Get the top stories, funding deals, technical analysis, cryptocurrency jobs and much more delivered to your inbox, every Monday morning.
CYBER Experiences Massive Price Increase, But There Is A Catch
Traders are paying hefty fees, reaching up to an annualized rate of 2,000%, to acquire the relatively lesser known CYBER tokens, as their value has surged by over 100% on select exchanges in the past week. Investors are taking on this cost to trade on margin, but they face the risk of sudden market downturns.
Most of these surges in the market are brief and occur in an overall pessimistic environment. Even when Bitcoin (BTC) is not making significant moves, one can still find a plethora of niche token pumps in the crypto world.
For instance, consider the CYBER token associated with the Web3 social network CyberConnect, boasting a market capitalization of $113 million. Over the past week, its value has more than doubled, marking one of the most substantial spikes in an otherwise stable market. Trading volumes have surged accordingly, with approximately $225 million worth of these tokens changing hands in 24 hours.
CyberConnect facilitates the development of blockchain-based applications related to digital identity, content, and social connections. It offers features like CyberGraph, a smart contract for recording user content and social connections, and CyberID, an ERC-721 token that serves as a unique handle for user accounts within the CyberConnect ecosystem.
Traders are eager to participate in the aforementioned surge, willing to pay over 2,000% in annualized fees to trade these tokens on margin. However, it is worth noting that CyberConnect could become the latest fleeting trend in the crypto world. Similar projects like Friend.tech, which enables notable individuals to create chat groups gated by tokens, initially gained popularity but later saw a staggering 95% drop in revenue within just over three weeks.
The majority of CYBER trades are also occurring on Binance, accounting for 74% of the total CYBER trading volume. UpBit, a Korean exchange, follows with $70 million worth of these tokens traded.
Still, there is considerable concern that altcoins such as these could continue to dominate the headlines over mainstays like Bitcoin and Ethereum (ETH), providing more ammunition for regulators to implement stringent policies on this industry when the seemingly inevitable price decrease occurs.
Approximately $1 billion Was Lost In 2023 Via Cybersecurity Incidents
In August 2023, the breakdown of losses in the crypto sector included approximately $26 million from exit scams, $6.4 million from flash loan attacks, and $13.5 million from exploits, resulting in a total monthly loss exceeding $45 million.
Notable incidents that contributed to these losses included the Zunami Protocol attack, causing $2.2 million in damages the Exactly Protocol exploit, resulting in $7.3 million in losses, and the recent PEPE withdrawal incident, which accounted for $13.2 million in damages.
Throughout the year, CertiK reported cumulative losses of over $997 million due to exploits, hacks, and scams. These losses can be further categorized into approximately $261 million attributed to flash loan attacks, over $137 million related to exit scams, and more than $596 million linked to exploits.
Although the losses in August remained substantial, they were notably lower than the losses recorded in the preceding month of July 2023. During July, Web3 data outlet De.Fi reported total losses of approximately $486 million, with the Multichain exploit alone contributing a significant portion of $231 million to this total.
In July, Multichain officially ceased its operations on July 14th, citing reasons such as insufficient funding for ongoing operations and a lack of alternative sources of information, as the CEO had reportedly been detained by Chinese authorities and was uncontactable.
In any case, experts agree that for the crypto community and industry to keep growing and become more reputable, these hacks and digital exploits must be prevented at all costs going forward.
Grayscale Triumphs Over The SEC As Push For BTC ETF Continues
History has been made as Grayscale, the popular cryptocurrency asset manager, has emerged successful in its legal dispute against the U.S. Securities and Exchange Commission (SEC).
The U.S. District of Columbia Court of Appeals has ruled in favor of Grayscale, overturning the lawsuit initiated by the SEC and potentially moving the company closer to achieving the status of a Bitcoin Spot Exchange Traded Fund (ETF).
This decision deals a significant setback to the attempts made by the SEC to hinder Grayscale and its progress in establishing a Bitcoin Spot ETF. Although the verdict does not directly transform the Grayscale Bitcoin Trust (GBTC) into a Spot ETF, it undoubtedly signifies a pivotal milestone toward that objective.
Unsurprisingly, Bitcoin experienced a notable upswing, slightly above its 200-day Moving Average (MA). Initial concerns were raised that the MA might obstruct recovery from recent setbacks. However, in view of the recent progress regarding Grayscale, BTC effortlessly crossed the $27,000 threshold and briefly reached $27,500.
Additionally, this victory for Grayscale against U.S. regulatory entities signifies a notable accomplishment for the overall cryptocurrency market, which has been contending with a continuous crackdown by regulatory bodies. The result therefore establishes a positive precedent that could restore confidence in the market and reverse the recent pattern of liquidity outflows.
Genesis And DCG Agree On Chapter 11 Bankruptcy Plan
Genesis and its parent company, Digital Currency Group (DCG), have preliminarily agreed on a Chapter 11 bankruptcy plan aimed at alleviating financial pressures for both entities.
According to a recent court filing, this plan could potentially offer unsecured creditors the opportunity to recover anywhere between 70% to 90% in USD and 65% to 90% in terms of digital assets, contingent upon market fluctuations.
Upon receiving court authorization, DCG is anticipated to inject over a billion dollars in new debt facilities into the struggling cryptocurrency lender, thus aiding its financial situation. In return, DCG would obtain specific financial concessions by Genesis and its creditors.
Within this arrangement, DCG hopes to settle its current debts, which encompass roughly $630 million in unsecured loans set to mature by May 2023 and a $1.1 billion promissory note expiring in 2032.
For the venture capital firm, this agreement offers a vital relief, given its struggles with liquidity problems that compelled it to sell assets at considerably reduced prices. Last year, its investment division, Grayscale, temporarily halted redemptions for its primary Bitcoin Trust, resulting in a noticeable decline in share value.
Genesis encountered bankruptcy filing in January after halting customer withdrawals in November, attributing the decision to the collapse of the FTX exchange and unfavorable market conditions.
While the agreement still confronts obstacles such as approval by the bankruptcy court and the backing of various creditors, if sanctioned, it represents a significant advancement in the overall restructuring process for the company.
Crypto Community Lambastes Sweeping Tax Proposal
The recently revealed tax plan for crypto gains in the United States faced criticism by the crypto community right after its release. The objections came particularly via individuals connected to decentralized operations categorized as brokers.
The prompt backlash by the crypto sector demonstrates that the new approach by the U.S. Treasury Department for managing taxes related to digital assets will encounter challenges as it goes through a prolonged phase of public comments and hearings.
A Flawed Plan
X, formerly known as Twitter, swiftly filled with grievances regarding the extent of the aforementioned plan, mainly focusing on how the tax reporting requirements might encompass decentralized crypto activities that are seen as unfeasible to conform with.
Miller Whitehouse-Levine, the CEO of a lobbying group for DeFi, expressed on the social media platform that the proposal is overly broad in its current iteration. He highlighted sections that could encompass a wide range of entities, such as self-hosted wallets. He noted that although the proposal acknowledges that users of self-hosted wallets carry out their own transfers, it still attempts to hold third parties accountable for these transfers.
Another individual on the platform pointed out that wallet providers like Metamask, decentralized exchanges like Uniswap, and any smart contract utilizing a multisignature security setup might fall under the obligations of the reporting requirements. This would necessitate these entities to establish new know-your-customer regulations for their users.
Room For Improvement
Congressman Patrick McHenry (R-N.C.), Chair of the House Financial Services Committee, conveyed in a statement that while he appreciated the inclusion of the effective date and specific exemptions, he found the proposed rulemaking deficient in various other aspects. He highlighted that after the passing of the Infrastructure Investment and Jobs Act, lawmakers emphasized that any proposed rule should be precise and limited in scope, which he believed this proposal failed to achieve.
Kristin Smith, CEO of the Blockchain Association, stated shortly after the release of the proposal that the crypto ecosystem differs significantly when compared to traditional assets, implying that regulations must be adapted accordingly to avoid affecting ecosystem participants without a feasible way to comply. She acknowledged that the forthcoming regulations could offer clarity for numerous crypto investors to accurately fulfill tax requirements, ultimately removing a substantial barrier to participating in digital assets.
Smith mentioned that, if executed correctly, these regulations could equip everyday crypto users with the necessary guidance to adhere to tax laws. The industry has until October 30th, 2023, to voice their concerns to the Treasury and Internal Revenue Service, followed by public hearings on November 7th and 8th. The drafters of the proposal included sections in the comprehensive document that invite input by the crypto industry.
One immediate positive aspect however is the general exclusion of crypto mining operations, alleviating concerns that arose when the 2021 infrastructure law established tax regulations.
Millions Lost As Magnate Finance Initiates Rug Pull
Magnate Finance, a popular lending company operating on the Ethereum Layer 2 network Base, appears to have conducted an exit scam, absconding with approximately $6.4 million.
Security firm PeckShield labeled this event as a rug pull, a phrase denoting crypto developers deceitfully vanishing with the deposited funds of the users. The investigation conducted by PeckShield revealed that Magnate Finance manipulated the price oracle used by the lending platform to drain all user deposits.
Since then, the Magnate Finance team has completely wiped out its online presence, erasing social media accounts on platforms like X and Telegram, and rendering the official website inaccessible. The exit scam was exposed following a warning issues by on-chain analyst ZachXBT after they raised concerns about the potential for an exit scam involving Magnate Finance on Base.
This suspicion emerged via the discovery that the deployer address for Magnate Finance was directly linked to a previous exit scam related to a project called Solfire, which had defrauded $4.8 million.
August has been a troublesome month for Base, as this incident marks the second rug pull observed within the month. Earlier in August, SwirlLend similarly disappeared with $460,000 in an exit scam on Base, with additional funds being stolen on Linea as well.
Popular Meme Coin Gets Shrouded In Controversy
As per information provided by the official PEPE Twitter account, certain members of the PEPE core team have allegedly sold around 16 trillion tokens (equivalent to $16 million) without prior notice.
According to the official statement, precautionary measures were taken by reducing the required number of signatory wallets for the multisig wallet to 2 out of 8. Initially, there were 10 trillion PEPE tokens in the multisig wallet, but now only one signature wallet remains, which is secure.
The remaining team members have indicated that the PEPE altcoin encountered disruptive and avaricious individuals within its ranks. These individuals, who reportedly impeded progress since the early days, have reportedly been removed.
Regarding the sale incident, the sole remaining signatory team member revealed being betrayed during the event. Allegedly, three malicious team members exploited the opportunity to sell 16 trillion PEPE tokens via the multisig wallet. Afterward, they attempted to run away by removing all traces of themselves in the multisig wallet.
The team member who stayed behind stressed that the tokens sold were never intended for sale and that the remaining tokens are securely held. Additionally, control of the PEPE Twitter account has been retained by this remaining team member.
The final team member also expressed a desire to transition PEPE into a fully decentralized state once all ongoing transactions conclude. This series of events has shed light on significant disagreements within the official token team and the subsequent token sale. The veracity of the statements made by the wallet claiming to be the sole remaining member remains uncertain.
AI Tokens Experience Surge In Value Subsequent To Latest Nvidia Financial Report
Cryptocurrencies linked to AI have shown significant progress after chip manufacturer Nvidia Corp released its impressive Q2 earnings report for fiscal year 2024. This surge in the AI tokens has added to the overall enthusiasm within the AI industry, which has been flourishing since last year.
Over the past week, Nvidia shares have ascended by almost 9%, and they have soared by more than 24% in the past three months. The company has shown exceptional performance over the past year, with a growth rate of 163%, and an impressive 222% year-to-date (YTD) increase.
The report also revealed a revenue of $13.51 billion, marking an almost 88% surge compared to the previous quarter and over 100% comparative to the same period in the previous year. This exceeded analyst predictions gathered by Refinitiv, which anticipated revenue of $11.22 billion and an adjusted earnings per share (EPS) of $2.09. Nvidia surpassed these initial projections, reporting an adjusted EPS of $2.70.
This boom could further enhance the value of AI tokens, which are likely to become even more prevalent thanks to the ongoing expansion of the AI sector as demand continues to grow and projections remain robust. In May, the market capitalization of Nvidia reached $1 trillion, aligning it with major players like Alphabet, Microsoft, and Amazon.
According to CEO Jensen Huang, Nvidia is well-positioned for an advantage due to the evolving landscape of computers and servers. Huang emphasized that the world is rapidly entering a new era of computing, and that companies globally are transitioning towards accelerated computing and generative AI.
AI tokens are poised for continuous growth as the industry expands and application possibilities increase. Nevertheless, there exists a general regulatory concern about the future of these tokens, as governments strive to regulate the AI industry.
BTC Daily RSI Reaches Most Oversold Level Since 2020 Covid Crash
In the rapidly changing realm of crypto trading, the RSI (Relative Strength Index) is a valuable instrument used by traders and investors to assess the momentum of any given asset. A recent occurrence has set the stage for a significant market event, as the daily RSI of Bitcoin has fallen to levels not witnessed since the crash caused by COVID-19 in March 2020.
As a commonly employed technical indicator, the RSI gauges the speed and alteration of price movements, oscillating between 0 and 100. Readings above 70 typically denote an excessively bought condition, while readings below 30 suggest an excessively sold condition.
The recent decline in the daily RSI of BTC below the 20-mark has grabbed the attention of the crypto community. This degree of oversold territory has not been observed since the tumultuous days of the market crash brought about by the pandemic in March 2020, when fear and uncertainty gripped the entire financial landscape.
Market analysts and enthusiasts are now closely monitoring this RSI movement, as many instances in the past have shown that extremely oversold conditions often preceded substantial price rebounds, leading to speculative conversations about the potential for a bullish reversal in the upcoming weeks.
Nonetheless, it is crucial to approach these indicators cautiously. While oversold RSI levels can provide insights into potential price turnarounds, they are not infallible predictors. Crypto markets in particular are known for their unpredictability, influenced by a multitude of factors, both on a macroeconomic and technological scale.
Crypto Traders Experience Significant Losses As Market Undergoes Sharp Decline
Bitcoin recently plummeted to around $25,000 from its previous value, leading to a substantial drop in cryptocurrency values across the board. Traders faced approximately $1 billion in liquidation losses in a 24 hour period. This sell-off also marked one of the most severe downturns for digital assets this year.
Bitcoin witnessed a 7% drop to roughly $26,900, with an earlier dip to nearly $25,000, the lowest value since June. CoinGlass data reveals that about $821 million worth of long positions, which are bets on price increases, were eradicated as traders hurriedly exited their positions. Among these losses, BTC traders bore the brunt, with long liquidations amounting to $472 million, followed by ETH at $302 million.
This represents the highest volume of Bitcoin liquidations on a single day since June 2022, a time when Bitcoin plummeted to $17,000. The trigger for this downturn included concerns about collapsing foreign currencies, apprehensions about the Chinese economy, and surging bond yields to multi-year peaks.
Typically, when an exchange closes a leveraged trading position due to a partial or total loss of the given initial margin, which means that the trader fails to meet the margin requirements or does not have enough funds to keep the trade open, this is referred to as a liquidation. When asset prices fall, the dynamic can set off a chain reaction of liquidations, exacerbating losses and price declines.
Certik Unveils Findings About Alleged Crypto Scammer Who Stole $1 Million
However, despite the investigation, the cybersecurity company remains unable to ascertain the true identities of these hackers who have managed to steal a whopping $1 million in crypto.
The report raised suspicions of an anonymous scammer being associated with a Canadian group. Nevertheless, the firm has been unsuccessful in confirming any specific name or identity. CertiK disclosed its discoveries resulting via the scrutiny of a crypto scam artist known as Faint. This individual, supposedly operational since 2022.
CertiK pinpointed various Ethereum Name Service (ENS) domains linked to Faint, encompassing domains such as faintxbt.eth, comefindme.eth, thanksfortheseed.eth, onchainkitten.eth, and hzontop.eth.
The report also underlined connections between Faint and another alleged scammer dubbed Soup. An on-chain researcher named ZachXBT previously published a probe on Soup, asserting their involvement in purloining substantial assets by infiltrating Discord servers and posing as a media platform employee.
Despite these revelations, CertiK still faces challenges in unmasking the true identities of these hackers. The company underscores that Faint continues to pose a threat to the crypto community and urges members to take precautions against potential wallet draining attempts.
Within the report, CertiK suggests utilizing applications like Wallet Guard and Pocket Universe, designed to alert users about interactions with wallet drainers. The company also advises users to exercise caution by verifying addresses and ensuring that any approvals granted do not originate from recognized phishing addresses.
SEC Will Postpone Approval Deadlines For Bitcoin ETFs Until Early 2024
The move gives the SEC up to 240 days to delay the processing of crypto ETF applications, which means that some companies might not hear decisions on filings made in July 2023 until around March 2024. The agency, which holds the final authority over permitting a crypto ETF, appears to be getting closer to approving such investment vehicles after several years of applications.
Stuart Barton, Co-Founder and Chief Investment Officer of Volatility Shares, a firm responsible for a leveraged Bitcoin futures ETF listing, shared that their interaction with the SEC involved negotiations, with the regulator proposing modifications to disclosure documents. He speculated that smaller firms might find it easier to gain SEC approval for a spot crypto ETF offering.
While larger companies have been making similar efforts for years without significant progress, the spotlight has shifted towards applications made by major asset management firms including ARK Invest, Bitwise Asset Management, VanEck, WisdomTree, Invesco, Galaxy Digital, Fidelity, and Valkyrie.
The hesitance in approving a spot crypto ETF could stem via the nature of the US crypto market, which, although regulated, has raised calls for clearer oversight. The SEC is currently involved in enforcement actions against Coinbase, Binance, and Ripple, and it has also imposed fines on companies like Bittrex.
There is a sense that both sides will need to be flexible, as Barton suggested that the SEC might need to be more open-minded and that US lawmakers are considering legislation to define the roles of the SEC and CFTC in regulating digital assets going forward.
One of the main obstacles facing approval for a spot crypto ETF by the SEC could be the nature of the investment itself. Bitcoin futures-linked ETFs enable investment in the crypto asset without using an exchange, whereas a spot BTC ETF involves directly holding Bitcoin within a fund for investment purposes.