FTX investors file class-action suit against Sequoia

According to reports, users of the now-defunct cryptocurrency exchange FTX have taken aim at financiers who marketed the platform, arguing that their efforts provided a “air of legitimacy” to the now-defunct exchange in a situation that has been described as “tricky” by a cryptocurrency attorney.

According to a story that was published by Bloomberg on February 15th, FTX investors had filed a class-action lawsuit on February 14th against the venture capital company Sequoia Capital as well as the private equity companies Thoma Bravo and Paradigm.

The investors said that the companies were promoting “their own investments” in FTX, which amounted to hundreds of millions of dollars.

It was stated that the companies participated in a promotional marketing campaign in 2021, which the investors said gave the discredited cryptocurrency exchange a “air of credibility.”

The three companies were all investors in FTX’s $900 million Series B round, which took place in July 2021. This was the biggest raise in the history of cryptocurrency, and individual partners at each of the three companies spoke favorably of former FTX CEO Sam Bankman-Fried at the event.

Matt Huang, one of the co-founders of Paradigm, issued a statement in the wake of the fundraising announcement in July 2021, in which he referred to Bankman-Fried as a “unique” entrepreneur who is “stunningly ambitious.”

He went on to say that despite the fact that Sequoia did not do its due diligence to a particularly high standard, the company is not “liable to others.”

The fact that there is no evidence to imply that Sequoia wasn’t “playing within the regulatory guidelines” led Hennessy to assume that it was a matter of “buyer beware.”

According to a separate report published by Bloomberg on February 15, it was revealed that in the same court filing, Sam Bankman-Fried and his father, along with former executives of FTX and Alameda Research named Caroline Ellison, Nishad Singh, and Gary Wang, were all served with a subpoena, which is an order compelling a person to appear in court in order to provide additional evidence.

It was said that Sam Bankman-Fried is likely to show up in court on February 17, while Joseph Bankman, Ellison, Wang, and Singh are scheduled to appear in court on February 16.


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Polygon Announces Beta Launch of Zero-Knowledge Ethereum Virtual Machine

Polygon (MATIC), an Ethereum layer-2 solution provider, has finally revealed the much-anticipated scaling update that has been in the works for quite some time. The beta launch of its zero-knowledge Ethereum Virtual Machine (zkEVM) mainnet is scheduled for March 27.

Polygon said in a blog post that was published on February 14 that after three and a half months of “battle testing,” the platform would be ready for the launch of the mainnet the following month.

It was first released as a testnet in December of the previous year and has since been marketed as “seamless scalability for Ethereum.”

Since the beginning of this decade, work on the scaling technique known as zk-rollup has been continuously progressing. In that span of time, the Polygon zkEVM system has accomplished a number of noteworthy goals, as mentioned by the team.

Among them are the implementation of more than 5,000 smart contracts, the production of more than 75,000 zk-proofs, the creation of more than 84,000 wallets, and the completion of two public third-party audits.

The group said that maintaining a secure environment is their first concern, which is “why Polygon zkEVM has been subjected to a battery of testing and audits,” as they put it.

This technique makes use of zero-knowledge proofs, which are cryptographic confirmations that, in the context of scaling, allow platforms to verify huge volumes of transaction data before bundling them up and confirming them on Ethereum.

There are other teams than Polygon that are toiling away at a zkEVM solution. Scaling provider zkSync is creating a solution that is comparable to EVM with its zkPorter product. This product moves key transaction data off-chain.

Scroll, another company that specializes in scaling solutions, is also developing a zkEVM solution in conjunction with the Ethereum Foundation’s Privacy and Scaling Explorations group.

Additionally, the Ethereum Foundation is providing financing for a project known as Applied ZKP. This project’s objective is to create a zk-rollup that is compatible with the EVM.

The group elaborated on the relevance of the technology by claiming that real EVM-equivalence indicates that Ethereum may be scaled “without having to settle for half-measures.”

The easiest approach to grow Ethereum is to maintain the present Ethereum ecosystem, which means that the code, tools, and infrastructure all need to function seamlessly together. And that is precisely what the Polygon zkEVM project hopes to do.”

The scaling technology offers large reductions in the costs of individual transactions. According to the researchers, the expenses of providing proof for a huge batch of hundreds of transactions have been reduced to around $0.06, while the costs for providing proof for a straightforward transfer are less than $0.001.

In November 2021, the company that is responsible for Polygon, Matter Labs, completed a Series B funding round that was lead by Andreessen Horowitz and received $50 million. The funds will be used to develop zk-Rollups that are interoperable with EVMs.


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Celsius Creditors to Sue Executives for Fraud

It has been proposed by the official committee of Celsius creditors that a lawsuit be filed against the company’s co-founder Alex Mashinsky and other executives for “fraud, recklessness, gross mismanagement, and self-interested conduct,” all of which contributed to the ultimate failure of the cryptocurrency lender.

Attorneys for the Official Committee of Unsecured Creditors said in a proposed complaint that was submitted to a New York Bankruptcy Court on February 14 that the action comes after six months of inquiries into Celsius’ current and past directors, officials, and employees.

The U.S. Trustee selected seven Celsius account holders to serve on the committee this past July. The group was established by the U.S. Trustee. Along with the interests of unsecured creditors, the committee acts as a representative for those who possess Celsius accounts.

According to documents written by attorneys from White & Case LLC, “The Committee’s inquiry has discovered substantial claims and causes of action based on fraud, negligence, gross mismanagement, and self-interested behavior by the Debtors’ former directors and officers.”

The planned legal action intends to file claims and causes of action against the following Celsius executives, people, and businesses that are affiliated with them:

The attorneys wrote in their letter that “Mr. Mashinsky, Mr. Leon, Mr. Goldstein, Mr. Beaudry, Ms. Urata-Thompson, and Mr. Treutler breached their fiduciary obligations to Celsius.” They went on to say that “those parties were aware Celsius was promising its customer’s interest payments that it could not afford and did nothing to fix the problem.”

The lawyers have also alleged that the executives made “negligent, reckless investments” that caused Celsius to lose $1 billion in a single year, while mismanagement led to another quarter-billion dollar loss “because they could not adequately account for the company’s assets and liabilities.” This loss was attributed to the fact that the executives “could not adequately account for the company’s assets and liabilities.”

According to the allegations made by the plaintiffs, “after that loss, they did not invest in or enhance the company’s systems to appropriately solve the problem, which resulted in subsequent losses.”

The motion also alleges that the executives of Celsius directed the company to spend “hundreds of millions of dollars” on public markets to artificially inflate the price of CEL tokens, while at the same time the executives “secretly sold tens of millions of CEL tokens” for their own benefit.

They did nothing except observe as Mr. Mashinsky carelessly gambled hundreds of millions of dollars on how the cryptocurrency market would move as they did so. They covered up Mr. Mashinsky’s persistently dishonest statements on Celsius’ investments and financial situation.

The attorneys continued by saying that “finally, when it became apparent that Celsius would be required to file for bankruptcy, the Prospective Defendants withdrew assets from the sinking ship while actively encouraging customers to keep their assets on the Celsius platform,” the prospective defendants did this.

The creditors committee of Celsius said that the planned lawsuit was just the “first of many stages” in their inquiry into suspected wrongdoings committed by former Celsius executives and the restitution of assets to victims.

On March 8, there will be a hearing on the planned complaint that was submitted.


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LidoDAO is considering selling or staking its $30 million

The decentralized autonomous organization that is responsible for Lido, which is the biggest Ethereum staking pool, is now debating whether or not it should stake the $30 million in Ether (ETH) that is currently in its treasury or sell it.

Steakhouse Financial, the financial arm of the DAO, put out a proposal on February 14 that examines four potential courses of action. One of these options is the possibility of the DAO staking some or all of its ETH to Lido in the form of Lido Staked ETH (stETH).

Another possibility involves the LidoDAO selling some or all of its 20,304 ETH in exchange for a stablecoin. This would be done with the intention of extending the DAO’s runway.

The suggestion comes at a time when ETH staking withdrawals will soon be possible via Ethereum’s Shanghai and Capella upgrades. According to the Ethereum Foundation, both upgrades are scheduled to take effect at some point in the beginning of this year.

Although changing the ETH to Staked ETH might result in an increase in the number of protocol awards, the DAO is mindful of the possibility that excessive staking could result in the organization not having sufficient Ether on hand “just in case.”

Steakhouse Financial said that in order to “preemptively secure more runway,” it may be required to exchange Ether for a stablecoin. This statement was made with reference to operational expenditures.

With the price of ETH fluctuating between $1,100 and $1,700 over the last few months, Steakhouse Financial observed that with LidoDAO’s current inflows at roughly 1000 stETH each month, the DAO is producing about $1.3 million to 1.5 million per month.

According to Steakhouse Financial, the numbers should be “sufficient to pay monthly operating expenditures” on their own.

However, they are currently considering whether or not it would be beneficial to convert their surplus of stETH into a stablecoin in order to better prepare themselves for any changes in market circumstances that may result in higher operational expenditures.


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What the U.S. Congress Decides on Crypto Will Ultimately Overstepping their authority

The policy expert for the cryptocurrency advocacy group Blockchain Association says that despite attempts to police cryptocurrency through enforcement actions, United States financial regulators “are bound by legal reality,” and Congress will ultimately decide what regulations should be put in place for cryptocurrencies.

Jake Chervinsky, the chief policy officer of the organization, contributed his thoughts to a lengthy Twitter conversation on the topic of the current status of crypto policy on February 14.

He made the observation that the Securities and Exchange Commission as well as the Commodity Futures Trading Commission “do not have the ability to completely oversee cryptocurrency.”

Given the ideological divide that exists between the House Republicans and Senate Democrats, Chervinsky is of the opinion that a compromise on the crypto legislation is “unlikely.” He said that the Securities and Exchange Commission and the Commodity Futures Trading Commission had exceeded their powers in an effort to “get things done” without Congress.

Chervinsky issued a plea for the sector to maintain its composure in the wake of the recent flurry of action from the SEC, which he referred to as “crypto’s biggest opponent.” As an example, Chervinsky cited the SEC’s crackdown on staking services.

The settlement that the SEC reached with the cryptocurrency exchange Kraken on February 9, which forbade Kraken from ever selling staking services to consumers in the United States, has been publicly criticized by SEC Commissioner Hester Peirce.

Peirce expressed his disagreement with the majority opinion in a statement dated February 9, in which he said that regulating a growing business via enforcement “is neither an effective or equitable manner of governing” the industry.

It was proposed by Chervinsky that litigation is one method the cryptocurrency business may press for appropriate legislation. Chervinsky said that the court plays a key role in influencing policy that has been “ignored.”

Coinbase, a cryptocurrency exchange, is also the subject of an SEC investigation that is similar to the one that led to Kraken’s settlement.

A more stronger position has been adopted by Coinbase CEO and co-founder Brian Armstrong, who believes that it would be disastrous for the United States to do away with staking for cryptocurrencies.

In a tweet dated February 12, Armstrong contended that Coinbase’s staking services are not securities and said that he would “gladly defend this in court if it were necessary.”

The decisions that judges make in important cases establish new standards in the law. If such a case were to be taken before a court and the judge concluded that Coinbase’s staking services did not qualify as securities, then other cryptocurrency businesses who are in a situation comparable to Coinbase’s may utilize the precedent as part of their defense.


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Circle Denies Receiving ‘Wells Notice’ Over USDC

The business that generates USD Coin (USDC), Circle, has denied allegations that it has been served with a “Wells Notice” in connection with its dollar-pegged stablecoin. These allegations have been contested by the company that issues USD Coin (USDC).

On February 14, a tweet by a Fox Business reporter named Eleanor Terrett that has since been deleted claimed that the United States Securities and Exchange Commission had ordered Circle to stop the sale of USDC due to the fact that the stablecoin was an unregistered security. The tweet claimed that the SEC had ordered Circle to stop selling USDC due to the fact that the stablecoin was an unregistered security. After the reporter was called out on her fraudulent statements, the tweet was removed and she apologized. The tweet was taken down at a later point in time.

On the other hand, Dante Disparte, chief strategy officer and director of foreign policy at Circle Pay, promptly and aggressively replied to the claim by disputing its legitimacy. He said that Circle Pay is not responsible for the claim. Just 15 minutes after Terrett’s post, Disparte responded to Terrett’s allegation on Twitter by declaring that his company has not been served with a Wells Notice. This statement came in response to Terrett’s tweet. This remark was made in reaction to the allegation that Terrett made before.

The Securities and Exchange Commission (SEC) will send recipients a formal communication that is known as a “Wells Notice” in order to alert them of its plan to commence enforcement proceedings against them. The receivers of this notice will be informed that the agency intends to take action against them as a result of this notice.

Terrett said that she “went with the word of multiple trustworthy sources” and apologized for the error in her reaction to Circle’s denial of the claim. Circle had stated that the allegation was false. In addition to this, she said that she “went with the word of several credible sources.”


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Polaris Ventures, a charity created by former FTX and Alameda

It has been claimed that Polaris Ventures, a charity founded by Ruairi Donnelly, a former head of staff at both FTX and Alameda, wants to get access to around $150 million in profits made through the selling of employee tokens by the insolvent exchange.

According to an article that was published in the Wall Street Journal on February 14, Donnelly was paid an annual salary of around $562,000 while he was employed by FTX. This pay was converted into FTX Token (FTT) at a rate that was not made accessible to the general public, which was $0.05. Reportedly, the former CEO “donated” the tokens to Polaris Ventures, which then proceeded to sell them for a price of $1 once public trading commenced in 2019 and 2020, resulting in the former executive receiving millions of dollars.

In November, FTX filed for Chapter 11 bankruptcy, which was also the moment when numerous wallets and cash associated with the exchange were confiscated by authorities or otherwise blocked for the duration of the legal process. It has been alleged that Donnelly is looking to pay out the $150 million in the midst of public criticism of FTX and Alameda and their previous CEOs.

It has been claimed that Donnelly’s legal team said that the charity’s FTT tokens “were not FTX’s finances,” implying that they are not susceptible to claims brought forward by third parties. On December 19, the debtors for the exchange said that they would “make arrangements for the restitution” of monies provided to charitable organizations or political campaigns. They also proposed taking legal action to retrieve payments with interest should any organization refuse to pay them back.

During the process of FTX filing for bankruptcy in the United States, many agencies have declared that they would be conducting investigations into charity groups. Due to the fact that FTX is a “major sponsor” of Effective Ventures, the Charity Commission for England and Wales said in January that it has initiated an investigation into the organization.

This article has been updated to reflect revisions that were made to a story in the Wall Street Journal about the usage of the term “insider.” The modification was made on February 15 at 3:01 AM.

According to reports, Ruairi Donnelly was able to make a profit by purchasing FTT tokens at a discounted rate and then reselling them at a higher one.


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Siemens Issues World’s First Blockchain Bond

Siemens, a German multinational firm that is a leader in the fields of engineering and technology, is one of the first companies in Germany to issue a digital bond on a public blockchain. Because of this achievement, Siemens is now able to count itself among an exclusive club of enterprises in Germany. It has a value of sixty million euros (or sixty-four million dollars), a maturity date of one year, and a maturity date, all in accordance with Germany’s Electronic Securities Act.

According to the announcement that was released on the 14th of February, the bond was issued directly to investors such as DekaBank, DZ Bank, and Union Investment without the need of paper-based international certificates or central clearing. When compared to the traditional methods of issuing bonds, Siemens commented that the approach made it possible for transactions to be carried out substantially more rapidly and effectively.

In the announcement, Siemens put a significant amount of emphasis on the benefits of employing digital bonds as compared to traditional bond-issuing methods. The company asserts that “issuing the bond on a blockchain delivers a lot of benefits” as contrasted to the procedures that came before it. Two examples of items that will become unnecessary as a consequence of this change are paper-based international certifications and central clearance. In addition to this, the bond may be issued to investors on a one-on-one basis without the need for an intermediary financial institution such as a bank to be present during the transaction.

Despite the fact that the transaction was carried out using conventional modes of payment rather than the digital euro at the time of the transaction since the digital euro was not yet available, it was nonetheless completed in only two days. Siemens has set itself the lofty objective of being the industry leader in the ongoing process of creating digital solutions for the capital and securities markets. This is a very ambitious target.


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Taurus raised $65 million

The Series B capital round for Taurus, a company that specializes in providing digital asset infrastructure to financial institutions in Europe, was led by Credit Suisse and brought in a total of $65 million. In addition, a number of additional institutional investors, such as Deutsche Bank, Pictet Group, Cedar Mundi Ventures, Arab Bank Switzerland, and Investis, took part in the investment round.

The announcement made on February 14 stated that the funds that were raised by Taurus would be used to strengthen its growth strategy in three primary areas: recruiting top engineering talent to continue developing its platform; expanding its sales and customer success organization to enhance its infrastructure solutions with new offices in Europe, the UAE, and later in the Americas and Southeast Asia; and finally, maintaining the most stringent security, risk, and compliance requirements across all of its operations.

Taurus has formed collaborations with over 25 different financial institutions and business customers across eight countries and three continents. These ties span the globe. Taurus counts Arab Bank Switzerland, CACEIS, Credit Suisse, Deutsche Bank, Pictet, Swissquote, and Vontobel among its clientele. Other customers include Credit Suisse, Swissquote, and Vontobel.

Through the digitization of private assets, Taurus believes there is a significant opportunity for the digital asset business to achieve a value of more than $10 trillion. The business has previously participated in the tokenization of 15 projects with a variety of issuers situated in Switzerland and the European Union. These issuers include banks, asset managers, small and medium-sized companies, and startups. In addition, a publicly listed insurance firm has just selected Taurus as their platform of choice for tokenizing actual assets.

Companies dealing in digital assets continue to seek financing despite the fact that the price of cryptocurrencies is in a bear market so that they may continue to expand and innovate within the ecosystem.


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Many Lawmakers and Witnesses Call for hearing exploring the crash of the crypto market

During a hearing that was called to investigate the collapse that occurred in the cryptocurrency market, the United States Securities and Exchange Commission (SEC) and Gary Gensler, the director of the SEC, came under criticism from attendees. Throughout the course of the hearing, a number of legislators and witnesses directed their criticism in this general direction.

During a hearing on February 14 titled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets,” the ranking member of the Senate Banking Committee, Tim Scott, stated that Gensler should appear before Congress before September to discuss additional enforcement actions in the cryptocurrency space. The hearing was titled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets.” In addition to this, Scott has been critical of the chairman of the SEC for not testifying and instead “making rounds on the morning talk shows.” The following was the focus of the hearing: “The Collapse of Cryptocurrencies and the Reasons Why Financial Systems Require New Protective Measures for Digital Assets The senator from South Carolina stated that the Securities and Exchange Commission (SEC) had not provided “the least amount of guidance,” which may have been a contributing factor to the absence of investor protection at financially struggling businesses such as FTX, Terra, BlockFi, Voyager, and Celsius.

 “to assume that the SEC has failed to take any significant preventive effort to assure that this type of catastrophic failure does not happen again” “to presume that the SEC has not made any significant attempt to prevent this from happening” “Have they just been dozing off behind the wheel despite the fact that they have every necessary piece of equipment? It would be quite beneficial if Chairman Gensler could make his way in here as soon as possible rather than later on, and deliver his views as soon as feasible.


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