According to a report on February 17th, a lawsuit alleges that FTX orchestrated a confidential deal with Deltec Bank. Caroline Ellison, previously the CEO of Alameda Research, disclosed that Alameda had the ability to generate USDT through credit and subsequently sell it for profit via an unofficial credit line with Deltec, deferring immediate payment.

This setup enabled Alameda to mint billions in USDT during 2020 and 2021, selling the cryptocurrency at a profit before settling debts. This approach provided Alameda with considerable financial leverage, facilitating transactions with funds not yet paid for, described as a short-term credit facility.

 

A Substantial Scam

The lawsuit contends that Deltec facilitated the movement of funds between FTX and Alameda, including transferring FTX customer deposits to Alameda, contrary to standard protocols. It further alleges that Deltec favored the transactions of Alameda, particularly during cryptocurrency market downturns.

Connections between Deltec, FTX, and Moonstone Bank are also highlighted, with Moonstone Bank receiving substantial sums by Alameda and an FTX affiliate. Following scrutiny by the Federal Reserve in August 2023, Moonstone Bank ceased operations this February.

 

Damage Control

Deltec representatives, including lawyer Desiree Moore, asserted that neither the bank nor its Chairman were aware of any wrongdoing. They argued that the accusations rely on unverified assertions by individuals seeking to resolve legal disputes.

These claims compound the legal hurdles facing FTX, which are largely distinct compared to its bankruptcy proceedings and the criminal case involving its former CEO, Sam Bankman-Fried. The intricate network of financial dealings raises concerns about regulatory oversight within the cryptocurrency sector.

 

Honduras has implemented a prohibition on cryptocurrency trading within its financial institutions, as declared by the National Banking and Securities Commission (CNBS). This action aims to safeguard the integrity of the local financial system, diverging as a result of the growing acceptance of cryptocurrencies worldwide, such as the introduction of Bitcoin ETFs in the US.

The decision arises due to the absence of precise regulations concerning crypto assets within Honduras, leaving consumers vulnerable to fraud and illicit activities like money laundering. Additionally, concerns have been raised regarding the decentralized nature of crypto enterprises, posing challenges for local regulators to oversee their operations.

 

A Ban To Protect Individuals

The CNBS directive explicitly forbids financial entities in Honduras when it comes to engaging with crypto assets, virtual currencies, tokens, or similar digital assets that have not received approval by the Central Bank of Honduras. This action is taken to closely monitor financial transactions and uphold the security of the domestic financial sector.

This approach contrasts with that of other nations increasingly embracing crypto trading and blockchain technology. While some countries are welcoming these digital assets, Honduras is adopting a cautious stance to mitigate potential risks.

 

Mixed Reactions

Unsurprisingly, the ban has elicited diverse reactions, with some commending the prudence of the government in protecting consumers, while others criticize it for potentially hindering innovation and restricting the involvement of the country in the global digital economy.

Looking ahead, the ban underscores the challenges of integrating digital assets into traditional financial systems and fuels the ongoing global debate on regulating these emerging technologies. In any case, Honduras contributes to the ongoing discourse on striking a balance between innovation and regulation in the cryptocurrency domain.

 

It has been an incredible week for companies around the globe in terms of securing funding to fuel their growth and innovation. Here are some of the latest investment highlights between February 13th-19th, courtesy of CryptoWeekly:

RAI Inc - Secured $3.5M in Seed funding from Aura Investment on 02/16/2024.

Lava Network - Raised an impressive $15M in Seed funding from HashKey Capital on 02/15/2024, bolstering their journey in Iceland's thriving tech ecosystem.

Helika - Successfully closed $8M in Series A funding led by Pantera Capital on 02/15/2024, driving forward their mission in Canada's vibrant startup landscape.

Life DeFi - Secured $500K in Seed funding from MDIM Holdings on 02/15/2024, empowering their vision to revolutionize the DeFi space in the United States.

Ultiverse - Raised $4M through an Initial Coin Offering (ICO) backed by IDG Capital on 02/14/2024, marking a significant milestone for the blockchain startup based in Singapore.

Architect - Closed a notable $12M in Series A funding led by BlockTower Capital on 02/14/2024, fueling their ambition to reshape the future of architecture in the United States.

FORDEFI - Secured $10M in Seed funding from Electric Capital on 02/13/2024, propelling their mission to democratize decentralized finance in the United States.

Nym Technologies SA - Received a grant of $150K from Zcash Open Major Grants on 02/13/2024, empowering their efforts to enhance privacy infrastructure from Switzerland.

IntentX - Raised $1.8M in Seed funding from Selini Capital on 02/13/2024, accelerating their journey to innovate in the global marketplace.

Thunderbirds - Secured $5.5M in Seed funding from Aura Investment on 02/13/2024, paving the way for their ambitious endeavors in the United States.

👏 Congratulations to everyone on their funding achievements! Excited to witness the remarkable impact they'll make in their respective industries. As always, stay up to date with all the latest developments with CryptoWeekly.

Despite hovering around the mark, Bitcoin maintained its position at $52,000 as Wall Street commenced trading on February 16th, while the latest macroeconomic data by the United States exceeded expectations. Other data indicated stability in BTC price as the final TradFi trading session of the week began.

Following the release of the Consumer Price Index (CPI) two days prior, the Producer Price Index (PPI) figures for January raised concerns about inflation in the US Year-on-year, PPI stood at 0.9%, slightly lower than the previous month but still 0.3% higher than market forecasts. Moreover, the combination of high CPI and PPI results prompted caution in the markets regarding potential adjustments to fiscal policy by the Federal Reserve this year.

 

Cutting Interest Rates

According to data by the FedWatch Tool, the likelihood of a Fed interest rate reduction at its March meeting was 8.5% at the time of reporting, significantly lower than the 17.5% probability at the beginning of the week. A March interest rate cut is likely completely ruled out after this data, trading resource The Kobeissi Letter commented on X, echoing its response to CPI. Furthermore, a May rate cut has become questionable as well.

Bitcoin had reached $52,884 on Bitstamp the previous day, marking its highest level since late November 2021, but faced resistance via sellers. Analyzing four-hour timeframes, popular trader Skew highlighted the significance of the 21-period exponential moving average (EMA), currently positioned around $51,000. There has been choppy price action here with a lot of inside bar closes essentially within the same intraday balance, he observed.

 

Other News

Elsewhere, U.S. spot-Bitcoin exchange-traded funds (ETFs) saw net inflows of nearly half a billion dollars on February 15th, contributing to a strong week where the ETF products regained attention more than a month after their initial launch. However, despite removing more BTC than adding to it daily within its circulation, the ETFs raised some concerns among market observers.

Strategists at Goldman Sachs Group Inc. and MFS Investment Management are among those talking up prospects in Europe. After being out of favor with investors for so long, stock valuations look enticing compared with their pace-setting US peers. Plus, there is no threat of Magnificent Seven tech bubble popping.

Additionally, fund managers are becoming increasingly concerned about a systemic credit event as alarms sound in global property markets. According to the most recent Global Fund Manager survey, about one in six of those polled believe such a crunch is the most serious tail risk facing markets. The growing concern about US commercial real estate and Chinese property markets has pushed it to third place among respondents, trailing only higher inflation and geopolitical tensions.

 

As reported by the blockchain analytics platform Lookonchain, a phishing incident recently targeted a crypto trader, resulting in the unauthorized acquisition of over 180 million BEAM tokens on Wednesday, impacting the valuation and price of the token.

Phishing schemes stand as one of the prevalent strategies in crypto-related fraudulent activities, exploiting the inexperience of some investors and oversights of more seasoned traders to gain illicit access to funds.

 

The Process

Identified by users as Kirill Marinov, the victim reportedly lost 180.25 million BEAM tokens valued at around $5.14 million to an account named Fake_Phishing291038. Following the theft, the scammer promptly liquidated the stolen BEAM tokens, converting them into 1,629 ETH, valued at roughly $4.6 million.

According to the Web3 anti-scam platform Scam Sniffer, the victim initiated an increase allowance transaction, granting access to the tokens to the scammer. It was later revealed that the token spender operates through a Safe Wallet address. However, the report lacks further specifics regarding the identity of the victim as well as the precise techniques employed by the scammer and their identity.

 

Price Impact

Phishing scams usually employ various methods to deceive victims into disclosing private keys or login credentials, thereby compromising the security of their wallets. Consequently, experts emphasize the importance of vigilance and implementing necessary precautions to safeguard crypto assets.

Regarding the impact on BEAM token price, following the theft and subsequent exchange to ETH, the token experienced a decline, dropping to approximately $0.028. The BEAM token functions as the native cryptocurrency for the Beam network, a gaming network powered by the Merit Circle DAO. The ecosystem aims to foster collaboration between developers and gamers to advance the gaming industry.

Despite the negative market reaction post-scam, the BEAM price recorded a 32.9% increase over the past week. Additionally, its trust score in spot markets remains unaffected, according to data provided by CoinGecko.

Spanish telecommunications firm Telefonica has announced a collaboration with Chainlink to establish secure connections for Web3 smart contracts. In a recent announcement, the company emphasized plans centered around GSMA Open Gateway API security, with blockchain technology taking precedence. As per the announcement, this partnership aims to ensure the security of telecommunications networks for linking any API to the Polygon network.

 

A Major Partnership

The partnership highlights a significant advancement in incorporating telecommunications capabilities into the blockchain sector and underscores the necessity for secure oracle networks to furnish real-world data on-chain. This interconnected environment enhances the functionality and security of Web3 applications, contributing to a more resilient and verifiable digital landscape.

Consequently, with the telecommunications industry progressing towards increased GSMA integration to enhance developer tools for deploying services across various networks, security emerges as a top priority. Amid the era of digital transformation, the Web3 ecosystem has witnessed notable changes in recent months, with efficiency and security emerging as crucial advancements.

 

Addressing Key Issues

Telefonica highlighted Sim Swap APIs as a significant advantage of the partnership, especially as developers rely on APIs to offer a wide array of services. The Sim Swap APIs verify and validate the last instance a mobile number was used in fraudulent activities, thereby aiding in account protection.

Both companies working together will therefore enhance security across all stages of data verification. Furthermore, allowing smart contracts to access information through APIs resolves trust issues while ensuring minimal changes to SIM cards.

The collaboration with Chainlink also addresses issues with two-factor authentication (2FA) in Web3 and DeFi ecosystems. In any case, the partnership is expected to empower developers as the ecosystem expands and asset adoption increases. Developers can additionally enhance the ecosystem by implementing proper verification systems through new connectivity platforms. Ensuring security will mitigate regulatory hurdles in the sector and open developers to broader markets, according to Johann Eid, the Chief Business Officer of Chainlink Labs.

Senator Elizabeth Warren, known for her doubts and criticisms regarding Bitcoin and cryptocurrencies in general, publicly commemorated its 15th anniversary by acknowledging the creator, Satoshi Nakamoto. Warren took part in the Capitol Flag Program to honor the establishment of Bitcoin as a financial system.

 

A Change In Tone

A flag was raised over the Capitol on December 18th, 2023, a date acknowledged by the Bitcoin community as HODL Day. The acknowledgment by Warren demonstrates a noticeable shift compared to her previous stance on crypto. The event surrounding the acknowledgment of the flag is spotlighted in New York City, with a gathering organized by Bitcoin Magazine and PubKey.

Thomas Pacchia, Co-Founder of PubKey, commented on Warren supporting Bitcoin, emphasizing the significance of political advocacy through actions. This change follows her recent legislative proposals aimed at curbing the misuse of cryptocurrencies for illicit activities, addressing the challenges posed by digital currencies.

 

Not Everyone Is Convinced

Despite Elizabeth Warren apparently expressing her support for Bitcoin, most in the crypto community are not convinced. In fact, many believe this is yet another attempt by someone in the government to garner favor with disenfranchised citizens, with others even going as far as to claim that the Fed may be trying to backtrack on its comments linking crypto to Hamas.

There is some truth to these opinions though, as several notable individuals like Warren Buffet are now allegedly supporting crypto despite lambasting it in the past. After the United States Securities and Exchange Commission recently approved various BTC ETF applications, the notion is that the government is attempting to capitalize on the growing popularity and mainstream usage of crypto even if they do not actually support it behind the scenes.

 

Genesis, a bankrupt digital asset lending firm, has been granted permission to sell shares valued at $1.6 billion, as it endeavors to undergo restructuring and reimburse its creditors. United States Bankruptcy Judge Sean Lane sanctioned the request by Genesis during a court session in White Plains, New York. Notably, the insolvent firm has been authorized to leverage its investments in Grayscale Bitcoin Trust, Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust.

 

DCG Cautions Genesis

It is worth noting that Genesis holds approximately $1.3 billion in GBTC shares and $207 million in Ethereum trust shares. Interestingly, the firm informed the court of the necessity to offload these shares to evade paying $1.9 million in monthly fees associated with its trust agreements.

However, Genesis has yet to attain approval for its comprehensive bankruptcy plan in court. According to a statement by Digital Currency Group (DCG), the parent company of the insolvent lender, creditors have not yet endorsed the restructuring proposal, which proposes Genesis winding down its operations and repaying creditors in either cash or cryptocurrency. DCG cautioned that if Genesis fails to secure approval for its bankruptcy plan, the sale of Grayscale shares might be untimely.

 

Troubles Continue

The price of Bitcoin recently surged above $52,000 for the first time in two years, while Ethereum is hovering around $2,800, according to CoinGecko. It appears that Genesis intends to capitalize on the uptick in prices and exploit the gains.

In addition, Genesis and Gemini, a popular crypto exchange established by the Winklevoss twins, are embroiled in a legal dispute over the custody of the $1.3 billion GBTC shares. The exchange asserts that Genesis lacks rightful ownership of the shares because they were utilized as collateral for loans obtained through the Gemini Earn program.

 

Charles Hoskinson, the mastermind behind Cardano (ADA) and co-founder of IOHK, recently sounded a warning during a live YouTube session. He highlighted a concerning trend, namely the infiltration of traditional financial institutions into the cryptocurrency realm, potentially jeopardizing its core principles.

During his live broadcast on February 12th, Hoskinson addressed critical issues that he believes many mainstream cryptocurrency enthusiasts overlook. He particularly emphasized the growing dominance of asset-backed stablecoins like USDT and USDC, signaling a pivotal moment for the industry.

Moreover, Hoskinson criticized the recent excitement surrounding spot Bitcoin ETFs and the potential encroachment of Wall Street into the crypto space. In related news, Input Output Global recently announced the release of Plutus V3, which is now available for testing on SanchoNet. This update includes several advanced cryptographic capabilities and efficiency improvements.

 

The Significance Of Stablecoins

Charles underscored the significant role played by asset-backed stablecoins, citing data indicating their involvement in 70% of on-chain transaction volume, surpassing major cryptocurrencies such as Ethereum (ETH) and Bitcoin (BTC). He also pointed out the centralized nature of these stablecoins, subject to regulatory control by their issuing authorities.

According to Hoskinson, relying heavily on these stablecoins carries profound implications for decentralized finance (DeFi) ecosystems and could dictate outcomes during blockchain forks. He explained that an asset-backed stablecoin cannot maintain its value across multiple forked chains without diluting its backing.

 

Addressing Concerns

In contrast, Hoskinson advocated for the use of algorithmic stablecoins, which he believes align more closely with the decentralized ethos of cryptocurrencies. These stablecoins are purportedly governed by on-chain algorithms, removing the influence of centralized entities that could manipulate outcomes.

However, Colin LeMahieu, the creator of Nano (XNO), expressed skepticism about the technical and economic viability of algorithmic stablecoins. He argued that achieving a truly reliable algorithmic stablecoin is either impossible or, at best, results in unfair advantages where the treasury holds asymmetric price information.

 

Cathie Wood, the founder of ARK Investment Management, recently expressed doubt regarding the United States Securities and Exchange Commission and its inclination to endorse spot exchange-traded funds (ETFs) for cryptocurrencies beyond Bitcoin and Ethereum. This viewpoint emerges amidst a flurry of filings by various asset management firms seeking approval for their crypto ETFs, showcasing the increasing interest in cryptocurrency investments.

 

Franklin Templeton Joins The ETF Battle

Following this skepticism, Franklin Templeton gained attention by submitting a filing to the SEC to launch a spot Ethereum ETF called the Franklin Ethereum ETF, slated for listing on the Chicago Board Options Exchange. This move by Franklin Templeton, managing $1.5 trillion in assets, emphasizes renewed confidence in the potential of Ethereum despite regulatory uncertainties. With this, Franklin Templeton joins a roster of prominent firms, including BlackRock, Fidelity, and Grayscale, all competing for a share of the crypto ETF market.

Despite the optimism, the SEC has yet to approve any spot Ethereum ETFs, with decisions on applications by Grayscale and BlackRock, among others, being delayed. These postponements underscore the regulatory obstacles hindering the broader integration of cryptocurrencies into traditional investment instruments.

 

Market Dynamics And Regulatory Challenges

The crypto ETF market has witnessed significant activity, with several firms launching spot Bitcoin ETFs in January 2024. Among them, the Bitcoin ETF by Franklin Templeton has struggled to attract investments, accumulating only $77 million by early February, in contrast to the iShares Bitcoin Trust and the Fidelity Wise Origin Bitcoin Fund, which have experienced substantial inflows.

In collaboration with crypto asset manager 21Shares, ARK Investment Management is among those aiming to introduce the first U.S. ETF holding Ether. While SEC Chair Gary Gensler has clearly classified Bitcoin as a commodity, his stance on Ethereum remains less clear. Some analysts view the potential approval of a spot Ether ETF as a gateway for ETFs containing other digital tokens, despite the SEC adopting a cautious approach thus far.

 

Ledger recently revealed a strategic alliance with Coinbase, incorporating Coinbase Pay into the Ledger Live app. The goal of the partnership is to empower users to directly acquire crypto via hardware wallets provided by Ledger, simplifying the process for users to transfer crypto and conduct transactions on their desktop or mobile device.

Previously, the process of transferring crypto to Ledger Live through Coinbase was intricate and prone to errors. With this latest development, Ledger users can receive crypto purchases directly through Coinbase on their Ledger device, maintaining their preferred payment methods such as ACH, Visa, Mastercard, and Maestro, as highlighted in a recent blog post by Ledger.

 

Simplification Is Key

Users can now reportedly purchase crypto through their Coinbase account at the same cost as on Coinbase.com and transfer it to their Ledger device with just a few clicks, without requiring additional Know-Your-Customer (KYC) procedures for existing Coinbase users. This new feature also facilitates instant transactions.

Ian Rogers, Chief Experience Officer at Ledger, emphasized the common values shared between Ledger and Coinbase, highlighting the mutual commitment to making crypto accessible and secure for consumers. Coinbase and Ledger are among the few companies in crypto with a tenure of over ten years, and the two companies already share both values and customers, Rogers stated, before also saying that both Ledger and Coinbase are dedicated to simplifying crypto usage and ensuring consumer security.

 

A Mutually Beneficial Partnership

Now, Coinbase users can effortlessly purchase crypto directly within Ledger Live, and Ledger users can easily buy through Coinbase. Ledger is pleased to offer this experience to Coinbase customers and provide an option for Ledger users through this partnership.

Lauren Dowling, Head of Product at Coinbase Developer Payment Services, expressed enthusiasm about the collaboration, stating that at Coinbase, the focus has been on developing the most trusted, scalable, and reliable onramps and infrastructure for onchain builders, expanding access to crypto and contributing to an updated financial system. This goal ultimately led to the collaboration with Ledger to enable users to seamlessly purchase crypto with Coinbase Pay directly into their self-custody solution.

This feature is being introduced across several key markets, including the US, UK, EU, Brazil, New Zealand, Australia, Canada, and Singapore.

 

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.