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US Judge Sanctions Request By Genesis To Sell Its Shares
Genesis, a bankrupt digital asset lending firm, has been granted permission to sell shares valued at $1.6 billion, as it endeavors to undergo restructuring and reimburse its creditors. United States Bankruptcy Judge Sean Lane sanctioned the request by Genesis during a court session in White Plains, New York. Notably, the insolvent firm has been authorized to leverage its investments in Grayscale Bitcoin Trust, Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust.
DCG Cautions Genesis
It is worth noting that Genesis holds approximately $1.3 billion in GBTC shares and $207 million in Ethereum trust shares. Interestingly, the firm informed the court of the necessity to offload these shares to evade paying $1.9 million in monthly fees associated with its trust agreements.
However, Genesis has yet to attain approval for its comprehensive bankruptcy plan in court. According to a statement by Digital Currency Group (DCG), the parent company of the insolvent lender, creditors have not yet endorsed the restructuring proposal, which proposes Genesis winding down its operations and repaying creditors in either cash or cryptocurrency. DCG cautioned that if Genesis fails to secure approval for its bankruptcy plan, the sale of Grayscale shares might be untimely.
The price of Bitcoin recently surged above $52,000 for the first time in two years, while Ethereum is hovering around $2,800, according to CoinGecko. It appears that Genesis intends to capitalize on the uptick in prices and exploit the gains.
In addition, Genesis and Gemini, a popular crypto exchange established by the Winklevoss twins, are embroiled in a legal dispute over the custody of the $1.3 billion GBTC shares. The exchange asserts that Genesis lacks rightful ownership of the shares because they were utilized as collateral for loans obtained through the Gemini Earn program.
Charles Hoskinson Claims Legacy Is Eating Crypto
Charles Hoskinson, the mastermind behind Cardano (ADA) and co-founder of IOHK, recently sounded a warning during a live YouTube session. He highlighted a concerning trend, namely the infiltration of traditional financial institutions into the cryptocurrency realm, potentially jeopardizing its core principles.
During his live broadcast on February 12th, Hoskinson addressed critical issues that he believes many mainstream cryptocurrency enthusiasts overlook. He particularly emphasized the growing dominance of asset-backed stablecoins like USDT and USDC, signaling a pivotal moment for the industry.
Moreover, Hoskinson criticized the recent excitement surrounding spot Bitcoin ETFs and the potential encroachment of Wall Street into the crypto space. In related news, Input Output Global recently announced the release of Plutus V3, which is now available for testing on SanchoNet. This update includes several advanced cryptographic capabilities and efficiency improvements.
The Significance Of Stablecoins
Charles underscored the significant role played by asset-backed stablecoins, citing data indicating their involvement in 70% of on-chain transaction volume, surpassing major cryptocurrencies such as Ethereum (ETH) and Bitcoin (BTC). He also pointed out the centralized nature of these stablecoins, subject to regulatory control by their issuing authorities.
According to Hoskinson, relying heavily on these stablecoins carries profound implications for decentralized finance (DeFi) ecosystems and could dictate outcomes during blockchain forks. He explained that an asset-backed stablecoin cannot maintain its value across multiple forked chains without diluting its backing.
In contrast, Hoskinson advocated for the use of algorithmic stablecoins, which he believes align more closely with the decentralized ethos of cryptocurrencies. These stablecoins are purportedly governed by on-chain algorithms, removing the influence of centralized entities that could manipulate outcomes.
However, Colin LeMahieu, the creator of Nano (XNO), expressed skepticism about the technical and economic viability of algorithmic stablecoins. He argued that achieving a truly reliable algorithmic stablecoin is either impossible or, at best, results in unfair advantages where the treasury holds asymmetric price information.
Cathie Wood Expresses Doubt And Calls Out The SEC Again
Cathie Wood, the founder of ARK Investment Management, recently expressed doubt regarding the United States Securities and Exchange Commission and its inclination to endorse spot exchange-traded funds (ETFs) for cryptocurrencies beyond Bitcoin and Ethereum. This viewpoint emerges amidst a flurry of filings by various asset management firms seeking approval for their crypto ETFs, showcasing the increasing interest in cryptocurrency investments.
Franklin Templeton Joins The ETF Battle
Following this skepticism, Franklin Templeton gained attention by submitting a filing to the SEC to launch a spot Ethereum ETF called the Franklin Ethereum ETF, slated for listing on the Chicago Board Options Exchange. This move by Franklin Templeton, managing $1.5 trillion in assets, emphasizes renewed confidence in the potential of Ethereum despite regulatory uncertainties. With this, Franklin Templeton joins a roster of prominent firms, including BlackRock, Fidelity, and Grayscale, all competing for a share of the crypto ETF market.
Despite the optimism, the SEC has yet to approve any spot Ethereum ETFs, with decisions on applications by Grayscale and BlackRock, among others, being delayed. These postponements underscore the regulatory obstacles hindering the broader integration of cryptocurrencies into traditional investment instruments.
Market Dynamics And Regulatory Challenges
The crypto ETF market has witnessed significant activity, with several firms launching spot Bitcoin ETFs in January 2024. Among them, the Bitcoin ETF by Franklin Templeton has struggled to attract investments, accumulating only $77 million by early February, in contrast to the iShares Bitcoin Trust and the Fidelity Wise Origin Bitcoin Fund, which have experienced substantial inflows.
In collaboration with crypto asset manager 21Shares, ARK Investment Management is among those aiming to introduce the first U.S. ETF holding Ether. While SEC Chair Gary Gensler has clearly classified Bitcoin as a commodity, his stance on Ethereum remains less clear. Some analysts view the potential approval of a spot Ether ETF as a gateway for ETFs containing other digital tokens, despite the SEC adopting a cautious approach thus far.
Coinbase And Ledger Team Up To Simplify Crypto Wallet Processes
Ledger recently revealed a strategic alliance with Coinbase, incorporating Coinbase Pay into the Ledger Live app. The goal of the partnership is to empower users to directly acquire crypto via hardware wallets provided by Ledger, simplifying the process for users to transfer crypto and conduct transactions on their desktop or mobile device.
Previously, the process of transferring crypto to Ledger Live through Coinbase was intricate and prone to errors. With this latest development, Ledger users can receive crypto purchases directly through Coinbase on their Ledger device, maintaining their preferred payment methods such as ACH, Visa, Mastercard, and Maestro, as highlighted in a recent blog post by Ledger.
Simplification Is Key
Users can now reportedly purchase crypto through their Coinbase account at the same cost as on Coinbase.com and transfer it to their Ledger device with just a few clicks, without requiring additional Know-Your-Customer (KYC) procedures for existing Coinbase users. This new feature also facilitates instant transactions.
Ian Rogers, Chief Experience Officer at Ledger, emphasized the common values shared between Ledger and Coinbase, highlighting the mutual commitment to making crypto accessible and secure for consumers. Coinbase and Ledger are among the few companies in crypto with a tenure of over ten years, and the two companies already share both values and customers, Rogers stated, before also saying that both Ledger and Coinbase are dedicated to simplifying crypto usage and ensuring consumer security.
A Mutually Beneficial Partnership
Now, Coinbase users can effortlessly purchase crypto directly within Ledger Live, and Ledger users can easily buy through Coinbase. Ledger is pleased to offer this experience to Coinbase customers and provide an option for Ledger users through this partnership.
Lauren Dowling, Head of Product at Coinbase Developer Payment Services, expressed enthusiasm about the collaboration, stating that at Coinbase, the focus has been on developing the most trusted, scalable, and reliable onramps and infrastructure for onchain builders, expanding access to crypto and contributing to an updated financial system. This goal ultimately led to the collaboration with Ledger to enable users to seamlessly purchase crypto with Coinbase Pay directly into their self-custody solution.
This feature is being introduced across several key markets, including the US, UK, EU, Brazil, New Zealand, Australia, Canada, and Singapore.
New Sentencing Date Announced For Changpeng Zhao
In a significant development within the legal proceedings involving Changpeng Zhao, the former CEO of Binance, the postponement of his imprisonment has emerged. According to a recent report, the original sentencing date of February 23rd has been pushed back to April 30th.
The unfolding narrative began with the United States Securities and Exchange Commission initiating legal action against Binance. Back in early June 2023, regulatory authorities levied 13 charges against Binance, accusing the platform of operating unregistered exchanges and facilitating the trading of unregistered securities.
Links To Malicious Activities
After a protracted legal battle to contest the allegations, both Binance and Zhao eventually pleaded guilty in November. Consequently, Zhao announced his resignation and consented to a settlement payment of $4.3 billion, along with a $50 million penalty.
Treasury Secretary Janet Yellen, known for her adversarial stance towards cryptocurrencies, criticized Binance and its founder, alleging that the platform facilitated various illicit activities, including but not limited to child exploitation, narcotics trafficking, and terrorism support.
A Controversial Decision
A subsequent legal filing revealed that Zhao potentially faced a maximum imprisonment term of 10 years. Additionally, the filing stipulated that he could remain free in the US pending sentencing upon posting a $175 million release bond. Despite an initial request to travel to his home country for the medical treatment of a close associate, the court rejected the plea, citing concerns about flight risk when it came to the former CEO.
The most recent decision by the court to delay the criminal sentencing by two months has sparked discussion within the cryptocurrency community. While the motives behind this action remain unclear, Zhao and his attorney, William Burck, declined to provide any commentary on the matter.
Lack Of Feasibility Results In Crypto Ads Skipping The Super Bowl
Once again, cryptocurrency companies opted out of advertising during the Super Bowl, despite the recent upswing in the U.S. market. Just two years ago, the Super Bowl served as a prime platform for crypto companies, particularly exchanges like the now defunct FTX, to widen their appeal to a broader audience.
Last year, crypto was noticeably absent when it came to the annual global event due to the ongoing bear market. However, this year, the absence seems more driven by companies realizing that it may not be economically feasible.
Not Worth The RIsk
Various reports indicate that although the financial standing of cryptocurrency firms has improved, investing significant advertising budgets in such a grand stage is no longer deemed practical or effective. This also comes at a time when BTC recently crossed the $50K mark for the first time in years.
Many in the industry now prefer directing their marketing funds to areas they believe will offer better returns on investment. In fact, the sole notable nod to crypto during the 2024 Super Bowl was former Twitter CEO Jack Dorsey sporting a Satoshi t-shirt.
No BTC ETF Ads
Interestingly, even Coinbase, which had been a prominent advertiser in previous Super Bowl events, opted out of advertising this year. Instead, the company has shifted its focus and financial resources towards political engagement, aiming to influence digital asset legislation through lobbying efforts and supporting lawmakers friendly to crypto in anticipation of the 2024 election cycle.
Perhaps most surprising was the absence of Bitcoin ETF ads during the event, despite issuers like BlackRock, BitWise, and Grayscale being notably aggressive with their marketing efforts on social media following ETF approval a month ago. BlackRock has aired several TV commercials in the U.S. since the launch, and Grayscale initiated a large billboard campaign across airports and New York subways. However, their absence this year suggests firms are exercising extreme caution in allocating funds.
Inflation Is Tearing Argentina Apart As Locals Resort To Crypto Caves
Argentines are resorting to underground P2P exchanges, locally known as crypto caves, to acquire USD stablecoins in an attempt to circumvent strict currency controls and the significant inflation of the Argentine Peso (ARS). These clandestine exchanges are preferred over Bitcoin due to perceived volatility.
Operated discreetly in hidden locations, crypto caves allow locals to exchange their fiat currency for cryptocurrencies, primarily USDT, at rates far superior to the official exchange rate. With local banks unable to officially accept Dollars, crypto wallets have become popular for storing Dollar-pegged stablecoins like Tether (USDT).
Restrictions Are To Blame
Saving in digital Dollars provides Argentinians with a means to safeguard their funds against the devaluation of the local currency, according to Ramiero Raposo, Vice President at Bitwage, a crypto payroll firm.
The origins of crypto caves trace back to the financial caves that emerged in response to local currency controls in the 1980s. These underground exchanges have thrived as a consequence of government restrictions on accessing traditional money exchange markets. Despite occasional scrutiny and raids by authorities, crypto caves continue to serve as essential outlets for locals seeking to trade their inflation-hit Pesos.
It is worth noting that while expectations of the relaxation of currency controls under President Javier Milei may decrease demand for crypto caves, high tax pressures ensure the persistence of a black market preference. Moreover, crypto caves also operate in other countries facing economic challenges, including Cuba, Venezuela, Iran, and various African nations.
While Argentina recently legalized Bitcoin as a payment method for contracts, many remain cautious about conducting business transactions in Bitcoin due to the heightened volatility. Instead, USDT on the Tron network is favored for its stability, speed, and minimal conversion requirements, providing a practical alternative amidst domestic economic instability.
Bullish Buys CoinDesk As Sara Stratoberdha Named New CEO
CoinDesk has named Sara Stratoberdha as CEO after being acquired by the cryptocurrency exchange known as Bullish, replacing Kevin Worth, who led the company since 2017. Stratoberdha, previously in charge of business development at Bullish, vows to maintain editorial independence despite the change in ownership.
CoinDesk is a news website dedicated to Bitcoin as well as several other digital currencies. Shakil Khan founded the company, which also provides crypto based guides for those new to digital currencies. Notably, alongside the CEO transition, there are departures of various high-ranking executives, including Elinor Hirschhorn, COO and President of Media, John DeGuenther, VP of Engineering, and Emily Parker, Executive Director of Global Strategy. Michael Casey, Chief Content Officer, is shifting roles but might stay in a different capacity.
A New Era
Bullish CEO Tom Farley outlined the restructuring in a memo, aiming to streamline the organizational setup of CoinDesk by merging certain departments and aligning tech and product teams. Farley praised the outgoing team for their contributions to continued growth and integration with Bullish, offering gratitude and best wishes for their future endeavors.
Essentially, this restructuring signifies a new phase for CoinDesk, underscoring its dedication to journalistic integrity while navigating the integration with Bullish, ensuring its continued role as a reputable source in the crypto news domain. The change comes at a critical time too, as many have accused CoinDesk of shady business practices with the most recent example being fake journalists pretending to work for the company in exchange for various favors.
Web3 Funding Deals 6th To 12th February 2024
On behalf of the Web3 community, we would like to extend our warmest congratulations to the companies that announced their success in fundraising between 6th-12th February, 2024. We are thrilled to see such tremendous support from all involved.
Flood, based in the United States, secured $5.2 million in seed funding from Bain Capital Crypto. Users can enable in-wallet trading within 10 minutes via Flood, as well as send orders with ease, and when they are ready, deploy their own Zone, charge their own fees, and start monetizing their order flow.
Axiology, headquartered in Lithuania, raised $2.1 million in venture funding from Baltic Sandbox Ventures. Utilizing the Axiology platform empowers users to optimize resources and trim costs in their daily financial operations.
OMEGA.xyz, operating in the United States, received $6 million in seed funding from an undisclosed investor. Omega unlocks the ability for users to leverage cross-chain digital assets to enhance their yield through modular DeFi opportunities in a decentralized and secure manner.
GigaStar, also located in the United States, obtained $3 million in seed funding from an undisclosed investor. GigaStar is on a mission to empower creators with access to crowdfunding and provide investors with unique revenue-sharing assets while fostering mutual success and innovation.
LightLink, headquartered in Singapore, secured $4.5 million in seed funding from MQDC on February 6, 2024. LightLink is an Ethereum Layer 2 blockchain that lets decentralized applications and enterprises offer users instant, gasless transactions.
MediConCen, based in Hong Kong, closed a Series A funding round of $6.8 million led by HSBC Asset Management. MediConCen aims to be the ultimate insurance claim automation solution powered by patented blockchain technology.
Follow CryptoWeekly for regular updates about Web3 funding deals and all the latest trends in crypto and blockchain.
Bitcoin Continues To Increase As US Inflation Expected To Slow Down
Bitcoin (BTC) continues its upward trend, surpassing $48,000 and reaching a new monthly high. AVAX, meanwhile, emerged as the top performer last week among the larger-cap altcoins. Other altcoins are also showing positive movements, with Ethereum (ETH) surpassing $2,500 and Solana (SOL) reaching $110.
Slow And Steady
The recent performance of BTC showcases significant fluctuations within the past week. It rebounded to around $43,000 last weekend and remained relatively stable until Wednesday, when it broke out of its trading range and surged to $48,200. Despite a slight decrease since then, Bitcoin still maintained a 2% increase for the day, with a market capitalization of $930 billion and dominance over altcoins at 52%.
Several altcoins have also experienced notable gains, with Ethereum adding 2% and trading just above $2,500, and Solana rising by 3.5% to $110. Other altcoins such as BNB, XRP, DOGE, DOT, Chainlink, and Polygon have seen minor gains of around 1%. Avalanche stood out among the larger-cap altcoins, with its native token AVAX surging by almost 9% and trading close to $40. Additionally, mid-cap altcoins like IMX (13%), KAS (7%), and TAO (9%) also saw modest gains.
The total cryptocurrency market cap has increased by $30 billion overnight, reaching close to $1.8 trillion on CoinMarketCap (CMC).
In other news, expectations of potential interest-rate cuts by the Federal Reserve have been fueled as a result of a likely slowdown in US inflation at the beginning of the year. The core consumer price index, excluding food and fuel, is also projected to increase by 3.7% comparative to a year earlier.
Elsewhere, corporate earnings have exceeded expectations, leading Wall Street to raise profit forecasts. Additionally, despite warnings by regulators about potential risks to the financial system, US banks have loaned over $1 trillion to non-deposit-taking financial companies, such as fintechs and private credit investors, surpassing the amount of about $894 billion which was the figure for last year.
Gary Gensler Called Out By US Senators For Fumbling The Bag
Following the recent dismissal of the case involving the crypto firm Digital Licensing by the United States Securities and Exchange Commission (SEC), a group of US Senators have penned a letter to Gary Gensler, the Chairman of the agency, expressing concerns about the case.
The letter, dated February 7th, was signed by five Republican US senators, namely J.D. Vance, Bill Hagerty, Katie Boyd Britt, Thom Tillis, and Cynthia Lummis. They raised apprehensions regarding the controversial enforcement proceedings of the SEC during the case against the crypto firm operating under the name DEBT Box. In the correspondence, the senators pointed out some questionable actions by the SEC, such as a temporary freeze of the firm and its assets.
Protecting The People
The senators highlighted that emergency relief measures were granted for the District of Utah before the court discovered that the SEC made materially false and misleading representations and undermined the integrity of the aforementioned proceedings.
Moreover, the senators also criticized the conduct of the SEC as being both unethical and unprofessional in handling the case and deemed such behavior unconscionable with regards to any federal agency, especially one frequently involved in significant legal procedures and regulatory enforcement actions.
In addition, the letter condemned the SEC with reference to their failure to rectify inaccurate information presented by its attorneys after being made aware of it, labeling it as unacceptable and deeply troubling. The senators also expressed concerns that the handling of the DEBT Box case casts doubt on similar cases conducted by the SEC, erodes public confidence in the commission, and raises questions about whether the agency is actually interested in safeguarding investors or serving their own interests.
SEC In Deep Trouble
Regarding the DEBT Box case, the SEC initiated legal action last year, alleging the involvement of the firm in a fraudulent crypto scheme, which purportedly involved the sale of $50 million in unregistered crypto asset securities to US investors.
The US regulator secured a temporary asset freeze for the crypto firm and personal assets by the defendants, including the principals of the company, namely Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelson, as well as thirteen others. As a result of what the SEC did, DEBT Box was temporarily shut down, and its native token DEBT witnessed a decline of more than 56%, according to the letter.
Following a review by District Judge Robert J. Shelby, the SEC faced the prospect of sanctions due to its inaccurate statements. The revelation also led to the dismissal of the case on January 30th, 2024. While admitting that its attorneys should have been more forthcoming with the Court, the SEC left open the possibility of filing a new suit against the crypto firm by dismissing the case without prejudice.
Launch Date For Highly Anticipated Ethereum Update Finally Revealed
The eagerly awaited Dencun upgrade for Ethereum is scheduled to launch on March 13th, 2024. Following the successful implementation of the Dencun upgrade on the Holesky testnet on February 7th, the Ethereum core developers team finalized the date for the mainnet rollout during the bi-weekly Consensus Layer Meeting call.
The anticipation surrounding this update stems via Ethereum Improvement Proposal 4844 (EIP-4844), known as Proto-Danksharding, which will be integrated through Dencun. In essence, this update will introduce blobs, designated spaces within blocks allowing for increased data storage capacity while maintaining block finality times.
These blobs are particularly advantageous for the various layer-2 blockchains of Ethereum, as they will accommodate a greater volume of their transactions within the network blocks. Consequently, users can expect layer-2 fees to be at least 10 times more economical, explains Rony Szuster, a crypto analyst at Brazilian exchange Mercado Bitcoin.
Time Is Of The Essence
Szuster also emphasizes that Ethereum itself stands to benefit as a result of these changes, although the fee reductions may be relatively minor. Given that layer-2 transactions will occupy specific block space, Ethereum will consequently have slightly more room to include mainnet transactions, he adds.
With that being said, developer teams have until February 22nd to release their finalized versions of Ethereum clients with Dencun support, and validators will have approximately two weeks to update their nodes with these new client versions. As of the time of this writing, ETH is trading at around the $2,450 mark.