Binance CEO Responds to Forbes Article on Fund Shuffling

Binance, one of the world’s largest cryptocurrency exchanges, has been in the news recently following a Forbes article that raised concerns about the movement of funds by the exchange. The article highlighted the transfer of $1.8 billion in stablecoin collateral by Binance to hedge funds such as Tron, Amber Group, and Alameda Research between August and December 2022. The article also drew parallels between Binance and the now-defunct FTX, which collapsed due to financial mismanagement.

In response to the article, Binance CEO Changpeng Zhao took to Twitter to refute the allegations made by Forbes. He called the article “FUD” and said that the authors did not understand how an exchange works. He emphasized that Binance’s users are free to withdraw their assets at any time they want.

The Forbes article also discussed the failed Voyager bid by Binance.US and the planned legal action by the United States Securities and Exchange Commission against Paxos Trust Company, the issuer of the Binance-branded stablecoin, Binance USD (BUSD). Binance had announced in February 2022 that it would take a $200 million stake in Forbes, but the deal fell through after Forbes’ plan to go public did not materialize.

The New York Department of Financial Services (NYDFS) also ordered Paxos Trust Company to terminate its issuance of BUSD. In response, Binance announced that it would no longer mint BUSD but would support the stablecoin until its redemption period ends in February 2024. The exchange is now looking into non-USD stablecoins.

Binance has faced regulatory scrutiny in several countries, including the United States, Japan, and the United Kingdom. The exchange has been accused of not complying with anti-money laundering and know-your-customer regulations. Binance has denied the allegations and said that it takes compliance seriously. The exchange has also announced plans to set up a regional headquarters in Malta to comply with European Union regulations.

Despite the regulatory challenges, Binance remains one of the largest cryptocurrency exchanges in the world. The exchange has a wide range of products and services, including spot trading, derivatives trading, and a decentralized exchange. Binance also has its own blockchain, Binance Smart Chain, which has become popular among developers for building decentralized applications (dapps).

In conclusion, the Forbes article has raised concerns about the movement of funds by Binance and its compliance with regulatory requirements. Binance CEO Changpeng Zhao has refuted the allegations and emphasized that the exchange takes compliance seriously. Binance has faced regulatory challenges in several countries but remains one of the largest and most innovative cryptocurrency exchanges in the world.


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Illuvium Community Blocks NFT Event Over Controversial Figure

Illuvium, an interoperable blockchain game, is working to be a leader in decentralized governance and Web3 gaming. As part of this mission, the project’s community leveraged its decentralized autonomous organization (DAO) to cancel an NFT pack-opening event between Illuvium CEO Kieran Warwick and Three Arrows Capital (3AC) founder Su Zhu. The event, an “Influencer Illuvitars D1sk Battle,” was part of a series where prominent crypto personalities go against each other to open NFT packs.

However, due to the controversies surrounding Zhu and 3AC, Illuvium’s community expressed concerns over the potential risks of being associated with Zhu, who currently faces various accusations of unethical behavior. Illuvium’s CEO suggested that the matter be voted on by its decentralized council, and following this, the council unanimously voted to cancel the event to avoid any association with Zhu.

According to Illuvium’s council member Deraji, the Illuvium project is committed to avoiding potential association with unethical individuals and incidents that may impede mainstream adoption. “In this case, the community made their collective voices heard that this event risked the reputation that the DAO has worked so hard to build. We leveraged our governance model to avoid having our most well-known figure share a stage with Zhu,” Deraji explained.

The Illuvium CEO accepted the outcome and voiced his confidence and belief in the community’s decision. “Although I weighed the benefits against the drawbacks, I will always respect the council’s verdict,” he said.

The DAO’s decision to not risk association with 3AC may have saved them from potential repercussions. On Feb. 10, a crypto exchange project associated with 3AC triggered a backlash from members of the crypto community. Many people were enraged by the launch, with some swearing never to use the exchange.

Additionally, community members have constantly voiced their disapproval of Zhu for his role in the 3AC bankruptcy. On Jan. 3, the 3AC founder started firing off accusations at the Digital Currency Group, alleging that it conspired with FTX to target Terra. However, community members called out to Zhu and asked him to focus on his own misdeeds.

This incident highlights the power of decentralized autonomous organizations and the importance of avoiding potential association with individuals who may harm a project’s reputation. By listening to its community and leveraging its DAO, Illuvium was able to make a decision that aligned with its values and mission.


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UAE’s Ras Al Khaimah to Launch Free Zone for Virtual Asset Companies

Ras Al Khaimah, one of the UAE’s seven Emirates, is set to launch a free zone dedicated to digital and virtual asset companies. The new free zone, RAK Digital Assets Oasis (RAK DAO), aims to create a hub for non-regulated activities in the virtual assets sector. This move comes as the UAE continues to attract global players in the crypto industry, positioning itself as a forward-thinking hub for crypto firms.

RAK DAO will provide a dedicated space for digital and virtual asset service providers operating in emerging technologies, such as the metaverse, blockchain, utility tokens, virtual asset wallets, nonfungible tokens (NFTs), decentralized autonomous organizations (DAOs), decentralized applications (DApps), and other Web3-related businesses. The free zone is expected to start with non-financial activities before introducing financial activities at a later stage.

Entrepreneurs looking to launch a crypto exchange may have to wait as this is an ESCA-regulated financial activity. The Securities and Commodities Authority (SCA) is one of the UAE’s main financial regulators, and it has authority throughout the Emirates, except for the financial free zones such as the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC).

The new free zone will add to the more than 40 multidisciplinary free zones in the country that have already attracted numerous crypto, blockchain, and Web3 firms. These include the Dubai Multi Commodities Centre (DMCC), DIFC, and the ADGM.

As part of the UAE’s efforts to create a friendlier regulatory environment for crypto firms, Dubai unveiled its virtual assets law in March 2022, along with the Virtual Asset Regulatory Authority. This was followed by the Financial Services Regulatory Authority’s guiding principles on regulating and overseeing the new asset class and its service providers in September 2022.

Sheikh Mohammed bin Humaid bin Abdullah Al Qasimi, the chairman of the RAK International Corporate Centre, the operator of the new free zone, expressed excitement about the project, saying, “We are building the free zone of the future for companies of the future. As the world’s first free zone solely dedicated to digital and virtual asset companies, we look forward to supporting the ambitions of entrepreneurs from around the world.”

The establishment of RAK DAO is a strategic move for the UAE as it seeks to cement its position as a global leader in the crypto industry. By creating a regulatory environment that is friendly to crypto firms, the UAE aims to attract more players in the industry and foster innovation in the emerging technologies sector.


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Grayscale CEO Calls on SEC to Protect Investors

Grayscale Investments’ CEO Michael Sonnenshein has called on the United States Securities and Exchange Commission (SEC) to protect Grayscale investors by returning the true asset value to them. In a recent interview on the popular podcast “What Bitcoin Did” hosted by Peter McCormack, Sonnenshein stated that he “can’t imagine” why the SEC “wouldn’t want” to protect Grayscale investors by approving the Grayscale Bitcoin Trust (GBTC) as a spot Bitcoin exchange-traded fund (ETF).

Sonnenshein explained that the SEC acted arbitrarily by denying approval for GBTC to be a spot Bitcoin ETF while approving Bitcoin Futures ETFs. He added that the SEC violated the administrative procedures act, which ensures that the regulator doesn’t show “favoritism” or act “arbitrarily.” According to Sonnenshein, Grayscale is currently suing the SEC over the denial of its initial application, and a decision on the case could be reached by fall 2023.

If GBTC were approved as a spot Bitcoin ETF, there is a “couple billion dollars” of capital that would immediately go back into investors’ pockets, on an “overnight basis,” as the fund would “bleed back” up to its net asset value (NAV). Sonnenshein explained that this is due to GBTC currently trading at a discount to its NAV, but if it were to convert to an ETF, there would be an “arbitraged mechanism” embedded, and there would no longer be a discount or a premium.

Grayscale has over a million investor accounts, with investors worldwide counting on the firm to “do the right thing for them.” Sonnenshein “can’t imagine” why the SEC wouldn’t want to “protect investors” and “return that value” to them. He added that Grayscale isn’t going “to shy” away from the fact that it has a “commercial interest” in this approval.

This comes after the SEC filed a 73-page brief with the U.S. Court of Appeals for the District of Columbia in December 2022, outlining its reasons for denying Grayscale’s request to convert its $12 billion Bitcoin Trust into a spot-based Bitcoin ETF in June 2022. The SEC based its decision on findings that Grayscale’s proposal did not sufficiently protect against fraud and manipulation. The agency had made similar findings in several earlier applications to create spot-based Bitcoin ETFs.

Grayscale is a digital currency investment firm that offers a range of investment products, including the Grayscale Bitcoin Trust, which is designed to provide investors with exposure to the price of Bitcoin without the challenges of buying, storing, and safekeeping Bitcoin directly. The trust is listed on the OTCQX market and is available to both accredited and non-accredited investors. GBTC was launched in 2013, and as of January 2022, it held over $30 billion in assets under management. Grayscale’s Bitcoin Trust is one of the most popular ways for investors to gain exposure to Bitcoin, and the firm has been at the forefront of the movement to bring Bitcoin to the mainstream.

The SEC has been hesitant to approve Bitcoin ETFs, citing concerns about fraud, manipulation, and the lack of regulation in the cryptocurrency market. In the past, the SEC has rejected several proposals for Bitcoin ETFs, citing concerns about market manipulation and insufficient investor protection. However, the agency has recently shown a more favorable attitude toward Bitcoin, with several Bitcoin Futures ETFs receiving approval.

In the case of Grayscale’s GBTC, the SEC has raised concerns about the trust’s structure and the potential for market manipulation. Grayscale’s proposal to convert GBTC into a spot-based Bitcoin ETF was denied in June 2022, with the SEC citing concerns about the lack of regulation in the Bitcoin market and the potential for market manipulation.

Grayscale has challenged the SEC’s decision, arguing that the agency acted arbitrarily and violated the administrative procedures act. Grayscale’s CEO, Michael Sonnenshein, has been vocal in his criticism of the SEC’s decision, arguing that it has hurt investors by preventing them from realizing the true value of their investment in GBTC.

The case is currently making its way through the U.S. Court of Appeals for the District of Columbia, and a decision is expected by fall 2023. If Grayscale is successful in its challenge, it could pave the way for other Bitcoin ETFs to be approved, opening up a new avenue for investors to gain exposure to Bitcoin.

Overall, the Grayscale-SEC dispute highlights the challenges facing regulators as they try to balance investor protection with the need to foster innovation in the cryptocurrency market. As the market for digital assets continues to grow, it is likely that we will see more clashes between regulators and industry participants as they try to navigate this rapidly evolving landscape.


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Colombia Holds Landmark Virtual Court Trial in Metaverse

On February 15, 2023, the Magdalena Administrative Court in Colombia made history by hosting the world’s first legal trial in the metaverse. The trial, which lasted for two hours, was held to resolve a traffic dispute between a regional transport union and the police. The court’s verdict could also be given in the metaverse, marking a major step forward in the virtualization of legal proceedings.

The participants in the trial appeared as avatars in a virtual courtroom, with the court magistrate, Maria Quinones Triana, dressed in traditional black legal robes. Quinones commented to Reuters that the experience felt “more real than a video call,” highlighting the potential for metaverse technology to transform the way we interact with each other and conduct legal proceedings.

Colombia’s pioneering trial follows recent research that suggests a growing interest in the metaverse and its potential impact on society. A survey released by CoinWire on January 16 found that 69% of respondents believe that the metaverse will eventually modify social lifestyles due to new approaches taken for entertainment and activities. It is therefore possible that virtual court trials may become more common in the future, especially in cases where the physical presence of all parties involved is not possible.

The World Economic Forum (WEF) has also recognized the potential of the metaverse, having recently boasted about its metaverse experiences. In January 2023, the WEF hosted its own 3D immersive digital sessions called the “Global Collaboration Village,” allowing delegates to experience the forum in their own virtual metaverse. The WEF’s involvement in the metaverse highlights the increasing interest from institutions and organizations in exploring the possibilities of this technology.

As the metaverse continues to grow and develop, it is likely that we will see more use cases emerge, including legal proceedings. The Colombia trial has demonstrated that the metaverse can offer an immersive and effective environment for conducting court trials. While it may take time for the legal industry to fully adopt metaverse technology, the potential benefits in terms of accessibility, efficiency, and cost-effectiveness are clear. The future of legal proceedings may be more virtual than we ever imagined.


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FTX Japan Users Withdraw Funds Amidst Legal Battle

The legal battle between FTX and Sam Bankman-Fried (SBF) has been ongoing, leaving FTX customers worldwide uncertain about the future of the exchange. In the midst of this, FTX’s subsidiary, Liquid Group, a Japanese crypto trading platform, had to halt withdrawals on Nov. 15, 2022. This was due to Changpeng Zhao, the CEO of Binance, announcing the liquidation of its substantial holdings of FTX Token (FTT), which caused a domino effect and led to the slowdown in fund withdrawals by FTX and its subsidiaries.

FTX Japan users have had to endure the frustration of not being able to access their funds for months. However, on Feb. 21, 2023, FTX Japan resumed withdrawals, which involved moving the funds from the defunct exchange to a Liquid Japan account. This news came as a relief to many investors, and it was soon followed by reports that a popular crypto trader from Japan, Hibiki Trader, had successfully withdrawn all of their funds.

The withdrawal of funds by FTX Japan users is not surprising, considering the uncertainty surrounding the legal battle between FTX and SBF. FTX is a well-known cryptocurrency exchange, and any negative news can impact user trust and confidence. Additionally, the slowdown in fund withdrawals caused by Binance’s liquidation of FTT holdings had a ripple effect on FTX and its subsidiaries, resulting in delayed access to funds for many customers.

It is important to note that the legal battle between FTX and SBF is not related to the slowdown in fund withdrawals or Binance’s liquidation of FTT holdings. The litigation is a separate issue that has been ongoing for some time, and its resolution is still unclear. FTX customers worldwide are eagerly awaiting a conclusion to the legal battle, which will hopefully bring some clarity and stability to the exchange.

In conclusion, the withdrawal of funds by FTX Japan users is a reflection of the impact of negative news and uncertainty in the cryptocurrency market. The legal battle between FTX and SBF and Binance’s liquidation of FTT holdings have added to the existing market volatility and has resulted in delayed access to funds for many FTX customers. It remains to be seen how the legal battle will be resolved and what the future holds for FTX and its customers.


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Crypto Industry Increases Lobbying Efforts During Crypto Winter

The crypto industry has been ramping up its lobbying efforts in recent years, particularly during the crypto winter that began in 2021. A new study published by the Money Mongers on February 23, 2023, sheds light on the increasing amount of money spent on lobbying by market participants in the United States.

According to the study, which analyzed data from OpenSecrets, a nonpartisan nonprofit organization that tracks lobbying expenses in the U.S., the crypto industry’s lobbying budgets increased by 922% over the past five years. In 2017, when Bitcoin’s price soared for the first time, the industry spent only $2.5 million on lobbying efforts. Last year, that number jumped to $25.57 million, and in 2021 alone, stakeholders raised their expenses by 121.41% to $11.54 million.

The study also found that the U.S.-based crypto exchange Coinbase was the largest spender, paying $3.3 million to 32 lobbyists in 2022. The Blockchain Association ranked second, with 18 lobbyists and $1.9 million spent, while Robinhood ranked third with 20 lobbyists and $1.84 million spent. Binance.US, the American subsidiary of the world’s largest crypto exchange, occupied only the ninth spot on the list with $960,000 spent in 2022.

Despite the increase in lobbying efforts, the overall expenditure of crypto companies on lobbying in America is modest compared to other industries. The pharmaceutical industry, for example, spent over $350 million in 2022 on federal lobbying efforts.

It’s worth noting that lobbying is an important aspect of any industry, as it allows stakeholders to advocate for policies that support their interests. In the case of the crypto industry, lobbying efforts may help shape regulations and laws that facilitate the growth and adoption of cryptocurrencies. It’s also worth noting that the increase in lobbying efforts may reflect the industry’s growing maturity and willingness to engage with policymakers.

Overall, the Money Mongers study highlights the increasing importance of lobbying in the crypto industry, particularly in the United States. As the industry continues to mature and grow, we can expect to see more lobbying efforts aimed at shaping regulations and laws that support its development.


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wBTC Supply Hits 9-Month Low After Major Burn

The supply of wrapped Bitcoin (wBTC), an Ethereum-based ERC-20 token that mirrors the value of Bitcoin and is pegged 1:1 with its price, has hit its lowest point since May 2021. This follows a significant burn of 11,500 wBTC linked to the now-bankrupt crypto lender Celsius, which has turned its growth rate negative. The current total supply of wBTC stands at 164,396, with a monthly growth rate of -7.39%.

wBTC was co-developed in 2019 by Bitgo, blockchain interoperability protocol Ren, and multichain liquidity platform Kyber. It is managed by the decentralized autonomous organization wBTC DAO, which comprises over 30 members. When merchants want to exchange BTC for wBTC, they start a burn transaction and alert the custodians. The merchant transfers real BTC to a custodian address on the Bitcoin blockchain, which is locked. Once it receives the real BTC, the custodian address mints the equivalent amount in wBTC on Ethereum. Being an ERC-20 token makes the transfer of wBTC faster than normal Bitcoin, but the key advantage of wBTC is its integration into the world of Ethereum wallets, decentralized applications, and smart contracts.

During the peak of the bull run, wrapped tokens became a popular tool of use in the decentralized finance (DeFi) ecosystem. The supply of wBTC peaked at 285,000 in April 2022, when the price of BTC was trading above $48,000. However, with the advent of the bear market and numerous crypto contagions, the demand for wBTC started to fade away.

The first signs of lowering demand came after the Terra collapse, which forced several crypto lenders to redeem their wBTC. According to one report, Celsius Network redeemed about 9,000 wBTC amid a growing withdrawal demand. A similar scenario occurred in November 2022 after the FTX collapse, where reports indicate the now-bankrupt crypto exchange tried redeeming 3,000 wBTC just before filing for bankruptcy. After the FTX collapse in November, wBTC experienced its largest monthly coin redemption, with over 28,000 wBTC redeemed back to the original coin.

The market contagion caused by the FTX collapse also depegged wBTC from the original value of BTC. Although the slippage was just about 1.5%, it raised serious concerns about whether such synthetic tokens were a viable mode of value transfer.

The recent burn of 11,500 wBTC linked to Celsius is significant, as it is the second-largest single-day burn of wBTC. This burn has turned the growth rate of wBTC negative, meaning its supply is decreasing. The total supply of wBTC has now hit a nine-month low.

Despite this, wBTC remains an important player in the DeFi ecosystem, offering a bridge between the Bitcoin and Ethereum networks. Its integration into the world of Ethereum wallets, decentralized applications, and smart contracts provides an added advantage to its users.


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UK lacks expertise for central bank digital currency

The Bank of England (BoE) is unlikely to issue a central bank digital currency (CBDC) anytime soon due to a lack of technical expertise, according to Jon Cunliffe, the deputy governor. Speaking at a treasury select committee hearing, Cunliffe stated that there is a greater than 50% chance that the central bank will eventually issue a CBDC, but the institution is not yet ready to do so.

The UK has been exploring the possibility of a digital pound for several years, but the BoE has been cautious about moving forward with the initiative. The deputy governor explained that the next phase of development will involve partnering with the private sector to test a potential digital pound in a simulated environment. This will help the BoE gain the necessary expertise to build a working prototype and test it in a live environment.

While the BoE has been exploring the potential benefits and risks of a CBDC, the institution has also been monitoring developments in other countries. China, for example, has been working on its own digital currency, the digital yuan, which has already been tested in several pilot programs. The European Central Bank (ECB) has also been exploring the possibility of a digital euro, and has launched a public consultation on the matter.

The BoE is aware that the development of a CBDC would require significant investment in infrastructure and technology, as well as a thorough understanding of the potential risks and benefits. The institution has been consulting with stakeholders in the private sector and academia to ensure that it has access to the necessary expertise.

Cunliffe emphasized that the BoE is committed to exploring the potential of a digital pound, but that the institution is not yet ready to move forward with the development of a CBDC. The next phase of the initiative will be critical in terms of gaining the necessary expertise and testing the technology in a simulated environment. If successful, the BoE may eventually move forward with the development of a working prototype and, eventually, the implementation of a digital pound.


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Cash App Integrates TaxBit for Streamlined Crypto Tax Reporting

Cash App, a mobile payments processor, has integrated tax and accounting software provider TaxBit into its platform to streamline the tax reporting process for Bitcoin users. The integration, which was announced by both companies, allows Cash App users to track their Bitcoin transactions for tax purposes using TaxBit’s platform. TaxBit’s chief operating officer, Lindsey Argalas, stated that their platform simplifies tax reporting for anyone who has integrated digital assets into their investment portfolio.

Cash App launched its Bitcoin trading services in 2018 and introduced BTC deposits the following year. As of now, the company boasts over 10 million Bitcoin users. Its parent company, Block Inc., has generated billions of dollars in Bitcoin revenue over the years. Block Inc. reported $1.96 billion in Bitcoin revenue during the fourth quarter of 2021, according to United States Securities and Exchange filings.

TaxBit, on the other hand, launched TaxBit Network in 2022, which provides crypto traders free tax forms. The industry consortium was launched with over a dozen U.S.-based companies, including PayPal, Coinbase, Binance.US, Paxos, and Gemini. The aim of TaxBit Network is to simplify tax reporting for cryptocurrency traders and investors.

The Internal Revenue Service (IRS) of Washington has set January 23 as the start of the 2022 tax filing season, giving most taxpayers until April 18 to file and pay their taxes owed. In January, the IRS reminded taxpayers of their crypto income reporting obligations, including capital gains from trading, mining, and staking activities.

The integration of TaxBit into Cash App’s services comes as more companies are exploring the potential of cryptocurrency and blockchain technology. As the popularity of digital assets continues to grow, regulators and tax authorities are paying closer attention to the tax implications of crypto investments. Platforms like TaxBit can help investors and traders stay on top of their tax obligations and avoid any potential legal issues.

In conclusion, the integration of TaxBit into Cash App’s services is a positive step for the cryptocurrency industry. It provides a more efficient and streamlined way for Bitcoin users to manage their tax obligations. As the industry continues to evolve, we can expect to see more developments aimed at making crypto investments more accessible and easier to manage.


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