Bitcoin Hash Rate Spikes to All-Time Highs

Bitcoin has been making headlines lately, as its price continues to rise, and the hash rate of the network has reached all-time highs. According to data aggregator YCharts, Bitcoin’s network hash rate hit 398 terahashes per second (TH/s) on March 23, a significant increase from 335.32 TH/s on March 26. This surge in hash rate is being attributed to various factors, including unused mining inventory coming online, new facilities going live, and entrepreneurs finding cheap sources of mining.

Sam Wouters, a research analyst at Bitcoin financial service provider River Financial, believes that the recent spike in hash rate is linked to the inventory of mining hardware that was brought online last year. He notes that while Bitcoin’s price was low, miners brought as much inventory online as possible, and the network reached maximum capacity. However, with the recent price surge and some time passing, more inventory has been able to go online, leading to the spike in hash rate.

Wouters also suggests that Hydro models are starting to enter the market, with “250+ TH/s per machine, which adds tremendous hash rate.” Similarly, a March 20 analysis from investment banking company Stifel shared a similar sentiment, speculating that miners are bringing hardware back online, which is leading to the increase in hash rate.

One company that is benefitting from the recent surge in hash rate is TeraWulf, a US-based Bitcoin mining company. According to its CEO, Ammar Khan, TeraWulf has been able to continue mining Bitcoin at lower price levels due to its efficient mining fleets. Khan explains that some have speculated that lower prices forced miners to shut down their rigs and wait for the BTC price to improve, but TeraWulf has been able to continue mining due to their low-cost energy sites.

Khan also notes that TeraWulf has the opportunity to expand its capacity by 80 MW at LMD and 50 MW at Nautilus. He believes that the recent price movement is an indication of the long-term value of the ability to expand at low-cost energy sites. However, he does not expect the network hash rate to continue to increase through the first half of the year, as there is a lag between when investment decisions are made and when that capacity comes online.

In conclusion, while the exact reason for the recent spike in hash rate is unclear, it is evident that Bitcoin mining is becoming increasingly profitable, and miners are taking advantage of the current market conditions. As more companies enter the market, and more inventory comes online, it will be interesting to see how the hash rate continues to evolve and how it impacts the price of Bitcoin.


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THORChain Pauses Network Amid Reports of Vulnerability

THORChain is a decentralized cross-chain liquidity protocol that enables users to swap assets between different blockchain networks without needing centralized exchanges. The platform, founded in 2018, currently offers swaps between eight different chains, including Bitcoin, Ethereum, and Litecoin.

On March 28, THORChain announced that it had temporarily paused all trading due to reports of a potential vulnerability with a THORChain dependency that could impact the network. The decision was made as a precautionary measure while the reports were verified, according to THORChain. Social media reports had indicated that THORChain’s liquidity platform, Nine Realms, and its dedicated security team, THORSec, had received “credible reports” of a possible vulnerability affecting THORChain. As a result, the THORChain network was halted globally.

“Network preemptively paused by NO’s to investigate the report; updates will follow,” Nine Realms tweeted.

THORChain’s native token, Rune (RUNE), has dropped about 5% in value following the news, according to CoinGecko data. As of this writing, the token is trading at $1.32, down 18% over the past 30 days.

This is not the first time that THORChain has had to pause its network due to issues. In October 2022, the network was paused due to a software bug that caused “non-determinism between individual nodes.” After 20 hours of maintenance, the network was fully functional once again.

In 2021, THORChain also had to halt its network after suffering a breach, resulting in hackers stealing $7.6 million worth of cryptocurrency assets.

After about eight hours of the initial announcement, THORChain updated its Twitter account, stating that the vulnerability was credible but would require a malicious node in the last churn, which is when new nodes are added to the network. THORChain has resumed trading as no nodes can exploit the current vulnerability, according to the update.

In conclusion, THORChain’s temporary network pause due to a potential vulnerability serves as a reminder of the risks associated with decentralized protocols. While such protocols offer many benefits, they can also be susceptible to security vulnerabilities and breaches. THORChain’s quick response and resolution to the situation demonstrate the importance of having a dedicated security team and protocol in place to handle potential issues swiftly and efficiently.


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Binance faces investor backlash and Bitcoin withdrawals following CFTC lawsuit

The United States Commodity Futures Trading Commission (CFTC) recently filed a lawsuit against Binance, one of the world’s largest cryptocurrency exchanges, and its CEO, Changpeng “CZ” Zhao, for alleged regulatory violations. In response to the allegations, CZ denied any market manipulation by Binance, but investors were quick to respond with a significant move of assets away from the exchange.

Within 24 hours of the lawsuit announcement, investors withdrew over 3,400 BTC from Binance, anticipating market fluctuations and seeking to lessen the potential impact of a Binance shutdown. The move by investors led to a reduction in Binance’s total Bitcoin balance, which was reduced by over 3,900 BTC in the past week. In contrast, competing exchanges such as Coinbase, Bitfinex, and Gemini saw an increase in BTC reserves during the same 24-hour timeframe.

While CZ maintains that Binance does not trade for profit or manipulate the market, recent episodes involving other crypto entrepreneurs, such as FTX’s Sam Bankman-Fried and Terraform Labs’ Do Kwon, have shaken investor confidence in the cryptocurrency ecosystem.

It is also worth noting that Bitcoin balances on major crypto exchanges have declined since March 20, with nearly 27,000 BTC leaving these exchanges over the past week. The reasons behind this trend are not entirely clear, but it may be due to a combination of factors, including increasing regulatory scrutiny and concerns about the overall cryptocurrency market.

Alongside the CFTC’s lawsuit against Binance and CZ, a federal judge temporarily halted a proposed deal between Voyager and Binance.US. This move indicates that regulators are taking a closer look at the cryptocurrency industry and may be ramping up their efforts to enforce existing regulations and prevent fraudulent activities.

Overall, the recent events surrounding Binance and the wider cryptocurrency market have raised concerns among investors and regulators alike. While the long-term impact of these developments remains to be seen, it is clear that the cryptocurrency industry is facing increased scrutiny and may need to adapt to evolving regulatory requirements to continue its growth and development.


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Binance Crypto Withdrawals Spike Before CFTC Accusations

On March 27th, the United States Commodity Futures Trading Commission (CFTC) filed a suit against Binance, accusing the crypto exchange of regulatory violations. The accusation, however, did not come without warning. Shortly before the indictment was made public, almost a billion dollars worth of cryptocurrency was reportedly withdrawn from Binance’s wallets. According to data from Thanefield Capital, the withdrawals were substantial and occurred within hours of the announcement.

In the 12 hours leading up to the indictment, a total of almost $1.5 billion was withdrawn from platforms such as Binance, Kraken, Coinbase, and Bitfinex. Of that amount, more than half, or $850 million, was withdrawn from Binance alone. One hour after the announcement, Binance saw an additional $240 million withdrawn. According to data from Nansen, in the past 24 hours, more than $400 million in Ethereum-based funds were withdrawn.

Despite the withdrawals, Binance still holds an impressive $63.36 billion worth of cryptocurrency assets. These assets include over $2 billion worth of Tether (USDT), $17 billion worth of Bitcoin (BTC), and $8.1 billion worth of Ether (ETH).

The CFTC’s accusations against Binance and its CEO Changpeng Zhao include failing to meet regulatory obligations by not properly registering with the derivatives regulator. The CFTC alleges that Binance conducted transactions in Bitcoin, Ether, and Litecoin for U.S. citizens since at least 2019. This investigation by the CFTC is not the only regulatory scrutiny that Binance has faced in recent times.

Binance has also been investigated by the Internal Revenue Service and federal prosecutors over its adherence to Anti-Money Laundering rules. Additionally, the Securities and Exchange Commission conducted its own inquiry into whether Binance allowed U.S. traders to access unregistered securities.

In response to the CFTC’s allegations, Binance’s CEO, Changpeng Zhao, has denied any wrongdoing. He argues that Binance “does not trade for profit or ‘manipulate’ the market under any circumstances.” Despite the denial, the regulatory scrutiny and the recent withdrawals may lead to a tumultuous time ahead for Binance and the wider cryptocurrency market.


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FTX Founder Bail Agreement

The legal saga surrounding FTX founder Sam Bankman-Fried continues as new developments arise in his case. On March 27, Bankman-Fried’s lawyers reportedly reached a new bail agreement with US prosecutors that would allow him to remain at home while restricting his use of electronic devices and apps. The proposed agreement is still subject to approval by US District Judge Lewis Kaplan, who is overseeing Bankman-Fried’s case.

The proposed bail conditions would prohibit Bankman-Fried from using a smartphone with internet access and any apps other than voice calls and text messaging. He would also be required to use a basic laptop with limited functions and monitoring software to track user activity. The use of any other electronic communication devices is forbidden. Additionally, if there is “reasonable suspicion” of a violation, Bankman-Fried must submit his devices for a search.

The need for new bail conditions arose after Judge Kaplan expressed concerns about Bankman-Fried’s access to electronic devices and the internet. In a previous hearing, the judge attempted to ban Bankman-Fried from using any electronic devices and the internet as a condition of his bail. He argued that Bankman-Fried had a “garden of electronic devices” with internet access available at his parents’ California home. Judge Kaplan also alleged that there was “probable cause” to believe that Bankman-Fried was involved in attempted witness tampering.

To address these concerns, Bankman-Fried’s lawyers proposed the new bail agreement that would limit his access to electronic devices and the internet. The agreement also includes provisions for Bankman-Fried’s parents to restrict his access to their devices and sign affidavits agreeing not to bring prohibited electronic devices into their home.

Bankman-Fried faces criminal charges of stealing billions of dollars in FTX customer funds facilitated through Alameda Research and making large illegal political donations. He has pleaded not guilty to eight criminal counts, which could result in 115 years in prison if convicted. His trial is set for October 2, 2023.

In December 2022, Bankman-Fried was released on bail with conditions that included a $250 million bond, home detention, location monitoring, and the surrender of his passport. However, a few days later, industry investigators allegedly spotted transactions involving Bankman-Fried cashing out about $700,000 in a crypto exchange in Seychelles. Bankman-Fried has denied involvement in this or any other transactions allegedly tied to him or FTX.

Although Bankman-Fried has not been banned from Twitter, he has refrained from any social media activity for a while. His last visible activity on Twitter included a repost on Sullivan & Cromwell continuing to represent FTX debtors on January 20 and a “like” on a report that the firm billed $7.5 million for the first 19 days of FTX work.


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ZeroSync to Bring ZK-Proofs to Expedite Bitcoin Validation

ZeroSync Association, a Swiss-based nonprofit organization, is pioneering the use of zero-knowledge proofs (ZK-proofs) for the validation of the Bitcoin network. ZeroSync’s open-source tooling allows users to validate the state of the Bitcoin network without having to download the entire blockchain or trust a third party for verification.

The organization is developing and maintaining software that enables succinct ZK-proofs on the Bitcoin blockchain. The group uses StarkWare’s proprietary Zero-Knowledge Scalable Transparent Argument of Knowledge (zk-STARK) validity proofs to generate succinct ZK-proofs for the Bitcoin network.

The use of ZK-proofs by ZeroSync promises to overhaul the process of verifying the Bitcoin blockchain. Node operators currently have to download a large amount of data to synchronize the correct state of the Bitcoin network. However, with ZK-proofs, ZeroSync aims to generate valid proof and verify the latest state of the blockchain almost instantaneously.

While ZK-proofs have been a revelation for the Ethereum ecosystem, powering several layer-2 scaling platforms, ZeroSync’s announcement highlights the promise of ZK-proofs for blockchain scalability and privacy by providing “almost-fixed-size” proofs verifying large computations.

ZeroSync is pioneering the application of ZK-proofs for the Bitcoin network, with the organization describing Bitcoin’s relative simplicity and the Unspent Transaction Output (UTXO) model as a unique value proposition for applying recursive proofs. ZeroSync notes that the ZK-Proof tools do not require consensus changes or additional trust assumptions for the Bitcoin network and its users.

The organization is building a software development kit that will allow developers to generate custom validity proof for specific use cases without requiring in-depth domain expertise. The kit will enable users to implement ZK-proofs for specific use cases while also ensuring compatibility with Bitcoin’s rules and regulations.

ZeroSync’s tool is currently in the prototype state but has the ability to prove the validity of individual assumed valid blocks, which verify all Bitcoin rules except for scripts. The team also has a working in-browser demo verifier for STARK proofs of Bitcoin blocks.

ZeroSync is using the Cairo programming language, pioneered by StarkWare, to create STARK-provable programs for computations. The organization is building a client for fast initial block download and implementing the first complete proof of Bitcoin consensus. The client will allow users to sync a full node without making code changes to Bitcoin core.

Geometry and StarkWare initially funded the ZeroSync Association, but the organization is establishing a nonprofit entity to enable ongoing development and maintenance from stakeholders within the Bitcoin community.

Overall, ZeroSync’s tooling will revolutionize the validation process of the Bitcoin blockchain, bringing ZK-proofs to the forefront of the Bitcoin ecosystem. The use of ZK-proofs will enable Bitcoin users to validate the state of the network more efficiently and securely, without having to trust third-party verifiers.


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US District Judge Rules in Favor of Custodial Arrangement for bZx DAO Members

In a recent update to the ongoing class-action lawsuit against bZx DAO members, a United States district judge ruled that the ability for developers to upgrade a smart contract where the key is in the hands of a single developer makes the arrangement custodial. The ruling, passed by United States District Judge Larry Alan Burns on March 27, marks a significant development for decentralized autonomous organizations (DAOs).

While the ruling may seem unremarkable on the surface, Web3 lawyers have noted its potential impact on the DeFi space. The defendants in the case claimed that transactions in the bZx protocol are noncustodial because users can maintain custody of their assets. However, a successful phishing attack on a bZx developer compromised the funds supposedly under users’ custody, rendering the distinction between custodial and non-custodial meaningless.

Gabriel Shapiro, the general counsel for crypto firm Delphi Labs, tweeted that the court’s ruling implies that a single developer holding the upgrade key makes the arrangement custodial. This could also apply to developers with multisigs, potentially leading to DeFi platforms that employ multisigs being seen as custodial platforms. As a result, these projects may need to obtain the necessary licenses for custody to comply with the law.

Gregory Schneider, the deputy general counsel for Hedera, commented on the lawsuit, highlighting that the ruling is significant for the DAO space. According to Schneider, the case must be “closely examined by anyone thinking about legal liability in the DAO space.”

DAOs are autonomous organizations that operate using smart contracts on a blockchain. They are designed to be decentralized and operate without intermediaries, such as banks or other financial institutions. However, the bZx case highlights the potential legal implications for DAOs, particularly those that employ multisigs.

Multisigs are a type of digital signature that requires multiple parties to sign off on a transaction. They are often used in the DeFi space to secure smart contracts and provide an additional layer of protection against hacks and other security breaches. However, the bZx case raises questions about the legal status of multisigs and their impact on the custodial vs. non-custodial debate.

The ruling in the bZx case may lead to further regulatory scrutiny of DAOs and DeFi platforms. It underscores the need for the DeFi industry to develop robust security measures and to comply with applicable laws and regulations. As the DeFi space continues to grow and evolve, it is likely that we will see more legal challenges and regulatory developments in the months and years ahead.


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China intensifies focus on blockchain despite cryptocurrency stance

The draft rules that have been developed by China’s Ministry of Industry and Information Technology to strengthen the requirements for the development of blockchain technology by the year 2025 are evidence of China’s increased attention on blockchain technology. In spite of China’s negative attitude toward virtual currencies, the country’s government is actively encouraging the development of its financial technology sector, notably in digital sectors such as blockchain.

The People’s Republic of China has established the year 2025 as the target date for the completion of a number of technological advancements, including the advancement of blockchain and distributed ledger technology. This deadline was included in the “National Economic and Social Development and Vision 2035 of the People’s Republic of China.” The draft rules were made available on the ministry’s website, along with a request for feedback on the topic from “people from all areas of life.”

The purpose of these rules is to make China’s blockchain and distributed ledger technology standards system’s degree of design more transparent. The deadline for comments from the general public on the draft has been extended to April 28.

This is not the first time that China has shown interest in blockchain technology. The plans for a national blockchain research center were announced by the government in February. The center’s purpose is to bring together blockchain-related businesses, developers, and academic institutions in order to investigate fundamental blockchain technologies and grow the blockchain industry.

According to a national white paper, China’s blockchain industry is currently comprised of over 1,400 different companies. Nevertheless, despite the fact that they claim to make up 84% of all blockchain applications filed globally, only 19% of all applications that were filed were approved.

Even though it maintains a wariness toward cryptocurrencies, China is continuing to place a significant amount of emphasis on blockchain technology. This demonstrates China’s dedication to the development of its financial technology industry. Along with other digital industries, such as communications equipment, core electronic components, and key software, the country has its sights set on the blockchain as a potential growth area for the business sector. China has high hopes that it will be able to boost the overall quality and power of its blockchain industry if it follows through with its plans to clarify its blockchain technology standards system by the year 2025.


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FTX Founder Faces New Charges, Including Alleged $40M Bribe

 The founder of the cryptocurrency exchange FTX, Sam Bankman-Fried, is facing a new 13-count indictment, including charges of bribery related to an alleged $40 million bribe to a Chinese government official. The charges stem from a court filing by United States attorney Damian Williams, which alleges that Bankman-Fried and other parties directed the transfer of at least approximately $40 million in cryptocurrency intended for the benefit of one or more Chinese government officials. The transaction was reportedly made in order to influence and induce Chinese officials to unfreeze cryptocurrency accounts at FTX’s affiliate firm, Alameda Research, which held over $1 billion worth of cryptocurrency.

The court filing alleges that Chinese law enforcement authorities froze certain Alameda accounts on “two of China’s largest crypto exchanges” in early 2021. Bankman-Fried was reportedly aware of the freeze and tried numerous methods to unfreeze the accounts, including attempting to transfer cryptocurrency to fraudulent accounts in an effort to circumvent China’s freeze orders. After months of failed attempts to unfreeze the accounts, Bankman-Fried allegedly directed a multi-million-dollar bribe to seek to unfreeze the accounts. After the accounts were unfrozen, Alameda reportedly used the unfrozen cryptocurrency to fund additional Alameda trading activity.

It is unclear which Chinese cryptocurrency exchanges Alameda was using in early 2021, as China officially banned crypto exchanges from providing services in the country back in 2017. However, the court filing alleges that Bankman-Fried was aware of the freeze and attempted to circumvent it through various means.

Bankman-Fried is already facing criminal charges related to the theft of billions of dollars in FTX customer funds facilitated through Alameda Research, as well as alleged illegal political donations. He has pleaded not guilty to eight criminal counts, which could result in 115 years in prison should he be convicted. Bankman-Fried’s trial is set for October 2, 2023.

FTX is a cryptocurrency exchange that was founded in 2019 by Bankman-Fried and Gary Wang. The exchange has quickly become one of the largest in the world, with a daily trading volume of over $10 billion. In addition to its exchange services, FTX also offers a range of other cryptocurrency-related products, including derivatives and tokenized stocks. Alameda Research is an affiliate firm of FTX that engages in quantitative trading and market making. The firm is known for its involvement in the DeFi (decentralized finance) space and has been an active participant in the development of the Solana blockchain.


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AllianceBlock and Crunchbase Partner to Enhance Decentralized Business Data

In a move that is set to enhance the availability of decentralized business data, AllianceBlock has partnered with Crunchbase to make its data available to users of the AllianceBlock Data Tunnel. The partnership will enable blockchain businesses and developers to create a range of applications, including default probability models, customer acquisition profiles, and maps of untapped markets, using Crunchbase’s investment and funding information, industry trends, and news data.

The Data Tunnel is a platform that serves both conventional institutions and individuals who typically rely on multiple sources of information to make well-informed decisions about their assets. By allowing users to share, study, and combine information without intermediaries, the Data Tunnel offers a decentralized solution to data sharing and management.

AllianceBlock launched the Data Tunnel in October 2022 as a public marketplace for standardized data. The platform aims to democratize data access and provide a one-stop-shop for data needs across a range of industries.

In 2021, AllianceBlock announced its integration with Avalanche, an up-and-coming “Internet of Finance” protocol. The integration allows users to access AllianceBlock’s DeFi Investment Terminal, peer-to-peer financial services, non-fungible token capabilities, and Know Your Customer solutions directly on Avalanche. The partnership also includes development work with Ava Labs, the developers behind Avalanche.

Furthermore, in the same year, AllianceBlock teamed up with Flare, a fellow blockchain tech entity that seeks to enable blockchains to access real-world data in smart contract execution. The two companies aimed to improve their blockchains with each other’s technology, from cross-chain bridges to decentralized exchanges to oracle networks.

Overall, the partnership between AllianceBlock and Crunchbase will provide a wealth of business data to blockchain businesses and developers, further enhancing the capabilities of decentralized finance solutions. The AllianceBlock Data Tunnel’s public marketplace for standardized data will continue to drive the democratization of data access and sharing, paving the way for new innovations and applications in a range of industries.


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