Senators slam bank execs for blaming collapses on crypto, pocketing millions

A former Signature Bank executive has been slammed for trying to place the blame for his bank’s collapse on crypto while purportedly being able to pocket millions in bonuses and stock options. 

During a Senate Banking Committee hearing on May 16, United States Senator Cynthia Lummis lashed out at Scott Shay, the former chairman of the now-defunct bank, in relation to his prepared statement on what led to his bank’s collapse.

In his testimony, Shay noted the bank began accepting deposits from businesses in the digital asset sector in 2018 and then “significantly” reduced its digital asset deposits in 2022 as the industry experienced volatility.

He said his bank was seized by regulators after “a bank with strong ties to the digital asset sector” fell, which then led to $16 billion being withdrawn from Signature.

“It looks like there has been a lot of deflection of blame onto those particular depositors that deal in digital assets and onto regulators, but you haven’t accepted any blame yourself,” Lummis said.

Shay, however, denied pointing the finger at digital assets during the Senate hearing.

“You use the term 10 times during your testimony,” responded Lummis.

‘Keeping millions’

During another part of the hearing, Senator Elizabeth Warren blasted Silicon Valley Bank (SVB) CEO Gregory Pecker and Signature Bank’s Shay for allegedly “keeping millions after recklessly crashing banks.”

“Right now, the law says that people like Mr. Becker and Mr. Shay […] can pay themselves tens of millions of dollars in bonuses and stock options, and when the banks blow up, Mr. Becker and Mr. Shay get to keep all the money. And that is just plain wrong.”

“If we don’t fix it, every CEO for these multibillion-dollar banks will keep right on loading up on risks and blowing up banks, and everybody else is going to have to pay for it.”

Warren noted that she is working within a bipartisan group in the Banking Committee to introduce a bill that can claw back “these crazy paychecks.”

Cointelegraph contacted Shay and Becker for comment but did not receive an immediate response.

Related: Signature Bank failed to understand risks associated with crypto: FDIC chair

In April, Adrienne Harris, superintendent of the New York Department of Financial Services (NYDFS) reportedly said it was “ludicrous” that one could blame crypto for Signature Banks collapse.

During a Chainalysis Links conference in New York City, she said the events leading up to the failure of Signature were instead a “new-fashioned bank run.”

The NYDFS took control of Signature Bank on March 12, claiming it was protecting the U.S. economy from “system risk.” The bank was the latest failure following the collapse of the crypto-friendly Silvergate Bank and SVB.

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Crypto retail trading should be regulated as gambling: UK lawmakers

The trading of so-called “unbacked cryptoassets” such as Bitcoin (BTC) and Ether (ETH) should be regulated as gambling rather than a financial service, a panel of British lawmakers said in a new report. 

The United Kingdom is currently working on a crypto regulatory framework that would mix existing financial asset laws with new crypto-specific rules.

However, in a May 17 House of Commons Committee report, the U.K. Treasury Committee “strongly recommended” regulating retail crypto trading and investment activity as gambling, consistent with the principle of “same risk, same regulatory outcome.”

It argued the price volatility and lack of intrinsic value mean unbacked crypto assets will “inevitably pose significant risks to consumers.”

Treasury Committee chair Harriett Baldwin described Bitcoin and Ether as accounting for two-thirds of the total market capitalization of crypto assets, both of which she claimed are “unbacked.”

“We are concerned that regulating retail trading and investment activity in unbacked cryptoassets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is, or protected when it is not.”

In the U.K., all gambling — whether online or land-based — is regulated by the Gambling Commission under the Gambling Act 2005. Its oversight includes businesses such as bingo halls, lotteries, betting shops, online betting companies and casinos, among others.

Graph used by the Committee as evidence of crypto’s volatility. Source: Yahoo Finance, U.K. Parliament

In its arguments, the lawmakers referred to written statements from Dr. Larisa Yarovaya, an associate professor from the University of Southhampton, who said crypto exchanges, online trading platforms and other crypto-asset businesses should be regulated with the same stringency as crypto speculation “can be addictive.”

In a small win for crypto, the committee said it also recognized the potential for some crypto assets and their underlying technology to bring benefits to financial services and markets — such as reducing the cost of cross-border payments and improving financial inclusion.

It said there should be an effective regulatory framework to support these developments in the U.K. while mitigating some of the risks associated with crypto assets.

Excerpt from the Fifteenth Report of Session 2022–23. Source: U.K. Parliament

“We therefore welcome the Government publishing proposals for how it plans to regulate cryptoassets used in financial services,” the Committee wrote.

Related: UK Treasury drops plans for Royal Mint NFT

Including chair Harriet Baldwin, who once served as the Economic Secretary to the Treasury, the Committee consists of a total of 11 members of parliament from the Labor and Conservative parties as well as the Scottish National Party.

The committee said it had launched its inquiry into the crypto industry in July 2022 to explore the role of cryptoassets in the U.K.

Research conducted by His Majesty’s Revenue and Customs (HMRC) — the nation’s tax authority — last year revealed 10% of U.K. citizens hold or have held crypto with more than 55% having never sold any.

Chainalysis ranked the United Kingdom 17th in its 2022 crypto adoption index.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Breaking: Court victory for Ripple as judge denies SEC motion to seal Hinman docs

A motion from the United States securities regulator to seal the controversial Hinman documents has been denied — a move that has been seen as a win for the Ripple and crypto community.

Judge Analisa Torres for the U.S. District Court ruled that the documents are “judicial documents” subject to a strong presumption of public access. 

Excerpt from Judge Torres’ ruling. Source: USDC

“The Hinman Speech Documents “would reasonably have the tendency to influence [the Court’s] ruling on a motion,” she added. 

Judge Torres also said the court is rejecting the U.S. Securities and Exchange Commission’s (SEC’s) argument that sealing the documents is necessary to preserve “openness and candor” within the SEC.

“The Hinman Speech Documents are not protected by the deliberative process privilege because they do not relate to an agency position, decision or policy.”

The price of Ripple’s XRP (XRP) spiked on the news, jumping around 2.6%. It is currently trading at $0.43.

This is a developing story, and further information will be added as it becomes available.

Memecoins are like Powerball for crypto fans: Matrixport exec

Memecoin buyers are playing the crypto-equivalent of Powerball — with many “playing” hoping for “life-changing money” yet only a few will walk away with the jackpot, says Matrixport’s head of research.

Memecoins have seen a huge resurgence over the last week. Crypto tokens such as Pepe (PEPE) and Milady (LADYS) have boasted staggering price surges despite each having little to no discernable utility. 

Speaking to Cointelegraph on May 10, Matrixport’s Markus Thielen suggested some buyers of memecoins bear resemblance to those that participate in the lottery. 

“There are numerous studies done on how most people in lower socio-economic classes play the lottery […] as that is their way to get out of their lower economic class,” he said, adding:

“The people that speculate in the lottery are trying to make money lightning fast, and I think that’s very similar with crypto.”

One memecoin that recently gained the attention of enthusiasts is PEPE, a cryptocurrency cashing in on the “Pepe the frog” meme. It launched on April 14 and hit its peak $1.83 billion market cap only weeks later on May 5.

The price of the token plummeted almost as quickly as it rose however, falling 57% from its peak in just five days, according to CoinGecko, which puts its market cap now well below a billion dollars.

Pepe token price since its launch on April 14. Source: CoinGecko

One should not discount the “entertainment” factor of buying memecoins however.

Dr. Anastasia Hronis, a clinical psychologist who specializes in gambling addiction believes younger investors are more likely driven by the “fun, entertainment element” of memecoins. 

“Many crypto investors might buy memecoins to be a part of a community or for entertainment value.” 

However, for the many hoping to gain from their investments, Hronis cautioned:

“Memecoins like PEPE might be fun, but they generally are highly risky investments and can end up holding no intrinsic value in the long run […] Investors are essentially gambling on its popularity, which undermines the principles involved in investing.”

In an emailed statement, Lucas Kiely, Chief Investment Officer at digital wealth platform Yield App argued that unlike Bitcoin (BTC), Ether (ETH) and stablecoins, memecoins don’t have the same fundamentals. Their prices are driven solely by “arbitrary factors” such as community sentiment and are “almost impossible to predict.”

“Even the most sophisticated models have been unable to discern any clear patterns,” said Kiely.

Pros and whales still get FOMO too

The unpredictability of memecoins doesn’t mean there isn’t an opportunity for outsized returns. Professional investors and “crypto whales” have been, and will continue to participate in trading them.

According to data from blockchain analytics firm Lookonchain, “Machi Big Brother,” the online persona of former tech entrepreneur Jeffrey Huang purchased a total of 73.4 ETH — equivalent to roughly $137,000 — of Pepe in the past 4 days.

Related: Coinbase calls PEPE a ‘hate symbol,’ prompting calls to boycott the exchange

Three other whales also started to buy PEPE on May 9 after prices dropped.

“When the prices are big, it can make sense,” said Thielen. “If it suddenly makes a lot of news and a lot of stories, then I think these people need to be invested as well.”

Thielen however cautioned investors of memecoins such as PEPE where the development team is anonymous and there is no discernable roadmap.

“The task is to be ahead of others and get out once the momentum is turning. This is why it is important to work with stop loss and stops when trading risky assets,” he suggested.

“Everybody wants to dunk (sell) on someone in memecoin land […] The question is only who is then holding the bag?”

Magazine: Cryptocurrency trading addiction — What to look out for and how it is treated

War of words: OKX takes a subtle jab at Coinbase in new ad campaign

It comes after Coinbase launched a campaign on March 9 called “It’s time to update the system.”

OKX’s message came at the end of a 60-second video campaign launched May 9 that takes aim at the so-called “broken ways” of the centralized financial system.

Crypto exchange OKX has seemingly called out rival exchange Coinbase in a new global ad campaign that argues “the system doesn’t need an update, it needs a rewrite.” 

While the video doesn’t reference Coinbase directly, it does appear to take a subtle dig at the exchange with its tagline.

Coinbase’s campaign argued while American financial institutions are an “essential part” of the traditional finance system — they still rely on outdated technology to serve their customers. Coinbase argued that crypto is the answer to this problem.

OKX appears to take Coinbase’s idea a step further, arguing the decentralized nature of Web3 means consumers don’t even need to be involved with centralized players in the first place.

“There are two camps of thoughts. One side suggests we update existing systems to create a better world. The other believes we need a system re-write. Our new campaign is a nod to those who believe we need to re-write the system into Web3,” Haider Rafique, Chief Marketing Officer of OKX said in a statement.

OKX said the campaign was produced in collaboration with BBDO New York, its advertising agency.

Cointelegraph contacted OKX asking if the campaign was in response to the Coinbase campaign in March but did not receive an immediate response.

Related: OKX just sent $60M in USDT, MASK token to Alameda Research

The Seychelles-based crypto exchange recently signaled its intention to expand its crypto services to Australia, explaining in a March 29 statement that Australia would be a key growth market for the firm moving forward.

Rafique told Cointelegraph that the decision to expand “Down Under” was driven by Australians’ “huge appetite” for more crypto investment and trading products:

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

Epic CEO mocks ‘metaverse is dead’ notion — 600M coming to the ‘wake’

Epic Games CEO Tim Sweeney is just as optimistic about the Metaverse as ever, after poking fun at a recent suggestion that online virtual worlds are “dead.”

The now-billionaire video game entrepreneur — creator of the Unreal Engine and Fortnite — took to Twitter on May 9 to mock a newly published article from Business Insider titled “RIP Metaverse, we hardly knew ye.”

The article by PR firm CEO Ed Zitron suggested the “once-buzzy technology” had “died after being abandoned by the business world.”

The article made particular mention of Meta’s virtual reality (VR) platform Horizon Worlds which Zitron claims has failed to live up to its “grand promise” of becoming the future of the internet.

It also mentions Decentraland and Yuga Labs’ Otherside as examples of Metaverses that have seemingly failed to live up to their hype and claimed investors have turned their attention to the next big tech fad — generative AI.

Excerpt from RIP Metaverse – An obituary for the latest fad to join the tech graveyard. Source: Business Insider

Sweeney however doesn’t appear to agree, suggesting there are 600 million users across virtual world platforms such as Fortnite, Minecraft, Roblox, The Sandbox and VR Chat.

“The metaverse is dead! Let’s organize an online wake so that we 600,000,000 monthly active users in Fortnite, Minecraft, Roblox, PUBG Mobile, Sandbox, and VRChat can mourn its passing together in real-time 3D,” he joked, which was echoed soon after by Sandbox CEO Sebastien Borget.

Related: Meta coughing up big money to developers building its metaverse

In April 2022, Epic Games announced a $2 billion funding round with the aim of accelerating the company’s plans for the Metaverse. The investment included a $1 billion investment from Sony Group and KIRKBI, the holding company behind the LEGO Group.

It came not long after LEGO Group and Epic Games announced they were entering a long-term partnership to build a “family-friendly” Metaverse.

Neither company is yet to reveal what plans entail. However, Lego Group chief executive Niels Christiansen told the Financial Times earlier this year that it is looking to announce more details about the collaboration.

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White House advisors renew push for 30% digital mining energy tax

The Biden administration has renewed its push for a 30% Digital Asset Mining Energy (DAME) on cryptocurrency miners, part of efforts to minimize the industry’s alleged impact on climate change. 

The proposed crypto-mining tax was first announced on March 9 and seeks to impose a phased-in 30% excise tax on electricity used by crypto-miners.

“An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms,” the Department of Treasury wrote at the time. Bitcoin (BTC) fell under $20,000 just a day later.

However, a May 2 statement from the White House’s Council of Economic Advisers (CEA) has brought the proposal back to light again, attempting to justify the need for the new tax.

“Currently, cryptomining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate,” the CEA wrote.

“The DAME tax encourages firms to start taking better account of the harms they impose on society,” it wrote, adding:

“While crypto assets are virtual, the energy consumption tied to their computationally intensive production is very real and imposes very real costs.”

The blog also referenced reports suggesting crypto mining has “negative spillovers” on the environment, quality of life, and electricity grids and that pollution from electricity generation falls on low-income neighborhoods and communities of color, while pushing up the cost of electricity for consumers.

Related: Biden budget proposes 30% tax on crypto mining electricity usage

It even suggests that crypto mining using existing clean power (such as hydropower) can still have a negative impact on the environment, by pushing other electricity users to “dirtier” sources of electricity.

Screenshot of CEA’s thread on the environmental impact of crypto mining. Source: Twitter

The Twitter thread posted by the Council of Economic Advisers has attracted widespread criticism from the community, with some calling it “misinformation” and “propaganda” while one Twitter user argued such a tax would “simply push Bitcoin mining to Russia & other countries.”

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

Coinbase stock will be ‘weighed down’ until US rules are clear: Citi

Crypto exchange Coinbase’s stock price will continue to be “weighed down” until regulators establish the legal “rules of the road” in the United States, according to investment analysts from Citi.

As per reports on May 1, the investment bank downgraded shares of the crypto exchange from “Buy” to “Neutral” and lowered its price target — citing “too many unknowns” as the company battles it out with regulators.

Screenshot of the analyst note from Citi. Source: Twitter

“Until the regulatory ‘rules of the road’ are better established in the U.S., the stock will remain weighed down by this high level of uncertainty,” Citi analyst Peter Christiansen wrote in a May 1 note.

In March, Coinbase disclosed it had received a Wells notice from the Securities and Exchange Commission (SEC) over possible violations of securities laws — signaling possible future enforcement action.

In April, it shot back at the SEC, filing a federal court action compelling the SEC to give clarity into the regulatory treatment of certain digital assets.

Later in the month, Coinbase CEO Brian Armstrong and Chief Legal Office Paul Grewal released a public response to the March Wells notice on YouTube.

“As it stands, both long and short debates begin and end with Coinbase’s regulatory predicament,” said Christiansen, noting there could be a few ways the regulatory scuffle could play out:

“Clarity could come from: (i) a lengthy legal process vs. the SEC, where the possibility of an operating injunction cannot be ruled out, (ii) long-awaited legislative movement amidst a challenging legislative calendar and an upcoming election year, and/or even (iii) Ripple’s ongoing legal process, which could be potentially precedent setting,” the analyst wrote.

The analyst noted that the latest SEC developments don’t suggest that the parties are close to any resolution.

Related: Coinbase is planning to set up crypto trading platform outside US: Report

At the time of writing, Coinbase is trading at $51.32, down 58.5% over the past year, as per Yahoo Finance.

Coinbase share price over a year period. Source: Google

It stock price slumped around 16% on March 22 after it disclosed it received the Wells notice.

The company has recently become the target of two proposed class action lawsuits, one of which alleges it breached privacy laws in Illinois over its collection of customer biometrics, and the other alleging certain executives profited from insider information when the company went public.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

Ethereum ERC-4337 ‘bundlers’ — How hard is joining the network?

A new decentralized layer has been added on top of Ethereum to make smart accounts possible with the introduction of ERC-4337 and account abstraction — but infrastructure providers suggest it may be tricky to participate profitably right now.

ERC-4337, commonly called “smart accounts” or “account abstraction” was deployed on the Ethereum mainnet on March 1. “Smart accounts” are essentially a supercharged version of an Ethereum wallet. Although smart contract wallets already exist, they rely on centralized components. ERC-4337 changes that with a distributed network of “Bundlers” and “Paymasters.”

Under the hood, there are a few subtle but significant changes — namely the addition of the “User Intent Layer” — explained Matt Cutler, co-founder and CEO of Blocknative, a core Ethereum infrastructure provider.

According to Cutler, an Ethereum transaction today involves several discrete steps.

A model explaining the current Ethereum transaction flow. Source: Blocknative

A user accesses their standard externally-owned account (EOA) or private key to compose a signed transaction — for example, transferring a nonfungible token (NFT) to another user.

This transaction is then sent to the public mempool — which could be described as a shared queue for transactions — to be plucked out by a “Builder” who organizes it into a “profitable block.” From there the block is proposed to a Validator who ultimately proposes and publishes it on-chain, completing the transaction.

Under ERC-4337, the new “User Intent Layer” is introduced before the current EOA step.

A mental model explaining the new Ethereum transaction flow with ERC-4337. Source: Blocknative

This additional layer allows a user to initiate more complex transactions in a single step. To make this possible, ERC-4337 introduces an “Alternative Mempool” and a network of transaction Bundlers, and along with it — a new way to earn fees.

Becoming a undler

A Bundler is a node that does a very similar job to the block “Builder.” Instead of organizing signed transactions from the public mempool to assemble a profitable block, a Bundler grabs User Operations, or userOps, from the Alt-Mempool to create the most profitable bundle which is signed and submitted to the network as a single transaction. This is all part of the newly added layer that makes smart accounts possible.

Bundlers get compensated via userOp gas fees for providing their much-needed service.

While anyone can be a Bundler in theory, in reality, being a successful one might be another story, warned Cutler.

Like Builders, Bundlers are “specialized actors” made up of “relatively sophisticated development teams operating substantial computational, storage, and networking infrastructure,” he said.

“ERC-4337 is trustless and permissionless. So if you’re technically adept, by all means, you can stand up and operate your own Bundler. The challenge is Bundling is a competitive market. So you will be competing against relatively sophisticated teams that are investing heavily into being a competitive Bundler,” he said.

“Bundlers are not the sort of tooling that you just stand up, forget about and it starts printing you money. We expect Bundling to be substantially more technically sophisticated than being a validator, for instance.”

Cutler noted there are already a number of open-source bundler code repositories.

Related: Ethereum ERC-4337 ‘smart accounts’ launch at WalletCon: Account abstraction is here

There is an ongoing debate about whether ERC-4337 will have an impact on Ethereum gas fees, particularly given the increase in transaction complexity associated with the introduction of the new User Intent layer.

“While it is still too early to tell, my current expectation is that, on average, gas fees will not change all that much. If ERC-4337 has an impact, it’s going to be pretty slight — either up or down. We do not expect transaction fees to suddenly go to zero, or suddenly become 100x more expensive,” said Cutler.

Magazine: ‘Account abstraction’ supercharges Ethereum wallets: Dummies guide

Breaking: First Citizens snaps up Silicon Valley Bank — Branches open Monday

North Carolina-based First Citizens Bank is set to acquire all deposits and loans of Silicon Valley Bank, according to a statement from the Federal Deposit and Insurance Corporation (FDIC). 

Under the agreement, 17 former branches of Silicon Valley Bank will open as First Citizens Bank and Trust Company on Monday, March 27, while all depositors of SVB will automatically become depositors of First Citizens Bank. 

“As of March 10, 2023, Silicon Valley Bridge Bank, National Association, had approximately $167 billion in total assets and about $119 billion in total deposits. Today’s transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association’s assets at a discount of $16.5 billion,” said the FDIC in a statement.

Approximately $90 billion in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million.

The North Carolina-based bank is the 30th largest commercial bank in the United States and has $109.2 billion in assets as of Dec. 31, 2022, according to Federal Reserve data.

Silicon Valley Bank collapsed on March 10 after rumors of a severe liquidity crisis at the bank prompted a bank run. The FDIC was then appointed as the receiver of the failed bank and attempted to auction off the fallen bank. 

The process included two separate auctions for SVB’s assets, one for its traditional deposits unit, and the other for its private bank, which is housed within its retail operations and caters to high-net-worth individuals.

Related: ‘How did this happen’ — Powell says Fed stumped over the collapse of SVB

Several firms are understood to have either been planning or have submitted bids for the collapsed U.S. bank.

First Citizens was reported by Bloomberg to have been planning an SVB bid as early as March 18. Three days later, it reportedly submitted a bid for all of SVB.. At the time, a First Citizens spokesperson declined to comment on “market rumors or speculation.”

Another regional bank, Valley National Bancorp is also understood to have submitted a bid for the collapsed bank.

Meanwhile, a March 24 report from Reuters suggests a third U.S. regional bank, Citizens Financial Group, had been preparing to submit an offer for SVB’s private banking arm.

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Titanium Blockchain CEO behind BARs ICO fraud, put behind bars for 4 years

The California-based CEO of Titanium Blockchain has been sentenced to four years of prison — putting an end to a 2018 initial coin offering (ICO) saga that stripped investors of $21 million. 

Michael Stollery, who founded Titanium Blockchain Infrastructure Services (TBIS), was a key figure in a “cryptocurrency fraud scheme” which involved an initial coin offering for TBIS — conducted between late 2017 and early 2018, according to the Department of Justice.

Investors purchased a crypto token called BARs to participate in the ICO. Approximately $21 million was raised from the United States and overseas, according to the Department of Justice.

Price chart showing how $BAR price fell from February 2018 to June 2018 Source: Nomics

However, in a United States Securities and Exchange Commission (SEC) complaint in 2018, Stollery was accused of not having registered the ICO with the regulator, among other accusations. 

In July 2022, he pleaded guilty to one count of securities fraud for his role in the “fraud scheme.”

He admitted to falsifying aspects of TBIS’ whitepapers and planting fake client testimonials on the TBIS website, along with falsely claiming business relationships with the United States Federal Reserve — all of which served to mislead investors about the TBIS’ legitimacy and prospects for profit.

He also admitted to commingling ICO investors’ funds with his own, using a portion to pay for unrelated expenses such as credit card bills and bills for his Hawaii condominium, according to the SEC.

Though he was facing up to 20 years of prison, he will instead serve a total of four years and three months in prison for his involvement.

Related: Euler Finance exploiter returns over 58,000 stolen Ether

SEC ramps up enforcement

The SEC has been ramping up actions against the cryptocurrency space in recent years.

According to Cornerstone Research, the number of cryptocurrency-related litigations brought by the SEC grew in 2022, with 30 enforcement actions against digital-asset market participants in the year, up 50% from the 20 actions in 2021.

Of the 30 total enforcement actions in 2022, 14 involved initial coin offerings (ICOs), with more than half of these including a fraud allegation.

“Based on its implementation of the U.S. Supreme Court’s Howey test, the SEC continues to pursue actions alleging that tokens issued in ICO-related unregistered securities offerings were investment contracts subject to SEC regulation and enforcement,” said Abe Chernin, vice president of Cornerstone Research and co-head of its FinTech practice.

“We have observed an increase in assistance to the SEC from outside agencies and organizations during crypto-related investigations under the Gensler administration,” he added.

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‘Crypto FUD’ — Industry outraged as White House report slams crypto

Crypto executives have expressed irritation over the latest White House economic report — which notably features an entire chapter dedicated to casting doubts on the merit of digital assets.

The Economic Report of the President, released March 20, marks the first time the White House has included a section on digital assets since it first began issuing the annual economic policy report in 1950.

Co-founder of digital asset investment firm Paradigm, Fred Ehrsam, remarked that 15% of the Economic Report was dedicated to “crypto FUD.”

The report includes 35 pages dedicated to debunking the “Perceived Appeal of Crypto Assets” along with a short section on the FedNow payment system and central bank digital currencies (CBDCs).

The report’s main argument is that crypto assets fail to deliver on their “touted” benefits, such as improving payment systems, financial inclusion, and creating mechanisms to transfer value and intellectual property, stating:

“Instead, their innovation has been mostly about creating artificial scarcity in order to support crypto assets’ prices—and many of them have no fundamental value.”

It also argues that cryptocurrencies fail to perform the functions of sovereign money — such as the U.S. dollar — as crypto prices fluctuate too wildly to be a stable store of value, nor can they function as a unit of account or medium of exchange.

Excerpt from Chapter 8: Digital Assets: Relearning Economic Principles Source: Economic Report of the President

The report also takes aim at stablecoins, which it argues are subject to run risks, and is thus too risky to satisfy their role as a “fast payment” instrument.

Blockchain Association CEO Kristin Smith called the latest presidential report “disappointing,” saying it shows that some in the government appear “increasingly allergic” to the burgeoning crypto industry, adding:

“We urge the Biden administration to consider how it will be remembered: as a leader of profound innovation or a roadblock to a global tech revolution.”

Decentralization is also highlighted in the report, which argues that “despite claims of being decentralized and trustless, blockchain-based applications are in practice neither.”

Users access crypto assets by going to a limited set of crypto asset platforms, while a small group of miners performs the majority of mining in most crypto assets, it argues.

Related: House Republicans directly criticize Biden administration for digital asset policies

The latest annual economic policy report was published some two weeks after the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank — all three of which served aspects of the crypto industry. 

Dan Reecer, chief growth officer at decentralized finance (DeFi) platform Acala Network, claims the report comes “just days” after Operation Chokepoint 2.0 was executed on crypto-friendly banks.

Source: Twitter

He also noted an “obvious early warning” of an upcoming United States CBDC, or digital dollar, referencing a section of the report that seemingly touts the benefits of a U.S. central bank-controlled currency. 

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Magic Eden launches marketplace for Bitcoin Ordinals

Nonfungible token (NFT) marketplace Magic Eden has launched its own “fully audited” marketplace for Bitcoin Ordinals, leveraging the surging interest in “Bitcoin NFTs.” 

The newly launched marketplace allows Bitcoin (BTC) NFT traders to buy and sell Bitcoin Ordinal collections, giving users a similar experience it offers for Polygon, Ethereum, and Solana-based NFTs.

“Just as we have expanded into other chains, we now aim to bring our expertise in building marketplaces to the nascent, yet flourishing Ordinals ecosystem,” the firm said in a March 21 statement

The new Ordinals protocol was introduced in January 2023 by former Bitcoin core contributor Casey Rodarmor. Since then, the popularity of Bitcoin Ordinals has surged.

According to data from Dune analytics, between Feb. 1 and March 1, the total number of Bitcoin Ordinals inscriptions surged from 679 to 240,000. As of March 21, a total of 567,087 have been inscribed.

Graph showing the daily and total Bitcoin Ordinals inscriptions. Source: Dune Analytics

“We paid close attention to the release of Ordinal Theory and the lightning pace of adoption that soon followed,” said Magic Eden, adding it built the new marketplace in less than a month:

“Our marketplace was built within a month, culminating in a hackathon in California with over a dozen devs.”

Currently, the marketplace only supports secondary sales of Bitcoin Ordinals. The marketplace said it is also looking into future tools that would allow creators to more easily mint or inscribe Bitcoin NFTs, such as its Launchpad which it offers for other chains.

In order to enable permissionless swaps, it uses partially signed Bitcoin transactions (PSBT) — a Bitcoin standard that allows multiple parties to sign the same transaction — rather than smart contracts.

The marketplace launched with over 70 collections. Source: Magic Eden

Meanwhile, Magic Eden says there will be no royalty support for the marketplace, but said it is “actively looking” into this, adding there is “very little tooling and no secure and trustless enforcement solutions.” 

“With no royalty standard today, we have decided to launch on Bitcoin without royalty support for now,” said Magic Eden.

“We believe that this is most in-line with the ethos of the ecosystem, and despite this, we are actively looking into the development of an on-chain, permissionless royalty standard and are committed to working with creators and the greater community,” it added.

Related: Bitcoin thought leaders weigh the pros and cons of Ordinals

Other Bitcoin Ordinals marketplaces have already launched, including ORDX and Generative XYZ which launched in February. Earlier this week, NFT platform unveiled its own Bitcoin Ordinals marketplace, allowing users to create and trade ordinal inscriptions in a manner similar to Ethereum NFT marketplaces.

Cointelegraph contacted Magic Eden for comment but did not immediately receive a response.

NFT Creator —  Terrell Jones: Become a hot new NFT artist via the ‘soft shell taco method’

Here’s how ChatGPT-4 spends $100 in crypto trading

GPT-4, the latest version of artificial intelligence chatbot ChatGPT, believes the events of the last seven days could be bullish for Bitcoin (BTC), Ether (ETH), and Cosmos (ATOM), according to an AI-trading experiment run by Cointelegraph. 

The experiment is aimed at understanding GPT-4’s potential biases towards certain cryptocurrencies, how the events of last week could impact investment decisions, and whether it can adjust strategy to eventually turn a profit.

The experiment began on March 17, instructing the chatbot to allocate $100 to “make as much money as possible in the shortest time.” The prompt had to be written in a way so that GPT would be comfortable giving out trading instructions.

Screenshot of the first message to ChatGPT. Source: OpenAI

As GPT-4 knowledge and training is current only to September 2021, Cointelegraph fed it with year-end round-ups for 2021 and 2022, along with its Markets News and most read stories over the past seven days to understand how it would invest based on the most recent events.

It noted that the current state of the crypto market has been volatile, with “various factors” influencing prices.

“The recent Silicon Valley Bank and Signature Bank failures have led to increased uncertainty in the financial sector. This situation, combined with regulatory pressure and macroeconomic factors, has contributed to fluctuations in cryptocurrency prices.”

With the context in mind, its advice to allocate the $100 involved the following:

  • $50 to Bitcoin (BTC)
  • $25 to Ether (ETH)
  • $15 to Cosmos (ATOM)
  • $10 to “NFT and Web3 related projects”

On Bitcoin, GPT-4 said that despite short-term volatility and a recent price drop, it still has strong-long term potential:

“The overall trend shows that Bitcoin acts as a safe haven during times of financial instability, such as the recent Silicon Valley Bank and Signature Bank failures. Additionally, Bitcoin’s dominance is nearing 50%, and some analysts predict a move towards $100k.”

Meanwhile, GPT-4 suggested that Ethereum’s upcoming Shanghai upgrade could strengthen its dominance and benefit liquid staking providers.

“Ethereum’s price is also showing signs of recovery, making it a suitable addition to the portfolio,” it added.

The chatbot then recommended allocating $15 to Cosmos (ATOM), due to Cosmo’s launch of Interchain Security, which “could create potential growth opportunities for ATOM.”

“It’s a promising project in the blockchain space, and the launch could attract more investors,” it wrote.

BallerGPT’s balance as at the time of writing. Source: CoinMarketCap

It also instructed Cointelegraph to put $6 in Decentraland (MANA), given “interest in virtual worlds and NFTs continues to grow,” and $4 in Chainlink (LINK):

“With the growing adoption of Web3 and decentralized applications, the demand for reliable off-chain data will continue to rise. Chainlink’s LINK token is used to pay for services within the Chainlink ecosystem, making it a good investment as the need for oracle services expands.”

Related: ChatGPT v4 aces the bar, SATs and can identify exploits in ETH contracts

Cointelegraph made the purchases on an exchange immediately after and is now tracking the fund’s performance using a portfolio tracker. At the time of writing, there has already been a small paper gain.

This is an ongoing experiment and more updates will be shared in the future. At the end of the experiment, any proceeds will be donated to a charity of the community’s choice.

The experiment was inspired by Twitter user Jackson Fall, who created a “HustleGPT” experiment covering e-commerce.

Forget HTTP: Ethereum has a new URL standard that can’t be blocked

Web3 URLs — enabled with the launch of ERC-4804 — have made it onto Ethereum, allowing internet users to access Ethereum apps and NFTs without worrying about centralized censorship.

The new Ethereum standard, titled “Web3 URL to EVM Call Message Translation,” was first proposed on Feb. 14, 2022, and was co-authored by ETHStorage founder Qi Zhou, Ethereum researcher Sam Wilson and Chao Pi.

It described the proposal as an “HTTP-style” URL to directly access on-chain Web3 content, such as decentralized apps (DApps) front-ends and NFTs. More than a year later, ERC-4804 was approved and finalized on the mainnet on March 1.

Anthurine Xiang, a spokesperson for layer-2 storage protocol ETHStorage, explained that in many cases, the ecosystem is still reliant on centralized web servers to provide access to “decentralized” apps. 

“Right now, all the DApps like Uniswap […] claim to be decentralized apps,” Xiang explained, adding: “But how [do] we get on the webpage? You have to go through the DNS. You have to go through GoDaddy. […] All those are centralized servers.”

Graphic explaining how the new model compares to Web2. Source:

Today, most users access the internet via “Hypertext Transfer Protocol,” widely known as HTTP. 

When an internet user clicks a link or types in a website address, the computer uses HTTP to ask another computer to retrieve the information, such as a website or pictures.

Under ERC-4804, internet users have the option to type in web3:// (as opposed to http://) in their browsers to directly bring up DApps such as Uniswap or on-chain NFTs. This is because the standard allows users to directly run a query to an Ethereum Virtual Machine (EVM).

Flow chart explaining how Web3 URL standard works with Uniswap. Source:

Entire websites can also theoretically be accessed by these means as long as their content is stored on the Ethereum blockchain or a compatible layer-2 protocol. However, the costs of doing this are still very prohibitive, according to ETHStorage founder Qi Zhou.

“The critical issue here is that the storage cost on Ethereum is super, super expensive on mainnet,” Zhou said in a recent presentation at ETH Denver.

“For example, 1 Gigabyte of on-chain data will cost roughly $10 million. […] That is unacceptable for a lot of Web2 applications and even a lot of NFTs,” Zhou added, noting that layer-2 storage solutions could help mitigate some of the costs.


Xiang suggested that given the costs, the new URL standard makes sense only for specific applications. 

“Not everything needs to go decentralized. If you are running a pretty good Web2 business and you don’t have to worry too much about centralized censorship. […] You can just go for that.”

On the other hand, the new standard would be useful for DApps or websites that are at risk of censorship, with Tornado Cash as an example.

“For example, for Tornado Cash, a lot of people can’t get to them through their website because there’s censorship,” Xiang explained.

“If you’re a DApp and you’ve already been decentralized, why are you still using a centralized website for people to get access to you?”

Example of websites that are able to be accessed via web3:// URL Source:

Asked whether the new standard could be leveraged by bad actors to partake in illicit activity, Xiang said:

“This is really hard to say just like how Bitcoin was founded. I think Bitcoin was not born for evil, but still, in the beginning, people [were] doing shady things like the Silk Road, they had been using Bitcoin.”

Instead, Xiang believes like Bitcoin, they’re just giving people a decentralized option they may not have otherwise. 

The new Ethereum standard is the first of its kind for the blockchain, noted Xiang, though it’s not the first solution to decentralized web hosting. 

Related: How to host a decentralized website

IPFS, or the InterPlanetary File System is an example of a network that was created to do what centralized cloud servers currently provide, only via decentralized means. However, Xiang noted that an IPFS URL can only link to static content, which can’t be amended or changed.

ERC-4804 however, will allow for “dynamic data,” such as allowing people to leave likes and comments and interact with content on a website, explained Xiang. Being Ethereum native, the standard is also expected to be able to interact with other blockchains much easier, Xiang added.

DOJ and SEC to probe SVB collapse and insider stock sales: Report

The United States Justice Department and the Securities Exchange Commission (SEC) have reportedly launched inquiries into the sudden collapse of Silicon Valley Bank (SVB) — which was shuttered by regulators last week amid a historic bank run. 

According to “people familiar with the matter,” — cited in a March 14 report from The Wall Street Journal — the probes will look into events that led to the bank collapse, along with the stock sales SVB financial officers undertook in the weeks leading up to the closure.

Securities filing show the bank’s CEO Greg Becker and CFO Daniel Beck sold shares two weeks before the bank’s failure, sparking outrage from some observers.

Becker sold $3.6 million worth of shares on Feb. 27, while Beck sold $575,180 in stocks that same day, according to Newsweek. Altogether, SVB executives and directors cashed out $84 million worth of stock over the past two years, CNBC reported.


The probes are however in the early stages and may not lead to charges or allegations of wrongdoing, the people said.

Another person with direct knowledge of the situation, quoted by NPR, said a formal announcement from the Justice Department is expected in the coming days.

Cointelegraph contacted the SEC and the Justice Department but did not receive an immediate response.

Only two days after the collapse of Silicon Valley Bank, SEC chairman Gary Gensler made a stark warning that the regulator would be on the lookout for violators of U.S. securities laws.

“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” said Gensler.

Related: Silicon Valley Bank was the tip of a banking iceberg

The U.S. Federal Reserve is also looking into the collapse of the bank in its own way — namely, how it supervised and regulated the now-collapsed financial institution.

Meanwhile, SVB Financial Group, along with two executives have been reportedly sued by shareholders on March 13, accused of failing to disclose how rising interest rates would leave the bank “particularly susceptible” to a bank run.

The lawsuit seeks damages for SVB investors from June 16, 2021, to March 10, 2023.

Reddit back up: Site resolves ‘major outage’ after nearly 6 hours

Social media platform Reddit is back online after it identified and implemented a fix for a “major outage” that made browsing impossible for desktop and mobile users for almost six hours.

The platform first noted it was offline at 7:18 pm UTC, according to Reddit Status, and said it was working to identify the issue.

Screenshot of the r/Cryptocurrency subreddit during the outage. Source: Reddit

About 30 minutes later at 7:56 pm UTC, it said it had identified an internal systems issue and is working to determine a fix, finding a confirmed fix around two hours later, stating:

“We’ve identified a fix which may take some time to implement, in the meantime ready your bananas  (or eat them!).”

In an update four hours after its initial announcement, Reddit said it had “implemented our fix” and was “slowly allowing things to ramp back up” and later confirmed “things are back in order” after a nearly six-hour outage.

Users who visited the website when it was offline saw blank boxes in some places where threads and comments would normally be shown. As of writing the website pages now show content and it appears to be functioning normally.

Reddit is a popular platform for cryptocurrency investors and enthusiasts, with some of the more popular subreddits including r/CryptoCurrency, r/Bitcoin and r/CryptoMarkets.

According to APE Wisdom, the top trending cryptocurrencies on Reddit (by the number of mentions) in the past 24 hours include Bitcoin (BTC), Ethereum (ETH) and USD Coin (USDC).

89% still trust centralized custodians despite 2022’s collapses: Survey

American crypto users haven’t lost their trust in “intermediaries” to hold their crypto, with a January survey from Paxos suggesting a majority of United States crypto hodlers still trust banks, exchanges and mobile payment apps to custody their assets.

An annual online survey published on Mar. 7 by the stablecoin issuer conducted between Jan. 5 and Jan. 6 sought to understand how the crypto winter and “large industry fallouts” in 2022 — including FTX and Alameda Research — impacted consumer behavior and confidence in the crypto ecosystem. Paxos noted:

“2022 was a rollercoaster year for the crypto industry.”

“Ranging from some of the highest Bitcoin prices ever to some of the lowest, largescale industry fallouts from companies like Terra, FTX, Alameda Research, and more — it was a volatile and potentially confidence-testing year for the ecosystem,” it added.

However, the survey found that of those that heard and followed the FTX saga, more than half (57%) of respondents either planned to buy more crypto or simply do nothing as a result of the news.

It also found that 89% of respondents still trusted “intermediaries” such as “banks, crypto exchanges and/or mobile payment apps” to hold their crypto, stating:

“In fact, despite the high-profile collapses and underlying poor risk management practices seen in several crypto companies, crypto owners still trust intermediaries to hold crypto on their behalf.”

The survey also found more desire from consumers to be able to buy Bitcoin (BTC), Ether (ETH) and other digital assets from household or traditional banks, with 75% of respondents indicating they were “likely or very likely” to purchase crypto from their “primary bank” if it were offered, a 12 percentage point increase from the year before.

Graph showing respondents who indicated they were likely to purchase crypto from their primary bank. Source: Paxos

“Additionally, 45% of respondents reported they would be encouraged to invest more in crypto if there was more mainstream adoption by banks and other financial institutions,” Paxos added. 

It said a “significant untapped opportunity” existed for banks if they expanded offerings to digital assets. “Not only would these services satisfy increasing demand, but they would also result in higher engagement,” Paxos claimed.

Related: Paxos is engaged in ‘constructive discussions’ with SEC: Report

Respondents qualified for the survey if they lived in the United States, were over 18 years of age, had a total household income greater than $50,000 and purchased cryptocurrency sometime within the last three years. The survey recruited 5,000 participants.

75% of respondents continued to be confident in the future of crypto. Source: Paxos

“Despite the volatile 2022 crypto landscape, consumers didn’t lose faith in their crypto investments. This number was unchanged from the previous year’s report, underlining the long-term confidence of those participating in crypto markets,” wrote Paxos. 

The timing of the survey however means that the gleaned results did not take into account more recent crypto headwinds, such as the bankruptcy of crypto lender Genesis, the crackdown on Binance USD (BUSD) involving Paxos and the financial uncertainty of crypto bank Silvergate Capital.

Silvergate reportedly talks with FDIC on ways to avoid shutdown

United States banking regulators have reportedly been sent to Silvergate’s headquarters in La Jolla, California — looking for ways to save the crypto-friendly bank from a possible shutdown. 

A Mar. 7 Bloomberg report citing “people familiar with the matter” said Federal Deposit Insurance Corporation (FDIC) officials have been discussing ways to salvage the company with management.

The FDIC is an independent government agency in the U.S. tasked with supervising financial institutions for safety, soundness and consumer protection, its website states.

The FDIC examiners reportedly arrived at the firm’s headquarters last week and have been reviewing the firm’s books and records, one of the sources said.

However, a decision has yet to be made on how it would deal with its financial strife, nor does FDIC involvement suggest a solution can’t be reached without the regulator’s input, suggested another source.

Related: Impact of the Silvergate collapse on crypto — Watch The Market Report live

Silvergate stock plummeted last week after the company announced a delay in the filing of its 10-K report — a document that would provide a comprehensive overview of the company’s business and financial condition.

At the time, it said it was “evaluating the impact” of market volatility and several high-profile bankruptcies in 2022 on “its ability to continue as a going concern” over the next 12 or so months.

Uncertainty over Silvergate’s financial situation has raised fears of an upcoming bankruptcy filing, which could prove costly for the rest of the industry. Silvergate stock plummeted over 50% on the New York Stock Exchange on Mar. 2 to $5.72, while crypto prices took a beating across the board

Within 24 hours after its 10-K delay announcement, Coinbase, Circle, Bitstamp, Galaxy Digital and Paxos noted a scaling back of their individual partnerships with Silvergate. MicroStrategy, Binance and Tether also denied any meaningful exposure to the bank.

As of the time of writing, Silvergate stock is priced at $5.21, down 70% over the past month, according to Google Finance.

Hacker returns stolen funds to, gets $97K bounty reward

The hacker behind the exploit of the decentralized finance (DeFi) lending platform has returned the stolen funds for a $97,000 bounty reward in Ether (ETH). 

The exploit was executed at 10:28 am UTC on Mar. 7, with confirming the incident on Twitter soon after citing “an unusual amount of borrows,” and adding it has paused all borrowing.

Blockchain data showed the exploiter used a price oracle glitch to borrow $1.59 million worth of assets from the protocol by depositing 1 GMX token, valued at around $71.

“It looks like your oracle was misconfigured. contact me to sort this out,” wrote the hacker in an on-chain message.

Message sent to from the price oracle exploiter. Source: Arbiscan

Eight hours later, the DeFi protocol announced it had come to an agreement with the “White Hat” exploiter, in which the hacker would repay all loans minus a 62.16 ETH “bounty,” worth around $97,000 at current prices. 

Another hour later, confirmed on Twitter that the exploiter had completed the loan repayments.

“Funds are officially SaFu, post mortem on the way,” it wrote. 

Related: DeFi lender suffers exploit, white hat hacker suspected

Last year in August, cross-chain Nomad Bridge appealed to exploiters that participated in a smart contract exploit that extracted $190 million in funds from the bridge in less than three hours.

Mere hours later, approximately $32.6 million worth of funds were already returned, suggesting some of the exploiters may have been white hat hackers attempting to extract funds for a later safe return.

Later in the month, nonfungible token (NFT) firm Metagame even offered a “Whitehat Prize” in the form of an NFT for anyone that proved they returned at least 90% of the funds they stole from the protocol.

Blockchain data from the Official Nomad Funds Recovery Address shows that funds continued to be returned to the recovery address since then, with the latest transaction recorded on Feb. 18, 2023, for $7,868 in Covalent Query Token (CQT).

Goldman Sachs still open to crypto hires amid massive 3,200 staff cut

Goldman Sachs’ digital assets unit is reportedly open to bolstering its 70-strong team, despite a massive cost-cutting exercise at the firm last month that will see 3,200 employees clear their desks.

Mathew McDermott, Global Head of Digital Assets for Goldman Sachs said the bank remains “hugely supportive” of exploring blockchain applications and that the digital asset division will hire “as appropriate” this year.

The executive made the comments in Hong Kong to Bloomberg last week, noting that the digital assets team has grown from just four staff members in 2020 to around 70 today.

The firm’s supposed openness to beef up its crypto team comes despite the firm cutting up to 3,200 jobs last month, its largest round of layoffs since the global financial crisis of 2008-2009.

The cuts have reportedly impacted senior, middle and junior-level executives and concentrated on its core trading and banking units according to a person with knowledge of the matter.

In a presentation during Goldman Sachs’ 2023 Investor Day in New York, CFO Denis Coleman reportedly said part of the payroll cuts will also involve holding off on replacing departing employees this year, so it can instead focus on “prioritizing strategic hires.”

Related: Crypto layoffs decelerate, with layoffs falling to 570 in February

In December, McDermott said the firm was seeing opportunities to buy crypto companies that are “priced more sensibly” after the collapse of crypto exchange FTX, adding that they are already doing its due diligence on some crypto firms.

He noted that while FTX was a “poster child” of the space, ultimately, the underlying tech behind the industry “continues to perform.”

Crypto layoffs decelerate, with layoffs falling to 570 in February

Crypto industry layoffs appear to have slowed down significantly over the past month with an estimated 570 crypto employees dismissed in February, down from an estimated 2,850 in January.

Cointelegraph compiled the figures based on publicly reported layoffs and found job cuts were spread across at least 12 companies over the 28-day period, but noticeably lacked the triple-digit crypto exchange layoffs compiled in January, such as those from Coinbase, and Huobi.

Instead, staff cuts came in the double-digits for the most part — impacting blockchain analytics firms, blockchain and software development firms, and digital asset platforms among others.

The most recent layoffs came from crypto analytics firms Elliptic and Messari, which cut 10% and 15% of staff, respectively.

Messari founder, Ryan Selkis, tweeted on Feb. 23 that the staff cuts were due to “market headwinds” and a restructuring of their internal teams. It is estimated to have impacted around 27 employees.

Meanwhile, an Elliptic spokesperson told DLNews on Feb. 24 that the decision to lay off 20 employees was a move to tamp down operating expenses.

It follows news from earlier in the month, when Chainalysis, another blockchain analytics company, revealed it had laid off 44 of its 900 employees, representing 4.8% of its workforce “primarily in sales.”

Neil Dundon, an Australia-based crypto recruiter told Cointelegraph “the spike in layoffs is a macro event not just in Web3 but tech in general fueled by fears of an extended recession.”

Tech layoffs between January 2022 to February 2023. Source:

Data from layoff tracker revealed there was a total of 24,572 employees laid off across 129 tech companies in February, down from 84,414 across 268 tech companies in January.

“Web3 is always going to be hit to a harder degree at least until Bitcoin decouples from the stock market. There may also be some fears of tougher regulations in web3 adding to the spike. But as always crypto is resilient.”

On the higher end of layoffs in the month, nonfungible token (NFT) company Dapper Labs and Ethereum-scaling platform Polygon Labs both dismissed around 20% of staff as a result of internal restructuring.

In a Feb. 21 Twitter post, Polygon co-founder Sandeep Nailwal explained the move was a result of unifying all its internal teams under Polygon Labs, leading to 100 jobs being cut.

On Feb. 23, Dapper Labs CEO Roham Gharegozlou confirmed another round of layoffs at his company following a first wave in November, noting it was part of restructuring “to improve our focus and efficiency.”

Immutable, the Australian firm behind another Ethereum layer-2 blockchain protocol, also reportedly cut staff during the month, reducing headcount by 11%.

Other firms to announce headcount reductions included crypto exchange Bittrex, NFT marketplace Magic Eden, institutional crypto custodian Fireblocks, software firm Protocol Labs and crypto media company The Block.

Payments company Affirm announced it was sunsetting its crypto program during the month amid a 19% staff cut, though it is not known how many employees from its crypto unit were dismissed as a result.

Related: Crypto recruitment execs reveal the safest jobs amid layoff season

Kevin Gibson, founder of blockchain recruitment firm Proof of Search agreed that the pace of layoffs appears to have slowed compared to January.

“Jan was big as it followed boards [and venture capital] looking [at] 2022 results and preparing for the worst,” he said. “We have seen less laid-off candidates this month.”

“Companies are still building great products and the current teams are really stretched so more layoffs would be cutting into muscle right now for many companies.”

Gibson however warns that the United States securities regulator could still “bring about more pain,” while continued press coverage of Sam Bankman-Fried and the FTX collapse “is having an effect on the public perception of the sector and mainstream adoption.”

Redditor could lose young family after crypto trading addiction spirals

A self-confessed crypto trading addict and father of two is facing the dire prospect of losing his family forever after secretly racking up $180,000 in debt from his crypto trading habits. 

Posting his story on the r/relationship advice subreddit on Feb. 21, Reddit user “Leather_Opposite2135” said he started dabbling in cryptocurrency trading around 2021.

Fast forward two years to the present day and he’s been kicked out by his wife and is at least $180,000 in debt.

Excerpt of one of the comments by the original poster responding to another Redditor. Source: Reddit

“It started just dabbling,” said Leather. “It’s a tech space so I found it very interesting. Joined a bunch of online spaces (discord) and eventually watched a few people trading btc and immediately got hooked.”

Within a year, he had already “burnt” $50,000 from trading cryptocurrency, with the funds lost coming mainly from his software business.

“Skip forward another year and it got really bad,” said Leather, noting that his addiction had started to take hold as he started to fund his trading through other means, such as personal loans and credit cards.

“I’m sure you’ve heard it before, but I found all sorts of ways to fund it, including getting personal loans, credit cards, lying about all of it.”

“I was gambling on my phone when I went to the bathroom, when the kids were sleeping, on my computer when not busy with work.”

Leather noted that around three weeks ago he finally came clean about the debt to his wife, who didn’t take the news well, threatening to leave him and take ownership of their house.

He’s since banned himself from crypto, handed over control of his trading accounts to his wife, and has been seeing a gambling addiction counselor weekly, but admitted it was initially hard to shake the addiction.

“Emotionally, I was all over the place for the first 2 weeks. Cold turkey from something I spent 10 hours a day on (minimum) […] All the while the little voice telling me to go looks at charts on the shoulder.”

The original post has since been deleted by Leather_Opposite2135 on Reddit but is neither the first nor last story shedding light on the possible dangers of crypto trading addiction.

Rehabilitation centers around the world have begun adding crypto trading addiction to their list of services treating compulsive habits, next to alcohol, drugs and behavioral health.

Crypto rehab center based in the United Kingdom. Source: Castle Craig

“Clinically, we have certainly seen an increase in people coming to therapy who report difficulties in managing their crypto trading behavior,” clinical psychologist Dr. Anastasia Hronis told Cointelegraph in an email.

“In a similar way to gambling, many of them will report that it disrupts their day to day life, they spend a lot of time thinking about it, and may also be experiencing financial hardship as a result.”

Dr. Hronis noted that similar to online gambling addiction, there is an “ease of accessibility” with crypto trading “that can be quite dangerous for individuals.”

Related: How to build a crypto portfolio without spending any money or time trading

“A person can be seen to be engaging in their normal day-to-day life e.g. going to work, spending time with family and friends, participating in hobbies etc, while still trading alongside. This means that an addiction can actually become quite severe before anyone else in that person’s life notices.”

“Given the newness of crypto trading, I think that treatment is still catching up to some degree. While the general principles of treating an addiction can certainly be applied here, there are nuances with crypto trading that would benefit from being better understood for better inform clinical treatments,” added Dr. Hronis.

Friendsies NFT creators deny ‘abandoning’ project amid rug pull allegations

Nonfungible token (NFT) collection Friendsies has refuted claims it is “abandoning” its NFT project following a tsunami of “rug pull” accusations aimed at its founders.

On Feb. 21, the founders behind the NFT project told its Twitter followers that it was putting a “pause” on Friendsies and “all future digital goods” for the time being, citing market challenges.

Around 40 minutes later, the Twitter account was deleted, while the account of Friendswithyou, who developed the project, was made private — sparking rumors that the founders had “rugged” for about $5 million.

The project’s Twitter account has since been reinstated with the founders vehemently denying it is “abandoning” the project. The founders’ account is still private, however.

“It is clear that we have upset many of you with the nature of our announcement, and perhaps we did not handle that in the best way possible,” they said, adding:

“To be very clear, we are not abandoning fRiENDSiES.”

The founders said the initial announcement was more about pausing social engagement “until further notice.”

“That was not intended to mean we are pausing building and seeking opportunities, those efforts remain on-going,” it added.

Friendsies is a collection of 10,000 Ethereum-based NFTs that launched in March 2022. It purported to give each holder a custom-built “digital companion” which could be used in the Metaverse, real-life experiences, art installations, and eventually a “Tomogatchi-like” play-to-earn game.

Friendsies NFT collection listing on OpenSea. Source: OpenSea

There are currently 3,323 owners of Friendsies NFTs, with a floor price of 0.012 Ether (ETH) (approximately $20) and a trading volume of 3,775 ETH, according to data from OpenSea.

In the initial announcement, Friendsies said the “volatility and challenges of the market have made it very difficult to move this project forward in a way we can be proud of.”

In the follow-up Twitter thread some 17 hours after the pause announcement, the project’s founders admitted they were “overwhelmed” with hate and threats over the announcement:

“We were overwhelmed with hate and threats & both our Twitter and website were attacked […] We are sorry if we let you down today with our communication, but we are not going anywhere,” it wrote.

Related: NFTs will act as high-end property during boom cycles: Real Vision CEO

Mastercard’s former NFT product lead, Satvik Sethi, who resigned in spectacular fashion earlier this month, has even made an offer to take over the Friendsies NFT project.

“I’ll install a new team and take the project forward with a different vision,” he said.

“[Friendswithyou] if you care at all about your holders like you’ve always claimed, do the right thing. Don’t abandon people who put their trust in you despite all the noise. Hit me up, let’s discuss it.”

SBF and FTX fraud ‘aided and abetted’ by Silvergate Bank, alleges lawsuit

Silvergate Bank and its CEO Alan Lane have been accused of “aiding and abetting” a “multibillion-dollar fraudulent scheme orchestrated by Sam Bankman-Fried (SBF)” and two of his entities, FTX and Alameda Research, in a newly proposed class action lawsuit.

The proposed class-action lawsuit was filed in the United States District Court of the Northern District of California on Feb. 14 by lawyers representing a San Francisco-based FTX user who — just like all other FTX customers — was frozen out of around $20,000 in crypto when the exchange collapsed last year.

Plaintiff Soham Bhatia alleges that Silvergate Bank, its parent company Silvergate Capital Corporation and CEO Alan Lane were aware of the use of FTX customer funds by Alameda Research and has accused them of concealing “the true nature of FTX” from its customers.

“At all relevant times, Silvergate, Bankman-Fried and Lane were each co-conspirators of the other,” according to the lawsuit, adding:

Silvergate and Lane aided and abetted, encouraged and substantially assisted Bankman-Fried in jointly perpetrating a fraudulent scheme upon Plaintiff and the class.

“By aiding, abetting, encouraging and substantially assisting the wrongful acts, omissions and other misconduct alleged above, Defendants acted with an awareness of their wrongdoing and realized that their conduct would substantially aid the accomplishment of their illegal design.”

The suit seeks a combination of damages, restitution and disgorgement of profits with the amount to be determined in trial.

However, the lawsuit is yet to be certified by the district court, which is a necessary step before it can proceed as a class action.

Related: Crypto bank Silvergate ranks as the second- most-shorted stock on Wall Street

The latest proposed lawsuit is just another class-action complaint filed against Silvergate over the last two months.

On Dec. 14, plaintiff Joewy Gonzalez filed a similar class-action suit in the California Southern District Court — accusing Silvergate of its alleged role in “furthering FTX’s investment fraud” by aiding and abetting the crypto exchange when it placed FTX user deposits into the bank accounts of Alameda.

On Jan. 10, a class-action suit was filed against Silvergate Capital Corporation in the United States District Court of Southern California alleging that Silvergate’s platform failed to detect occurrences of money laundering “in amounts exceeding $425 million” involving South American money launderers.

On Feb. 6, algorithmic trading firm Statistica Capital filed a putative class-action lawsuit against Signature Bank alleging it had “actual knowledge of and substantially facilitated the now-infamous FTX fraud.”

“In particular, Signature knew of and permitted the commingling of FTX customer funds within its proprietary, blockchain-based payments network, Signet,” it wrote.

Cointelegraph has reached out to Silvergate for comment but did not receive a response at the time of publication.

Celsius creditors committee proposes suing Mashinsky, other Celsius execs

The official committee of Celsius creditors is proposing to sue Celsius co-founder Alex Mashinsky and other executives for “fraud, recklessness, gross mismanagement and self-interested conduct” that eventually led to the collapse of the crypto lender.

In a proposed complaint filed in a New York Bankruptcy Court on Feb. 14, attorneys representing the Official Committee of Unsecured Creditors said the move follows six months of investigations into Celsius’ current and former directors, officers and employees.

The committee is made up of seven Celsius account holders and was appointed by the U.S. Trustee in July 2022. The committee represents the interest of Celsius’ account holders along with unsecured creditors.

“The Committee’s investigation has uncovered significant claims and causes of action based on fraud, recklessness, gross mismanagement, and self-interested conduct by the Debtors’ former directors and officers,” wrote lawyers from White & Case LLC.

The proposed lawsuit — which seeks damages in an amount to be proven at trial — aims to bring claims and causes of action against the following Celsius executives, persons and their associated entities:

  • Alex Mashinsky, co-founder, director and former CEO
  • Daniel Leon, co-founder, director and former CSO and COO
  • Hanoch “Nuke Goldstein, co-founder and CTO
  • Harumi Urata-Thompson, former CFO and CIO
  • Jeremie Beaudry, former General Counsel and CCO
  • Johannes Treutler, former head of Celsius’ trading desk and person in charge of purchasing CEL tokens on behalf of Celsius
  • Aliza Landes, the former VP of Lending of Celsius and spouse of Daniel Leon
  • Kristine Mashinsky, the spouse of Alex Mashinsky

“Mr. Mashinsky, Mr. Leon, Mr. Goldstein, Mr. Beaudry, Ms. Urata-Thompson, and Mr. Treutler breached their fiduciary obligations to Celsius,” the lawyers wrote, adding:

“Those parties were aware Celsius was promising its customer’s interest payments that it could not afford and did nothing to fix the problem.”

The lawyers have also alleged the executives made “negligent, reckless (and sometimes self-interested) investments” causing Celsius to lose $1 billion in a single year, while mismanagement led to another quarter-of-a-billion dollar loss “because they could not adequately account for the company’s assets and liabilities.”

“After that loss, they did not invest in or develop the company’s systems to adequately fix the issue, resulting in further losses,” they alleged.

The motion also alleges the executives directed Celsius to spend “hundreds of millions of dollars” on public markets to inflate the price of CEL tokens, while they “secretly sold tens of millions of CEL tokens (or were aware of such sales)” for their own benefit.

Excerpt from the recent motion from Celsius’ official creditors committee. Source: Stretto

“They sat idly by as Mr. Mashinsky recklessly bet hundreds of millions of dollars on the movement of the cryptocurrency market. They covered up Mr. Mashinsky’s repeated lies about Celsius’ investments and financial condition.”

Related: Judge denies motions from Celsius users seeking to reclaim assets

“Finally, when it became apparent that Celsius would be required to file for bankruptcy, the Prospective Defendants withdrew assets from the sinking ship […] while actively encouraging customers to keep their assets on the Celsius platform.”

The Celsius creditors committee said the proposed complaint was just the “first of many steps” in its investigation into potential former Celsius executive wrongdoings and the return of assets to victims.

A hearing with respect to the proposed complaint will be held on March 8, 2023.

Cointelegraph contacted Celsius for comment but did not receive an immediate response.

Circle squashes rumors of planned SEC enforcement action

USD Coin (USDC) issuer Circle has denied rumors that it received a “Wells Notice” over its United States dollar-pegged stablecoin.

On Feb. 14, a now-deleted tweet from Fox Business reporter Eleanor Terrett claimed Circle had been ordered by the U.S. Securities and Exchange Commission (SEC) to cease the sale of USDC — due to the stablecoin being an unregistered security. 

Dante Disparte, Chief Strategy Officer and Head of Global Policy at Circle Pay clarified on Twitter just 15 minutes after Terrett’s tweet that his firm has not received a Wells Notice.

In a follow-up tweet, Dante told Terrett that her apology is accepted, adding:

“Alas, there is a lot of churn, swirl and rumors informing the market right now.”

The original tweet from Terrett has since been deleted. Her account on Twitter has been deleted as well.