Day: August 24, 2023

Base Unveils Its Decentralized Superchain Vision Powered by OP Stack

by Blockchain News

Base, the Ethereum Layer 2 (L2) solution incubated at Coinbase, recently spotlighted its unwavering dedication to decentralization, aligning seamlessly with the Superchain vision. Born out of a collaboration with the Optimism Collective, Base utilizes the open-source OP Stack, aiming to bring a billion users and a million developers into the blockchain ecosystem. This ambitious goal is anchored in the principle of decentralization, seen as the linchpin for a global, open, onchain economy. 

The OP Stack, maintained by the Optimism Collective, is the open-source development stack that powers Optimism. It comprises various software components that together form Optimism’s backbone, designed as a public good for both Ethereum and Optimism ecosystems. The stack’s primary focus is on creating a shared, high-quality system for generating new L2 blockchains.

This coordination on shared standards helps avoid repetitive software creation in isolated silos. While the current core of the OP Stack is infrastructure for L2 blockchains, it extends to tools like block explorers, governance systems, and more. The Bedrock release of the OP Stack supports the Optimism Superchain, a proposed network of L2s sharing security, communication layers, and a common development stack.

The choice of the OP Stack as the foundation is strategic. Recognized as a universally accessible asset, it beckons every developer. As teams like Base and OP Labs converge, the mission is clear: reinforce the OP Stack. This shared aspiration with the Optimism teams paints a picture of Ethereum’s future—a “Superchain” of interconnected rollups and L2s.

Base’s commitment to decentralization isn’t just theoretical. The platform is on a quest to decentralize its core while bolstering the OP Stack. With technical advancements on the horizon, Base aims to transition from a Stage 0 to a Stage 2 L2, a categorization attributed to Ethereum’s co-founder, Vitalik Buterin. This collaboration with the Optimism Collective promises to elevate the OP Stack’s trifecta of scalability, reliability, and decentralization.

On the technical front, Base’s roadmap is laden with milestones. From refining op-geth and op-node for enhanced scalability to backing the op-reth initiative for diversified clients, the path is well-defined. Additionally, the advent of “Pessimism” is set to amplify the OP Stack’s monitoring prowess.

Base’s allegiance to the “Law of Chains” is steadfast. This framework sketches out standards for Superchain protocols, emphasizing neutrality and a decentralized security model. It also offers a protective shield for users and operators. Base’s launch strategy is meticulously crafted to obliterate centralization bottlenecks.

In a philanthropic stride, Base pledges to allocate a portion of its sequencer revenue to the Optimism Collective. This contribution is earmarked as either 2.5% of Base’s sequencing revenue or 15% of L2 transaction profits after accounting for L1 data submission costs. Moreover, Base’s foray into onchain governance is commendable, with prospects of acquiring up to 2.75% of the OP token supply over six years.

In conclusion, Base’s fervor for the Superchain vision is palpable. In synergy with the Optimism Collective, the objective is lucid: establish a robust foundation for the OP Stack and the Superchain, heralding a new era in the blockchain realm.

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Prominent Crypto Businessman Moshe Hogeg Faces Serious Allegations Following Two-Year Investigation

by Blockchain News

Moshe Hogeg, a notable figure in the cryptocurrency sector and the former owner of Beitar Jerusalem FC, is now under intense scrutiny as Israeli police have officially recommended pressing charges against him. These allegations, which have been building over a two-year investigation, include fraud, theft, money laundering, and sex crimes.

The crux of the accusations centers on Hogeg’s fundraising activities between 2017 and 2018. He is alleged to have misleadingly secured approximately $290 million from investors worldwide for four separate cryptocurrency projects. These funds, according to the police, were then misappropriated for his personal use.

The depth and breadth of the investigation have been significant. Since the investigation was made public in 2021, around 180 individuals have been questioned, numerous searches have been conducted, and a substantial amount of evidence, money, and property has been seized across multiple countries.

Further complicating matters for Hogeg are the emerging details suggesting his involvement in sexual offenses and consistent violations of women’s privacy. The list of financial crimes he’s potentially linked to is extensive, ranging from aggravated fraud and theft by an authorized person to forgery, money laundering, and tax violations.

In a related incident in 2021, Hogeg found himself detained due to suspicions surrounding his involvement in the alleged fraud and sex crimes. He was, however, released to house arrest after a month. Throughout this period, Hogeg has staunchly denied all allegations against him.

The scope and scale of the investigation are noteworthy. Revealed to the public in 2021, it has led to the questioning of approximately 180 people, the execution of many searches, and the confiscation of a considerable amount of evidence, funds, and assets in various nations.

As this high-profile case progresses, the global crypto community watches closely. The final verdict could set a precedent and have far-reaching implications for the cryptocurrency industry at large.

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Washington D.C. Attorney Faces SEC Insider Trading Charges

by Blockchain News

Romero Cabral da Costa Neto, a visiting attorney at a renowned global law firm, has been thrust into the spotlight following insider trading charges announced by the Securities and Exchange Commission (SEC). This incident, coupled with a recent case in the digital asset market, underscores the evolving challenges of insider trading in both traditional and modern financial landscapes.

Romero Cabral da Costa Neto’s Alleged Misconduct

According to the SEC’s complaint, in 2023, Costa accessed confidential information about the biopharmaceutical company Swedish Orphan Biovitrum AB’s acquisition of CTI BioPharma Corp. (CTIC). On May 9, 2023, a day before the deal’s public announcement, Costa allegedly purchased over 10,000 shares of CTIC. He is accused of selling these shares on the announcement day, realizing a profit exceeding $42,000. The SEC alleges that Costa’s trading activities extended to securities of several other issuers represented by the law firm, closely timed with their significant announcements.

Nicholas P. Grippo, Regional Director of the Philadelphia Regional Office, remarked, “As alleged in our complaint, Costa violated his duties to the law firm and its clients when he abused his position to enrich himself.” The case, originating from the SEC’s Market Abuse Unit’s Analysis and Detection Center, has also led to parallel criminal charges against Costa by the U.S. Attorney’s Office for the District of Columbia.

Insider Trading Across Financial Realms

Insider trading is not an uncommon illegal financial misconduct, evident not only in traditional finance but also in the emerging crypto market. Nathaniel Chastain, the former head of product at OpenSea, was recently sentenced to three months in prison for insider trading involving Non-Fungible Tokens (NFTs). Chastain, responsible for selecting NFTs to be featured on OpenSea’s platform, was convicted of “fraud and money laundering” earlier this year. The U.S. Department of Justice and the FBI highlighted this case as the pioneering insider trading scheme involving digital assets.

Chastain’s activities were unveiled post his 2021 departure from OpenSea. An internal investigation led to his resignation, and following his conviction, Chastain forfeited equity in OpenSea, reportedly valued in the millions.

Conclusion

The cases of Costa and Chastain serve as a stark reminder of the complexities and challenges posed by insider trading in both traditional securities and the burgeoning digital asset markets. As financial landscapes evolve, the need for stringent regulations and oversight remains paramount.

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SEC’s Chair Gary Gensler Issues Statement on Amendments to Broker-Dealer Registration Rule

by Blockchain News

The U.S. Securities and Exchange Commission (SEC) oversees the registration of broker-dealers, individuals or firms engaged in buying and selling securities. This registration ensures adherence to federal securities laws and SEC rules, safeguarding market integrity and investor confidence.

Chair Gary Gensler recently provided clarity on the amendments to Rule 15b9-1, a specific regulation concerning the registration requirements for broker-dealers with national securities associations like the Financial Industry Regulatory Authority (FINRA). Established in the 1960s and last significantly updated in 1976, the rule is being amended to better reflect the current landscape of the capital markets.

Rule 15b9-1 was crafted to allow a subset of exchange floor members to bypass membership with the National Association of Securities Dealers (NASD), the predecessor to FINRA. This exemption was tailored for broker-dealers primarily registered with a single exchange, conducting floor business, and meeting other specific criteria.

However, the dynamics of the market have undergone significant changes since then. With the rise of high-frequency trading and the proliferation of cross-exchange or off-exchange activities by many broker-dealers, there’s been a noticeable shift. Some broker-dealers still operate under an exemption from national securities association registration that predates even the advent of mobile phones. This has resulted in a regulatory void, with several firms that have monthly trading volumes in the ballpark of hundreds of billions of dollars escaping the purview of national securities association oversight.

The newly introduced amendments aim to redefine and restrict the conditions under which broker-dealers can sidestep registration with a national securities association. This move is anticipated to bolster consistent and rigorous oversight, especially in the realms of cross-market and off-exchange activities. Mandatory membership in national securities associations for a significant number of these previously exempt firms is expected to amplify transparency and oversight, particularly in the Treasury markets.

Such measures are projected to be advantageous for investors, promoting markets that are fair, orderly, and efficient.

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Pantera Capital Predicts Bitcoin to Hit $35k Before 2024 Halving and Surge to $148k Afterward

by Blockchain News

In a recent publication by Pantera Capital, the firm delved into the concept of a “positive black swan” event in the blockchain industry. The term “black swan” traditionally refers to unpredictable events with potentially severe consequences. However, in this context, Pantera Capital highlights the positive implications of such events for the blockchain sector.

Key takeaways include:

Historical Bitcoin Price Predictions

Pantera Capital references historical trends to make a significant prediction about Bitcoin’s price trajectory. The firm states, “If history were to repeat itself, the next halving would see bitcoin rising to $35k before the halving and $148k after.”

Blockchain’s Rapid Growth

The blockchain sector has witnessed exponential growth over the past few years. Pantera Capital cites that the number of blockchain users has doubled every twelve months. This rapid adoption rate underscores the increasing acceptance and integration of blockchain technologies in various industries.

Bitcoin’s Resilience

In the face of regulatory hurdles and market shifts, Bitcoin has showcased significant stability. Pantera Capital points out that, over the last 90 days, Bitcoin’s price fluctuations have been steadier than 87% of stocks in the S&P 500.

DeFi’s Potential

Decentralized finance (DeFi) platforms have garnered significant attention and investment. Pantera Capital emphasizes the potential of DeFi to revolutionize traditional financial systems by offering decentralized alternatives.

Blockchain’s Positive Impact

The article suggests that blockchain technology can play a pivotal role in addressing global challenges. From improving supply chain transparency to fostering financial inclusion, blockchain solutions have the potential to drive positive change on a global scale.

Future Outlook

Pantera Capital remains optimistic about the future of blockchain and its transformative potential. The firm believes that as the technology matures, its impact will be even more profound, touching various facets of our daily lives.

In conclusion, while black swan events are typically associated with negative outcomes, Pantera Capital presents a compelling case for the positive impact of such events in the blockchain domain. The firm’s insights underscore the transformative potential of blockchain technology and its role in shaping the future of various industries.

About Pantera Capital

Established by Dan Morehead, the former Head of Macro Trading and CFO at Tiger Management, Pantera Capital stands as a prominent figure in the investment arena. The firm’s adeptness in global macro strategies has seen it oversee more than $1 billion in institutional allocations. In a pioneering move in 2013, Pantera introduced the United States to its first blockchain hedge and venture funds. The firm observed a swift rise in the adoption of digital assets globally, a trend accentuated during the COVID-19 pandemic, serving as a countermeasure against unparalleled fiscal and monetary expansion. Additionally, a noteworthy transition in the fiscal domain is evident as major public corporations have begun incorporating Bitcoin into their financial reserves.

Pantera Capital’s investments span a myriad of blockchain initiatives, encompassing but not restricted to Zcash, Xapo, Wintermute, Ripple, Polkadot, Near, Filecoin, Coinbase, Circle, BitGo, and Bitstamp.

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Crypto Liquidity Provider B2C2 Acquires Woorton, Strengthening European Crypto Presence

by Blockchain News

B2C2, a prominent crypto liquidity provider catering to institutional clients worldwide and a digital asset pioneer shaping the future ecosystem, has finalized its acquisition of Woorton, a leading European entity in market making and over-the-counter transactions for the digital asset sector.

Founded in 2015 and majority-owned by the Japanese financial group, SBI, B2C2 has facilitated institutional access to cryptocurrencies by offering consistent liquidity across various market conditions. Its achievements are rooted in its crypto-native technology and continuous product innovation, with headquarters in the UK and branches in the US and Japan.

This acquisition underscores B2C2’s dedication to expanding its client base in Europe. With the forthcoming MiCA (Markets in Crypto Assets Regulation) regulations, B2C2 is poised to serve clients within the European Union jurisdiction. This move also paves the way for B2C2 to tap into client growth opportunities beyond the UK, Asia-Pacific, and the USA. A significant aspect of this acquisition is B2C2’s access to Woorton’s PSAN (prestataires de services sur actifs numériques) License, regulated by the AMF (Autorité des Marchés Financiers). This license permits B2C2 to operate within the European Union.

Established in 2017, Woorton boasts an active clientele of approximately 250 clients, trading in 96 coins with a 24/7 liquidity provision. The company has been actively engaged with regulatory bodies and co-founded ADAN (Association for the Development of Crypto-Assets). This association aims to foster dialogue between the digital asset industry and policymakers. Woorton has also played a pivotal role in initiating Paris Blockchain Week, an event that attracts over 5,000 attendees and 170 speakers globally, focusing on blockchain and digital assets.

Charlie Meraud, Woorton’s CEO, stated, “In joining forces with B2C2, we merge the unique strengths of both firms. This collaboration will offer our clients access to a more substantial liquidity pool and an enhanced market presence.”

Nicola White, B2C2’s CEO, remarked on the acquisition as a “significant milestone in B2C2’s growth journey.” She expressed enthusiasm about the potential opportunities this acquisition presents for B2C2 and its European clientele.

Thomas Restout, Head of EMEA at B2C2, highlighted Woorton’s innovative approach and its alignment with B2C2’s values and operational practices. He emphasized the synergy between the two firms, which will benefit clients in the European market.

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Coin Center Questions Tornado Cash Indictments in Light of FinCEN Guidance

by Blockchain News

Two former developers of Tornado Cash, Roman Storm and Roman Semenov, have been indicted on charges including conspiracy to operate an unlicensed money-transmitting business. The indictment, issued by the United States Office of Foreign Asset Control (OFAC) on August 23, has raised questions in the crypto community, particularly regarding its alignment with existing Financial Crimes Enforcement Network (FinCEN) guidance.

Coin Center, a crypto advocacy group, has expressed concerns over the indictment, suggesting that the charges may not align with the definitions and guidelines provided by FinCEN. Peter Van Valkenburgh, Coin Center’s research director, highlighted that the indictment’s primary claim against the defendants is that they “engaged in the business of transferring funds on behalf of the public” without registering with FinCEN.

However, Valkenburgh points to the 2019 FinCEN Virtual Currency Guidance which states, “An anonymizing software provider is not a money transmitter.” This guidance further elaborates that those who use such software for their transactions could be considered either users or money transmitters, depending on the transaction’s purpose. Valkenburgh argues that while Tornado Cash’s tools might have facilitated users in transmitting money using the protocol’s smart contracts, this does not necessarily categorize the developers as money transmitters.

The indictment also alleges that Storm and Semenov had “complete control” over Tornado Cash’s smart contracts. Addressing this, Valkenburgh emphasized the variable nature of Ethereum smart contracts, where control can range from none to total. He stated that the degree of control is a crucial factor in determining if one is involved in money transmission. The indictment, according to Valkenburgh, does not provide clear details on the nature of the defendants’ control over the smart contracts.

Furthermore, the OFAC indictment suggests that by transferring funds on behalf of the public, Storm and Semenov were operating an unlicensed money transmission service and should have registered with FinCEN. On August 23, Semenov was added to OFAC’s list of Specially Designated Nationals and Blocked Persons, while Storm was arrested in Washington state.

This case has broader implications for the crypto community. Valkenburgh believes that the outcome could significantly influence the legal rights of U.S. citizens to develop and publish software in the future.

In related news, another Tornado Cash founder, Alexey Pertsev, was detained by Dutch authorities in August 2022 and subsequently released in late April.

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Tornado Cash Founders Face Legal Action Over Money Laundering and Sanctions Violations

by Blockchain News

A number of charges, including breaches of sanctions and involvement in money laundering, have been brought against the individuals who created the cryptocurrency mixer known as Tornado Cash.

The co-founders of Tornado Cash, Roman Storm and Roman Semenov, have been accused on counts of conspiracy to conduct money laundering, conspiracy to commit sanctions breaches, and conspiracy to run an unlicensed money transmitting company. The charges arise from claims of money laundering, sanctions breaches, and running an unauthorized money transmission service. The indictment was unveiled on August 23, 2023.

Roman Storm has been apprehended in Washington state, while Semenov remains elusive. In August 2022, another co-founder of the firm, Alexey Pertsev, was arrested in the Netherlands on money laundering charges.

The duo is accused of creating, managing, and promoting Tornado Cash. This platform is suspected of facilitating the laundering of over a billion dollars in illegal proceeds. Of significant concern is the claim that the platform processed hundreds of millions for the blacklisted North Korean cybercrime entity, the Lazarus Group.

The United States Attorney for the District of Maryland, Damian Williams, claimed that “while publicly claiming to offer a technically sophisticated privacy service, Storm and Semenov in fact knew that they were helping hackers and fraudsters conceal the fruits of their crimes.”

On August 23, the list of Specially Designated Nationals and Blocked Persons (SDN) maintained by the Office of Foreign Assets Control (OFAC) of the United States Treasury was updated to include Roman Semenov. The OFAC has blacklisted 44 USD Coin (USDC) and Ethereum addresses by the year 2022, which made it impossible for those living in the United States to use Tornado Cash.

Strong reactions have been given by the crypto community in response to these activities. Coinbase provided legal assistance to the six plaintiffs in a case in which they contended that the Treasury Department overstepped its bounds by imposing sanctions on Tornado Cash. A similar action was taken by the advocacy organisation Coin Centre, which filed a lawsuit, and by Representative Tom Emmer of the United States House of Representatives, who questioned the decision in a letter to Treasury Secretary Janet Yellen.

The cryptocurrency sector is being subjected to persistent difficulties and widespread scrutiny, as seen by the legal steps taken against the inventors of Tornado Cash. It is still unknown how regulatory organisations will tackle the many problems that are linked with digital currencies and the platforms on which they are traded as the industry continues to undergo further development.

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Russian Investors File Class Action Against Atomic Wallet Following $100 Million Heist

by Blockchain News

Russian and CIS investors have filed a class action lawsuit against Atomic Wallet, claiming losses of around $12 million following a security breach in June. The lawsuit, coordinated by German lawyer Max Gutbrod and Moscow’s Destra Legal, highlights concerns about the platform’s security measures and the growing reliance on cryptocurrencies in Russia. (Read More)

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Schwab Q3 Survey: 44% Bullish on U.S. Stock Market and 66% See AI as a Significant Market Impact

by Blockchain News

The Charles Schwab Trader Sentiment Survey for Q3 reveals a shift in trader expectations towards a more optimistic view of the market environment. After two consecutive quarters of heightened recession anticipation, the latest survey indicates a brighter outlook among traders.

Key Findings

  1. For the upcoming three months, 44% of traders are bullish about the U.S. stock market, a significant increase from 32% in Q2. Conversely, bearish sentiment has decreased from 52% in Q2 to 35%.

  2. Although 69% of Schwab’s trader clients believe a U.S. recession is likely, this figure has dropped from 86% in Q2 and 87% in Q1. Among those expecting a recession, 64% now forecast its onset in Q4 2023 (26%) or later (38%). This is a notable shift from the previous quarter, where only 19% predicted a recession in the same timeframe.

  3. Primary Concerns Around Investing: Traders have expressed concerns about the potential of a recession (14%), the Federal Reserve raising interest rates (14%), the political landscape in D.C. (13%), inflation (10%), and market corrections (10%).

  4. The survey, which captures the perspectives of traders at Charles Schwab and TD Ameritrade, delves into primary concerns around investing, the likelihood and expected duration of a recession, and economic data influencing outlook. For instance, 77% of traders are influenced by inflation, 63% by consumer spending, and 55% by the labor market.

James Kostulias, head of Trading Services at Charles Schwab, commented on the findings, stating, “While traders certainly don’t feel we’re entirely out of the woods yet when it comes to an economic downturn, we’re seeing an influx of cautious optimism.” He attributed this optimism to a robust jobs market and relatively low unemployment rates. Despite a slight increase in inflation, it remains significantly lower than the highs of 2022.

Demographic Insights

Older traders are more bullish at 49%, compared to 41% for younger traders and 38% for retirees.

51% of traders believe it’s a favorable time to invest in stocks and other equity-based investments, an increase from 41% in Q2. Moreover, 53% feel they are in a better financial position than a year ago, a jump from 36% in the previous quarter.

Sector and Asset Class Perspective

Traders are most bullish on the energy, information technology, and health care sectors. Real estate is the only sector where the majority (54%) are bearish.

On the asset class front, traders show bullishness towards value stocks, domestic stocks, growth stocks, and equities in general.

AI’s Role in Trading

Artificial Intelligence (AI) is gaining traction in traders’ decision-making. 66% of traders believe AI will have a significant impact on the market in the next 1-3 years. Furthermore, 35% are already incorporating a company’s use of AI in their stock analysis, and 51% are bullish on AI stocks for the next quarter.

The Charles Schwab Trader Sentiment Survey is a quarterly study that included 768 Active Trader clients at Charles Schwab and TD Ameritrade, conducted from July 6 – August 3, 2023.

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Bitcoin (BTC) $ 41,623.15 5.16%
Ethereum (ETH) $ 2,224.01 3.20%
Litecoin (LTC) $ 72.49 1.31%
Bitcoin Cash (BCH) $ 246.22 8.38%