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Delays At Major Banks Reported Amongst Massive Unrealized Losses
According to Downdetector, a network monitoring app, widespread problems at several major banks in the United States have been reported in the last 24 hours, with many financial institutions currently dealing with an influx of complaints about account balances and direct deposits.
Understanding what went wrong
Customers at many TradFi (Traditional Finance) institutions like JPMorgan Chase, Bank of America, US Bank, and Wells Fargo have all reported that funds which should have arrived in their accounts have not come through.
While individual bank statements have been issued, the Federal Reserve has stated that a processing issue at a national network designed for processing ACH (Automated Clearing House) transactions caused the problem.
The Federal Reserve Banks and the Electronic Payment Network manage the ACH system, which is a critical component of the US banking system. It facilitates the transfer of capital between banks and financial institutions, as well as the electronic deposit of wages into the bank accounts of employees. Although the Fed believes the problem has been resolved, there appear to be ongoing delays.
A TradFi disaster
JPMorgan Chase in particular has recently disclosed substantial losses on its securities, which have come to light in a fresh report concerning the overall financial situation of the company. The banking giant finds itself burdened with approximately $40 billion in bond losses that have not yet been realized as of Q3 of this year, marking a 20% increase compared to the previous quarter. These updated figures were discovered in a footnote within the third-quarter financial supplement and exceeded the anticipated loss of $34 billion.
Elsewhere, Bank of America has also revealed via a new quarterly report that it currently holds a total of $131.6 billion in unrealized losses. Although Wells Fargo and Citigroup have released their third-quarter earnings, they have not disclosed the most recent statistics regarding their unrealized losses. In the second quarter of this year, Wells Fargo also reported $40 billion in unrealized losses in the bond market, while Citigroup showed unrealized losses of $25 billion.
Bad to worse
The risks associated with unrealized losses came into prominence earlier this year following the sudden collapse of Silicon Valley Bank in March, which was triggered by an announcement that it had incurred a $1.8 billion loss by selling a portion of its bond portfolio that had fallen underwater.
On a broader scale, estimates show that the US banking industry is confronting roughly $650 billion in unrealized losses. These losses have arisen via a historic decline in bonds due to the efforts made by the Federal Reserve to maintain higher interest rates for a prolonged period.
In a moment of irony, many of these banks had previously disparaged crypto for being too volatile and unpredictable, yet they have proven to be no exception. Not your keys, Not your crypto, is a popular phrase that many in the crypto community often use, as it conveys the notion that investors cannot be sure of their crypto holdings unless they are kept within a wallet to which they have the keys. One could say the same for TradFi institutions however, a fact which the aforementioned unrealized losses prove.
Disgraced FTX Founder Found Guilty On All Charges
Sam Bankman-Fried (SBF), the founder of the failed crypto exchange FTX, received guilty verdicts on all charges in his recent fraud trial held on November 2nd, 2023. In a federal court in Manhattan, a 12-member jury found him culpable on 7 criminal counts linked to the now infamous collapse of FTX last year, a development which caused the crypto market to crash and many investors to lose their hard earned money.
Although FTX had collapsed in 2022, the trial of SBF was an entirely different story. Many of his lawyers tried to negotiate a bailout, but repeated instances of new evidence being brought forth only made matters worse for him. The aforementioned decision by the jury itself was only reached following a month-long trial.
Prosecutors depicted the 30 year old former billionaire as a deceitful fraudster who misappropriated billions via funds provided by FTX customers in order to try and cover up significant losses at his hedge fund known as Alameda Research.
SBF had also been imprisoned since August 11th, 2023, for leaking portions of a diary belonging to former Alameda Research CEO, Caroline Ellison, to the New York Times, which the prosecution claimed was witness intimidation.
Ellison testified in early October as part of a plea agreement with the government after pleading guilty to a series of fraud charges and conspiracy to commit money laundering. Not long afterwards, FTX co-founder Gary Wang also testified against Sam.
A historic decision
Sam Bankman-Fried was convicted of wire fraud, securities fraud, participation in a conspiracy, and involvement in money laundering. His sentencing, slated for March 2024, could result in a prison term of up to a whopping 110 years.
The jury swiftly reached a unanimous decision on all charges, which is uncommon in complex white-collar crime cases. Prosecutors presented ample evidence, including messages, indicating that SBF had misled investors about the financial well-being of FTX and utilized customer funds for unauthorized and risky investments through Alameda Research.
The story of Sam and FTX has indeed made history as it is the first instance of such a notable entity within the crypto space not only being charged with a plethora of fraudulent endeavors, but also convicted in such a short amount of time. Going forward, this story will always serve as a cautionary tale for everyone, especially those in relatively newer industries like crypto who may think their malicious actions will go unnoticed and unpunished.
Crypto Experiences Tumultuous Week Amid Interesting Global Developments
Bitcoin (BTC) and other cryptocurrencies saw strong gains in late October, but now there seems to be a pause, raising concerns about a potential downturn. This might be due to profit-taking or a return to normalcy after the election of a new house speaker, where crypto was a key campaign topic. Tom Emmer won the Republican nomination for the position in late October.
Elsewhere, Andrew Bailey, Governor of the Bank of England (BoE), recently discussed the Monetary Policy Report and potential inflation concerns. He emphasizes the need for vigilance but not excessively prolonged restrictive policies, citing uncertainties due to events like the ongoing conflict in the Middle East affecting energy prices.
Bearish concerns yet bullish momentum
The crypto sentiment indicator is turning bearish, indicating caution among investors. Historical data suggests that when negative keywords increased, both Bitcoin and altcoins like Ether, Solana, XRP, Cardano, and Shiba Inu saw upward trends.
Despite the bearish sentiment, positive factors persist. CryptoQuant suggests optimism in the market. Additionally, the potential approval of a Bitcoin spot ETF could attract institutional investors and boost prices.
On another note, major stock indexes, including Nasdaq, rose on the back of the United States Federal Reserve deciding to keep interest rates unchanged. Fed Chair Jerome Powell commented on adopting a more cautious approach to rate hikes, making it less likely in the near term.
BoE discusses important updates
The Bank of England maintained the policy rate at 5.25%, as expected. The decision passed with a 6-3 vote, with several main constituents favoring a rate hike. In the policy statement, the BoE noted persistent upside inflation risks.
Key points in the aforementioned Monetary Policy Report include revised inflation forecasts, a slowdown in GDP, and wage growth estimates. The BoE aims to maintain a sufficiently restrictive bank rate for an extended period. The market reacted positively, with GBP/USD rising 0.55% to 1.2215 after the announcement.
Solana Labs Introduces GameShift As SOL Experiences Price Resurgence
As first revealed via a press release on October 31st, Solana Labs has officially introduced GameShift, its Web3 solution for game developers. The beta launch for GameShift coincides with a remarkable performance in the market for Solana. SOL, its native cryptocurrency, exhibited a 28.4% increase during the 7 day period concluding on November 1st, positioning it among the top-performing cryptocurrencies for that week. Over the past 30 days, SOL surged by 75.5%.
Helping out developers
Davis Hart, Product Lead for GameShift, stated that by integrating the API provided by GameShift in order to successfully manage the intricacies of blockchain technology behind the scenes, developers can therefore allocate more resources to actual game development. This enables developers to offer a user-friendly Web2 experience to gamers, reducing the typical Web3 obstacles that might discourage user acquisition and engagement.
The announcement also outlined that game developers will now have the capability to utilize GameShift for creating in-game assets. Additionally, the platform supports the posting, acquisition, and trading of these assets, all of which can be accomplished without ever possessing cryptocurrency, according to Solana Labs. Transactions can be carried out using USD payments and credit card transactions. It was also revealed that users will be given a fully self-managed wallet too, granting them complete control over their assets, as per the latest documentation.
Solana steadily improving
Solana Labs also mentioned that the service streamlines various aspects associated with blockchain, including storage, transaction fees, and the implementation of smart contracts. The API can also be utilized without requiring any knowledge of blockchain or blockchain programming.
The announcement named three collaborators that support the service alongside Solana Labs itself, namely the NFT creation tool Crossmint, the cryptocurrency payment gateway Coinflow, and the non-custodial wallet protocol Metakeep.
While Solana seems to have gotten back on track, not everyone is convinced as comebacks like this have happened before only for the seemingly inevitable crash to occur not long afterwards. Still, Solana seems to be on the right track, but only time will tell if that will last.
Cardano Reveals Key Details About Mithril 2 Update
Cardano (ADA) recently unveiled a significant update related to its scaling solution, Mithril. The project has presented a research paper named Mithril 2, outlining the tangible outcomes of their efforts.
Introduced on the Cardano mainnet in July, Mithril has now introduced what the developers refer to as innovative cryptographic methods to validate knowledge of a substantial dataset without fully disclosing the contents of the dataset.
Understanding Mithril 2
Romain Pellerin, the Chief Technical Officer of the research company Input Output Global (IOG), summarized the key points featured in the Mithril 2 document. The CTO clarified that the paper introduces a technique called Approximate Lower Bound Arguments (ALBAs), which aim to enable individuals to confirm ownership of a large dataset without revealing the entirety of it.
This approach proves valuable in scenarios where demonstrating possession of multiple digital signatures by different individuals is needed without disclosing each signature. The fundamental concept behind ALBAs is that the prover only discloses a carefully selected small dataset sample. This approach minimizes the potential for cheating by making it improbable to create such a sample if the actual dataset is small.
Conversely, if the real dataset is extensive, there is likely to be at least one such sample, which ensures the success of an honest prover. The Telescope technique, as outlined in the paper, facilitates the efficient recursive generation of the sample.
Cardano looking to impress
Mithril 2 also addresses situations where the dataset is divided among multiple parties who collectively create the proof. It demonstrates how ALBAs can be applied to extract witnesses efficiently in SNARKs (Succinct, Non-interactive Arguments of Knowledge). Using ALBAs instead of custom constructions reduces the workload for the prover, resulting in shorter proofs when extracting witnesses via SNARKs.
In any case, the Cardano community eagerly anticipates the implementation of these innovative cryptographic techniques, which underscore the dedication of the project toward enhancing the overall scalability and privacy of the Cardano blockchain.
It remains to be seen whether upcoming positive developments within the Cardano ecosystem will have the potential to propel ADA to new highs in 2023 and beyond as well as maintain its competitive standing among the top 10 cryptocurrencies in the market.
Circle Will Stop Providing Support For Consumer Accounts Soon
Popular stablecoin issuer, Circle, has reportedly informed its users about its intention to discontinue support for specific accounts. In a recent announcement, company representatives stated that Circle would no longer provide assistance to consumer-only accounts as part of its strategic re-evaluation.
Leaving the US behind
This development follows comments made by Circle CEO, Jeremy Allaire, who said that the main focus for the company, especially in the long term, extends beyond the United States. He revealed that a significant portion of business for Circle, approximately 70% of USDC stablecoin adoption in fact, originates via non-US markets.
Notably, Circle recently obtained a Major Payment Institution (MPI) license, which was issued by the Monetary Authority of Singapore (MAS). This license allows Circle Singapore to offer digital payment token services in that country, marking a significant advancement for the crypto industry in Asia.
More than meets the eye
The company will officially terminate the wiring and mining features and close user accounts on November 30th, 2023. The specific reasons for this action were not disclosed by Circle, but they emphasized that it aligns with their terms and agreements, as stated in their applicable legal agreement.
In their ongoing global expansion efforts, Circle also announced plans to establish its European headquarters in Paris. This decision is influenced by the favorable stance on cryptocurrencies which France has adopted alongside its aspiration to become a prominent hub for Web3 technologies.
Notably however, experts believe that there is a bigger picture at play here, namely that many crypto-oriented companies are leaving the United States behind. This should come as no surprise, as regulators like the SEC have certainly not made it easy for these companies to succeed in the country. Still, there is a light at the end of the tunnel with the recent Bitcoin Spot ETF applications, but only time will tell where that road shall lead.
DTCC Website Now Shows Invesco Galaxy Spot BTC ETF
The ticker for the Invesco Galaxy Spot Bitcoin Exchange-Traded Fund, BTCO, has been included on the Depository Trust and Clearing Corporation (DTCC) website, signifying progress in the application process by both asset management firms. While BTCO is indeed currently visible on the DTCC site, it does not suggest imminent approval.
A big step forward
The addition occurred within the last week, as there was no BTCO listing on October 25th, according to the WayBack Machine web archive. As previously mentioned, adding a ticker to the ETF Products list on the DTCC website does not in any way guarantee future approval of the product. Nevertheless, the buzz generated by the development had briefly caused the DTCC site to crash due to an excessively high amount of traffic.
It is also standard procedure to include securities in the NSCC security eligibility file in preparation for the potential launch of a new ETF in the market. In any case, the crypto community has reacted positively, especially following the recent success regarding the Grayscale ETF application.
A catalyst for a bull run
The joint spot Bitcoin ETF application managed by global investment firm Invesco and crypto asset fund Galaxy Digital was reactivated on June 21st. This decision to resubmit the application to the United States Securities and Exchange Commission (SEC) followed a surge of similar filings for spot Bitcoin ETF products, sparked by investment giant BlackRock and their submission for a spot Bitcoin ETF on June 15th.
The Bitcoin community is keeping a close eye on the Securities and Exchange Commission and what the regulatory agency does next, particularly during the upcoming closed-door meeting on November 2nd, as it may hint at possible approval of a spot BTC ETF.
A potential approval of such an ETF promises to bring significant new sources of demand for Bitcoin, and many investment firms and market analysts are actively speculating about the price impact it will have on the flagship crypto, claiming that approval could truly kickstart the next bull run.
Bittrex US Receives Approval For Revised Bankruptcy Plan
Bittrex, a popular cryptocurrency exchange, has received approval for a modified insolvency strategy to wind down its operations in the United States. According to a legal submission, Judge Brendan Shannon approved the liquidation plan presented by the company for repaying its outstanding creditors during a hearing in Delaware on October 30th, 2023.
Settlement reached but work to be done In the aforementioned submission, the Court announced its decision to enter a revised Proposed Order, which resolves the informal remarks put forth by the United States Securities and Exchange Commission (SEC).
Bittrex filed for Chapter 11 bankruptcy protection in May after the SEC accused it of operating an unregistered exchange. In August, the firm reached a $24 million settlement with the SEC. It is worth pointing out that while Bittrex has ceased operations in the United States, Bittrex Global continues to operate in other regions.
Looking toward the future Back in August, Bittrex Global CEO Oliver Linch reassured those who were growing wary of any association with the United States due to regulatory uncertainties in the country. He went on to say that if the SEC or any other regulator wishes to engage with an unregulated non-U.S. digital assets exchange, Bittrex Global is available.
Bittrex was once one of the most prominent exchanges in the United States, with a market share of nearly 23% at the start of 2018. However, it fell to less than 1% in 2021 and has not recovered since. Understandably then, the exchange had little choice but to apply for Chapter 11 bankruptcy, which was approved as previously mentioned.
More Than $600,000 Stolen In Massive Unibot Exploit
The Telegram trading bot, known as Unibot, has become the subject of a token approval exploit within its recently deployed order router. Unibot pledged to reimburse any funds stolen in response to this exploitation, claiming losses in excess of $600,000.
A dark day for Unibot. The Unibot protocol had been a profitable investment at its peak, attracting the attention of numerous investors. The aforementioned hack is the latest in a long line of cryptocurrency-related exploits, as LastPass users collectively lost $4.4 million in crypto assets last week. More worryingly, numerous Telegram users believe that, despite the company saying otherwise, their keys and wallets may not be safe anymore and many have actively left Unibot altogether.
Damage control Unsurprisingly, the disclosure of the exploit resulted in a significant drop in the price of the token, which was by 33% to $38.50 before recovering slightly, according to data provided by CoinGecko. PeckShield security experts first raised the alarm on October 31st, 2023, in a post on X, estimating that losses over $600,000 in crypto had been recorded.
Telegram confirmed that Unibot indeed suffered a token approval exploit within the new router and have since suspended its operation to address the situation. The company assured users that any assets lost as a result of this vulnerability will be reimbursed, but there has yet to be any announcement regarding potential improvements to security measures to ensure that this does not happen again. Users are also concerned that PeckShield was able to identify the exploit before Telegram itself.
Crypto Fundraising October 24 - 30
On behalf of the Web3 community, we would like to extend our warmest congratulations to the companies that announced their success in fundraising between 24th October and 30th October 2023. We are thrilled to see such tremendous support from all involved. Well done!
HYTOPIA raised $3M - HYTOPIA (previously NFT Worlds) is a game platform & engine crafted from the ground up. It blends long-sought social and modern features for players.
BRLA Digital raised $600.66K - The fintech BRLA Digital, which specializes in cross-border payments and cryptocurrency infrastructures, has just raised BRL$3 million in its first round of funding.
Cube.Exchange raised $9M - Cube.Exchange aims to solve the problem of founder risk by creating a unique hybrid market structure that takes advantage of the benefits of both traditional exchanges and the efficiencies offered by embracing certain elements of Web3.
Virtual Labs raised $1.2M - Virtual Labs' main research direction is zero-knowledge ZK state channels. Its founder is a Yale University dropout who aims to use zero-knowledge technology.
Noble raised $3.3M - Noble is leveraging the power of cosmos public blockchain infrastructure to usher in a new era of growth for the Interchain ecosystem.
TonUP raised an undisclosed amount - TonUP are delighted to note that the funds amassed from seed round will be strategically channeled to expand.
smIXL raised $13.4M - smlXL will continue to expand evm.storage and introduce new products building upon the unique capabilities of our iEVM, streaming data platform, and program analysis tools.
Integral raised $8.5M - Integral is a real-time finance platform that automates web3 financial workflows. Integral connects to all of your organization's wallets, safes, exchanges, and custodians.
Atani raised $13M - Atani is an end-to-end platform that enables crypto investors to trade in multiple exchanges, manage their portfolios, perform technical analysis and automate tax reports.
PRINT3R raised $500K - PRINT3R's innovative approach to gamification and user-centric design is setting a new standard. PRINT3R are thrilled to be part of this journey.
Nocturne raised $6M - Founded last year in the United States, Nocturne is building a protocol that aims to allow users to transact anonymously within the Ethereum ecosystem.
Rymedi raised $9M - Rymedi streamlines the transfer of medical records and data via blockchain, and it intends to use the funding to bolster data security and healthcare record accessibility.
Shrapnel raised $37.5M - Shrapnel - is a futuristic shoot-'em-up game built on the Avalanche blockchain. The Shrapnel economy will allow several personas to participate in the ecosystem through play, creation, ownership.
Firedancer Could Be A Potential Game Changer For Solana
Firedancer is a new Solana validator client developed by Jump Crypto, a division of the Jump Trading Group. It is meant to strengthen the overall resilience of Solana by diversifying its client base and improving performance. Previously, Firedancer processed 1.2 million transactions per second (TPS) in a live demo in November 2022, indicating its potential. It is also written in C/C++ for hardware performance and reliability, and is compatible with Rust.
Solving real problems Notably, Firedancer hopes to greatly reduce the likelihood of software glitches which cause widespread network outages. According to Alchemy, in contrast to the current single validator client that Solana uses, Firedancer aims to diversify the client ecosystem. It is therefore designed for increased performance, resiliency, and scalability. While still in development, Alchemy suggests that early tests indicate Firedancer could provide Solana with some much-needed redundancy and performance boosts.
Enhancing Solana Jump Crypto is mainly offering Firedancer as a solution to the monolithic approach to scalability that Solana has often relied on. Not only did its fd_quic milestone of 1 million TPS show promise, but it also enhanced several components including transaction propagation and load balancing.
Messari believes that Firedancer could alleviate various shortcomings by providing advanced transaction processing, sharding, and optimized networking. For increased efficiency and lower operating costs for node operators, it employs a modified Proof-of-Stake (PoS) consensus protocol. While Firedancer has the potential to be transformative, the main challenges thus far include execution, timing, and competition with Ethereum, alongside potential bugs and infrastructure provider adaptation.
New Plan Announced For Stablecoin Regulation In The UK
The United Kingdom government recently updated its plans to supervise fiat-backed stablecoins. The document, which was released on October 30th, aims to support and govern the use of fiat-backed stablecoins in local payment systems. According to the document, there are plans to present specific policies to the UK Parliament in 2024, delegating oversight of fiat-backed stablecoins to the Financial Conduct Authority (FCA).
Regulating stablecoins Notably, the UK Treasury is considering designating local businesses as payment organizers, as authorized by the FCA, with the responsibility of ensuring that foreign stablecoins meet local standards. Non-fiat-backed stablecoins, such as algorithmic stablecoins, will not be accepted in regulated payment networks.
Instead of outright prohibition, the document states that these transactions will remain unregulated. Furthermore, the Treasury regards them as subject to the same requirements as unbacked crypto assets.
In the case of standard stablecoins, the FCA will be given the authority to require stablecoin issuers to keep all reserve funds in a legal trust. The terms of the trust will be outlined in a specific set of guidelines provided by the FCA, including redemption obligations if the company experiences financial difficulties. In such a case, stablecoin issuers in the United Kingdom will be subject to procedures outlined in the Insolvency Act of 1986.
Trust is key The Financial Services and Markets Act, which is the overarching framework for all types of cryptocurrency, was passed in the House of Lords in June 2023. The document frequently refers to the FCMA 2023 bill, which grants the Treasury, the Bank of England, and the FCA the authority to regulate cryptocurrencies and stablecoins, specifically.
In any case, there would need to be a certain level of trust established between UK regulators and local crypto-oriented businesses, something which has been lacking for quite a while now. As cryptocurrencies and stablecoins steadily become more popular, the United Kingdom would have to implement the previously mentioned policies as soon as possible so as to not get left behind.