Get the top stories, funding deals, technical analysis, cryptocurrency jobs and much more delivered to your inbox, every Monday morning.
Coinbase Files Amicus Brief in Support of Ripple Labs In SEC Lawsuit
Coinbase has formally filed an amicus brief in support of Ripple Labs Inc. in the 2020 lawsuit filed by the Securities and Exchange Commission against Ripple.
The SEC filed the aforementioned lawsuit against Ripple and its executives approximately two years ago, alleging that the sale of XRP constituted an offering of unregistered securities worth over $1.38 billion.
To ensure that the existing due process guidelines on which the fair notice defense is based continue to protect against unauthorised regulatory enforcement when needed, Coinbase mentioned in the filing that the SECs motion for summary judgment on this issue should be denied.
According to Coinbase, government agencies cannot condemn conduct as a violation of the law unless fair notice is provided. Moreover, by suing sellers of XRP tokens after making public statements signaling that those transactions were lawful, Coinbase claims that the SEC has indeed lost sight of this bedrock principle.
Crypto.com Noted Again For Unintentional Crypto Transfers
The collapse of FTX highlighted the importance of proof of reserves in mitigating risks and increasing investor confidence, prompting leading cryptocurrency exchanges to publicly list their hot and cold wallet addresses.
When attempting to confirm the availability of funds on Crypto.com, cold store information disclosed a suspicious transfer of 320,000 ETH on October 21st to a wallet address linked to Gate.io.
Given that Crypto.com claims that all user-owned cryptocurrencies are held offline in cold storage in collaboration with hardware wallet provider Ledger, concerns were understandably raised about the issue.
As the debate heated up, CEO Kris Marszalek revealed that the funds, which accounted for 82% of Crypto.com's ETH in cold storage at the time, were indeed sent to Gate.io by mistake.
On-chain data verifies that Gate.io returned 285,000 ETH to Crypto.com, but Marszalek claims that all funds were restored. Further investigation revealed that the missing 35,000 ETH was sent to a different address, which the crypto exchange has yet to confirm.
Alarmingly, this is not the first time Crypto.com has made headlines due to an unintentional transfer. In August 2022, it was discovered that the company had sent over $7 million to Melbourne-based investors in error, despite the fact that the refund was supposed to be just $67.
Binance FTX Fiasco Continues, Crypto Market Suffers As A Result
After much back and forth, Binance initially signed a non-binding letter of intent to acquire FTX, adding a surprising twist to the public feud between the worlds two biggest cryptocurrency exchanges, which contributed to a drop in the value of several tokens across the market. However, while the firms agreed to not disclose the deals value until the due diligence process was completed, certain revelations have since led to Binance reportedly backing out of the deal.
FTXs native exchange token, FTT, was the subject of controversy after the balance sheet of FTX sister company Alameda Research was revealed. This sparked a public spat between Alameda CEO Caroline Ellison and Binance CEO Changpeng Zhao, who also owns a large number of FTT tokens.
Taking note of the findings in a recent report, Zhao stated that his exchange would start liquidating any remaining FTT on its books. Ellison responded on Twitter, saying Alameda was ready to buy any amount of FTT Binance wanted to unload for $22 each. However, Zhao appeared to reject Ellisons offer, saying Binance would stay in the free market.
Binance and FTX would then clash after Changpeng Zhao tweeted that his exchange would gradually withdraw billions of dollars in FTT due to certain revelations that came to light. As speculation about the solvency of billionaire Sam Bankman-Frieds crypto exchange grew, the FTX CEO initially tweeted that everything in FTX is satisfactory and that the assets were fine.
He also stated that FTX has sufficient liquidity to cover all client holdings and that the company does not invest client funds. He concluded by saying that FTX always has and will continue to process all withdrawals. However, much to his supporters surprise, Sam would then agree to the aforementioned deal with Binance. Eventually though, Binance would then reverse their decision to acquire FTX which only made the situation even worse.
What comes next?
Binance was the first investor to back FTX, but as the younger firm's popularity grew, the relationship between the two firms began to deteriorate. Following the announcement of the acquisition, FTX CEO Sam Bankman-Fried thanked Binance CEO Changpeng Zhao as well the general crypto community for their patience and understanding. Now though, it remains unclear as to what will happen as the entire crypto community and market suffered heavy losses due to the ongoing fiasco.
SBF further indicated that this is a user-focused development which will benefit the entire industry, and that Binance has done and will continue to do a fantastic job of expanding the global crypto ecosystem and fostering a more free economic environment for everyone. Once again however, many have come to doubt anything Sam says after additional details about him and FTX have since surfaced.
Ultimately, whether this was a strategic move for Binance which will benefit them in the long run or a decision taken in the spur of the moment, the fact remains that the worlds largest crypto exchange can now forge ahead seemingly unchallenged as it looks to work alongside regulators across the world. However, many have condemned Changpeng Zhao by calling his actions extremely predatory and have even accused him of intentionally destroying his competition. Elsewhere, Sam Bankman-Frieds net worth decreased by over 90% in just one day, effectively putting an end to his otherwise meteoric rise in the industry.
FTX Initiates Bankruptcy Proceedings and CEO Resigns
Following a liquidity crisis and the Binance and FTX fiasco, Sam-Bankman-Frieds company has now initiated US bankruptcy proceedings with the CEO officially resigning.
FTX had been struggling to raise billions of dollars to avoid bankruptcy following a wave of withdrawals and after a potential rescue deal with larger rival Binance fell through within a day.
FTX and its affiliated crypto trading fund Alameda Research, as well as roughly 130 other companies, filed for voluntary Chapter 11 bankruptcy in Delaware on Friday, according to a statement shared via Twitter.
The groups CEO has been named John J Ray III. SBF will reportedly be helping out in order to ensure a smooth transition. The former CEO also indicated that the bankruptcy filing does not have to mean the end of the companies and that he is trying to stay optimistic.
FTX stated in its bankruptcy petition that it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors.
A few investors, including Sequoia and SoftBank, had already written off their FTX investments. SkyBridge Capitals founder, Anthony Scaramucci, said on Friday that the alternative investment firm is working to repurchase its FTX stake.
US Department Of Just Seizure Of 50,676 Bitcoin
Following a US Department of Justice raid, a large amount of stolen crypto was discovered in a popcorn tin. According to the DOJ, this was the second biggest financial seizure in recorded history. Moreover, after the seizure, the United States government now holds over 214,000 BTC, making up more than 1% of the total capped BTC supply.
Over 50,676 BTC, valued at approximately $3.36 billion at the time of discovery, were discovered hidden on various devices discovered within the home of a hacker who had stolen them from Silk Road, a dark web marketplace.
James Zhong, 32, pled guilty last week to wire fraud in September 2012, after taking advantage of a flaw in the websites payment structure. Mr Zhong pleaded guilty to hacking the website on November 4th and has surrendered his Bitcoin and other assets to police while awaiting sentencing. The punishment for his crime is up to 20 years in prison.
Binance Announce Intent To Purchase FTX Exchange
Binance has signed a non-binding letter of intent to acquire FTX, adding a surprising twist to the public feud between the worlds two biggest cryptocurrency exchanges, which contributed to a drop in the value of several tokens earlier today. Moreover, until the due diligence process is completed, the firms will not disclose the deals value.
Binance was the first investor to back FTX, but as the younger firms popularity grew, the relationship between the two firms began to deteriorate. Following the announcement, FTX CEO Sam Bankman-Fried thanked Binance CEO Changpeng Zhao as well the general crypto community for their patience and understanding.
He further indicated that this is a user-focused development which will benefit the entire industry, and that Binance has done and will continue to do a fantastic job of expanding the global crypto ecosystem and fostering a more free economic environment for everyone.
Binance Announces Sale Of FTT Token And Troubles Ensue
Binance and FTX clashed recently after Binance CEO Changpeng Zhao tweeted that his exchange would gradually withdraw billions of dollars in FTX's native token, FTT, due to certain revelations that have come to light.
As speculation about the solvency of billionaire Sam Bankman-Frieds crypto exchange grew over the weekend, the FTX CEO tweeted early Monday morning that everything in FTX is satisfactory and that the assets are fine.
He also stated that FTX has sufficient liquidity to cover all client holdings and that the company does not invest client funds. He concluded by saying that FTX always has and will continue to process all withdrawals.
FTXs native exchange token FTT was loaded into a story last week revealing the balance sheet of FTX sister company Alameda Research. This sparked a public spat between Alameda CEO Caroline Ellison and Changpeng Zhao, who also owns a large number of FTT tokens.
Taking note of the findings in a recent report, Zhao stated that his exchange would start liquidating any remaining FTT on its books. Ellison responded on Twitter, saying Alameda was ready to buy any amount of FTT Binance wanted to unload for $22 each. Zhao appeared to reject Ellisons offer in a tweet Monday afternoon, saying Binance would stay in the free market.
JPMorgan Successfully Conducts First On Chain DeFi Transaction
On November 2nd, 2022, the Monetary Authority of Singapore (MAS) launched Project Guardian as part of a pilot program to explore potential DeFi applications in wholesale funding markets. To that end, the initiative was a vital step in investigating how traditional financial institutions, among various other use cases, can potentially utilize tokenized assets and DeFi protocols to successfully carry out financial transactions.
The pilot program was also attended by Singapores biggest bank (DBS Bank), SBI Digital Asset Holdings, and Oliver Wyman Forum. The transaction was carried out on the Ethereum Layer 2 network Polygon with the help of a modified version of the Aave protocols smart contract code. Furthermore, the MAS stated that a live cross-currency transaction incorporating tokenized Singaporean Dollar and Japanese Yen deposits, as well as a simulated exercise of purchasing and selling tokenized government bonds, was successfully carried out.
According to MAS Chief Fintech Officer Sopnendu Mohanty, this is a huge step in the right direction, one that will significantly improve existing financial networks and help bridge the gap between them and DeFi. The CFO also said that the latest pilot has aided in the development of the countrys digital asset strategy as well.
Umar Farooq, CEO of Onyx by JP Morgan, a blockchain focused business unit within the asset management firm, claimed that JPMorgans on chain transaction on a public blockchain was nothing short of groundbreaking and will forever be known as a truly historic moment. The achievement comes as many top financial institutions have anticipated big things for blockchain oriented tokenization of real world assets.
Earlier in 2022, Boston Consulting Group predicted that the total value of tokenized illiquid assets would reach over $16 trillion by 2030. Popular DeFi lending protocol Aave also recently commented on the new pilot, calling it a monumental achievement for the industry because it indicates a gigantic step towards bringing traditional financial assets into DeFi.
Instagram Announces Digital Creators Will Soon Be Able To Mint And Sell NFTs On The Platform
Instagram has announced that a select group of digital creators will soon be able to mint and sell NFTs directly the social media platform instead of relying on various third parties.
The image based app recently launched its Digital Collectibles feature in 100 countries, thereby successfully enabling users to connect to their digital wallets and display NFTs that they created or purchased. The linked NFTs would therefore appear in users feed with a unique effect to indicate authenticity.
Moreover, the most recent update will enable creators to create their own digital collectibles and sell them on and off Instagram, providing them with a end-to-end toolkit which can be utilized for creating, displaying, and selling NFTs.
The new marketplace would also first be tested among a small group of creators in the United States, including Amber Vittoria, Dave Krugman, Jason Seife, Refik Anadol, and others, via the Polygon blockchain. Instagram will additionally support the Solana blockchain and the Phantom wallet along with video focused digital collectibles.
Meta stated that there will be no fees for displaying and sharing a digital collectible on Facebook or Instagram and that there will be no additional fees for selling digital collectibles either until at least 2024.
Furthermore, the company promised that neither creators nor collectors would have to pay gas fees for digital collectibles purchased on Instagram at launch. However, application store fees for Android and iOS may still be applicable.
To Add To Security OpenSea Announces Testing With Systems To Freeze Suspicious NFT Sales
The worlds biggest NFT marketplace, OpenSea, recently announced that it shall be testing a new system which freezes trading of NFTs involved in suspicious sales while it investigates the transaction to prevent theft, scams, and any other potential fraudulent behavior.
When the platforms new automated system detects a suspicious NFT sale, it will notify the seller, providing the user a week to confirm or dispute the transaction before the asset may officially be sold.
Moreover, as per OpenSea, fraudulent entities often attempt to flip stolen NFTs after draining the victims assets through malicious links claiming to offer free mints or airdrops. In fact, cryptocurrency analysis firm Elliptic revealed that more than $100 million in NFTs had been stolen between July 2021 and July 2022.
Scams and theft, according to Saurabh Sharma, OpenSeas Head of Search Products, are therefore among the most significant barriers to wider NFT adoption. Additionally, while OpenSea can prevent the resale of stolen NFTs, the company cannot guarantee that victims can successfully reclaim their lost assets unless the perpetrators cooperate.
In related news, OpenSea also recently unveiled the launch of an automated URL scanner to detect malicious links to further deter undesirable entities.
Immutable X Powering GameStops NFT Marketplace
Immutable X, a Layer 2 Ethereum scaling protocol, is now officially powering GameStops NFT marketplace as the initiative has gone live. In March of this year, Immutable was valued at $2.5 billion.
The video game store industry is declining, but it is poised to become a major player in the NFT gaming sector, competing with crypto based gaming NFT platforms such as Fractal, among others.
Furthermore, the marketplace shall reportedly include assets for Immutable X games like Gods Unchained, Guild of Guardians, and Illuvium, as well as various other Web3 games. Also, by utilizing Immutable Xs Ethereum scaling, all transactions would not have any fees and will additionally provide carbon-neutral minting.
Other strategic Web3 moves by GameStop this year include a collaboration with the cryptocurrency exchange FTX US last month in order to provide users with access to FTXs digital asset marketplace.
New Smart Contract Monitoring System Launched By Fantom In Collaboration With Debaub
Fantom is among the most rapidly growing Layer 1 blockchain platforms. Recently, it launched Watchdog, a continuous smart auditing system. Decentralized applications built on Fantom will therefore reportedly benefit from automatic audits by the Watchdog system, thanks to a collaboration with leading blockchain security firm Debaub.
The release of Watchdog will not only improve the security of dApps on Fantom, but it will additionally improve the overall quality as well as performance of apps native to Fantom.
Why does this matter?
Security flaws in smart contracts are becoming increasingly common. According to FBI research, approximately $1.3 billion in crypto was stolen in the first quarter of 2022, with 97% of the theft occurring within the DeFi ecosystem. While third party smart contract auditing firms are essential for projects to discover these vulnerabilities, a combination of factors, such as high costs and lengthy wait times, frequently discourage startups and emerging projects from conducting an audit.
With that in mind, Watchdog will provide a powerful automated tool which continuously monitors smart contracts to offer projects with an alternative auditing system that is reliable, affordable, and most importantly consistent.
With Watchdog, Fantom is hence striving to bring a new level of security and protection to the ecosystem, said Michael Kong, CEO of Fantom Foundation. He further indicated that developers need access to smart contract auditing tools that are affordable, efficient, and trustworthy. Watchdog does exactly that, he added, and it will thus set a new security standard going forward.
What comes next?
Using automated, continuous auditing systems like Watchdog to supplement costly third party audits allows projects to effortlessly analyze selected smart contracts. In addition, any issues with dApps analyzed on the Fantom Network are investigated by a human auditor.
Moreover, the Watchdog auditing system will reportedly provide various benefits such as round the clock analysis for more than 80 different types of exploits, periodic updates as well as improvements with new attack vectors which correspond to the gradual emergence of new research, versatile updates with the latest network data and smart contracts of selected projects, professional examination for warnings at a larger scale, addressing specific issues far more effectively, and immediately contacting the relevant project team as soon as a vulnerability has been discovered.
As the crypto and blockchain industry continues to grow, we can expect more security measures to be steadily deployed over many fields in DeFi such as smart contracts, NFTs, the metaverse, and blockchain itself.