In a significant development within the legal proceedings involving Changpeng Zhao, the former CEO of Binance, the postponement of his imprisonment has emerged. According to a recent report, the original sentencing date of February 23rd has been pushed back to April 30th.

The unfolding narrative began with the United States Securities and Exchange Commission initiating legal action against Binance. Back in early June 2023, regulatory authorities levied 13 charges against Binance, accusing the platform of operating unregistered exchanges and facilitating the trading of unregistered securities.

 

Links To Malicious Activities

After a protracted legal battle to contest the allegations, both Binance and Zhao eventually pleaded guilty in November. Consequently, Zhao announced his resignation and consented to a settlement payment of $4.3 billion, along with a $50 million penalty.

Treasury Secretary Janet Yellen, known for her adversarial stance towards cryptocurrencies, criticized Binance and its founder, alleging that the platform facilitated various illicit activities, including but not limited to child exploitation, narcotics trafficking, and terrorism support.

 

A Controversial Decision

A subsequent legal filing revealed that Zhao potentially faced a maximum imprisonment term of 10 years. Additionally, the filing stipulated that he could remain free in the US pending sentencing upon posting a $175 million release bond. Despite an initial request to travel to his home country for the medical treatment of a close associate, the court rejected the plea, citing concerns about flight risk when it came to the former CEO.

The most recent decision by the court to delay the criminal sentencing by two months has sparked discussion within the cryptocurrency community. While the motives behind this action remain unclear, Zhao and his attorney, William Burck, declined to provide any commentary on the matter.

 

Once again, cryptocurrency companies opted out of advertising during the Super Bowl, despite the recent upswing in the U.S. market. Just two years ago, the Super Bowl served as a prime platform for crypto companies, particularly exchanges like the now defunct FTX, to widen their appeal to a broader audience.

Last year, crypto was noticeably absent when it came to the annual global event due to the ongoing bear market. However, this year, the absence seems more driven by companies realizing that it may not be economically feasible.

 

Not Worth The RIsk

Various reports indicate that although the financial standing of cryptocurrency firms has improved, investing significant advertising budgets in such a grand stage is no longer deemed practical or effective. This also comes at a time when BTC recently crossed the $50K mark for the first time in years.

Many in the industry now prefer directing their marketing funds to areas they believe will offer better returns on investment. In fact, the sole notable nod to crypto during the 2024 Super Bowl was former Twitter CEO Jack Dorsey sporting a Satoshi t-shirt.

 

No BTC ETF Ads

Interestingly, even Coinbase, which had been a prominent advertiser in previous Super Bowl events, opted out of advertising this year. Instead, the company has shifted its focus and financial resources towards political engagement, aiming to influence digital asset legislation through lobbying efforts and supporting lawmakers friendly to crypto in anticipation of the 2024 election cycle.

Perhaps most surprising was the absence of Bitcoin ETF ads during the event, despite issuers like BlackRock, BitWise, and Grayscale being notably aggressive with their marketing efforts on social media following ETF approval a month ago. BlackRock has aired several TV commercials in the U.S. since the launch, and Grayscale initiated a large billboard campaign across airports and New York subways. However, their absence this year suggests firms are exercising extreme caution in allocating funds.

 

Argentines are resorting to underground P2P exchanges, locally known as crypto caves, to acquire USD stablecoins in an attempt to circumvent strict currency controls and the significant inflation of the Argentine Peso (ARS). These clandestine exchanges are preferred over Bitcoin due to perceived volatility.

Operated discreetly in hidden locations, crypto caves allow locals to exchange their fiat currency for cryptocurrencies, primarily USDT, at rates far superior to the official exchange rate. With local banks unable to officially accept Dollars, crypto wallets have become popular for storing Dollar-pegged stablecoins like Tether (USDT).

 

Restrictions Are To Blame

Saving in digital Dollars provides Argentinians with a means to safeguard their funds against the devaluation of the local currency, according to Ramiero Raposo, Vice President at Bitwage, a crypto payroll firm.

The origins of crypto caves trace back to the financial caves that emerged in response to local currency controls in the 1980s. These underground exchanges have thrived as a consequence of government restrictions on accessing traditional money exchange markets. Despite occasional scrutiny and raids by authorities, crypto caves continue to serve as essential outlets for locals seeking to trade their inflation-hit Pesos.

 

Cautious Optimism

It is worth noting that while expectations of the relaxation of currency controls under President Javier Milei may decrease demand for crypto caves, high tax pressures ensure the persistence of a black market preference. Moreover, crypto caves also operate in other countries facing economic challenges, including Cuba, Venezuela, Iran, and various African nations.

While Argentina recently legalized Bitcoin as a payment method for contracts, many remain cautious about conducting business transactions in Bitcoin due to the heightened volatility. Instead, USDT on the Tron network is favored for its stability, speed, and minimal conversion requirements, providing a practical alternative amidst domestic economic instability.

 

CoinDesk has named Sara Stratoberdha as CEO after being acquired by the cryptocurrency exchange known as Bullish, replacing Kevin Worth, who led the company since 2017. Stratoberdha, previously in charge of business development at Bullish, vows to maintain editorial independence despite the change in ownership.

 

Significant Departures

CoinDesk is a news website dedicated to Bitcoin as well as several other digital currencies. Shakil Khan founded the company, which also provides crypto based guides for those new to digital currencies. Notably, alongside the CEO transition, there are departures of various high-ranking executives, including Elinor Hirschhorn, COO and President of Media, John DeGuenther, VP of Engineering, and Emily Parker, Executive Director of Global Strategy. Michael Casey, Chief Content Officer, is shifting roles but might stay in a different capacity.

 

A New Era

Bullish CEO Tom Farley outlined the restructuring in a memo, aiming to streamline the organizational setup of CoinDesk by merging certain departments and aligning tech and product teams. Farley praised the outgoing team for their contributions to continued growth and integration with Bullish, offering gratitude and best wishes for their future endeavors.

Essentially, this restructuring signifies a new phase for CoinDesk, underscoring its dedication to journalistic integrity while navigating the integration with Bullish, ensuring its continued role as a reputable source in the crypto news domain. The change comes at a critical time too, as many have accused CoinDesk of shady business practices with the most recent example being fake journalists pretending to work for the company in exchange for various favors.

On behalf of the Web3 community, we would like to extend our warmest congratulations to the companies that announced their success in fundraising between 6th-12th February, 2024. We are thrilled to see such tremendous support from all involved.


Flood, based in the United States, secured $5.2 million in seed funding from Bain Capital Crypto. Users can enable in-wallet trading within 10 minutes via Flood, as well as send orders with ease, and when they are ready, deploy their own Zone, charge their own fees, and start monetizing their order flow.


Axiology, headquartered in Lithuania, raised $2.1 million in venture funding from Baltic Sandbox Ventures. Utilizing the Axiology platform empowers users to optimize resources and trim costs in their daily financial operations.


OMEGA.xyz, operating in the United States, received $6 million in seed funding from an undisclosed investor. Omega unlocks the ability for users to leverage cross-chain digital assets to enhance their yield through modular DeFi opportunities in a decentralized and secure manner.


GigaStar, also located in the United States, obtained $3 million in seed funding from an undisclosed investor. GigaStar is on a mission to empower creators with access to crowdfunding and provide investors with unique revenue-sharing assets while fostering mutual success and innovation.


LightLink, headquartered in Singapore, secured $4.5 million in seed funding from MQDC on February 6, 2024. LightLink is an Ethereum Layer 2 blockchain that lets decentralized applications and enterprises offer users instant, gasless transactions.


MediConCen, based in Hong Kong, closed a Series A funding round of $6.8 million led by HSBC Asset Management. MediConCen aims to be the ultimate insurance claim automation solution powered by patented blockchain technology.


Follow CryptoWeekly for regular updates about Web3 funding deals and all the latest trends in crypto and blockchain.
 

Bitcoin (BTC) continues its upward trend, surpassing $48,000 and reaching a new monthly high. AVAX, meanwhile, emerged as the top performer last week among the larger-cap altcoins. Other altcoins are also showing positive movements, with Ethereum (ETH) surpassing $2,500 and Solana (SOL) reaching $110.

 

Slow And Steady

The recent performance of BTC showcases significant fluctuations within the past week. It rebounded to around $43,000 last weekend and remained relatively stable until Wednesday, when it broke out of its trading range and surged to $48,200. Despite a slight decrease since then, Bitcoin still maintained a 2% increase for the day, with a market capitalization of $930 billion and dominance over altcoins at 52%.

Several altcoins have also experienced notable gains, with Ethereum adding 2% and trading just above $2,500, and Solana rising by 3.5% to $110. Other altcoins such as BNB, XRP, DOGE, DOT, Chainlink, and Polygon have seen minor gains of around 1%. Avalanche stood out among the larger-cap altcoins, with its native token AVAX surging by almost 9% and trading close to $40. Additionally, mid-cap altcoins like IMX (13%), KAS (7%), and TAO (9%) also saw modest gains.

The total cryptocurrency market cap has increased by $30 billion overnight, reaching close to $1.8 trillion on CoinMarketCap (CMC).

 

Other Markets

In other news, expectations of potential interest-rate cuts by the Federal Reserve have been fueled as a result of a likely slowdown in US inflation at the beginning of the year. The core consumer price index, excluding food and fuel, is also projected to increase by 3.7% comparative to a year earlier.

Elsewhere, corporate earnings have exceeded expectations, leading Wall Street to raise profit forecasts. Additionally, despite warnings by regulators about potential risks to the financial system, US banks have loaned over $1 trillion to non-deposit-taking financial companies, such as fintechs and private credit investors, surpassing the amount of about $894 billion which was the figure for last year.

 

Following the recent dismissal of the case involving the crypto firm Digital Licensing by the United States Securities and Exchange Commission (SEC), a group of US Senators have penned a letter to Gary Gensler, the Chairman of the agency, expressing concerns about the case.

The letter, dated February 7th, was signed by five Republican US senators, namely J.D. Vance, Bill Hagerty, Katie Boyd Britt, Thom Tillis, and Cynthia Lummis. They raised apprehensions regarding the controversial enforcement proceedings of the SEC during the case against the crypto firm operating under the name DEBT Box. In the correspondence, the senators pointed out some questionable actions by the SEC, such as a temporary freeze of the firm and its assets.

 

Protecting The People

The senators highlighted that emergency relief measures were granted for the District of Utah before the court discovered that the SEC made materially false and misleading representations and undermined the integrity of the aforementioned proceedings.

Moreover, the senators also criticized the conduct of the SEC as being both unethical and unprofessional in handling the case and deemed such behavior unconscionable with regards to any federal agency, especially one frequently involved in significant legal procedures and regulatory enforcement actions.

In addition, the letter condemned the SEC with reference to their failure to rectify inaccurate information presented by its attorneys after being made aware of it, labeling it as unacceptable and deeply troubling. The senators also expressed concerns that the handling of the DEBT Box case casts doubt on similar cases conducted by the SEC, erodes public confidence in the commission, and raises questions about whether the agency is actually interested in safeguarding investors or serving their own interests.

 

SEC In Deep Trouble

Regarding the DEBT Box case, the SEC initiated legal action last year, alleging the involvement of the firm in a fraudulent crypto scheme, which purportedly involved the sale of $50 million in unregistered crypto asset securities to US investors.

The US regulator secured a temporary asset freeze for the crypto firm and personal assets by the defendants, including the principals of the company, namely Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelson, as well as thirteen others. As a result of what the SEC did, DEBT Box was temporarily shut down, and its native token DEBT witnessed a decline of more than 56%, according to the letter.

Following a review by District Judge Robert J. Shelby, the SEC faced the prospect of sanctions due to its inaccurate statements. The revelation also led to the dismissal of the case on January 30th, 2024. While admitting that its attorneys should have been more forthcoming with the Court, the SEC left open the possibility of filing a new suit against the crypto firm by dismissing the case without prejudice.

 

The eagerly awaited Dencun upgrade for Ethereum is scheduled to launch on March 13th, 2024. Following the successful implementation of the Dencun upgrade on the Holesky testnet on February 7th, the Ethereum core developers team finalized the date for the mainnet rollout during the bi-weekly Consensus Layer Meeting call.

 

Introducing Blobs

The anticipation surrounding this update stems via Ethereum Improvement Proposal 4844 (EIP-4844), known as Proto-Danksharding, which will be integrated through Dencun. In essence, this update will introduce blobs, designated spaces within blocks allowing for increased data storage capacity while maintaining block finality times.

These blobs are particularly advantageous for the various layer-2 blockchains of Ethereum, as they will accommodate a greater volume of their transactions within the network blocks. Consequently, users can expect layer-2 fees to be at least 10 times more economical, explains Rony Szuster, a crypto analyst at Brazilian exchange Mercado Bitcoin.

 

Time Is Of The Essence

Szuster also emphasizes that Ethereum itself stands to benefit as a result of these changes, although the fee reductions may be relatively minor. Given that layer-2 transactions will occupy specific block space, Ethereum will consequently have slightly more room to include mainnet transactions, he adds.

With that being said, developer teams have until February 22nd to release their finalized versions of Ethereum clients with Dencun support, and validators will have approximately two weeks to update their nodes with these new client versions. As of the time of this writing, ETH is trading at around the $2,450 mark.

 

United Nations (UN) sanctions monitors have recently accused North Korea of engaging in a significant theft of cryptocurrency assets, amassing $3 billion through cyberattacks. An independent panel of sanctions monitors disclosed that North Korea persistently flouted regulations despite international sanctions, by advancing its nuclear arsenal and generating nuclear fissile materials.

The monitors also observed that the country conducted ballistic missile launches, deployed a tactical nuclear attack submarine, and successfully launched a satellite into orbit. The UN report identifies 58 suspected cyberattacks on cryptocurrency-related companies between 2017 to 2023, valued at about $3 billion. These cyberattacks purportedly served as vital funding sources for WMD development in North Korea.

 

The Context

The report alleges that hacking groups affiliated with the Reconnaissance General Bureau, the primary foreign intelligence agency in North Korea, orchestrated these cyber intrusions. The monitors underscored the growing trend of North Korea targeting defense companies and supply chains, as well as collaborating with other entities by sharing infrastructure and tools.

Furthermore, the UN raises concerns about rumors of North Korea supplying conventional arms and munitions, which violate existing sanctions. Although the UN report is scheduled for public release later this month or early next, North Korean representatives have yet to respond to requests for comments on the allegations made by the sanctions monitors.

 

Mounting Tensions

The Security Council, typically at an impasse on this issue, is unlikely to take immediate action against North Korea. China and Russia have advocated for easing the sanctions to encourage North Korea to return to denuclearization talks. In addition, Russia and North Korea have recently vowed to enhance military relations, although both countries deny accusations of weapons supply.

Regarding illicit trade, the report indicates that despite the lockdown imposed amid the COVID-19 pandemic, North Korea has started to gradually reemerge. The UN report demonstrates signs of trade recovery, with higher trade volumes in 2023 compared to 2022.

Notably, the UN monitors noted the reappearance of foreign consumer goods, including potential luxury items prohibited under Security Council sanctions. The sanctions monitors also probed reports of numerous North Korean nationals working overseas, violating sanctions, particularly in information technology, restaurants, and construction sectors. These individuals were found to earn income benefiting the North Korean government.

 

Walt Disney Co. is investing $1.5 billion in Epic Games for a stake in its equity, aiming to create what it terms a persistent universe. This move follows the decision by Disney to close its metaverse division less than a year ago.

In a statement on February 7th, Disney announced a long-term venture, pending regulatory approval, to develop a gaming experience that integrates with Fortnite, the ultra popular title by Epic Games. This collaboration aims to establish a comprehensive games and entertainment universe, enabling users to interact with the various intellectual properties of Disney through playing, viewing, purchasing, and engaging with content, characters, and narratives.

 

A Significant Collaboration

Tim Sweeney, the founder and CEO of Epic Games, emphasized the intention to construct a persistent, open, and interoperable ecosystem. Disney CEO Bob Iger hailed it as the most significant foray by Disney into the gaming realm to date. Disney also highlighted the opportunity for players and fans to craft their own narratives and experiences. Although specifics regarding the launch date of this metaverse-like project were not disclosed, it was mentioned that Unreal Engine would power the envisioned universe.

The initiative comes after Disney chose to dismantle its metaverse division in March 2023, which involved laying off approximately 50 employees as part of cost-cutting measures. The company had previously obtained a patent for a virtual-world simulator in a real-world venue. Epic Games, despite earlier setbacks, remains enthusiastic about the potential of the metaverse. However, Epic faced its own challenges, including a significant workforce reduction of around 16% in September, attributed to overestimations of revenue by metaverse-related ventures.

 

Getting Back On Track

Epic Games has prior experience in collaborative projects, having received a $2 billion investment via Sony and KIRKBI in April 2022 to develop a metaverse. This collaboration led to the creation of the open-world survival game LEGO Fortnite.

The announcement of this partnership coincides with the release of the first-quarter 2024 earnings report of Disney, following a string of underperforming box office and streaming releases in the previous year. Despite revenue growth remaining stagnant compared to the same quarter last year, Disney slightly exceeded various revenue estimates by Wall Street. The company also declared a dividend increase of 50% to 45 cents per share, prompting a nearly 7% surge in its after-hours trading price to over $105.

 

The crypto firm Bakkt, supported by the Intercontinental Exchange (ICE) and introduced with much excitement in 2019, has issued a warning about its financial stability for the next 12 months. In a recent filing with the US Securities and Exchange Commission on February 7th, Bakkt amended its quarterly report, highlighting a section on risk factors indicating a potential inability to sustain operations.

 

Encountering Difficulties

Established in 2018 amid significant anticipation by Intercontinental Exchange, owner of the NYSE, Bakkt was initially perceived as a gateway for institutional investors to enter the Bitcoin market during a downturn.

A Bitcoin investor with a substantial following questioned how Bakkt encountered difficulties amidst the rise in crypto markets. However, Bakkt now expresses doubt regarding its cash reserves and their adequacy to support operations in the upcoming year. The company cites uncertainties related to its expansion into new markets and the evolving landscape of crypto assets, acknowledging its inability to generate sustainable operating profits and adequate cash flows. Its future prospects hinge on the ability to raise capital.

 

Looking Ahead

Bakkt discloses intentions to potentially raise funds by issuing registered securities in public markets to fulfill its long-term objectives. A newly filed amended Form S-3, once effective, will authorize the firm to issue up to $150 million in registered securities to secure additional capital. Regarding the utilization of proceeds through the sale, Bakkt maintains broad discretion, specifying a focus on working capital and general corporate purposes.

As a digital asset platform and payments app facilitating institutional transactions with crypto assets, Bakkt has also formed strategic partnerships with entities such as Starbucks and AWS. Despite going public in 2021 with a surge in share prices, reaching over $40, Bakkt saw its stock experience a 7.6% decline in after-hours trading when it plummeted to $1.34. This marks a 37% decrease since the beginning of the year.

 

US Congress members have openly challenged the call made by Treasury Secretary Janet Yellen regarding increased oversight of cryptocurrencies, emphasizing the limitations of the Howey Test in safeguarding crypto consumers in a recent letter addressed to her.

The correspondence, endorsed by House Financial Services Committee Chair Patrick McHenry, House Agriculture Committee Chair Glenn Thompson, along with Rep. French Hill and Rep. Dusty Johnson, requests detailed elucidation by Yellen on shaping the regulatory framework regarding digital assets, following her recent pronouncement.

 

Clarity Is Needed

Congress seeks clarification on the role of the US Securities and Exchange Commission (SEC). Notably, they have voiced concerns regarding the efficacy of the Howey Test, utilized to ascertain the classification of a transaction as an investment contract and hence a security. Congress is questioning whether the Howey Test provides adequate consumer protection.

The lawmakers have contended that according to SEC Chairman Gensler, the vast majority of crypto tokens likely meet the investment contract test. However, the final investment contract analysis is backward-looking, determined by a court after the transaction has concluded. How does this reactive legal authority ensure sufficient customer protection, especially in the absence of comprehensive legislation, the lawmakers asked.

Moreover, Congress has underscored that the current regulatory framework does not encompass a significant portion of the crypto-asset ecosystem, including Bitcoin and Ethereum. They have inquired of the Financial Stability Oversight Council (FSOC) whether these cryptocurrencies are regarded as securities. Led by Yellen, the FSOC convenes key financial regulators to oversee potential risks and uphold the stability of the financial.

 

Addressing Concerns

Congress members have additionally raised concerns about regulatory gaps in spot markets for digital assets not classified as securities. They are querying whether the Commodity Futures Trading Commission should extend its jurisdiction to include these spot markets, considering its existing authority over certain aspects of non-security digital asset transactions.

In any case, Congress anticipates Yellen to respond to these concerns by February 20th. Yellen has also been actively advocating for stricter regulations post the collapse of FTX. During a recent testimony before the House Financial Services Committee, she cautioned about the risks associated with crypto platforms and stablecoins, urging Congress to enact stringent regulations for the crypto industry.