Arbitrum DAO decided against proceeding with its recent proposition to contribute funds, up to $1.2 million, to support Tornado Cash developers Roman Storm and Alexey Pertsev amid their legal battles, according to a source familiar with the situation. Last week, ImmutableLawyer, a contributor to Arbitrum, suggested allocating between 200,000 and 600,000 ARB tokens, valued at $400,000 to $1.2 million, to aid the legal defense of the developers.

Tornado Cash In Hot Water

Storm and Pertsev are currently facing legal charges linked to their creation and advancement of Tornado Cash, a smart contract protocol designed to conceal cryptocurrency transactions on the Ethereum network. The exploitation of the protocol by criminals for money laundering purposes has attracted considerable legal scrutiny.

Despite the withdrawal of the proposal, supporters are exploring alternative means to provide financial support. One such option being considered is directing funds through Coin Center, a nonprofit organization focused on cryptocurrency policy, to back the fundraising efforts of WeWantJusticeDAO, aiming to cover estimated monthly legal expenses of $100,000.

Bad To Worse

In August 2022, the US Treasury imposed sanctions on Tornado Cash, a crypto-mixing service, over allegations of laundering funds for malicious cyber actors like the Lazarus Group. These sanctions resulted in the freezing of Tornado Cash assets, restrictions on transactions involving the service, and the prohibition of its code.

The actions of the Treasury have sparked concerns regarding privacy implications and the potential closure of similar services in the future. Some individuals have contested these sanctions through a lawsuit funded by Coinbase against the US Treasury Department. Moreover, on February 14th, GoFundMe terminated a fundraising campaign aimed at gathering legal defense funds for Storm and Pertsev due to a violation of its terms of service.

The decentralized finance (DeFi) sector presents both lucrative prospects and potential pitfalls for astute cryptocurrency investors. For instance, engaging in stablecoin lending within liquidity mining protocols can yield returns of up to 20%.

Key DeFi platforms such as Aave and Compound, operating on Ethereum (ETH), notably incentivize suppliers of stablecoins. Aave offers annual percentage yields (APYs) of 19.18% for USDC and 20.44% for USDT. Compound v3 features a 15.19% APY for USDC based on Ethereum. Furthermore, exploring lending on alternative chains like Polygon (MATIC), Arbitrum (ARB), or Base could potentially yield even higher APYs.

High APYs Continue To Dominate

This trend is primarily driven by significant demand for borrowing, with traders willing to pay borrow-APYs reaching as high as 23.45% and 25.13% for USDC and USDT, respectively, on Aave. These borrowed stablecoins are often utilized for cryptocurrency speculation, aiming for returns exceeding their APY costs.

Notably, this dynamic arises due to substantial borrowing demand, with traders willing to pay borrow-APYs as high as 23.45% and 25.13% for USDC and USDT, respectively, on Aave. These traders might utilize the borrowed stablecoins to speculate on cryptocurrencies, aiming for higher returns than their APY costs.

A Much Needed Conversation

Erik Voorhees, the founder of ShapeShift, raised questions about why major financial institutions overlook this risk-allocation opportunity. ShapeShift recently settled illegal securities charges with the SEC on March 5th. The company agreed to a cease-and-desist order and a $275,000 fine.

In response, Hayden Adams, founder of Uniswap, elaborated on the paradoxical nature of stablecoin lending yields. He noted that while 30% APY might not suffice for crypto native investors, traditional finance players may find DeFi too risky even at such rates.

Overall, lending platforms present attractive yield opportunities for supplying stablecoins like USDC and USDT, while traders can opt to borrow stablecoins to engage in short-term price speculation in the cryptocurrency market. However, both avenues carry inherent risks, including the potential control exerted by entities behind stablecoins like Tether and Circle.

Zama secured a significant $73M in Series A funding, fueled by Multicoin Capital's backing. Zama is an open source cryptography company building state-of-the-art FHE solutions for blockchain and AI. It focuses on building apps with FHE (Fully Homomorphic Encryption).

Nav set sail with a $2M Seed investment, though the investor remains undisclosed. Users can optimize their DeFi investments with NAV's SIPs and step into the world of quantitative decentralized finance investing.

Firewall fortified its position with $3.7M in Pre-Seed funding, supported by Breyer Capital. Firewall is building the safety rails that enable the everyday person to use the next era of the Internet. The focus is not on marginal improvements rather, to try and bring a paradigm shift in the usability of blockchains.

Hedgehog Protocol emerged with a notable $1.5M in Pre-Seed funding, with undisclosed backers. Hedgehog mirrors the economic essense of blocks without getting into physical blockspace delivery complexities. This approach allows Esko Koivula and his team to create a gas derivatives market that everyone can easily interact with.

Sahara AI powered up with a $6M Seed round, courtesy of Polychain Capital. Sahara is a decentralized AI network which focuses on unlocking fair and universal access to global knowledge capital. They provide blockchain infrastructure that's trustless, permissionless, and privacy-preserving.

Meo, based in Denmark, secured $2.46M in Venture funding, while also securing $1M in Debt Financing from Gilion (Formerly Ark Kapital). Meo is an end-to-end platform helping users with seamless onboarding, risk assessment and continuous due diligence of their clients.

Well done to everyone! Exciting times ahead for the entire industry. Once again, be sure to follow CryptoWeekly and check out our website to stay updated on all the latest deals, news, and trends in Web3.

The overall cryptocurrency market valuation has surged past $2.7 trillion. Bitcoin (BTC) remained steady for a few days before making a strong move not too long ago, surpassing $70,000 for the first time ever, only to face a sharp rejection shortly after.

Numerous alternative cryptocurrencies, notably Worldcoin and FLOKI, have experienced significant gains over a 24 hour period. Other cryptocurrencies such as The Graph (25%), AGIX (20%), AR (19%), and NEAR (19%) have also seen substantial gains. Meanwhile, BNB, DOT, ICP, TON, and SHIB have recorded minor increases over the last day. ETH briefly surpassed $4,000 yesterday but has since retreated to nearly $3,900.

Recent Crypto Activity

Various reports highlighted the recent impressive performance of Bitcoin, including two consecutive all-time highs this week. Initially, Bitcoin surged above $69,000 on Tuesday following substantial gains on Monday. However, the upward momentum was swiftly countered by bearish pressure, resulting in a rapid decline of almost ten thousand dollars and triggering billions in liquidations.

Bitcoin quickly recovered most of its losses and returned to $67,000 in the subsequent days. The second surge occurred yesterday, propelling BTC above $70,000 for the first time. Once again, the flagship cryptocurrency could not sustain its momentum and retraced by a few thousand dollars. At present, BTC is trading around $69,500, with a market cap nearing $1.350 trillion on CoinGecko. Its dominance over other cryptocurrencies stands at 49.2%.

Elsewhere, various meme coins have been dominant during this bull run. While SHIB and DOGE compete for dominance, FLOKI has seen significant gains, climbing over 110% in the past week and 40% in the last 24 hours. Consequently, it has approached the top 50 largest cryptocurrencies by market cap. Worldcoin is another notable performer among the top 100 altcoins. WLD has surged by 42% despite controversies surrounding the project.

Other Markets

In the United States, it is likely that inflation eased gradually last month, while retail sales showed signs of improvement. This demonstrates why the Federal Reserve is not in a hurry to reduce interest rates.

The core consumer price index, which excludes food and fuel to provide a clearer view of underlying inflation, is expected to have increased by 0.3% in February compared to the previous month, following a 0.4% rise at the beginning of the year. The Labor Department is scheduled to release its CPI report on Tuesday.

Lastly, despite the dollar experiencing its most significant selloff of the year, Wall Street remains cautious about fully embracing bearish bets on the currency. The Bloomberg Dollar Spot Index has fallen for six consecutive sessions, marking its longest losing streak in five months. This week, the index has declined by 1.1%, putting it on track for its largest weekly drop of the year.

The United States experienced a notable surge of 53% in losses linked to cryptocurrency investment scams during 2023, reaching a cumulative sum of $3.94 billion, as indicated by a recent report issued by the Federal Bureau of Investigation (FBI).

According to the FBI Internet Crime Report 2023, the total losses incurred through scams involving cryptocurrencies like Bitcoin, Dogecoin, and Shiba Inu surged to $3.94 billion, representing a 53% rise compared to the 2022 amount of $2.57 billion.

Scams Still Prevalent

The report highlighted a 38% increase in overall investment fraud, amounting to $4.57 billion compared to $3.31 billion previously. A significant portion of these fraudulent activities involved cryptocurrency scams, underscoring the prominent role of digital currencies in online criminal activities.

Fraudsters are increasingly utilizing custodial accounts at financial institutions for cryptocurrency exchanges or third-party payment processors, or they are directing targeted individuals to send funds directly to these platforms, where the funds are quickly dispersed, noted the FBI report.

A Ways To Go

Investment scams dominated internet crime in 2023, constituting over a third of the total losses of $12.5 billion, as per the report. The surge in cryptocurrency scams during 2023 is noteworthy in light of several significant developments. In January, Germany seized over $2 billion in Bitcoin via piracy proceeds, marking the largest seizure of Bitcoins by law enforcement in the country, in collaboration with the FBI.

Around the same time, the United States government announced its plan to sell off $132.5 million in Bitcoin seized in connection with the Silk Road scam investigation. Furthermore, in September, JP Morgan decided to suspend cryptocurrency-related transactions for its clients based in the United Kingdom, indicating the increasing apprehension of financial institutions regarding crypto-related crimes.

President Nayib Bukele responded with humor to a social media post on March 7th, drawing attention to the legal issues of a prominent critic in Capitol Hill. Bukele shared a post on X with a laughing emoji. The post discussed the indictment of Senator Bob Menendez, adding a touch of irony to the situation. Senator Menendez, a vocal opponent of El Salvador deciding to openly adopt Bitcoin, is facing charges of bribery and obstruction of justice in the US.

The indictment emerged amidst bribery allegations. The charges claim that the senator and his spouse conspired to obstruct justice and conceal bribe payments that the senator had previously been accused of making.

A Touch Of Irony

Prosecutors accuse Menendez of receiving various gift items, including luxury watches and gold bars, in exchange for helping Uribe and the governments of Egypt and Qatar. The Senator has pleaded not guilty to the charges, and the trial is scheduled for May. In addition, the Senate Foreign Relations Committee revealed that Menendez had supported legislation to mitigate the risks of Bitcoin adoption in El Salvador.

After adopting Bitcoin as legal tender in June 2021, President Bukele has affirmed that it will maintain its Bitcoin portfolio regardless of price fluctuations. When Bitcoin hit a new all-time high this past Tuesday, El Salvador reported a 53% increase in profit via local Bitcoin holdings. Nayib Bukele has also criticized the mainstream media, accusing them of publishing negative articles about his any unrealized losses during the 2022 Bitcoin bear market.

Bukele Remains Unfazed

President Bukele continues to advocate for Bitcoin and for everyone to recognize it as a globally acceptable currency. He reacted to the recent decline in the New York Community Bancorp holdings, which saw an 85% decline over five years. The President, known for his pro-Bitcoin stance and efforts to reduce gang violence, first took office in 2019. He is admired locally for making Bitcoin a legal tender in Latin America.

El Salvador also plans to further integrate Bitcoin into the domestic financial market during his next term. To achieve this, the country intends to launch Volcano Bonds, a financial instrument for Bitcoin mining, and establish a tax-free enclave for Bitcoin enthusiasts called Bitcoin City. The Volcano Bond project recently received regulatory approval by the Digital Assets Commission (CNAD).

Pantera Capital, a firm specializing in crypto asset management, reportedly seeks funds to acquire Solana tokens held by the estate of the bankrupt FTX exchange. The Pantera Solana Fund aims to secure investments of up to $250 million in SOL tokens, as detailed in marketing materials provided to potential investors.

Buying SOL

Pantera intends to purchase a portion of the FTX SOL holdings at a rate of $59.95, which represents a 57% discount relative to its price of $142 per token at the time of writing. Investors considering this opportunity must commit to a vesting period of up to four years. The FTX estate reportedly holds approximately 41.1 million SOL tokens, valued at around $5.4 billion, equivalent to roughly 10% of the total supply of Solana tokens.

Over the 24 hours preceding 11:47 A.M. UTC, SOL experienced a 2.51% increase in value, trading at $142.51. On a weekly basis, the token saw a rise of over 10.5%, and on a monthly basis, it increased by 49.7%, according to data by CoinMarketCap. Pantera aimed to finalize the fund by the end of February, with a minimum investment requirement of $25 million by each investor, as outlined in the presentation. The fund management fee is set at 0.75%, with a 10% performance fee.

Nearing The End

The potential sale would enable FTX liquidators to commence repayments to investors of the defunct crypto exchange. FTX and Alameda reached a tentative settlement with BlockFi to resolve their disputes, involving FTX agreeing to pay up to $874.5 million to BlockFi and dropping its claims against the firm.

This settlement would resolve the claims made by BlockFi against FTX, amounting to approximately a billion dollars, and also involve FTX waiving millions of dollars of avoidance claims and other counterclaims against BlockFi.

FTX is in the final stages of its bankruptcy proceedings, with plans to fully reimburse billions of dollars to its customers. As part of its efforts to recover funds for creditors, the company received approval on Feb. 22 to divest more than $1 billion in shares in the artificial intelligence company Anthropic.

The Spanish government has directed the human identity-focused crypto project Worldcoin (WLD) to halt its data collection activities in the country following numerous complaints by customers. According to a recent announcement by the Spanish Data Collection Agency (AEPD), Worldcoin is mandated to cease the gathering of personal data due to complaints indicating that its data collection process violated user rights.

OpenAI In Hot Water

The AEPD has declared its intention to block the data already gathered by the eye-scanning digital identification project. As per the aforementioned announcement, the Spanish Data Protection Agency has issued a precautionary measure against Tools for Humanity Corporation, instructing it to halt the collection and processing of personal data conducted in Spain under the Worldcoin project, and to block the already collected data.

Several complaints have been lodged against the company, citing inadequate information provision, collection of data by minors, and the inability to withdraw consent, among other violations. Late last year, Worldcoin, co-founded by Sam Altman, CEO of OpenAI, faced operational suspensions in Brazil, India, and France, resulting in a 20% drop in its price at that time.

Elon Gets Involved

Earlier this month, Elon Musk also filed a lawsuit against Sam Altman and OpenAI, alleging a breach of the founding agreement. According to the lawsuit, Altman initially proposed OpenAI to Musk in 2015. Musk agreed and provided funding and assistance in recruiting for the firm. However, OpenAI was subsequently acquired by Microsoft, allegedly breaching the original agreement.

The lawsuit stated that contrary to the founding agreement, defendants have opted to utilize GPT-4 not for the betterment of humanity, but as proprietary technology to maximize profits. Moreover, Elon claims that the entire development of OpenAI is now shrouded in secrecy, with the public having only rumors and fragmentary communications to grasp what might be released next.

Earlier this week, Binance declared its decision to halt all services involving the Nigerian naira, citing an ongoing legal conflict between the U.S.-based cryptocurrency company and Nigeria, the most populous nation in Africa.

Binance announced that any remaining balances in user accounts denominated in naira will be automatically converted to Tether, a stablecoin cryptocurrency tied to the value of the U.S. dollar. The company specified that it will cease supporting deposits in naira after 02:00 P.M. UTC on March 5th and will discontinue withdrawals of the currency after 06:00 A.M. UTC on March 8th.

Binance Still Controversial

Binance has previously faced controversy due to various reasons. The exchange has encountered regulatory scrutiny in several countries over compliance issues related to operating without proper licenses or regulatory oversight. The platform has also experienced security breaches in the past, leading to the loss of user funds and raising questions about its security measures. Some critics have also accused Binance of lacking transparency in its operations, including its listing processes and trading activities.

Moreover, Binance has been involved in legal disputes with authorities in different countries over allegations ranging including money laundering and regulatory violations. Lastly, there have also been allegations of market manipulation against Binance, including accusations of wash trading and insider trading. These controversies have contributed to Binance facing numerous challenges in maintaining its reputation and regulatory compliance.

The Importance Of Nigeria

Nigeria is recognized as one of the largest cryptocurrency markets globally. However, reports indicate that the Nigerian government is seeking nearly $10 billion in damages by Binance. The government alleges that Binance engaged in manipulation of foreign exchange rates through currency speculation and rate fixing. Last week, Nigerian authorities reportedly arrested two senior executives of the firm.

The Nigerian naira has experienced a significant devaluation, with its value dropping by approximately 70% in recent months. This depreciation coincides with a currency crisis and steep inflation in the largest economy within Africa.

The BRICS nations are actively collaborating to strengthen emerging economies, aiming to counterbalance the political and financial dominance of developed Western powers. As part of their efforts to deepen ties and enhance economic cooperation, BRICS has revealed plans for a payment system based on blockchain technology, aiming to decrease reliance on the US dollar (USD).

BRICS Nations Elevate Blockchain Strategy

Perhaps most notably, BRICS nations are developing a blockchain-driven payment system to lessen the use of the dollar among member countries. Kremlin aide Yury Ushakov explained that the payment system will utilize digital blockchain technologies to facilitate cost-effective and politically neutral transactions for governments and individuals alike.

According to Ushakov, the blockchain-based payment network seeks to amplify the influence of BRICS nations in the global financial landscape by increasing settlements in national currencies and fortifying correspondent banking networks, thus diversifying international transactions.

Specifics regarding the payment system, such as whether BRICS will develop its blockchain or leverage an existing platform, were not disclosed by the Kremlin. The blockchain-based platform represents a natural progression of the BRICS Contingent Reserve Arrangement (CRA), which was established to provide liquidity and support for balancing payments among member countries.

The Contingent Reserve Arrangement

The CRA was instituted in 2014 during the sixth BRICS summit in Fortaleza, Brazil, with the aim of facilitating payments between member countries and mitigating global liquidity pressures. Member countries collectively committed $100 billion to the CRA, with contributions ranging to $5 billion by South Africa.

While bolstering the global financial safety net, the CRA aims to reduce reliance on US dollar-denominated assets and institutions such as the IMF, which are influenced by Western powers. Earlier on in the year, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates joined BRICS. Traditionally comprising emerging market countries, BRICS now includes the high-income developed country, the UAE.

Now, member countries are deliberating on the possibility of adopting a single common currency for BRICS. With increasing skepticism toward fiat currency, the rise of BRICS reflects a deliberate response to the collective desire for change.

Billions of dollars in leverage vanished within the crypto market as Bitcoin (BTC) took a sudden 14% nosedive within a few hours after briefly hitting a fresh all-time high. Traders using options and futures to get exposure to Bitcoin are facing a staggering $1 billion loss after the cryptocurrency lost its price peak on March 5th, 2024, where it also recorded a new all time high (ATH).

Declining OI

On March 6th, Santiment, an on-chain analytics provider, noted a significant decline in total open interest (OI) on exchanges for Bitcoin, Ethereum, and Solana following the recent all-time high experienced by BTC. The open interest of Bitcoin plunged by $1.46 billion (-12%), whereas Ethereum dropped by $967 million (-15%) and Solana tumbled by $424 million (-20%).

Santiment explained that most of the speculation on the price of Bitcoin revolved around traders opening long positions, expecting the flagship crypto to surpass its all-time high and maintain a price above $70,000. A smaller portion of the downturn came via liquidated short positions as Bitcoin touched its new high.

Part Of The Process

This decrease in open interest suggests a temporary removal of speculative excess within the markets, according to Santiment. Open interest refers to the total number of open positions traders have taken on a derivatives contract. It increases when traders open new positions and decreases when they close existing ones.

While the sudden downward movement of Bitcoin might have rattled the market, many experts view derivatives flush-outs as a normal part of price fluctuations. One notable crypto trader known as Daan Crypto Trades highlighted that about $3 billion in open interest was lost during this correction, with approximately 312,500 traders being liquidated, totaling $1.13 billion in liquidations over the past 24 hours.

MicroStrategy recently made an announcement regarding its intention to offer $600 million in aggregate principal convertible senior notes due 2030. This offering will be conducted privately to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended.

Going All In

MicroStrategy intends to utilize the proceeds generated by selling the notes for the acquisition of additional Bitcoin (BTC) and for general corporate purposes. Additionally, there is a provision allowing MicroStrategy, subject to specific conditions, to repurchase all or part of the notes in cash with a starting date of March 22nd, 2027.

Furthermore, bondholders will possess the right to demand MicroStrategy to repurchase all or part of their bonds for cash by September 15th, 2028. The convertible notes will offer the choice of conversion into cash, shares of class A common stock, or a blend of both, at the discretion of MicroStrategy itself.

The Thought Process

The significant investment in Bitcoin by MicroStrategy stems via its strategic belief in the long-term potential and value proposition of the cryptocurrency. Michael Saylor has been a vocal advocate for Bitcoin for several years now, viewing it as a reliable store of value and a hedge against inflation.

MicroStrategy choosing to allocate a substantial portion of its treasury reserves to Bitcoin is driven by several factors, namely the preservation of purchasing power, diversification of assets, long-term investment profitability, and an overall effective corporate treasury strategy.

Overall, the decision to buy substantial amounts of Bitcoin aligns with an overall strategic vision by both the company as well as Michael Saylor and reflects its confidence in the future utility and value of the flagship cryptocurrency.