Day: April 2, 2023

Bittrex to Shut Down U.S. Platform

by Blockchain News

Cryptocurrency exchange Bittrex will close its U.S. platform on April 30, according to an announcement from the company on Friday. After nine years of operation, Bittrex co-founder and CEO Ritchie Lai stated that the current U.S. regulatory and economic environment made it “economically unviable” for the exchange to continue operating in the country.

Lai cited unclear regulatory requirements that are enforced without appropriate discussion or input, resulting in an uneven competitive landscape as the reasons behind the closure. He added that operating in the U.S. was no longer feasible for Bittrex.

Despite the shutdown of its U.S. platform, Lai assured customers that all their funds are safe and available for withdrawal. The closure will not affect Bittrex Global, which operates in Europe, Canada, and South America, among other locales, and will remain open for trading.

Bittrex’s decision to shut down its U.S. platform is not the first time a crypto exchange has faced regulatory hurdles. In recent weeks and months, U.S. regulators have increased their oversight of crypto-related companies. Coinbase recently disclosed receiving a Wells Notice from the U.S. Securities and Exchange Commission (SEC), while Kraken paid a $30 million fine in a settlement with the same agency after shuttering its crypto staking service.

Binance and its CEO and founder Changpeng Zhao were also recently named in a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC). The complaint alleges the offering of unregistered crypto derivatives products in the U.S.

The crypto industry has been grappling with regulatory challenges in the U.S., with some companies choosing to exit the market altogether. However, other companies, like Bittrex Global, continue to operate and expand their reach in other parts of the world.

Bittrex Global operates in over 100 countries and recently launched a new platform for institutional investors. The exchange’s closure of its U.S. platform may be a strategic decision to focus on expanding its operations elsewhere.

The crypto industry is still in its early stages, and regulatory challenges are expected to persist. The industry’s stakeholders will need to work with regulators to find a balance between innovation and compliance to ensure the healthy growth of the industry.

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Swiss non-profit and Blockstream to Broadcast Bitcoin Proof via Satellite

by Blockchain News

Swiss non-profit ZeroSync Association and Bitcoin infrastructure firm Blockstream are teaming up to enable faster syncing and global access to Bitcoin by broadcasting zero-knowledge proofs (zk-proofs) from Blockstream’s satellite network. This technology, which has become one of the hottest blockchain-tech trends of 2023, can validate the Bitcoin blockchain without requiring nodes to download the chain’s 500GB of data. Instead, nodes can sync in fractions of a second, enabling faster validation and global access to Bitcoin.

The satellite network provides free global access to Bitcoin by broadcasting the blockchain to the entire planet, including areas with unreliable internet coverage. ZeroSync expects to carry out the first experimental broadcast by the end of the year, and the newly-formed association aims to help scale Bitcoin using zk-proofs.

Co-founder Robin Linus said that “applying [zk-proofs] to generate a proof of Bitcoin’s chain state, and broadcasting it via satellite, can bring Bitcoin to almost everyone in the world. Don’t trust, verify.” This partnership between ZeroSync and Blockstream could potentially make Bitcoin more accessible and help to scale the network in a secure manner.

Zero-knowledge proofs have been gaining popularity in the blockchain space due to their ability to prove the validity of information without revealing the information itself. This is particularly useful in the case of Bitcoin, where every participant must verify every transaction, making the process slow and cumbersome. By using zk-proofs, nodes can validate the blockchain without downloading the entire dataset, making the process faster and more efficient.

Blockstream’s satellite network has been providing free global access to Bitcoin since 2017, with the aim of increasing the decentralization and resilience of the network. The network broadcasts the blockchain to nodes all over the world, providing access even in areas with unreliable internet coverage.

The partnership between ZeroSync and Blockstream could potentially bring Bitcoin to even more people around the world, making it more accessible and easier to validate. By using zk-proofs, nodes can sync faster and more efficiently, reducing the load on the network and enabling more people to participate in the Bitcoin ecosystem.

Overall, the partnership between ZeroSync and Blockstream is an exciting development in the world of Bitcoin and blockchain technology. By using zk-proofs and satellite technology, the two companies aim to make Bitcoin more accessible and secure, helping to scale the network and bring it to more people around the world.

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US Judge Supports Government Bid to Quash Binance.US’s $1 Billion Deal

by Blockchain News

The US government’s bid to quash a $1 billion deal by Binance.US to buy the assets of Voyager, a bankrupt crypto lender, has received support from District Judge Jennifer Rearden. The judge stated that the government had a “substantial case on the merits” and promised to move quickly to settle the dispute, given that delays could cost as much as $10 million per month for the estate. This decision came after objections from the US Attorney, who argued that the contract effectively rendered Voyager immune by exculpating it from breaches of tax or securities law.

Earlier in March, U.S. Bankruptcy Judge Michael Wiles had approved the sale, but Judge Rearden put it on hold this week. In her further reasoning published on Friday, Judge Rearden appeared sympathetic to government arguments, saying that “the Exculpation Clause appears to go further than the quasi-judicial immunity doctrine allows.” The judge also noted that the government’s arguments have “gone entirely unrebutted” by Voyager and its creditors, neither of which has provided any authority for the proposition that a bankruptcy court can release criminal liability.

Binance.US’s bid to purchase Voyager’s assets for $1 billion has been embroiled in controversy, with the US government seeking to block the deal due to concerns about Voyager’s alleged breaches of tax and securities law. Binance.US is a cryptocurrency exchange that operates in the US and is a subsidiary of the larger Binance platform. Voyager is a crypto lender that filed for bankruptcy in February 2022 after facing regulatory issues.

The controversy surrounding the deal underscores the ongoing debate about the regulation of cryptocurrencies and related assets. While cryptocurrency advocates argue that the decentralized nature of these assets makes them immune to traditional forms of regulation, governments and financial institutions are increasingly seeking to impose greater oversight and control. The situation with Binance.US and Voyager highlights the complexities and challenges involved in reconciling these competing interests.

In addition to the issues related to the sale of Voyager’s assets, the case also raises broader questions about the role of bankruptcy courts in addressing criminal liability. Judge Rearden’s decision to put the sale on hold suggests that the court is taking seriously the concerns raised by the US government. The ultimate outcome of this case could have far-reaching implications for the regulation of cryptocurrencies and the legal responsibilities of companies operating in this space.

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“Deutsche Bank share slide fuels global banking fears”

by Blockchain News

The recent decline in Deutsche Bank’s share price has reignited concerns about the state of the global banking system and the possibility of a new financial crisis. As we have seen in the past, major commercial banks are deemed too big to fail, and governments will often bail them out to prevent widespread economic collapse. However, the mounting debt levels of the U.S. government and other countries are raising concerns that this time, the situation may be different.

While politicians may kick the can down the road when it comes to addressing unsustainable debt levels, the market is starting to feel the effects of this issue. The yo-yoing between interest rate hikes and quantitative easing programs by central banks is not designed to solve the systemic issue of government expenditure exceeding income. Instead, the Federal Reserve and U.S. Treasury are working to protect the dollar’s position as the global world reserve currency. This short-term solution may have long-term consequences, including the threat of hyperinflation.

As a result of these economic concerns, some investors are turning to alternative investments such as Bitcoin. The cryptocurrency has often been touted as a potential hedge against inflation due to its limited supply and decentralized nature. Despite criticism from some commentators, the recent rise in Bitcoin’s price suggests that the inflation hedge thesis may be back in play.

However, the relationship between Bitcoin and inflation is complex and difficult to predict. In 2021 and early 2022, inflation was on the rise, and Bitcoin’s price fell, leading many to dismiss the idea that Bitcoin could be an inflation hedge. But some members of the Bitcoin community, such as Steven Lubka, continued to hold this conviction. They argued that the inflation was due to systemic supply chain shocks caused by the pandemic and not monetary inflation. Therefore, the idea that Bitcoin could act as a lifeboat amid the devaluing of the U.S. dollar could still hold true.

Bitcoin’s price decline in the past was also partly due to the unwinding of fraud and leverage from certain players in the cryptocurrency market. As the market continues to mature, the value of Bitcoin as a hard money asset may become more apparent to investors.

In conclusion, the recent decline in Deutsche Bank’s share price highlights the fragility of the global banking system and the potential for a new financial crisis. While politicians and central banks may try to kick the can down the road, the mounting debt levels of governments and the threat of hyperinflation suggest that a historic economic correction may be looming. Some investors are turning to Bitcoin as a potential hedge against these risks, but the relationship between the cryptocurrency and inflation remains complex and difficult to predict.

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Arbitrum Foundation Proposes Control of $1 Billion in ARB Tokens

by Blockchain News

The Arbitrum blockchain, which recently launched its governance token ARB, has been rocked by controversy over a proposal to give the centralized Arbitrum Foundation control of 750 million ARB tokens, valued at almost $1 billion. The tokens would be used to fund a “special grants” program designed to foster growth on Arbitrum, the Ethereum layer 2 solution. However, the proposal, AIP-1, has sparked opposition because it would not allow ARB holders to have any say in how the Arbitrum Foundation allocates the funds.

The centralized Arbitrum Foundation would not need to subject its grant allocations to “full on-chain governance”, the process by which ARB holders shape the blockchain and its ecosystem, further fueling concerns about the lack of community involvement. This approach stands in contrast to other aspects of AIP-1 that emphasize the importance of token holders in governing Arbitrum.

Although the proposal is still in the preliminary stage and must go through a formal forum, some community members are already worried about the consequences of giving the Arbitrum Foundation complete control over such a large sum. “We’re talking about $1 billion to start,” said an Arbitrum community member who wished to remain anonymous. “Having seen other governance examples where large treasuries were drained for community pet projects, this is pretty concerning.”

Lemma Ltd, the organization that submitted the proposal, has not yet commented on the situation. The “special grants” program aims to fast-track grants proposals and prevent them from clogging up the governance channels. It would also alleviate “voter fatigue,” according to the proposal. However, community members who spoke to CoinDesk were not convinced by this argument, pointing out that governance is difficult but that due process should not be circumvented.

The situation highlights the importance of community involvement in blockchain governance, particularly when large sums of money are at stake. The lack of transparency and potential for abuse by centralized entities could undermine the trust that users have in the blockchain and its ecosystem. As such, it is critical that blockchain projects find ways to ensure that token holders have a meaningful voice in governance decisions.

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Arbitrum Foundation Under Fire for Selling ARB Tokens Before Budget Ratification

by Blockchain News

The Arbitrum Foundation’s recent decision to sell ARB tokens for stablecoins before the ratification of its nearly $1 billion budget has sparked a governance crisis. The Foundation’s actions raise concerns about the efficacy of community governance models and the power dynamics between centralized organizations and decentralized ecosystems.

In a recent blog post, Arbitrum employee Patrick McCorry explained that the Foundation believed its omnibus governance package, Arbitrum Improvement Proposal (AIP-1), served as a “ratification” of decisions it had already made, including receiving 7.5% of all ARB tokens. As a result, the Foundation began using these tokens for the DAO’s operational purposes.

Arbitrum attempted to empower its community by airdropping over 1 billion ARB governance tokens to nearly 300,000 wallets as part of its community governance efforts. The first critical decision was AIP-1, covering governance, emergency powers, funding, and grants. However, McCorry pushed back against the perception that token holders had a say in the matter, stating that the point of AIP-1 was to inform the community of decisions that had already been made.

The controversy erupted after governance hawks pointed out the Foundation’s “special grants” program, which proposed that the Foundation would receive 750 million ARB tokens (around $1 billion) to spend without the approval of token holders. The tide of votes in favor of ratification shifted to rejection, creating uncertainty around what would happen if AIP-1 is defeated.

McCorry’s post adds to the governance crisis by introducing the “chicken and egg problem” of setting up decentralized governance structures. Certain parameters must be decided ahead of time, such as the structure of a “security council” that wields emergency powers, voting mechanics, and funding. According to McCorry, these blank check powers are fundamental to the ecosystem’s competitive edge and are necessary to attract partnerships with traditional companies.

In conclusion, the Arbitrum Foundation’s decision to sell ARB tokens before budget ratification highlights the power dynamics at play in decentralized ecosystems. The situation calls into question the efficacy of community governance models and raises important considerations for centralized organizations in the decentralized world.

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Stablecoin Depeg Event Reveals Risks to DeFi and Traditional Finance

by Blockchain News

The recent depegging event of Circle’s USD coin (USDC) has shed light on the potential risks to both decentralized finance (DeFi) and traditional finance. Traditionally, regulators have expressed concerns that DeFi could pose risks to the traditional financial services sector. However, the recent failures of established financial institutions, such as Silicon Valley Bank and Signature Bank, have shown that distress can also spread to the DeFi sector.

The depegging of stablecoins, such as USDC, BUSD, and DAI, has highlighted governance risks related to the custody of reserve assets. Stablecoin issuers’ reliance on a relatively small set of off-chain financial institutions limits their stability, and the reduction in the available pool of financial institution partners could make it even more difficult for fiat-backed stablecoins to maintain stable exchange rates.

The USDC depegging event caused the fiat-backed stablecoin to fall below $.90 following the announcement that Circle had up to $3.3 billion in exposure to Silicon Valley Bank, which had suffered a deposit run. Other smaller-circulation stablecoins also lost their pegs. Only USDT seemed to benefit from the turmoil, briefly exceeding $1, most likely because of investors shifting out of the depegged stablecoins.

While the depeg event was relatively short-lived, it has laid bare the risks associated with stablecoins. Moody’s anticipates that regulators could increase their scrutiny of stablecoins and require greater counterparty diversification. Last year, the Terra/LUNA collapse raised concerns about stablecoins’ reserves, leading regulators to recommend additional liquidity and transparency requirements. The EU cryptoasset regulation (MiCA) briefly touches on this, but leaves precise regulatory standards to be determined by European banking authorities.

As traditional finance and DeFi become more intertwined, the risk of systemic failure increases, emphasizing the need for effective regulation, transparency, and risk management. Regulators could potentially trigger additional regulatory requirements, notably on counterparty diversification, in light of the Silicon Valley Bank and Signature Bank failures.

In response to the shortcomings of stablecoins, there is growing interest in exploring alternative solutions, such as tokenized bank deposits. Tokenized bank deposits would allow users to hold digital tokens that represent ownership of underlying bank deposits, subject to the regulatory standards of banking. This would provide greater confidence in the underlying assets’ safety, although credit risks associated with traditional banking would still remain.

In conclusion, the depegging of stablecoins has brought to light the potential risks associated with both DeFi and traditional finance. The event has highlighted the need for effective regulation, transparency, and risk management, and has sparked interest in exploring alternative solutions to address the shortcomings of stablecoins.

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Uniswap V3 Protocol License Expires, Allowing Developers to Fork Code

by Blockchain News

Uniswap, the biggest automated market maker in the decentralized finance (DeFi) space, has opened up its code for developers to fork after the expiration of its Business Source License (BSL) on April 1, according to the protocol’s documentation. The two-year BSL license was created to protect the author’s right to profit from their creations, preventing the code from being used for commercial purposes. The expiration of the BSL license now allows developers to deploy their own decentralized exchange (DEX) using the Uniswap V3 protocol.

Uniswap V3’s new license, the “General Public License,” now applies to the protocol. Developers who want to fork the code will need to use an “Additional Use Grant,” which is a production exemption that is meant to accommodate the needs of both open-source and commercial developers.

Uniswap is widely used by traders, token creators, and liquidity providers in the DeFi space for swapping tokens. Its native token, UNI, is popular among investors looking to gain exposure to the DeFi market. Earlier this month, Uniswap officially went live on the BNB Chain, Binance’s smart contract blockchain, after over 55 million UNI tokenholders voted in favor of a governance proposal by 0x Plasma Labs to deploy the protocol on the BNB Chain. This move allows Uniswap users to access BNB Chain’s ecosystem for trading and swapping tokens, as well as tap into a liquidity pool with BNB Chain’s DeFi developer community.

Uniswap’s decision to make its code available for forking is significant for the DeFi ecosystem, as it allows developers to create new and innovative DEXs that can integrate with the Uniswap V3 protocol. This move is expected to result in a proliferation of DEXs, each with its own unique features, contributing to the growth and maturity of the DeFi space.

While the expiration of the BSL license is a welcome development for developers, it also underscores the need for blockchain projects to carefully consider the licenses they choose to use. The BSL license has been criticized by some in the open-source community for its restrictive nature, and it remains to be seen whether other projects will follow Uniswap’s lead in using the license. Nonetheless, the expiration of the BSL license is a positive development for the Uniswap community, as it opens up new avenues for innovation and growth.

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US Crypto Crackdown Could Push Industry to Hong Kong

by Blockchain News

The cryptocurrency industry has been at the forefront of technological innovation for quite some time, and the United States has been a leader in the sector. However, recent US government actions toward cryptocurrency regulation have raised concerns for some about the future of the industry in the country. While the US has been adopting a regulation-by-enforcement approach, there is a growing feeling among some that a significant amount of companies, developers, and investors will soon flock elsewhere to work in friendlier environments.

Kaiko’s CEO, Ambre Soubiran, recently spoke to The Wall Street Journal and suggested that the recent crackdown on crypto in the US will inadvertently help Hong Kong in its goal of becoming a major crypto hub. She noted that “The U.S. being more stringent these days than ever on crypto and Hong Kong regulating in a more favorable way…is going to clearly shift the center of gravity of crypto assets trading and investments more towards Hong Kong.”

Hong Kong has been moving in a different direction, with the government initially outlining plans in January 2023 to become a crypto hub by rolling out progressive regulation to support high-quality crypto and fintech firms. The Hong Kong Securities and Futures Commission (SFC) proposed a crypto licensing regime on Feb. 20, aiming to provide consumer protections without stifling innovation. According to a March 20 speech from Hong Kong’s Secretary for Financial Services and the Treasury, Christian Hu, over 80 virtual asset-related firms have expressed interest in setting up shop there, and 23 crypto firms have already indicated that “they planned to establish their presence.”

Bloomberg reported on March 28 that the Hong Kong Monetary Authority and SFA are set to hold a joint meeting on April 28 to help crypto firms set up domestic banking partnerships. Chinese banks, such as Shanghai Pudong Development Bank, the Bank of Communications, and the Bank of China, have reportedly started offering banking services to crypto firms in Hong Kong or made inquiries with crypto firms.

Soubiran also revealed in mid-March that Kaiko is looking to relocate the headquarters of its Asian-Pacific unit from Singapore to Hong Kong in response to the country’s friendly crypto stance. “What we’re seeing is a clear support for more clarity on the regulatory framework in Hong Kong,” she told Bloomberg in an interview, adding that “while we’re seeing an increased attractivity of Hong Kong in the region, we are relocating.”

The US government has become increasingly aggressive toward crypto since the collapse of FTX in November 2022, with Senator Elizabeth Warren even recently stating that they are building an “anti-crypto army.” However, the industry’s “center of gravity” could soon shift toward Hong Kong, as it rolls out progressive regulation and attracts more virtual asset-related firms to establish a presence there.

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Trump NFT Floor Price Surges on Indictment News

by Blockchain News

The world of non-fungible tokens (NFTs) has been a hot topic in recent months, with an increasing number of investors looking to cash in on these unique digital assets. One of the latest developments in this space involves the Trump Digital Trading Cards NFT project, which has seen a surge in floor price following news of former President Donald Trump’s indictment.

According to data from OpenSea, the floor price for the officially licensed Trump Digital Trading Cards NFT project rose from 0.46 ETH (or $835 at current prices) to as high as 0.6 ETH ($1090) on March 30, the same day that a New York Grand Jury voted to indict the former president. However, the floor price has since fallen back to around the 0.51 ETH range, which is still significantly higher than the initial mint price of $99 when the project launched in December 2022.

The Trump Digital Trading Cards NFT project offered exclusive one-on-one experiences to certain NFT hodlers when it launched, including private golf sessions, dinners, and conversations with Trump. However, the recent news of his indictment could potentially impact his ability to deliver on these experiences.

The surge in the Trump NFT’s floor price is just one example of the increasing popularity of NFTs. According to a March 30 report from blockchain analytics platform DappRadar, there was $4.7 billion worth of NFT trading volume in Q1 2023, more than double that of the previous quarter. The report pointed to bullish action from the Blur marketplace, which took the market by storm during its token airdrop farming period in February.

The report also showed that there were 19.4 million NFT sales in Q1, marking an increase of 8.56%, with total volume increasing by 147% compared with the $1.9 billion posted in Q4 2022. The Ethereum network accounted for a whopping $4.1 billion worth of the volume, with second-placed Solana contributing $242 million, while Polygon ranked third with $85 million for the quarter.

Another recent development in the NFT space involves the Japanese gaming giant Square Enix, which has released NFT trading cards in celebration of the 25th anniversary of Final Fantasy VII. The Final Fantasy VII Anniversary Art Museum Digital Card Plus collection features five physical cards and a sixth digital NFT card. However, despite being called trading cards, Square Enix stated on its website that the NFTs couldn’t be traded or transferred at this stage unless the company decides to build a marketplace in the future.

The packs were dropped on March 31 and cost around $3.30 a pop, with the card artwork depicting various characters and scenery from the iconic Final Fantasy VII game. While it is unclear if the firm intends to build a marketplace to support its digital collectibles, Square Enix has been gradually ramping up its NFT and blockchain gaming-related initiatives over the past few years, suggesting something could be in the works.

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