,” and had thus placed themselves up to the scrutiny of the general public as a result of their actions.

In the meanwhile, on February 7th, Kaplan decided against approving a joint agreement that had been negotiated between Bankman-legal Fried’s team and the prosecution. This agreement would have changed Bankman-bail Fried’s restrictions and enabled him to use certain messaging applications.

Although Kaplan did not cite a rationale for refusing the request, he did mention that more discussion on the topic will be place at a hearing scheduled for February 9.

After it came to light that the former CEO had been communicating with both current and former members of staff, Judge Kaplan issued a ruling on February 1 that prohibited Bankman-Fried from contacting employees of FTX or Alameda Research. The judge justified this decision by citing the potential for “inappropriate contact with prospective witnesses.”

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Ishan Wahi pleads guilty to two counts of conspiracy to commit wire fraud

by Blockchain News

Ishan Wahi, a former product manager at Coinbase Global Inc., has entered a guilty plea to two charges of conspiracy to conduct wire fraud in a case that has been dubbed the first insider trading case using bitcoin by the prosecution in the United States.

According to a story that was published by Reuters on February 7th, the authorities are alleging that Wahi gave sensitive information to his brother Nikhil and friend Sameer Ramani, including upcoming announcements of new digital assets that Coinbase customers will be able to trade. The announcement resulted in a subsequent increase in the value of assets, which made it possible for Nikhil and Sameer Raman to create illegal profits of at least $1.5 million. Nikhil Wahi and Ramani are accused of utilizing Ethereum blockchain wallets to buy digital assets and engaging in trade prior to the notifications made by Coinbase.

Ishan Wahi confessed at the hearing on February 7 in a Manhattan federal court that he knew Sameer Ramani and Nikhil Wahi would use such information to make trading choices. The hearing took place in a federal court. He continued by saying, “It was inappropriate to misappropriate and spread Coinbase’s property.”

Ishan Wahi has reached a bargain with the prosecution in which he would serve between 36 and 47 months in jail in exchange for his guilty plea. The date set for his hearing to determine his sentence is May 10th. According to reports, Coinbase provided the authorities with the results of an internal investigation company had conducted into the trade.

Due to the fact that Nikhil Wahi benefited approximately $900,000 from his illegal actions, U.S. prosecutors recommended that he serve a jail term ranging from ten to sixteen months in prison. This recommendation was made because of the fact that he engaged in illegal activity. However, his defense attorneys offered an alternate verdict, arguing that the man’s motivation for the act was to reimburse his parents for the money they had put into his college degree and that the man did not have a history of committing any other crimes.

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Lido Announces Upcoming Upgrade, Introduces New Staking Router

by Blockchain News

Procedure for staking liquid assets With the introduction of the impending Lido v2 update, Lido is planning to provide staking reward withdrawals in addition to improving the architecture of the staking process.

The implementation of Lido’s new Staking Router and the facilitation of withdrawals for Ether (ETH) stakers are going to be two of the most significant focus areas of the proposed update.

A modular architectural design is introduced by the Staking Router. This architecture enables the construction of on-ramps for additional node operators, such as solo stakers, decentralized autonomous organizations (DAOs), and distributed validator technology clusters. The latter refers to a technique that enables validator responsibilities to be distributed over a number of different nodes.

It is hoped that the modular architecture of the Staking Router would make it possible for Lido to evolve into an extendable protocol. Validator modules are going to be handled in the same manner as sets of validator pools, which are capable of performing the function of a supplier for the protocol. Modules will be responsible for managing an internal operator registry, storing validator keys, and distributing stakes and rewards among its operators.

Users who are interested in withdrawing ETH will be required to undergo a suggested request and claim procedure. Users will be required to lock their stETH before they can begin the withdrawal process after submitting a request. The user’s ETH will be retrievable after the request has been fulfilled, the ETH will be locked, the locked stETH will be burned, and the request will be marked as claimable by the protocol.

A concise roadmap describes development phases from February to April 2023, during which time code will be tested on the Goerli Testnet. This will be followed by a withdrawal credential rotation ceremony and the upgrade itself.

The withdrawal credential rotation is required because of a discrepancy between Lido protocol validators that use BLS-based “0x00” signatures and those that use newer smart-contract based “0x01” signatures. BLS-based “0x00” signatures are the older method, while “0x01” signatures are based on smart contracts.

The credentials are going to be rotated by Lido, and they’re going to do it via a DAO ceremony. During the ceremony, participants are going to sign a rotation message, and then that message is going to be broadcast to the consensus layer network.

Lido Finance is now leading the race as the biggest decentralized finance protocol, with over $8 billion of value pledged on its platform moving into 2023, as was previously reported. Ethereum’s next Shanghai upgrade is expected to take place in Shanghai, China.

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Hut 8 Mining Company to Merge with US Bitcoin

by Blockchain News

Hut 8 Mining, a Canadian company that mines cryptocurrencies, has announced publicly their desire to merge with US Bitcoin to become Hut 8 Corp., often referred to as “New Hut.” Hut 8 Mining is also known as “New Hut.”

The news that the boards of directors of both firms had given their unanimous approval to a final business combination agreement was revealed in a statement that was issued by Hut 8 on February 7th. Through the execution of this agreement, the two mining businesses are going to be merged into a single corporation with its headquarters located in the United States. After the merger is finalized, Hut 8 Mining and US Bitcoin, also known as USBTC, will both become subsidiaries of New Hut, and the company’s stockholders will collectively own fifty percent of the newly amalgamated business. The former Hut 8 Mining and USBTC locations will hereafter be referred to as New Hut.

It not only accelerates our diversified strategy and positions us for near-term growth, but it also establishes us as a strong, U.S.-based player that is ready and able to seize additional opportunities as they arise, according to Hut 8 CEO Jaime Leverton. “Bringing together Hut 8’s operational track record and diversified revenue streams with US Bitcoin’s scalable mining sites, sizeable hosting business, and industry-leading managed infrastructure operations,” said Hut 8 CEO Jaime Leverton Mining bitcoins is the primary focus of US Bitcoin, a firm that was founded in 2014.

It is anticipated that after the merger is finalized, the New Hut company would have access to around 825 megawatts of electricity over a total of six distinct sites, which may then be used for bitcoin mining and other operations. This will include five sites in the United States, including New York and Texas, as well as one location in Canada, the province of Alberta. Each of these five locations will have a capacity of 5.6 exahashes per second (EH/s) for their own mining activities.

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Crypto and NFT Communities Respond to Turkish Earthquake Relief Efforts

by Blockchain News

On February 6, a devastating earthquake struck the southeastern part of Turkey at the border with Syria. As of right now, over 5,000 people have lost their lives as a result of the quake. The earthquake occurred over a stretch of the fault line that was 100 kilometers (62 miles) long and had a magnitude of 7.8 on the Richter scale. This is considered to be a “significant” earthquake on an international scale.

The region’s infrastructure sustained significant damage, which led to a catastrophic humanitarian crisis that crossed international borders and claimed the lives of many people.

Nevertheless, there was an immediate reaction all throughout the globe. People have been collecting donations for local and international humanitarian groups via the internet and different social media platforms in order to give assistance to individuals who are impacted by the disaster in the places that have been affected.

AFAD Turkiye, the government agency for such calamities, and the non-governmental organization Ahbap, which is run by the philanthropist Haluk Levent, have been at the lead of coordinating an inflow of supplies. Both of these organizations are among the major humanitarian operations in Turkey.

Levent made the announcement that his company is now able to receive donations in the form of a variety of digital currencies by launching crypto addresses to do so.

Refik Anadol, an artist and art director from Turkey, also launched a crowdfunding campaign via the use of an Ether (ETH) address. He plans to donate the money that is raised to both AFAD and Ahbap.

Within the Web3 business, a number of different firms have come up to provide assistance, whether it be in the form of cryptocurrency or fiat currency contributions, or even in the form of physical assistance.

Bitget, a cryptocurrency derivatives trader, made the announcement that it would contribute 1 million Turkish liras (approximately $53,000), while Bitfinex, Keet, Synonym, and Tether each pledged 5 million Turkish liras (approximately $265,500), and Gateio pledged 1 million Turkish liras (approximately $53,000).

Local Turkish cryptocurrency exchange Bitci has dispatched a relief truck to the epicenter of the earthquake while simultaneously announcing that the entirety of the commission income generated during the month of February will be donated to Ahbap in the name of the earthquake that was centered in Kahramanmaraş. Icrypex made the announcement that they would be coordinating their efforts with AFAD and Ahbap.

Both the Turkish branch of ByBit and OKX have pledged to contribute to the relief effort by sending one million liras (about $53,000) and one hundred thousand dollars, respectively.

Today, the Turkish people are first in our minds and hearts. Together with the creative community of The Sandbox in Turkey, we are coordinating with the necessary non-governmental groups to establish a relief fund and provide assistance to places that were impacted by the earthquake.

He said that along with The Sandbox Turkey, they had assisted in filling a truck with emergency supplies for the victims and individuals who were impacted, and they were looking at opportunities for further long-term assistance.

Nonfungible tokens, often known as NFTs, have been suggested as another potential method of generating money for those affected by the catastrophe.

The Turkish musician and NFT artist Pak tweeted about a contribution of ETH to Ahbap, along with intentions for an NFT project to provide long-term assistance. In its proposal, Gate.io emphasized the possibility of establishing an NFT assistance program in the near future in order to provide extra help.

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