The United States Department of Justice (DoJ) has initiated a crackdown on fraud within the meme coin market, which is primarily aimed at key players to restore trust in the sector and safeguard investors against manipulative practices.

Currently, the meme coin market is among the fastest-growing segments in all of crypto, boasting a market value exceeding $47 billion as of October 10th. Most recently, NEIRO, a popular meme coin on Ethereum (ETH) known for its vibrant online community, experienced a remarkable rise of over 40% in just 24 hours. 

Rife With Fraud

Leading coins such as Dogecoin, Shiba Inu, and Pepe dominate this space, with significant trading volumes and valuations. Despite its rapid expansion, the meme coin sector is rife with fraudulent activities. Recently, the DoJ targeted four cryptocurrency companies and 14 individuals engaged in illicit trading operations, recovering over $25 million in crypto assets and highlighting the manipulation prevalent in the market.

One of those implicated was Aleksei Andriunin of GoBit, a prominent market maker for meme coins. GoBit and others faced allegations of wash trading, a method employed to fabricate market activity and deceive investors. Such market manipulation is prohibited in the US and various other countries. By artificially inflating trading volume, these firms misled traders, leading to substantial financial losses.

A Long Way To Go

Some analysts, including those at Santiment, view the actions taken by the DoJ as a beneficial move for the industry. They argue that eliminating manipulative entities like GoBit could enhance market confidence in the future, signaling that deceptive tactics will face consequences and potentially attracting cautious investors.

While short-term confidence might wane, the long-term prospects for meme coins could improve with greater transparency and reduced manipulation. Should GoBit re-enter the market, it is likely to operate more transparently, fostering a fairer trading environment for all participants.

Chinese researchers recently claimed to have successfully breached encryption algorithms used in banking and cryptocurrency with a quantum computer. Led by Wang Chao at Shanghai University, the team utilized a technique called quantum annealing to target algorithms like Present, Gift-64, and Rectangle, all of which are foundational to the advanced encryption standards (AES) that secure crypto wallets.

A Significant Threat

AES-256 is considered one of the most secure encryption methods, but experts warn that quantum computing could soon challenge this status, threatening established password protections. Wang and his team likened their approach to an AI algorithm that optimizes solutions on a global scale. Unlike traditional algorithms that explore every option, quantum tunneling allows particles to pass through barriers, enabling quantum computers to find solutions more efficiently.

This is the first time a true quantum computer poses a significant threat to full-scale SPN structured algorithms currently in use, the team stated. As quantum computing looms as a concern for the crypto industry, it raises fears of exposing user funds to theft at unprecedented speeds.

Still Some Limitations

While the breakthrough is significant, researchers noted that various limitations, such as environmental factors and hardware constraints, currently prevent a full-scale quantum attack. They also confirmed that the attack did not reveal specific passwords but achieved greater gains than before.

The findings were published in The Chinese Journal of Computers through The China Computer Federation on September 30th. Ethereum (ETH) co-founder Vitalik Buterin has suggested a potential remedy, proposing a hard fork of the blockchain to mitigate future quantum risks, which could be implemented swiftly to protect user funds.

Fission Labs raised $1.60M in Pre-Seed funding with support by Kraynos Capital. Fission is a DeFi application built for venture capital products on Ethereum. It integrates tokenization, trading, lending, and automated liquidity provisioning into a simple, end-to-end solution.

AiGO Network secured an undisclosed amount in Strategic funding with Waterdrip Capital providing assistance. AiGO Network is an AI-powered, decentralized platform designed to address challenges in urban mobility by capturing mobility data and encouraging community contributions.

Ithaca raised $20M in Undisclosed funding with support by Paradigm. Ithaca is a project focused on building a Layer 2 blockchain solution to enhance scalability and efficiency in decentralized networks while also providing faster and more efficient transactions without compromising security.

PiP World obtained $10M in Seed funding with help by Exinity. PiP World is a Web3 gaming and educational ecosystem designed to make financial markets education engaging and accessible. It has also launched a tapping game called Gold Rush on Telegram Messenger.

Infinitar secured $9M in Series A Funding with assistance by AccelByte. Infinitar is an integrated Moba game that combines team competition, NFT collection, game asset trading, and a social system, aimed at providing an unprecedented Web3 gaming experience.

Apex Fusion acquired $6M in Undisclosed funding. Apex Fusion is a multi-chain Layer-1 network that aims to provide a seamless experience for blockchain builders and developers by combining the transaction execution methods of UTXO and EVM into a single decentralized ecosystem.

Yala Finance raised $8M in Seed funding with help by Polychain Capital. Yala Finance leverages the Yala modular infrastructure to offer a lending protocol enabling users to borrow over-collateralized stablecoins ($YU) by depositing BTC or UTXO assets.

Solv Protocol secured $11M in Strategic funding with assistance by Blockchain Capital. Solv is a decentralized platform focused on providing liquidity and yield infrastructure for digital assets. It offers products like SolvBTC, which allows users to earn DeFi yield and participate in cross-chain point farming.

Scallop obtained an undisclosed amount in Strategic funding with support by Sui Foundation. By emphasizing institutional-grade quality, enhanced composability, and robust security, Scallop is dedicated to building a dynamic money market that offers high-interest lending, low-fee borrowing, AMM, and digital asset self-administration tool on a unified platform.

Trendies raised $1.75M in Pre-Seed funding with help by Archetype Ventures Inc.. Trendies is the first launchpad built for holders, where holders are rewarded for being active in their communities.

After several days of disappointing price movements, bulls seem to be making a comeback. The cryptocurrency market experienced an increase of nearly $70 billion in total capitalization over the last 24 hours. This surge coincided with Bitcoin (BTC) showing a significant recovery, rising to $63,000. 

Bitcoin Recovers
Just a few days prior, Bitcoin had fallen below $60,000, briefly dipping under $59,000. Fortunately, bulls reacted swiftly, orchestrating an impressive rally that reached about $63,400 earlier today. Although the price has since retraced slightly, BTC still recorded a 3.4% increase over the last day.

It is important to highlight that Bitcoin has outperformed the other top 10 cryptocurrencies by market cap, which also saw around $120 million in liquidated leveraged positions, mostly short positions. Sentiment has significantly improved compared to yesterday, currently sitting at a neutral stance, up 17 points today.

Altcoins on the Rise
Altcoins are thriving, with all trading in the green. Notable cryptocurrencies like ETH, BNB, SOL, XRP, DOGE, TRX, TONCOIN, and ADA are experiencing modest gains ranging between 0.5% to 3%. Bitcoin has managed to surpass all of these.

One of the standout performers today is NEIRO on ETH, a popular meme coin known for its vibrant online community, which experienced a remarkable rise of over 40% in just 24 hours. Overall, WhiteBIT Coin (WBT) ranks as the second-best performer among the top 100, up nearly 30%, followed closely by Ethenea (ENA), which has increased by 25%. Conversely, Uniswap (UN) is down 2% today, although it has gained 17% over the past week.

Other Markets

Chinese economists express a desire for more decisive action to combat deflation, as the finance minister has not specified the expected fiscal stimulus amount. Despite this lack of new measures, efforts are underway to reassure investors. Inflation in China has come in lower than anticipated, and factory prices are decreasing. Key insights emerge as China reveals strategies aimed at revitalizing the economy and addressing the housing crisis.

Meanwhile, the European Central Bank plans to implement an unexpected rate cut, intensifying global easing. SpaceX has secured approval sooner than anticipated to launch its fifth Starship and is starting to feel pressure due to rising competition.

Reports indicate that the U.S. anticipates Israel will target Iranian military and energy facilities. Additionally, Iraq acknowledges it produced below its OPEC+ oil quota last month. In the electric vehicle sector, significant disagreements persist between China and the EU regarding EV tariffs, following eight rounds of discussions in Brussels that have yet to yield an agreement.

A man under home detention for his alleged role in a $180 million cryptocurrency fraud scheme is reportedly evading capture after tampering with his ankle monitor, according to New York prosecutors.

Horst Jicha, the former CEO of the alleged crypto mining and trading firm USI-Tech, is thought to have altered his ankle bracelet on October 4th and subsequently violated his pretrial conditions by going on the run, as detailed in a court filing dated October 10th.

The Hunt Is Afoot

Pretrial Services informed the authorities about 12 hours after the monitor attached to Jicha stopped functioning, quickly pursuing an arrest warrant for the fugitive. Jicha, a German citizen, was apprehended on December 23rd, 2023, in Miami, Florida, after returning to the United States for the first time in over five years for a vacation. He had left the U.S. in 2018 following cease-and-desist letters issued by US officials.

He was placed under home detention in New York on a $5 million bond secured by his domestic partner and children, as reported by CNBC on October 11th. John Marzulli, a spokesperson for the Brooklyn United States Attorney Office, stated that an active investigation is ongoing to locate him.

The 64-year-old also surrendered his German passport in December, complicating any attempts to escape abroad. His trial was set for March 31st, where he faces multiple charges related to securities fraud and money laundering connected to USI-Tech.

Alleged Fraud

Prosecutors allege that Jicha assured investors a daily return of 1% on their investments through participation in various mining and trading operations related to USI-Tech. Authorities claim that 1,774 BTC and 28,589 ETH, valued at over $180 million, are unaccounted for in the alleged fraud scheme, with the funds reportedly sent to a crypto exchange deposit address controlled by Jicha.

USI-Tech was said to have been established in Europe in May 2017 before being aggressively marketed to U.S. investors a few months later. Following increased regulatory scrutiny, the firm shut down on January 8th, 2018, citing misleading remarks by investors regarding its products, which left investors unable to withdraw funds via the platform.

Singapore, October 10, 2024 Libra Capital is pleased to announce the addition of David Lim, a seasoned professional with over two decades of investment banking, hospitality, and IT experience.  This strategic addition enhances the capabilities of the firm when it comes to delivering value to its current portfolio and investors while simultaneously expanding its reach in the Real World Assets (RWA) and tokenization sectors.

David brings a robust background that spans over two decades in traditional finance, encompassing corporate finance, capital markets, and mergers and acquisitions. He is now pivoting towards the transformative opportunities presented by blockchain and Web3 technologies.

Moreover, throughout his career, David has advised on a diverse range of deals across hospitality, technology, and real estate sectors, and he will now focus on driving innovation within Web3 by identifying and supporting emerging projects. 

"As Web3 evolves and increasingly shapes the world, I am excited to leverage my experience in RWA to drive the tokenization of assets to unlock new financial and ownership models", said David. The potential for blockchain and DeFi applications to transform industries is immense and David wants to contribute toward the continued success of Libra Capital in this space. 

"We are excited to welcome David to our team as we continue to deepen our commitment to blockchain and Web3 ventures", said Kanny Lee, Co-Founder of Libra Capital, before adding that his extensive experience in RWA will be invaluable as the team continues to drive growth for the company.

 About Libra Capital

Libra Capital is a leading fintech and Web3 venture capital firm focused on accelerating innovation in the decentralized economy. With deep roots and a strong track record in TradeFi and fintech, the firm consistently invests in blockchain startups and decentralized applications that are transforming industries globally.

For more information and updates, visit the official website and X (Twitter) account of Libra Capital.

Tether has consistently faced scrutiny regarding the transparency of its reserves. While the company claims that its USDT token is fully backed on a one-to-one basis by its reserves, it has not yet completed a full audit, leaving lingering doubts.

In an effort to improve the situation, Tether CEO Paolo Ardoino expressed a willingness to pursue an audit by a Big Four firm. Such an audit could significantly address concerns about the financial stability of the company.

Reputational Risk

To enhance its reputation, Tether informed Fox Business that the firm is increasing its collaboration with law enforcement to tackle crypto-related crimes, investing in emerging technologies like AI, and contemplating a Big Four audit for greater transparency.

However, Ardoino noted that finding an accounting firm for a complete audit may prove difficult due to challenging regulatory conditions in the United States. He highlighted specific rules that complicate the ability of audit firms to work with crypto companies, particularly those based outside the U.S.

Despite these challenges, Ardoino remains optimistic that the regulatory environment might improve after the upcoming presidential election, which could reduce restrictions and make a full audit more attainable. Still, CPA Blake Oliver remarked that none of the Big Four accounting firms are willing to take on Tether for an audit, citing concerns about reputational risks.

More Than Meets The Eye

This drive for transparency emerged after a 2021 investigation by the New York Attorney General (NYAG), which revealed that assertions made by Tether concerning a dollar-for-dollar backing were in fact misleading. The inquiry uncovered that Tether had been moving funds between its parent company, Bitfinex, to cover losses and mixing user funds.

Since then, Tether has utilized accounting firm BDO for quarterly attestations, with the most recent report indicating a surplus of $11.893 billion in assets compared to liabilities. While the quarterly attestations represent a positive step, it is essential to recognize that these attestations are limited, offering only snapshot reviews of specific financial aspects, such as reserves, rather than a comprehensive assessment of all financial records. In contrast, audits provide a thorough evaluation which delivers greater assurance to both investors and regulators.

Layer 2 network Optimism has launched its fifth airdrop, distributing 10.3 million OP tokens (valued at approximately $16 million) to 54,700 user addresses. This airdrop specifically recognized users engaging with Superchain, a network of blockchains built with the OP Stack.

Rewarding Users

Activity on various chains, including OP Mainnet, Base, Zora, Mode, Metal, Fraxtal, Cyber, Mint, Swan, Redstone, Lisk, Derive, BOB, Xterio, Polynomial, Race, and Orderly, was taken into account. Wallets that interacted with at least 20 contracts on the Superchain between March 15th and September 15th, 2024, are eligible for the airdrop. Users have until February 13th, 2025, to claim their tokens.

Optimism stated that this particular airdrop rewards power users who have contributed to the growth of the Superchain Ecosystem. Additionally, there were bonus criteria that increased individual allocations, such as delegating a minimum amount of OP or participating with seven chains on the Superchain.

An Impressive Feat

Through five airdrops, Optimism has now distributed over 265 million OP tokens, with around 550 million OP tokens remaining for future distributions. The initial airdrop took place on May 31st, 2022, followed by a second on February 8th, 2023, and a third on September 13th, 2023.

The third airdrop allocated 19.4 million OP, valued at $26 million at that time, to nearly 32,000 addresses involved in the delegation activities of the Optimism Collective. A fourth airdrop occurred in February 2024. Presently, the circulating supply of OP tokens stands at 1.3 billion, with a market cap of $1.9 billion.

A covert operation is typical for the U.S. Federal Bureau of Investigation (FBI). However, this marks the first effort by the agency to create its own crypto token aimed at achieving justice. On Wednesday, an unsealed indictment charged Gotbit, CLS Global, MyTrade, ZM Quant, and 18 individuals with artificially raising token prices through fake transactions in exchange for payment.

The Importance Of NexFundAI

One of the aforementioned tokens was NexFundAI, an Ethereum-based cryptocurrency developed by the FBI to target crypto market manipulators. Jodi Cohen, a Special Agent with the FBI Boston Field Office, described it as an unprecedented step.

The NexFundAI token currently has a market capitalization of $177,000, according to DEXScreener. Over the past 24 hours, trading volume for the token reached $3.5 million, reflecting a whopping 5,000% surge.

This investigation, the first of its kind, uncovered numerous fraudsters within the cryptocurrency sector. Wash trading has long been banned in financial markets, and cryptocurrency is no exception, stated Acting United States Attorney Joshua Levy. The FBI is urging individuals impacted by the trading of fraud-related tokens to reach out to them. The agency has included its own token among others like Saitama, Robo Inn, VZZN, and Lillian Finance.

Clarity Needed

The U.S. Securities and Exchange Commission (SEC) has also taken legal action against Gotbit Consulting, ZM Quant Investment, and CLS Global. Onchain activity suggests that wallets associated with the FBI have recently conducted a number of meme coin transactions, as noted by Coinbase director Conor Grogan.

It remains unclear whether the FBI was aware of this, but they inadvertently revealed their wallets. The wallet that funded the FBI wallet quickly allocated resources to several other wallets, resulting in numerous transactions. Grogan remarked on X that it seems FBI wallets hold at least 75% of the token supply.

In addition, Grogan identified that wallets connected to the FBI hold coins like Pornrocket, EthereumMAX, and BONE. It remains uncertain if other users transferred those coins to the FBI-linked wallet addresses.

Hex Trust, headquartered in Hong Kong, has announced a partnership with the DeFi credit protocol Clearpool via X. They also shared this news in a blog post on October 8th. Ozean, a platform focused on real-world asset (RWA) yields, claims to operate using the CPOOL token and is backed by Optimism.

Impressive Progress

Ozean aims to leverage the lending expertise provided by Clearpool alongside the regulated infrastructure and institutional clients offered by Hex Trust to enhance adoption within the RWA ecosystem.

Thus far, Clearpool has facilitated over $620 million in loans for firms such as Flow Traders, Wintermute, and Jane Street. Hex Trust is poised to significantly influence Ozean and its development, with more than $5 billion in assets under custody and over 270 institutional clients.

Mutual Benefit

Certain clients of Hex Trust, including banks, exchanges, funds, and decentralized applications, may tap into the RWA ecosystem. Hex Trust will bring its extensive and expanding client base, along with our advanced technology infrastructure, to elevate Ozean and unlock this trillion-dollar market opportunity, stated Hex Trust CEO Alessio Quaglini.

Ozean will also benefit via the rising adoption of USDX, a US dollar-pegged stablecoin launched by Hex Trust in May. USDX has integrated with LayerZero to provide cross-chain liquidity and has partnered with Velodrome as its primary decentralized exchange. At present, the company offers services and products across several countries, including Singapore, Hong Kong, Dubai, and France.

Institutional investments in Ethereum (ETH) through ETFs hit a significant but disappointing milestone yesterday, as no net new US dollars were added to spot Ether ETFs throughout the day on Wall Street. In related news, according to a recent report by on-chain analyst EmberCN, a sharp decline in ETH prices triggered a wave of liquidations among leveraged ETH whales.

The Difference Between Inflows And Outflows

Referred to as daily total net flow or simply flows in the crypto community, this metric tracks the total investments in spot Ether ETFs (inflows) against withdrawals (outflows) each day. The purpose of this measurement is to illustrate the impact that spot Ether ETFs, which are different compared to other investment options like direct purchases or derivatives, have on the daily price of ETH.

Calculations are usually in US dollars and encompass all buying and selling activities across the nine spot Ether ETFs available on US exchanges, managed by sponsors such as BlackRock, Fidelity, Bitwise, 21Shares, Franklin, VanEck, and two Grayscale offerings.

More Net Outflows

Ether ETF flows have fallen short of expectations. The $0 figure reported on Monday sharply contrasts with optimistic forecasts by bullish investors who anticipated spot Ether ETFs would signal a wave of institutional adoption, with price predictions reaching as high as $15,000 per ETH. Currently, ETH trades around $2,450, which is about half of its peak value.

In the first quarter following the introduction of various Bitcoin (BTC) spot ETFs, bitcoin saw inflows exceeding $12 billion. In comparison, Ether has unfortunately recorded net outflows since its ETFs launched. Notably, Wall Street entities had initially funded the nine spot Ether ETFs with $10.2 billion, most of which originated via Grayscale, creating a pool of capital that could be withdrawn.

An Intriguing Opportunity

Taking advantage of the aforementioned situation, investors have consistently withdrawn funds through the spot Ether ETFs since their US introduction, leading to a total of $548 million in net outflows since July 23rd. Several factors influence investors and their decisions to no longer invest capital into spot Ether ETFs.

A significant reason for their lackluster performance could be the absence of yield in these ETFs. Also, while large ETH holders can earn a 3.3% yield through Proof-of-Stake (PoS), most Ether ETFs do not offer any yield and instead charge management fees.

A South Korean investigation into soldiers allegedly using their military passwords as collateral for loans to purchase cryptocurrency has revealed 29 additional incidents of compromised military secrets.

Among these is a case involving a captain who transmitted confidential documents regarding the wartime missions of a special forces brigade. According to TVChosun, the captain shared this sensitive information with someone who then sent crypto assets valued at approximately $35,700 in return.

Previously, South Korean regulators engaged in discussions with officials representing ASEAN, the Association of Southeast Asian Nations, and the OECD regarding cryptocurrency policy in Seoul on March 18th, 2024.

Damage Control

Previously reported findings indicated that at least three active-duty soldiers this year provided Level 3 military passwords and secret documents to loan sharks to invest in crypto or settle crypto investment debts. Earlier this month, the Ministry of National Defense disclosed that a court handed down a suspended jail sentence to one captain, leading to his discharge.

Several other soldiers are suspected of similar actions, and prosecutors have charged three loan sharks for accepting military secrets in exchange for illegal cash loans. The ensuing controversy has prompted legislative involvement. Kang Dae-sik, a member of the National Assembly Defense Committee, claims that as of October 6th, acting soldiers have leaked secrets on 29 separate occasions since 2021.

Attitude Adjustment

The ministry recorded six incidents in 2021, eight in both 2022 and 2023, and seven cases up until July 2024. One case in 2021 also involved a captain trading military secrets for money, while another instance saw a captain take photos of a Korean Joint Command and Control System terminal with his cellphone and send them to an unnamed recipient via the Telegram app.

The findings also include examples of senior soldiers selling information to private defense firms for cash, as well as a soldier who sold copies of a top-secret military manual. Some incidents stemmed due to a lax attitude toward security. In one case, a soldier sent videos of secret military equipment to his girlfriend using the KakaoTalk app, claiming he wanted to share his daily life in the army with her.