Day: May 10, 2023

QuadrigaCX Users to Receive Interim Distribution

by Blockchain News

Users of the now-defunct Canadian cryptocurrency exchange QuadrigaCX are expected to receive interim distribution of funds tied to bankruptcy proceedings in the coming weeks. Law firm Miller Thomson, which represents QuadrigaCX users, announced the news on May 8. Bankruptcy trustee Ernst & Young has consulted with estate inspectors to announce the interim distribution. In the near future, the trustee will post a Notice to Affected Users providing details about the manner and procedure of the distribution.

However, a small number of affected users are expected to receive a Notice of Disallowance of Claim, which means that the creditor’s claim has been revised or disallowed in the bankruptcy process. If users receive such a notice, they have the right to appeal the decision. Miller Thomson explained that users should review the reasons for the revision or disallowance and gather any necessary evidence to support their claim. The Trustee is likely to have issued a Notice of Disallowance if there was a discrepancy in the user’s proof of claim.

QuadrigaCX was once the largest cryptocurrency exchange in Canada before it became insolvent in February 2019. The exchange’s co-founder, Gerald Cotten, died in India, taking the private keys to QuadrigaCX’s offline storage systems to his grave. According to the Ontario Securities Commission (OSC), QuadrigaCX owes its affected clients an estimated $160 million.

In addition to losing access to cold storage, the OSC alleges that Cotten realized $86 million in crypto trading losses on the QuadrigaCX platform, which was then covered with users’ funds. Since then, bankruptcy trustee Ernst & Young has recovered $34.3 million worth of assets. The OSC stated that they did not identify any other assets beyond those identified by Ernst & Young.

The collapse of QuadrigaCX was a major blow to the Canadian cryptocurrency market, raising concerns about investor protection and regulatory oversight. The QuadrigaCX case highlighted the need for proper safeguards and measures to protect investors and prevent similar incidents from happening in the future.

The interim distribution of funds provides some relief to QuadrigaCX users, who have been waiting for over two years to receive any compensation for their losses. However, it remains to be seen how much users will actually receive and how long the bankruptcy proceedings will continue. The QuadrigaCX case serves as a cautionary tale for investors, highlighting the importance of conducting due diligence and being cautious when investing in cryptocurrencies.

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BRC-20 Bitcoin Tokens Surpass $1 Billion Market Cap

by Blockchain News

On May 9, 2023, BRC-20 Bitcoin tokens reached a significant milestone, with their total market capitalization surpassing $1 billion. This milestone is a testament to the growing popularity of BRC-20 tokens, which employ a novel form of fungible token that uses Ordinals and Inscriptions to create and manage token contracts, token minting, and token transfers on the Bitcoin base chain.

According to analysts at multichain wallet BitKeep, the Ordinals numbering system assigns a unique number to each satoshi, or 0.00000001 Bitcoin (BTC), allowing for its tracking and transfer. On the other hand, the “inscription” process adds a layer of data to each satoshi, enabling users to create unique digital assets on the Bitcoin blockchain. The BRC-20 token standard was developed by a Twitter user known as Domo on March 8, 2022.

Compared to Ethereum, Bitcoin has been lagging in the deployment of token standards, with only a few notable ones like ERC-20 and ERC-721. However, BRC-20 tokens have been gaining traction since its inception, with over 14,000 tokens currently deployed on the Bitcoin blockchain. Despite this progress, Domo, the creator of BRC-20, has openly stated that the standard is “worthless” and that users should not waste money on “mass minting this fun experiment.”

Nevertheless, the growing adoption of BRC-20 tokens by traders and investors has led to a surge in trading volume, with a total trading volume of $207.7 million recorded in the past 24 hours. Notable tokens like ORDI, NALS, VMPX, PEPE, and MEME have experienced significant price variance within the past day, ranging between +11% and -55%.

As the adoption of BRC-20 tokens continues to grow, it remains to be seen how this new standard will fare in the highly competitive and rapidly evolving cryptocurrency market. Nonetheless, the development of the BRC-20 token standard highlights the potential of the Bitcoin blockchain to support new and innovative financial instruments beyond its traditional role as a store of value.

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Grayscale Files for Three New Crypto ETFs

by Blockchain News

Grayscale Investments, the cryptocurrency asset manager, is seeking approval from the United States Securities and Exchange Commission (SEC) for three new cryptocurrency-focused exchange-traded funds (ETFs). The new funds include a Bitcoin Composite ETF, an Ethereum Futures ETF, and a Privacy ETF.

Grayscale’s Bitcoin Composite ETF will invest in exchange-traded products related to or backed by Bitcoin, including Bitcoin mining firms. The Ethereum Futures ETF, on the other hand, will offer indirect exposure to the potential future value of Ether through shares that track ETH’s price. The Grayscale Privacy ETF will invest in companies working on blockchain-based privacy technology.

Despite previous roadblocks from the SEC over crypto-related ETFs, Grayscale has filed a registration statement for the new ETFs. However, until the registration statement is approved, the funds will not be available for public purchase.

Grayscale also announced the launch of the Grayscale Funds Trust, a new arm of its business that allows it to manage many of its publicly traded financial products in-house. This move indicates the company’s growing confidence in its ability to manage its funds internally.

While Grayscale continues to navigate a conflict with the SEC over converting its $17 billion Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF product, the company remains optimistic about the future of crypto ETFs. In January 2021, Grayscale sued the SEC for denying its application, arguing that the SEC acted unfairly in treating crypto spot traded exchange-traded products differently from futures products. Grayscale claims that there is a 99.9% correlation between prices in the Bitcoin futures market and the spot Bitcoin market.

Despite the SEC’s approval of several Bitcoin Futures ETFs, it has so far rejected every application for a spot Bitcoin investment product due to concerns about exposing investors to potential fraud and market manipulation. However, Grayscale’s move to launch new crypto ETFs and manage its publicly traded financial products in-house demonstrates the company’s commitment to the cryptocurrency market and its belief in the long-term potential of digital assets.

In conclusion, Grayscale Investments’ filing of three new cryptocurrency-focused ETFs and the launch of its Grayscale Funds Trust is a significant step forward for the company and the cryptocurrency market as a whole. While the SEC’s approval of these new ETFs is still pending, Grayscale’s continued efforts to introduce crypto-focused investment products is a positive sign for the industry’s growth and adoption.

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Crypto Conferences Scale Back

by Blockchain News

The crypto winter has been long and harsh, and as a result, crypto conferences are toning down the lavishness. Attendees are no longer interested in DJs and parties; they want to focus on discussing regulation and tax issues. Tiffany Fong, a popular crypto vlogger, attended her first crypto conference this year and observed that attendees were more interested in asking intelligent questions and discussing regulatory issues, rather than enjoying the extravagances of past events.

While the XRP Las Vegas conference for XRP enthusiasts and the “XRP Army” took place in the United States gambling capital on May 6 and 7, frustration over regulatory clarity in the United States dominated the discussion. XRP fans asked “well-thought-out, intelligent questions,” but also expressed frustration with the Securities and Exchange Commission’s (SEC) lawsuit against Ripple. Attorney John E. Deaton, an active social media commentator during the SEC’s lawsuit, said that the frustration was not due to fear but because of the length of time it is taking to achieve regulatory clarity.

Regulation was also a top concern at Binance Australia’s recent meetup event on May 3. According to Ben Rose, general manager for Binance Australia and New Zealand, regulation was the most popular point of discussion among attendees. Despite the ongoing bear market, interest in crypto remains strong, and Rose noted that there is still “interest from the crypto-curious” with newcomers asking beginner-level questions.

The frustration and concern over regulation are understandable given the SEC’s recent actions against several crypto firms. Many in the crypto community are frustrated with SEC Chair Gary Gensler’s “regulation by enforcement” approach to crypto. Nevertheless, interest in crypto remains strong, and Australian crowds are starting to get excited about the potential for a bull run as the price of Bitcoin creeps up.

In conclusion, the crypto winter has forced crypto conferences to become more serious and focus on regulatory issues, which is a positive development for the industry. Attendees are no longer interested in the extravagances of past events but are instead asking intelligent questions and discussing regulatory issues. The frustration and concern over regulatory clarity remain high, but interest in crypto remains strong, even in the face of ongoing market volatility.

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Wendy’s Launches AI Drive-Thru Chatbot

by Blockchain News

Wendy’s has announced a partnership with Google Cloud to launch an AI chatbot called “Wendy’s FreshAI” that will take orders from drive-thru customers. Over 75% of Wendy’s customers prefer to place their orders via drive-thru, making this an important area for the fast-food chain to focus on.

The chatbot will use natural language processing to understand what customers are saying and then generate a response using machine learning algorithms. This technology is already used by AI chatbots like OpenAI’s ChatGPT, which has demonstrated impressive abilities in generating human-like responses.

According to a statement from Google Cloud, the use of an AI chatbot to service drive-thru customers has the potential to revolutionize the fast-food industry. This technology has the potential to reduce wait times, increase order accuracy, and improve overall customer satisfaction.

Wendy’s CEO and president Todd Penegor has said that the chatbot will be “very conversational” and customers “won’t know they’re talking to anybody but an employee.” This level of conversational ability will be important in creating a seamless and enjoyable customer experience.

This partnership with Google Cloud is just the latest example of how AI and machine learning are being used in the fast-food industry. Other chains like McDonald’s and Burger King have also been experimenting with AI-powered technology to streamline their operations and improve customer experience.

Overall, the use of AI chatbots like “Wendy’s FreshAI” has the potential to significantly improve the drive-thru experience for customers, while also providing cost savings and operational efficiencies for fast-food chains. As this technology continues to advance, we can expect to see more and more AI-powered solutions in the food service industry.

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Trader Spends $118k in Ether on Memecoin

by Blockchain News

In recent news, a single trader has spent an enormous amount of money on gas fees to purchase a memecoin called Four (FOUR) on the Ethereum network. The trader paid $118,000 in gas fees using Ether (ETH) to buy $155,000 worth of FOUR tokens through a Uniswap trade. The trade involved swapping 84 Wrapped Ether (WETH) for 13.8 billion FOUR tokens.

The trader voluntarily increased their gas fee to speed up the transaction time and has reportedly gained 133 ETH ($245,667) in unrealized profit on their investment in the memecoin. However, this raises the question of whether the rise in gas fees is sustainable for mass adoption, as many have criticized the fees for being too high.

The Ethereum network has been facing a lot of criticism for its gas fees, which have been increasing due to the rise in activity on the network. Some prominent Ethereum advocates have praised the heightened activity for its revenue-generating effects and long-term deflationary pressure on the supply of Ether. However, others have claimed that mass adoption will never be achieved if the network remains unaffordable.

Another major reason behind the drastic uptick in gas fees is the maximal extractable value (MEV) trading bot that is front-running memecoin trades en masse. A pseudonymous attacker known only as jaredfromsubway.eth has been profiting significantly from the heightened network use. The attacker has been using a sandwich attack to manipulate the price and profit from the user.

A sandwich attack occurs when an attacker “sandwiches” a victim’s transaction between their two transactions. Jared has cleared a whopping $950,000 in profits from the sandwich attacks alone. On April 20, Jared used 7% of the total gas on the network and spent 455 ETH in transaction fees.

In conclusion, the rise in gas fees on the Ethereum network has caused debates in the crypto community over its impact on mass adoption. The attacker, jaredfromsubway.eth, has been using a sandwich attack to manipulate the price and profit from the user. While some advocate for the heightened activity, others have criticized the fees for being too high, and it remains to be seen whether the network will become more affordable for mass adoption.

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Canadians Consulted on Digital Currency

by Blockchain News

The Bank of Canada (BoC) has launched a public consultation to seek input from Canadians on the possible creation of a digital Canadian dollar. The consultation will run from May 8 until June 19, and the bank has emphasized it is not currently developing a central bank digital currency (CBDC) nor looking to replace cash. Rather, it is exploring the idea of a digital Canadian dollar as the world becomes increasingly digital. Senior Deputy Governor of the BoC, Carolyn Rogers, stated that the bank is seeking to hear from Canadians what they value most in the design of a digital dollar. The input will help the bank make decisions relating to the security and reliability of a potential digital currency, as well as ensuring it meets the needs of Canadians.

The BoC highlighted that it is important to consider the possibility of a digital Canadian dollar as cash usage declines, potentially excluding many Canadians from the economy. The bank also acknowledged the potential risks posed by the use of foreign CBDCs or cryptocurrencies, which could threaten the stability of the Canadian financial system.

The consultation’s questionnaire covers a wide range of topics, including payment methods used in the last month, how often the respondent would potentially use a Canadian CBDC, and what design features they would like to see. It also asks whether the respondent currently holds or uses cryptocurrencies and features demographic questions about age, gender, education, and income.

If a CBDC was issued, physical notes would still be provided “for those who want them,” according to the bank. The BoC said it will publish a report summarizing the consultation later this year.

While the consultation does not necessarily mean that a digital Canadian dollar will be created, it is a significant step towards exploring the possibility. Canada is not the only country considering a CBDC, with many central banks worldwide exploring the potential of digital currencies. The BoC’s consultation seeks to ensure that the bank makes an informed decision on the matter, taking into account the needs and desires of Canadians.

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Public Worry Grows Over Bank Stability

by Blockchain News

In a recent Gallup poll conducted across the United States in April, 48% of respondents expressed concern about their money in the bank, with almost 20% indicating they were “very concerned.” The poll was conducted after the collapse of Silicon Valley Bank and Signature Bank but before the failure of First Republic Bank in late April. According to Gallup, this level of worry is on par with the last bank-induced financial crisis in 2008, when financial institutions previously believed to be “too big to fail” collapsed.

Experts at the Hoover Institution think tank suggest that if half of all uninsured savers withdrew their cash, 186 American banks would be at risk of impairment. These banks have total assets of $300 billion but represent less than 5% of the estimated 4,135 FDIC (Federal Deposit Insurance Corporation) insured commercial banks in the United States.

Additionally, California-based PacWest, Arizona’s Western Alliance, and Memphis-based First Horizon reportedly hang in the balance following a share price slump last week. A more concerning report from the UK’s Telegraph earlier this month suggested that half of the banks in America could be insolvent. The report cited research published in April by Stanford University banking expert Amit Seru, who estimated that more than 2,315 U.S. banks are currently sitting on assets worth less than their liabilities.

“The U.S. banking system’s market value of assets is $2.2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity,” Seru said. This gap is due to the banks’ underestimation of the risk of loan defaults and represents a significant threat to the stability of the banking system.

The current public opinion of banks appears to be dwindling as the industry struggles to contain the collapse of several high-profile financial institutions in recent months. While these concerns are not yet at crisis levels, they do suggest a lack of confidence in the banking system. It remains to be seen what steps regulators will take to address these issues and restore public faith in the stability of financial institutions.

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US Regulator Crypto Custody Proposal Opposed

by Blockchain News

In response to the SEC’s proposal to amend its custody rule, the Blockchain Association and Andreessen Horowitz have filed letters of opposition. The Blockchain Association claimed that the rule would limit investment in digital assets and could leave investors’ assets at more risk. Meanwhile, Andreessen Horowitz stated that the rule could prevent registered investment advisers from transacting with crypto exchanges and violate the SEC’s duty of care requirements.

The proposal, which has not yet been approved by the SEC, aims to impose more stringent rules on investment advisers in the custody of assets, including crypto. The proposed measures include proper segregation of assets and annual audits from public accountants, among other transparency measures.

The SEC’s Chair, Gary Gensler, has specifically targeted crypto exchanges with the rule, claiming that some crypto trading platforms offering custody services are not qualified custodians. However, even within the SEC, Commissioner Hester Pierce has questioned the rule’s workability and breadth, suggesting that it appears to be targeting crypto and crypto-related companies.

The Blockchain Association and Andreessen Horowitz have both argued that the rule exceeds the SEC’s authority and would have a negative impact on investment in digital assets. They have also claimed that the proposed measures would prevent investment advisers from using crypto and could leave investors’ assets at greater risk.

Despite opposition from industry proponents and within the SEC itself, the proposal remains under consideration. It is yet to be seen whether the SEC will make any changes to the rule in response to the letters of opposition.

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Estonia Shuts Down Crypto Firms

by Blockchain News

In recent news, Estonia has strengthened its Anti-Money Laundering laws and almost 400 virtual asset service providers (VASPs) have shut down as a result. The amended laws expanded the defined scope of VASPs and increased licensing fees, capital requirements, and information reporting requirements. Additionally, the laws introduced the Financial Action Task Force Travel Rule. The Estonian Financial Intelligence Unit (FIU) announced that almost 200 domestic crypto service providers voluntarily shut down, and another 189 had their authorizations revoked due to non-compliance.

The FIU’s director, Matis Mäeker, noted that the response from the legislator and the supervision activities have been relevant, given the documents submitted by the service providers that lost their authorizations and their methods of operation and risks involved. The FIU also found several general issues within the companies it shut down, including misleading company information. For instance, some companies had registered board members and company contacts without their knowledge, while others had falsified professional backgrounds on their resumes. Additionally, many companies had copy-pasted identical business plans from each other, which were also found to be lacking any logic or connection with Estonia.

Estonia has made significant efforts to implement strong AML laws, primarily due to the discovery in 2018 that around $235 billion worth of illicit capital had been laundered through the Estonian branch of Denmark megabank Danske Bank. The ongoing war between Russia and Ukraine has also had an impact, as Estonia has pushed to cut off revenues supporting Russia’s war machine and protect international financial systems via strong AML regulation as part of its partnership with the U.S. Estonia is a member of the European Union and will soon have to implement the upcoming Markets in Crypto-Assets (MiCA) laws that are slated to come into effect in early 2025. Under MiCA, crypto firms will be subject to stringent AML and terrorism prevention requirements.

In conclusion, Estonia has taken significant steps to ensure the implementation of robust AML laws. The recent enhancement of AML laws has resulted in the closure of nearly 400 crypto firms in Estonia. The FIU found several issues with the companies it shut down, including misleading company information. As a member of the European Union, Estonia will soon have to implement MiCA laws, which will require crypto firms to comply with stringent AML and terrorism prevention requirements.

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