Polygon has launched its second public testnet, thereby bringing the platform to the final stages before the mainnet launch. Another zkEVM (zero-knowledge proofs) platform, zkSync, raised $200 million in a Series C funding round last month.

The testnet will put a new upgrade called recursion through its paces, with the goal of exponentially scaling Ethereum. As of this moment, Polygon has not provided a timetable for the mainnet launch.

Polygon claims to be the first zkEVM scaling technology to achieve public testnet with open-source code for its proving system, which is an essential aspect of operating the zkEVM. Although Polygon claims to be open source, it has previously received criticism from various other zkEVM platforms for its broad usage of the term.

Put simply, zkEVMs are a new Ethereum scaling technology which have become very popular over the last year. Although they have yet to be proven, they have the potential to significantly improve transaction costs and speeds for Ethereum, as well as enable on-chain privacy,

Additionally, zkEVMs are said to greatly simplify the process of application development. This could pave the way for a slew of new on-chain apps that bridge the gap between physical assets and off-chain data.

Two top ranking FTX executives have pleaded guilty to federal fraud charges and have agreed to fully cooperate with the authorities.

Meanwhile, Sam Bankman-Fried himself may soon appear in front of a US judge after the decision to extradite him was recently made following a lengthy stay in the Bahamas. SBF will also reportedly be released from jail on a $250 million bailout.

Caroline Ellison and Gary Wang accepted their fate on the eve of December 21st, according to the United States Attorney for the Southern District of New York. Ellison was the former CEO of Alameda Research, and Wang was a founding member of the FTX exchange.

Sam Bankman-Fried has been accused of defrauding customers, investors, and lenders, according to prosecutors. Furthermore, liquidators are sifting through the FTX wreckage in search of up to $8 billion in missing funds.

As if things were not bad enough for SBF, fraud and diverting customer funds to purchase real estate, lend out, make questionable investments through Alameda, and make political donations are among the various charges leveled against him. If found guilty, he faces up to 115 years in prison.
 

Core Scientific is among the most notable Bitcoin miners in the industry, and it just announced that it intends to declare Chapter 11 bankruptcy soon but will continue to mine BTC during the process.

Although numerous mining companies have declared bankruptcy during the ongoing bear market, Core Scientific is the first publicly traded company to do so. Greenridge, another Bitcoin miner, reached a debt restructuring agreement with NYDIG on December 20th, allowing the company to avoid bankruptcy for the time being.

Binance Pool launched a $500 million fund in October to offer emergency financing to distressed miners, with loans collateralized by physical assets along with the crypto mined by the companies. Likewise, Bitmain also launched a $250 million fund with a similar mandate.

Earlier this month, investment bank B Riley proposed a $72 million financing plan to keep Core Scientific from going bankrupt. Most of the main problems with Core Scientific, according to B Riley, are self-inflicted and could be corrected with an open, transparent discussion as well as ongoing participation with its equity holders and creditors.

For now, Core Scientific maintains a positive cashflow, but its income is insufficient to cover the financing costs of its mining equipment due to the bear market, hence the decision to file for bankruptcy.

Voyager Digital, the bankrupt crypto lender, has announced that Binance US has agreed to purchase its assets for $1.022 billion. The bid signifies the fair market value of just over $1 billion, as well as an additional consideration of $20 million in incremental value.

Voyager, which declared bankruptcy earlier this year, agreed to sell its assets to the now-defunct crypto exchange FTX, with FTX outbidding rivals Binance and Wave Financial.

Voyager representatives stated that the Binance US bid intends to return crypto to customers in kind, as per the court-approved disbursements and platform functionalities.

CEO Changpeng Zhao previously noted that the US branch of the exchange would make a new bid for Voyager Digital. Binance US will hence make a $10 million good faith deposit and reimburse Voyager for certain expenses for a maximum of $15 million. Additionally, Voyager will seek the approval of the bankruptcy court via a hearing on January 5th, 2023.

Former US President Donald Trump recently unveiled an NFT digital trading card collection, which sold out the day after its initial release, early Friday.

115 customers bought 45 NFTs, which is the minimum number of tokens required to guarantee a ticket to a dinner with Trump 17 people purchased 100 NFTs, which was the maximum quantity allowed to mint, according to the Trump Trading Card website.

Additional Dune metrics, however, show that other wallets held far more. One of the rare trading cards, depicting the 45th President holding a torch in front of the Statue of Liberty, was listed for 20 ETH.

Presently, 1,000 NFTs, including many one-of-ones, are held in a single Gnosis Safe multisignature wallet, which appears to be the wallet receiving royalties from secondary NFT sales.

PayPal is a well known worldwide payment processor operating in over 200 countries. Most recently, the company decided to make it easier for users to get started with crypto. In this regard, ConsenSys, the company behind MetaMask, announced that it shall incorporate a PayPal integration into its crypto wallet, allowing users to purchase cryptocurrencies with their PayPal account.

PayPal and MetaMask, a match made in heaven?

MetaMask is among the most widely used non-custodial cryptocurrency wallets across the globe. Users can utilize their MetaMask wallets as their authentication method to store crypto assets as well as interact with Web3 products.

However, users are powerless if their MetaMask wallet is empty. As a result, they often use centralized crypto exchanges such as Coinbase and Kraken to purchase crypto and subsequently transfer them to their respective MetaMask wallets.

Moreover, MetaMask also has its own on-ramp features in its mobile app, which eliminates the need to switch to another service and go through numerous intermediate steps. MoonPay, Wyre, and Transak are among the on-ramp partners. If users buy crypto from one of these partners, they will have to go through a KYC process, which means they would have to enter a lot of personal information and provide some form of identification for verification purposes.

What happens now?

The collaboration of MetaMask and PayPal could very well benefit both companies. For MetaMask, the conversion rate with existing on-ramp solutions is likely to be low, mainly because KYC procedures can often be unnecessarily lengthy and intimidating.

Furthermore, there are already over 430 million PayPal accounts globally as per the most recent earnings report. With that in mind, if MetaMask users are indeed able to buy crypto with a PayPal account, it will appear simple and familiar and lead to more activity for the payment processor which would then result in higher revenues for PayPal. For the time being though, MetaMask users would only be able to purchase Ethereum using PayPal. ETH shall be made available to some users in the United States before eventually being rolled out to everyone in the country.

Earlier in the year, PayPal added support for cryptocurrency transfers. PayPal users in the United States can also obtain wallet addresses in order to fund their PayPal accounts with crypto assets. Likewise, PayPal users have the ability to send funds to a third party cryptocurrency wallet if desired.

The government of Australia has promised to establish a new framework for the licensing and regulation of cryptocurrency service providers by 2023. Furthermore, the development of appropriate custody and licensing settings to protect consumers will be among the next steps taken.

Unfortunately, local regulatory infrastructure has not kept pace with market changes, said Treasurer Jim Chalmers and Assistant Treasurer and Minister for Financial Services Stephen Jones in a joint statement. They also claimed that the previous administration did nothing in many areas while simultaneously making promises that seemingly went nowhere.

The government will decide which tokens or digital assets should be subject to financial services regulations. The new framework will thus be part of a strategic plan set to be released in the first quarter of 2023, along with a consultation paper.

The consultation paper is open for feedback until February 6th, 2023, and covers a wide range of topics in the crypto ecosystem, including CBDCs, stablecoins, digital wallets, and crypto assets.

As part of the latest twist in an investigation that began in 2018 and gained traction during the shocking FTX collapse, U.S. prosecutors are now considering charging Binance and its top executives with money laundering and sanctions violations.

It is being suggested that Binance CEO Changpeng Zhao is among the executives who may be targeted. However, Department of Justice (DOJ) officials are divided on whether to proceed, as some want more time to review evidence before taking any drastic measures.

According to different reports, multiple government agencies including both the National Cryptocurrency Enforcement Team and the Money Laundering and Asset Recovery Section (MLARS) are involved in the investigation. Various defense attorneys representing Binance have reportedly met with DOJ officials to discuss possible plea deals.

Binance noted earlier this year that only 0.15% of all crypto transactions in 2021 were associated with some type of illicit activity. While this may offer some level of comfort to investors, nobody can deny that authorities are cracking down on cryptocurrency companies with increasing intensity, particularly in the aftermath of the Terra and FTX disasters.

The United States SEC and Ripple Labs are reportedly requesting a deadline for sealing information in the case in their ongoing legal battle. Both parties in the case have until December 22nd, 2022, to file their respective sealing motions.

As per a request by the attorneys posted online by crypto legal expert James K. Filan, they are asking U.S. District Judge Analisa Torres to set a deadline of January 4th, 2023 for non-parties to file sealing arguments prior to a summary judgment.

The SEC first filed a lawsuit against Ripple in late 2020, alleging that the payments company sold the crypto asset XRP as an unregistered security. Filan previously stated that he anticipates the judge making a decision on what is sealed in the case at the same time she issues her summary judgment.

Moreover, documents related to a speech by former Director of Corporate Finance, William Hinman, have received the most attention in the case but remain under seal, including drafts and internal emails. Ripple had previously won a legal battle when a judge ruled that the SEC had to turn them over.

Hinman stated in his 2018 speech that the SEC is just trying to make an example out of Ripple as part of a wider attack on crypto in general, to which end he pointed out that Ethereum was not viewed as a security by the agency.

Additionally, several prominent voices in the crypto industry, including Coinbase, have filed amicus briefs in support of Ripple and believe that the SEC has overstepped its boundaries.

According to a blog post published on December 5th, the crypto borrowing and lending platform known as Nexo intends to slowly cease operations in the U.S. over the coming months. Nexo has stated that leaving the United States is a regrettable yet necessary step.

What happened?

Nexo indicated that the company had been in discussions with U.S. regulators for 18 months in order to determine how to comply with local financial laws. However, no agreement has been reached between the company and U.S. officials so far.

As per the company, the decision was made following countless back and forth discussions with state and federal regulators in the United States that have since come to a halt. According to the post, despite rhetoric to the contrary, the U.S has reportedly refused to offer a clear path forward for empowering blockchain businesses.

Due to this, Nexo believes that it cannot grant its customers confidence that regulators are looking out for their best interests. Most recently, Nexo announced that it has deactivated customers from New York and Vermont and has also halted new registrations for their Earn Interest product in the country. Furthermore, current customers in eight other states also lost access to this product on December 6th, 2022.

What comes next?

After the FTX collapse, U.S. lawmakers have contended that regulators should be given greater authority to monitor cryptocurrency exchanges. On the other hand, several industry leaders have claimed that overregulation is precisely why so many U.S. investors are leaving the country behind in the first place.

Elsewhere, a Democratic congressman recently called for an independent investigation into the inability of the U.S. SEC to prevent the FTX disaster. Representative Ritchie Torres (D-NY) asked the GAO (Government Accountability Office) to conduct an independent review of everything that happened in the SEC within the months leading up to the collapse, citing the inability of the agency to prevent such a historic disaster despite constantly demanding more authoritative and regulatory power over the crypto industry.

Ledger, a security-focused company which sells crypto hardware wallets, has collaborated with Tony Fadell, the designer of the iPod, in the hopes of creating a simpler, more accessible means for customers to secure their cryptocurrencies.

Crypto hardware wallets have grown in popularity in recent weeks, owing to users wanting to self custody their digital assets in the aftermath of industry changing events such as the FTX and Terra disasters.

Following the FTX collapse, Chief Experience Officer Ian Rogers said the company had its biggest sales day ever, followed by its largest sales week ever, in mid-November, indicating that demand for hardware crypto wallets is rapidly increasing.

As per the company, it has sold over 5 million devices to customers in 200 countries and has secured approximately 20% of the global crypto assets held to date. The new Ledger Stax joins existing hardware products such as the Nano S Plus and Nano X.

Additionally, the new credit card-sized cryptocurrency wallet supports NFT collections along with more than 500 coins and digital assets. In the United States, the product shall be available for $279 in the first quarter of 2023 on the company's website or at retail stores such as Best Buy.

Lastly, according to Rogers, the first 10,000 products sold would include a free NFT which can be redeemed.

A Democratic congressman has called for an independent investigation into the inability of the U.S. SEC to prevent the FTX disaster. Representative Ritchie Torres (D-NY) asked the GAO (Government Accountability Office) to conduct an independent review of everything that happened in the SEC within the months leading up to the collapse.

A strongly worded letter by Representative Torres took umbridge with SEC Chair Gary Gensler for claiming exclusive regulatory authority over cryptocurrency exchanges while also seemingly failing to properly regulate them.

Torres claimed that if the SEC has the authority which Mr. Gensler claims, it would certainly have been able to prevent the biggest crypto Ponzi scheme in U.S. history. The letter indicated that it is extremely irresponsible to assert authority while avoiding accountability, which the SEC seems to be doing.

In the past, the SEC has had no problems putting the hammer down on the crypto industry, as was the case with the still ongoing Ripple Labs lawsuit. In October, the SEC also fined Kim Kardashian $1.26 million for reportedly promoting EthereumMax, an exchange which the agency considers an unregistered security.