Coinbase Rolls Out AI-Driven ERC-20 Scam Token Detection System

Coinbase’s Chief Legal Officer, Paul Grewal, recently shed light on how their Engineering team is harnessing Artificial Intelligence (AI) to root out ERC-20 scam tokens.This innovation was disclosed on October 6, 2023, by Yifan Xu, Indra Rustandi, Yao Ma, and Vijay Dialani from the engineering team at Coinbase. The innovative ERC-20 Scam Token Detection System is a blend of smart contract auditing and machine learning prediction aimed at identifying both known and emergent scam types, marking a significant leap towards ensuring a safer crypto space.

The burgeoning realm of cryptocurrency is not without its share of scams, especially surrounding new and unverified tokens. Fraudsters employ a variety of devious tactics, ranging from Honeypot scams, which are deceptive traps to ensnare investors, to Internal Fees scams involving hidden or unusually high transaction fees. The evolving nature of these scams presents a continuous challenge, with new scam types emerging daily, posing a significant threat to both investors and the broader crypto ecosystem.

To combat these challenges, Coinbase has developed the Scam Token Detection System which employs a two-pronged strategy: 

Smart contract auditing is a proactive measure to identify and filter out known scam types. By meticulously examining the integrity of tokens, this step helps to mitigate the risk of fraud by excluding tokens associated with known malicious activities, capturing and cataloging them for future reference.

On the flip side, the system employs a machine learning framework to detect unknown scam types by identifying abnormal activity patterns. For instance, unusual patterns in time-series transactions among a concentrated group of accounts could be indicative of unknown scam types. This abnormality detection mechanism spots these irregularities, safeguarding against potential unidentified scams.

The Scam Token Detection System isn’t just a technological safeguard; it translates into tangible benefits for users. The establishment of a whitelist of trusted tokens is crucial for launching Coinbase’s asset recovery service for unsupported ERC-20 tokens. This feature, coupled with the ability to hide scam/spam tokens within the Coinbase Wallet, significantly enhances the platform’s capacity to filter out spam tokens, providing a cleaner, safer, and more user-friendly experience.

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Coinbase CLO Responds to SEC’s Opposition

Paul Grewal, the Chief Legal Officer of Coinbase, took to Twitter on October 4, 2023, to address the U.S. Securities and Exchange Commission’s (SEC) recent filing against the company. The SEC has opposed Coinbase’s motion to dismiss the case against it, a move that Grewal describes as “more of the same old same old.”

In a series of tweets, Grewal criticized the SEC for making “sweeping claims of what the law is/must be without any legal citation.” He pointed out specific pages in the SEC’s opposition brief where these claims were made, such as pages 8, 17-18, and 21.

Grewal emphasized that the assets listed on Coinbase‘s platform are not securities and therefore fall outside the SEC’s jurisdiction. He cited recent court decisions that have clarified this point, stating, “Court decisions over the past several months have made that plain.”

The Chief Legal Officer also took issue with the SEC’s broad interpretation of what constitutes a security. He argued that by the SEC’s logic, “everything from Pokemon cards to stamps to Swiftie bracelets” would also be considered securities. This interpretation, he said, is neither supported by existing law nor reasonable.

Grewal expressed concern over the SEC’s “continued regulation by enforcement approach,” which he believes ignores the voice of the 52-million strong crypto constituency in the U.S. He mentioned that last week, founders from over 40 crypto companies joined the Stand With Crypto campaign in Washington, D.C., to advocate for legislation that “protects consumers, enables innovation, and creates jobs and opportunities in the U.S.”

Coinbase is set to file its reply to the SEC’s opposition on October 24, 2023. Grewal concluded his Twitter thread by stating, “We look forward to filing our reply on Oct 24. As always, we appreciate the court’s consideration of our case.”

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BETA, BOND, WTC, and XEM Added to Binance’s Monitoring Tag List

Binance has expanded its Monitoring Tag list to include Beta Finance (BETA), BarnBridge (BOND), Waltonchain (WTC), and NEM (XEM) as of October 4, 2023, according to Binance official blog. The Monitoring Tag serves as a risk indicator for tokens with elevated volatility and risk. 

The Monitoring Tag is a feature on Binance that flags tokens with higher volatility and risk compared to other listed assets. Binance performs regular reviews of these tagged tokens based on a comprehensive set of criteria. These criteria include the team’s commitment to the project, the level and quality of development activity, trading volume and liquidity, and the stability and safety of the network from attacks, among others. Tokens that consistently fail to meet these criteria are at risk of being delisted from the platform.

To trade these tagged tokens, Binance mandates that users pass quizzes every 90 days on its Spot and Margin trading platforms. These quizzes aim to ensure that traders are fully aware of the risks involved in trading such volatile assets. Additionally, a risk warning banner is displayed on the trading pages for these tokens, serving as an extra layer of caution for traders.

Binance’s decision to extend its Monitoring Tag to these four tokens is part of a broader industry trend towards increased scrutiny and risk management. On September 6, 2023, Coinbase announced that it would suspend trading for BarnBridge (BOND) and other tokens. Similarly, OKX revealed plans to delist several trading pairs, including XEM, that did not meet its listing criteria on September 21, 25, and 26.

Binance has committed to conducting periodic reviews to reassess the Monitoring Tag status of tokens. This is part of the exchange’s broader strategy to foster a transparent and sustainable cryptocurrency ecosystem. The Monitoring Tag serves as a tool for both the exchange and its users to manage risk effectively, and its extension to include more tokens is indicative of a maturing market that is increasingly focused on risk management and compliance.

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Precedent Trial of SBF Engrosses Coinbase Executives as FTX Faces Judicial Scrutiny

On the morning of October 4, 2023, a significant legal event will unfold as Judge Kaplan begins the criminal trial against Sam Bankman-Fried (SBF), a name that has become synonymous with the crypto exchange FTX. The anticipation surrounding the trial has caught the attention of top executives at Coinbase, a leading competitor to FTX. Brian Armstrong, CEO of Coinbase, and Paul Grewal, the Chief Legal Officer, shared their insights on the impending court proceedings through a series of Twitter exchanges on October 3, 2023.

Grewal, having an extensive background in federal court with over 35 jury selections to his name, expounded on his expectations regarding the jury selection process. He highlighted the seriousness with which federal judges approach jury selection, ensuring a fair trial by a jury of peers, and the emphasis on not wasting prospective jurors’ time. Moreover, he pointed out the active role federal judges play in the questioning process during jury selection, a stance differing significantly from many state courts. According to Grewal, while lawyers are naturally inclined to favor a jury beneficial to their case, federal judges strive for a balanced and fair jury.

The Twitter thread invited a comparison of civil and criminal trials’ procedural dynamics, sparking a detailed discussion among the crypto community. An account named Degens Oasis chimed in, outlining the distinct strategies and concerns in high-profile cases like that of SBF. The discussion also touched on the perceived preferential treatment towards SBF and the influence of political donations, hinting at a skepticism towards the impartiality of federal judges amidst political entanglements.

FTX Under Legal Spotlight

The trial comes at a time when FTX has been facing legal scrutiny, marking a noteworthy chapter in the crypto exchange’s journey. The judicial tussle is not only a focal point for legal analysts but also for competitors and the broader crypto community, keen on understanding the ramifications of the case on the crypto industry’s regulatory landscape.

The discourse surrounding the trial and the involvement of industry leaders like Armstrong and Grewal underscores the trial’s broader implications on the crypto sector. It brings to light the evolving legal frameworks and the pressing need for clear regulatory guidelines to foster a conducive environment for crypto enterprises.

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Ethereum’s Layer 2s Break New Ground in Scalability

Ethereum has marked a commendable 22% upsurge in its value as of September 2023, surpassing many substantial smart contract blockchains, according to Will Ogden Moore‘s article on Grayscale blog. The escalation is significantly credited to the advent of Layer 2 solutions (L2s) which have been instrumental in bolstering Ethereum’s scalability, rendering the network 100 times more cost-effective for its users. The endorsement of this paradigm came with the launch of BASE, a Layer 2 blockchain on Ethereum by Coinbase in August 2023. This development not only accentuates the growing credence in the Ethereum ecosystem but also extends the dissemination of decentralized applications to over 100 million Coinbase users. Concurrently, leading Layer 2 blockchains on Ethereum, namely Optimism and Arbitrum, have overstepped large Layer 1 blockchains like Solana in Total Value Locked (TVL), inching Ethereum closer to becoming the predominant Layer 1 blockchain if this trajectory persists.

The essence of Layer 2s emanates from the burgeoning need to augment Ethereum’s scalability. The analogy of a congested highway necessitating express lanes mirrors Ethereum’s scenario that propelled the genesis of Layer 2s. As transaction volumes swell, the network grapples with the scarcity of block space and surging gas fees, which peaked at an average of $196 per transaction by May 2022. This surge not only impinged on the user experience due to high costs and time inefficiency but also positioned Ethereum (~14 transactions per second) far behind competitors like Solana, capable of handling up to eight thousand transactions per second.

Layer 2 solutions ameliorate Ethereum’s inherent issues by processing transactions from decentralized applications, batching them, and transmitting a condensed version back to the main network for settlement. This mechanism drastically trims fees, up to 100x less than on the main chain, enhancing the usability and transaction capacity of the Ethereum ecosystem while buttressing its network security. Additionally, the incremental activity on Layer 2s reciprocates value to Ethereum with every transaction fee shared between the L2 and Ethereum network, alongside a minuscule burn of the total ETH supply, enriching the ETH value.

August witnessed a pivotal development with Coinbase launching its Layer 2 scaling solution, BASE, on Ethereum, extending the reach of dApps built on BASE Layer 2 to over 110 million users in the Coinbase ecosystem. BASE’s launch has already shown a notable upturn, surpassing Ethereum and other Layer 2 competitors in daily transactions within a month, and further propelled by the viral growth of decentralized application friend.tech. While presently centralized, BASE has expressed a progressive decentralization roadmap, aligning with the broader vision of Ethereum’s Layer 2 scalability agenda.

The previous months have seen a consistent rise in the usage of Layer 2 scaling solutions, with the aggregate daily active addresses on Layer 2 outpacing leading Layer 1s. The TVL metric also reflects a burgeoning trust in Layer 2s like Arbitrum and Optimism, which have surpassed Ethereum’s Layer 1 competitors Solana and Avalanche. The launch of the ARB token in March 2023 further entrenched Arbitrum as a leading Layer 2, boasting a TVL of $1.69 billion, only behind Tron and Ethereum.

While Layer 2s are pioneering in scaling Ethereum, they are at nascent stages of decentralization, posing certain risks. The predominant model involves a single entity running a “sequencer” for processing and batching transactions on Layer 2s, which could potentially lead to adverse outcomes such as outage risks. However, the progressive decentralization plans shared by most Layer 2s aim to mitigate such risks over time.

Despite the general consensus of a crypto market downturn since 2022, Ethereum’s ecosystem is burgeoning, courtesy of the Layer 2 solutions. The Layer 2 paradigm not only validates Ethereum’s model but also propels value to ETH, attracting more users and developers. With BASE, Coinbase is potentially paving the path towards mainstream adoption of Ethereum-based decentralized applications. The collective advancements in Layer 2s, despite the inherent centralization risks, are deemed to foster competition and innovation, positioning Ethereum to further cement its dominance in the smart contract blockchain realm.

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Coinbase Secures Major Payment Institution License from Singapore’s Monetary Authority

Coinbase Singapore announced on October 1, 2023, that it has obtained a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS). This license follows the company’s initial “In Principle Approval” and signifies Coinbase’s commitment to the Singaporean market. The license allows Coinbase to expand its digital payment token services to both individuals and institutions in the country.

Coinbase is not the first company to secure an MPI license from MAS. In early June, Circle announced its receipt of an MPI license, followed by Blockchain.com, which made its announcement on August 7 after receiving the license on August 1. Crypto.com also joined the ranks on June 1. These companies are authorized to provide digital payment token services to institutional and accredited investors in Singapore, highlighting the competitive and regulated landscape of the crypto market in the city-state.

Singapore has emerged as a significant player in the crypto and Web3 space. According to surveys, 25% of Singaporeans view cryptocurrency as the future of finance, and 32% are either current or past crypto owners. The city-state is also home to over 700 Web3 companies, making it a crucial market for the growth of the crypto and Web3 economy.

Coinbase has been proactive in tailoring its offerings to the Singaporean market. Earlier this year, the company introduced convenient funding options like PayNow and FAST bank transfers. It also integrated SingPass, Singapore’s trusted digital identity system, to streamline the onboarding process. Additionally, Coinbase introduced no-fee purchases of USDC with Singapore Dollars (SGD).

Coinbase has also been active in forming partnerships and making investments in the region. The company has collaborated with local developer communities and key partners like Nansen.ai, Blockdaemon, and Infura. Over 15 of Coinbase’s investments through Coinbase Ventures are rooted in Singapore. The company has also been involved in training and hiring initiatives at its Singapore tech hub.

The Monetary Authority of Singapore is a significant regulatory partner for Coinbase. The newly acquired license is not just an approval but represents a shared commitment between Coinbase and MAS to support and grow the local crypto and Web3 community.

Coinbase’s acquisition of the MPI license from MAS is a significant development that underscores the company’s strategic focus on Singapore as a vital market. It also reflects the broader trend of international markets crafting innovative policies to emerge as crypto hubs. With this license, Coinbase not only validates its operations but also takes on a promise and responsibility to the growing crypto and Web3 community in Singapore. The license places Coinbase in a competitive but regulated landscape, alongside other key players like Circle, Blockchain.com, and Crypto.com, further emphasizing the importance of regulatory compliance in the rapidly evolving crypto market.

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Coinbase CEO Criticizes Chase UK’s Crypto Transaction Ban

Key Takeaways

* Brian Armstrong condemns Chase UK’s decision to restrict crypto-related transactions

* The move prompts dialogue with UK officials regarding the country’s crypto policy

* The ban poses challenges for Coinbase’s expansion ambitions in the UK

 

Brian Armstrong, the Chief Executive Officer of the major United States-based cryptocurrency exchange, Coinbase, has expressed disapproval over Chase UK’s recent decision to halt all crypto-related transactions. Armstrong shared his criticism publicly through a post on X (formerly Twitter) on September 26, 2023, describing Chase UK’s move as “totally inappropriate.”

Reaction to Transaction Ban

Armstrong’s comments came in response to the news that Chase UK, a subsidiary of JPMorgan, has resolved to decline all customer transactions related to cryptocurrency, citing a high level of fraud associated with crypto transactions as the primary reason. The bank confirmed this stance to Cointelegraph on the same day. According to Chase UK, customers attempting to carry out crypto-related transactions will receive a declined transaction notification.

In his post, Armstrong urged crypto holders in the UK to close their Chase accounts as a form of protest against this restrictive measure. He also beckoned UK officials, including Prime Minister Rishi Sunak and Economic Secretary Andrew Griffith, to evaluate whether Chase UK’s actions align with the broader policy goals of the country concerning cryptocurrency.

Implications for Coinbase

This development could potentially hinder Coinbase’s aggressive expansion efforts in the UK and Europe. According to the official website of Coinbase, the platform supports transactions in the UK, alongside the US, Europe, and Canada. In April 2023, Coinbase had expressed its serious commitment to expanding its operations in the UK and Europe. This ambition, however, may face challenges given the restrictive stance of major financial institutions like Chase UK towards cryptocurrency transactions.

While the UK and European markets present significant growth opportunities for Coinbase, the firm has also been dealing with legal hurdles in the US. Notably, in June 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, alleging violations of securities laws.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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SEC Raises Objections to Celsius Network’s Restructuring Plan Involving Coinbase

Key Takeaways

SEC files limited objection against Celsius Network’s restructuring plan.

Concerns raised over the company’s proposed engagement with Coinbase.

SEC’s ongoing lawsuit against Coinbase cited as complicating factor.

Next bankruptcy court hearing scheduled for October 5, 2023.

Background and Timeline

Celsius Network filed for Chapter 11 bankruptcy after announcing a $14 million agreement with Core Scientific, a mining company. Since filing for bankruptcy in July 2022, Celsius has reportedly failed to meet its payment obligations to Core Scientific. The restructuring plan has undergone several amendments since its initial filing in March 2023, with the fourth iteration submitted in August 2023. The bankruptcy court has yet to approve the plan, and the next hearing is scheduled for October 5, 2023.

SEC’s Concerns

The SEC’s limited objection focuses on Celsius Network’s proposed engagement with Coinbase, which is intended to act as a Distribution Agent for international customers under the restructuring plan. The SEC argues that the role of Coinbase in the arrangement “goes far beyond the services of a distribution agent,” potentially implicating brokerage and master trading services. These services are central to the SEC’s ongoing lawsuit against Coinbase, initiated in June 2023. The SEC has reserved the right to object further based on the outcome of this and other related cases.

Coinbase’s Response

Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal took to social media to express their support for Celsius Network. They questioned why the SEC would object to a “trusted US public company” taking on the role of distributing assets back to Celsius customers. The statement raises questions about the SEC’s motives and adds another dimension to the ongoing legal complexities.

Implications and Next Steps

The SEC’s objection could potentially delay or alter the terms of Celsius Network’s restructuring plan. It also raises questions about the regulatory landscape for crypto companies engaging with traditional financial institutions. The bankruptcy proceeding is set to continue, with the next hearing scheduled for October 5, 2023. The SEC reserves the right to object further based on the outcome of this and other related cases.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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Coinbase Completes Tender Offer for 3.625% Senior Notes Due 2031

Coinbase Global, Inc. has announced the conclusion of its cash tender offer for its 3.625% Senior Notes due 2031. The offer, which aimed to purchase up to $180.0 million of the notes, excluding accrued and unpaid interest, expired at 11:59 p.m., New York City time, on September 18, 2023.

Coinbase, established in 2012, has been at the forefront of building the cryptoeconomy, aiming to create a more transparent, efficient, and accessible financial system through cryptocurrency.

The company has stated its intention to finalize payments for all validly tendered notes by September 20, 2023. This follows the conditions outlined in Coinbase’s offer to purchase, dated August 7, 2023.

By 5:00 p.m., New York City time, on August 18, 2023, holders had tendered $50,034,000 of the notes. On August 22, 2023, Coinbase accepted this amount for purchase. By the Interim Expiration Time on September 1, 2023, an additional $211,062,000 of the notes were tendered. Consequently, on September 6, 2023, Coinbase accepted this aggregate principal amount.

Data from the Global Bondholder Services Corporation, the tender and information agent for the offer, indicates that an additional $1,447,000 of the notes were tendered by the Final Expiration Time. This brings the total tendered amount in the offer to $262,543,000. Holders who tendered their notes by the Final Expiration Time are set to receive $675.00 per $1,000 principal amount of notes accepted.

A breakdown of the tender offer is as follows:











Issuer Coinbase Global, Inc.
Title of Security 3.625% Senior Notes Due 2031
CUSIP Number/ ISIN 44A CUSIP/ISIN: 19260Q AD9 / US19260QAD97; Regulation S CUSIP/ISIN: U19328 AB6 / USU19328AB62
Aggregate Principal Amount Outstanding $1,000,000,000
Aggregate Principal Amount Tendered after Interim Expiration Time $1,447,000
Aggregate Principal Amount Expected to be Accepted for Purchase on Final Settlement Date $1,447,000
Aggregate Amount to be Paid $1,001,349
Total Consideration $675.00

Citigroup Global Markets Inc. acted as the Dealer Manager for the Tender Offer. Further details and documents related to the Tender Offer can be accessed at the Tender and Information Agent’s website.

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Coinbase Suspends Trading on 41 Non-USD Pairs

On September 13, 2023, Coinbase Exchange affirmed its decision to suspend 41 non-USD trading pairs. The list encompasses the following:

ALCX-USDT, BIT-USDT, BOBA-USDT, BOND-USDT, CLV-EUR, CLV-USDT

CTX-EUR, CTX-USDT, DDX-USDT, DIA-EUR, DIA-USDT, DYP-USDT

FARM-USDT, FIDA-EUR, FIDA-USDT, FIS-USDT, HOPR-USDT, INDEX-USDT

KRL-EUR, KRL-USDT, MATH-USDT, MDT-USDT, NCT-EUR, NCT-USDT

NEST-USDT, ORN-BTC, ORN-USDT, POLS-USDT, PRQ-USDT, QSP-USDT

SHPING-EUR, SHPING-USDT, SUKU-EUR, SUKU-USDT, SYLO-USDT

TIME-USDT, WAMPL-USDT, WCFG-BTC, WCFG-EUR, WCFG-USDT, XCN-USDT

This decision impacts users on three of Coinbase’s platforms: Coinbase Exchange, Advanced Trade, and Coinbase Prime.

Strengthening Market Health

The suspension stems from Coinbase’s continuous market monitoring. Their mission behind this significant action is to “improve overall market health and consolidate liquidity.” This change was scheduled “on or around 12PM ET on 13 September 2023.”

Options for Continuing Trades

Although these pairs have been suspended, trading remains viable on the platform. Users on Coinbase.com’s Advanced Trade have been advised to leverage “more liquid USD order books by using USDC balances.” Additionally, Coinbase Exchange traders have the option to adopt “USDC unification” and utilize their USDC holdings for trades in both USD or USDC order books.

Impact on Trading Volume: Minimal

Despite the lengthy list of suspended pairs, Coinbase underscores the relative minimal impact on their business. They elucidate that “these markets constitute an immaterial portion of Coinbase Exchange’s overall trading volume.”

Coinbase’s endeavor appears to lean towards enhancing its platform’s efficiency and user experience. The rationale behind choosing these particular non-USD pairs is likely informed by the company’s regular internal market evaluations.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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