https://forkast.news/spot-bitcoin-etfs-hong-kong-crypto-throne/

In this issue

1. Bitcoin ETFs: Hong Kong has entered the chat
2. Bitcoin Ordinals flip Ethereum NFTs
3. IPO comes full circle

1. Bitcoin ETFs: Hong Kong has entered the chat

The Hong Kong Securities and Futures Commission (SFC) is considering the approval of ETFs investing directly in cryptocurrencies, with regulations to mitigate new risks.

• Two Bitcoin futures ETFs and one Ethereum futures fund have already been approved by the SFC, signaling a cautious advancement into institutionally accessible crypto-based financial products.
• According to Bloomberg, SFC Chief Executive Julia Leung emphasized the need for a “comprehensive regulatory framework” following a significant fraud case involving the Hong Kong Exchange JPEX, which saw HK$1.6 billion (US$204 million) in customer funds misappropriated.
• The SFC is refining its cryptocurrency regulations and developing new rules for stablecoins and asset tokenization, while the Hong Kong Monetary Authority (HKMA) is aiding banks in handling tokenized assets.
• In the U.S., the Securities and Exchange Commission (SEC) has been wary of approving Bitcoin ETFs, citing potential market manipulation and the need for secure handling of customer assets.

• BlackRock and Fidelity Investments are among several major investment giants that have applied to set up a spot Bitcoin ETF in the U.S., with Grayscale Investments looking to convert its Bitcoin trust into a spot ETF.

2. Bitcoin Ordinals flip Ethereum NFTs

Bitcoin’s ecosystem of inscribed blockchain artifacts, Ordinals, BRC20s, and infinite future iterations, overtook Ethereum’s ecosystem of NFTs in sales volume this week for the first time.

• Bitcoin Ordinals and BRC20s saw over US$17.9 million in sales Tuesday, beating the combined sales volume of the next four blockchains.
• The Bitcoin ecosystem has traded for over US$57.6 million in November, reflecting a return to pre-summer levels of trading.
• $SATS BRC-20s are the top-selling NFT collection in the past seven days across blockchains, with US$25.2 million in sales.

3. IPO comes full circle

Circle Internet Financial Ltd., the company behind USDC, the world’s second-largest stablecoin, is contemplating an initial public offering (IPO) in early 2024, Bloomberg reported Wednesday, citing unnamed sources.

• The sources reportedly said Circle is in talks with advisers over the potential listing, although the outcome and valuation remain uncertain.
• Circle canceled a previous attempt to go public via a SPAC merger. The company was valued at US$9 billion in 2022.
• Despite the aborted merger with Concord Acquisition Corp., Circle has attracted significant investment from heavyweights like Goldman Sachs and BlackRock.
• The stablecoin issuer faced a scare earlier this year due to its US$3.3 billion exposure to the defunct Silicon Valley Bank. 

https://forkast.news/sbf-trial-drama-cryptos-meteoric-october/

In this issue

1. Bankman-Fried’s memory lapses seek jury’s doubt
2. Betting that NFTs are Back
3. ETF dreams inspire Bitcoin’s October revival

1. Bankman-Fried’s memory lapses

Bankman-Fried’s fate now rests in the hands of a 12-member jury after his testimony concluded in a lower Manhattan courtroom on Tuesday. Facing potential life imprisonment if convicted on fraud charges related to the collapse of FTX and its sister hedge fund Alameda Research, the 31-year-old has pleaded not guilty. Both the defense and prosecution made their closing arguments Wednesday, with jurors now set to deliberate.

• Assistant U.S. Attorney Danielle Sassoon led the cross-examination, focusing on Bankman-Fried’s relationship with the Bahamian Prime Minister, Philip Davis. Sassoon asked if Bankman-Fried had proposed paying off the Bahamas’ US$11 billion national debt. He claimed not to remember such discussions. The attorney also probed into other alleged favors given to members of the Bahamian government, such as the prime minister’s visit to an FTX-sponsored Miami Heat basketball game.
• The key issue in the case is the US$8 billion hole in FTX’s balance sheet, and Bankman-Fried expressed regret for not investigating it further. He claimed that when he asked his deputies about the missing funds, they brushed off his inquiries, stating they were too busy to discuss it.
• Bankman-Fried’s defense strategy revolves around convincing the jury that he did not intentionally divert customer money to fund a luxurious lifestyle involving private jets and a penthouse in the Bahamas.
• During the redirect examination, Bankman-Fried discussed his frustration with regulators and how his comments might have influenced the regulatory landscape. He also addressed why he didn’t fire anyone upon discovering the US$8 billion liability, stating that his focus was on moving forward rather than assigning blame.
• He defended his use of a private jet as a valid CEO expense, stating it was essential due to logistical challenges in traveling between the Bahamas and Washington, D.C.

2. Betting that NFTs are back

CryptoPunks are on the move and large offers are starting to roll in for some of the rarest Punks in the iconic Larva Labs collection.

• CryptoPunk #9280 has a current active bid of 1.1k ETH (US$2.01 million) on Larva Labs’ CryptoPunks website.
• There are currently 2,099 ETH worth of open bids for CryptoPunks on the Larva Labs website.
• Over US$4 million worth of CryptoPunks have been sold on secondary markets over the past seven days.
• The floor price of CryptoPunks is up 9.0% this week to 46.88 ETH.
• Eleven CryotoPunks have sold for over US$100,000 over the past week.

3. ETF dreams inspire Bitcoin’s October revival

Bitcoin experienced a notable rise in October. It was down to around US$26,600 half way through the month before starting its sudden rise. The coin is now sitting pretty at over US$35,000 as we go to print. The price pump saved the ‘Uptober’ narrative of October rises in the crypto market. The catalyst? Anticipation that the U.S. Securities and Exchange Commission will approve at least one of a number of spot Bitcoin ETF applications in the near future.

• The “Uptober” narrative is driven by historically strong Bitcoin performance in the month of October. While dismissed by some analysts as coincidence, the narrative is backed up by data, with only one negative October for the coin since 2015.

• Many crypto advocates feel that an ETF approval could usher vast institutional investment into Bitcoin, potentially boosting the crypto market by US$1 trillion.

• After losing US$2 trillion in value over 18 months, the crypto industry is therefore pinning much of its hope for recovery on the imminent arrival of a spot Bitcoin ETF in the U.S.

• Beyond cryptocurrencies, other sectors of Web3, including NFTs and the metaverse, face an uncertain future despite Bitcoin’s uptrend.

• Analyst views on Bitcoin’s performance are split between an upcoming bearish November and a positive long-term outlook.

• Kaiko’s Clara Medalie underscores the need for more than just an ETF approval to counteract the market’s volatility after 18 months of losses. 

https://forkast.news/neo-sets-sights-on-defi-unveils-evm-compatible-sidechain/

Neo blockchain has announced the development of a new Ethereum virtual machine (EVM)-compatible sidechain. An EVM-compatible blockchain can execute smart contracts written for Ethereum without changes.

See related article: In Conversation with Da Hongfei, Neo: China-Born Digital Asset Protocol

Fast facts

• Neo founder, Da Hongfei, introduced the sidechain during his keynote speech at Neo’s 2023 Asia-Pacific hackathon’s grand finale held in Hong Kong.
• The Neo Sidechain will further allow the deployment of smart contracts, paving the way for trading-specific applications, including decentralized finance.
• The sidechain will be interoperable with Neo N3 (mainnet). Additionally, the sidechain is structured to counteract Maximum Extractable Value (MEV) attacks like frontrunning, to enhance the trading experience.
• DeFi has become a popular use case of blockchain technology with over US$41 billion worth of value locked in decentralized applications, according to DeFiLlama data.
• However, MEV attacks threaten its sustainability. The transparency of most DeFi transactions allows attackers to manipulate and exploit transaction details. They use sophisticated algorithms to monitor mempools, enabling them to execute profitable actions, including transaction reordering.
• Neo’s cryptocurrency, NEO, rose 13.7% to US$8.87 in the 24 hours to 8:20 p.m. in Hong Kong on Friday, putting on the strongest daily performance among the top 100 cryptocurrencies by market capitalization.

See related article: BSN to integrate Neo’s chain to bolster NFT issuance in China

https://forkast.news/taiwan-introduces-crypto-regulation-proposal/

Taiwan has introduced a crypto bill for its first reading to the Legislative Yuan, the country’s parliament, The Block reported, citing official records. 

See related article: Taiwan may mandate public servants to declare crypto holdings

Fast facts

• The bill proposed Friday, mandates crypto platforms in Taiwan to apply for an operating permit. Failure to do so may result in a forced shutdown of their operations.
• Taiwan’s Financial Supervisory Commission last month rolled out guidelines prompting the local crypto industry to devise its own self-regulatory standards, according to the Block. 
• Yung-Chang Chiang, one of the lawmakers backing the proposals, told the crypto media outlet that the “special law” would grant regulatory authorities the power to levy administrative penalties on entities flouting self-regulation rules.
• Chiang reportedly added that a date for the second reading has not been set. 

See related article: Taiwan tightens crypto governance, HK acts on JPEX; El Salvador stockpiles Bitcoin

https://forkast.news/bitcoinetf-approval-crypto-renaissance-horizon/

In this issue

1. ETF price pump
2. Ethereum NFTs on the up
3. Working blues

1. ETF price pump

With one announcement Monday, the U.S. Securities and Exchange Commission (SEC) may have inched closer to green-lighting a U.S. spot Bitcoin exchange-traded fund (ETF). The belief is that once one such ETF is approved, others will follow, catalyzing institutional investment in the blockchain industry.

• This sentiment was bolstered as the SEC announced it won’t challenge Grayscale’s conversion of its GBTC into a spot Bitcoin ETF. The news contributed to a 10% spike in Bitcoin’s price, briefly sending the coin above US$35,000 for the first time since May 2022.
• Grayscale’s GBTC, with assets worth $16.7 billion, is currently the world’s largest cryptocurrency fund. Following the SEC announcement, the company expressed its readiness and eagerness to transition GBTC into a Bitcoin ETF, emphasizing a commitment to its investors.
• The introduction of a spot Bitcoin ETF is expected to bridge the gap between traditional finance and the relatively niche cryptocurrency market. As Jack Jia of Unlimit highlighted, such ETFs will streamline the investment process for potential crypto investors, making the onboarding process smoother via traditional brokers.
• Heavyweight financial institutions like BlackRock, Fidelity, and Ark Invest are also in the queue, having submitted their applications to the SEC. Historically, the SEC has shown reluctance to approve a spot Bitcoin ETF, voicing concerns about crypto market liquidity and potential price manipulation.
• Vivian Fang, a finance professor and fintech expert, feels the SEC is becoming more receptive to the idea, especially given its recent acknowledgments of the Bitcoin market’s resilience to potential manipulation.

2. Ethereum NFTs on the up

The Forkast 500 NFT Index is up 6.28% in the past seven days. Ethereum NFT sales volume is up 43.40%, hitting US$45.6 million in the week.

• Average Sale price of Ethereum NFTs climbed to US$389.74 on Oct. 24, the highest it’s been since average sale prices reached US$429.36 on July 13.
• It was a 63-day high for Ethereum NFT sales, its highest mark since Aug. 22, when sales reached US$8.9 million.
• ETH price climbed 13.70% in the past seven days to US$1,788.29, helping to drive up the price of NFTs on the network, which are denominated by the cryptocurrency. 

3. Working blues

Parity Technologies, the developer of the Polkadot blockchain, is cutting around 30% of its workforce, primarily targeting marketing and business development sectors.

• Parity CEO Björn Wagner told Bloomberg via a spokesperson that the company aims to allow affected employees to continue contributing to Polkadot. Wagner said that Parity’s financial health and regulatory engagement “remains robust.”
• Polkadot’s DOT token has a market value of US$5.35 billion and is ranked 15th in market cap among cryptocurrencies.
• This wave of layoffs comes as the global crypto market capitalization plunged 63% from its all-time high. Widespread staffing reductions have become a trend in the crypto sector throughout this year, reflecting continued bear market conditions.
• Earlier in August, blockchain intelligence firm Chainalysis announced it is shedding 15% of its 900 staff members, marking its second round of layoffs this year.
• Binance.US, the American subsidiary of global cryptocurrency exchange Binance, announced last month that it had cut one-third of its workforce.
• Blockchain and cryptocurrency developers like Polygon Labs and Circle have also announced job cuts over the course of the past year.

https://forkast.news/binance-challenges-cftcs-global-reach-in-legal-clash/

Binance, the world’s largest cryptocurrency exchange, argued in a court filing on Monday that the U.S. Commodity Futures Trading Commission (CFTC) is overstepping its boundaries by trying to police global cryptocurrency activities.

See related article: Binance’s rollercoaster week: expansion, setbacks, and the ghost of FTX’s collapse

Fast facts

• In March, the CFTC accused Binance of offering unregistered crypto derivatives to U.S. customers.
• The CFTC is the U.S. commodities regulator that oversees the nation’s derivatives markets, such as futures and options.
• Binance filed a statement in an Illinois court on Monday in response to the CFTC. The exchange said that while U.S. law applies within its borders, it doesn’t have the authority to regulate activities across the globe. Binance criticized the CFTC’s “broad arguments” and stated that the agency was not the “world’s derivatives police.”
• Binance claimed that its U.S. operations, conducted under Binance.US, are separate. The company argues that only this domestic segment should be under U.S. regulatory scrutiny.

• Binance also faces regulatory scrutiny from the U.S. Securities and Exchange Commission, which has accused the exchange of violating local securities rules. 

See related article: Binance says it signed agreements with new euro banking partners

https://forkast.news/binances-expansion-setbacks-ftx-collapse/

In this issue

1. Japan — a new frontier for Binance?
2. AI art sweeps NFT sales
3. ETF buzz electrifies Bitcoin

1. Japan — a new frontier for Binance?

Binance Japan started trading operations Aug. 1, launching with an impressive 34 coins on its platform. The number might be a fraction of what Binance’s global exchange offers, but for the Japanese crypto market, it marks a significant leap. The number places Binance Japan at the forefront of the domestic industry in terms of cryptocurrency variety.

• The official arrival of Binance, the world’s largest cryptocurrency exchange, as a licensed entity in Japan, signals challenging times ahead for the multitude of smaller domestic exchanges already grappling with dwindling liquidity and an oversaturated market. As noted by Norbert Gehrke, founder of the Japan FinTech Observer newsletter, the dominance of Binance could potentially kill off many of these smaller competitors.

• Binance has faced regulatory hurdles in Japan in the past. It received reprimands from the Financial Services Agency (FSA) for operating as an unlicensed online exchange in both 2018 and 2021. However, the company’s strategic acquisition of the Sakura Exchange BitCoin platform last year fast-tracked its official re-entry into the country.

• Binance’s interest in the Japanese market showcases an industry-wide pivot toward the Asia Pacific market amidst growing U.S. resistance to crypto.

• Despite past frictions, the country’s pro-crypto stance — led by Prime Minister Fumio Kishida’s endorsement of Web3 technologies — hints at a promising future for foreign crypto investments in the country. But some local competitors have raised concerns over Binance’s swift licensing process, suggesting a potential double standard.

• While Binance’s global operations face legal scrutiny in various countries, experts like Tokyo-based fintech lawyer So Saito believe that existing Japanese regulations will safeguard local investors. As they were during the FTX collapse, Japanese assets are expected to remain secure even if Binance Global encounters challenges.

• On the positive side for Binance and Japan, the entry of a global giant might just be the spark the domestic crypto industry needs to really get up and running. The market is shifting away from one-note cryptocurrency trading to the broader potentials of Web3. If developers can integrate Japan’s traditional strengths in areas like anime, manga, and video games, then the future seems ripe with opportunity. 

• The hope, as expressed by industry advocates, is that Binance’s presence will rejuvenate Japan’s crypto space, drawing in more foreign interest and innovation much like the crypto hubs of Dubai and Singapore.

2. Art and charity over apes in NFTs

Refik Anadol’s artificial intelligence (AI)-created art collection “Winds of Yawanawa” is currently the top non-fungible token collection on the Ethereum blockchain. 

• Over US$3.7 million in secondary sales of the collection have been recorded over the past seven days, marking a 446% increase since the collection’s unveiling last week.
• Winds of Yawanawa was responsible for 11.4% of Ethereum’s US$32 million in total NFT sales the past week.
• The highest sales within the collection include one NFT for 23 ETH (US$36.560.17), and 17 individuals sales at more than 15 ETH (over US$23,000) each.
• Refik Anadol’s art was featured on the exterior of The Sphere, an immersive events structure in Las Vegas, during the venue’s opening in September.
• The Museum of Modern Art welcomed Refik Anadol’s “Unsupervised — Machine Hallucinations” NFT into their permanent collection, making it the first NFT to be owned by MoMA.

3. Finks forecast: Golden Bitcoin era?

BlackRock CEO Larry Fink addressed the recent fleeting surge in Bitcoin prices during an appearance on the Fox Business broadcast on Monday, highlighting the immense global interest in cryptocurrency.

• This surge was initially fueled by a rumor that the U.S. Securities and Exchange Commission (SEC) had given the green light to BlackRock’s application for a spot Bitcoin exchange-traded fund (ETF).
• Fink refrained from delving into specifics but noted that the rally wasn’t solely based on the rumor. He attributed the upswing to worldwide concerns about the current Israel-Palestine conflict and what he described as escalating global terrorism. He discussed the growing trend of investors moving towards safer assets, whether it’s treasuries, gold, or even — at a time of global disruption in traditional markets — cryptocurrencies.
• The ETF rumor and spike in Bitcoin price originated from Cointelegraph, a cryptocurrency news platform. It claimed early Monday on social media platform X (formerly Twitter) that the SEC had approved BlackRock’s spot Bitcoin ETF application.
• However, Cointelegraph later retracted the claim. In the meantime, Bitcoin’s value briefly spiked to nearly US$30,000 before stabilizing back to within the US$28,000 range.
• In June, BlackRock lodged an application for its iShares Bitcoin Trust with the SEC. Should it gain approval, the firm plans to collaborate with Coinbase Custody as its custodian.
• Despite an influx of spot Bitcoin ETF applications from various institutions, the SEC has delayed a decision on approvals. Nevertheless, Steven Schoenfeld, a prominent figure in the industry, anticipates the SEC to approve all applications in the coming three to six months.

https://forkast.news/israel-palestine-navigating-conflict-aid-blockchain/

In this issue

1. Gaza tensions, digital tremors
2. NFTs: not dancing in September
3. Lubin talks twilight: Traditional system’s eclipse

1. Crisis? Bitcoin’s dual response

Israel’s cyber crimes unit, in conjunction with the National Headquarters for Economic Warfare, has announced the freezing of cryptocurrency accounts believed to be instrumental in raising funds for the Gaza-based Palestinian militant group, Hamas. 

• Israeli authorities have reportedly urged Binance, the world’s largest crypto exchange, to transfer the confiscated funds into Israel’s state treasury.
• That follows a devastating series of attacks on Israel by Hamas over the weekend. The attacks, which included multiple atrocities against civilians, killed an estimated 1,200 people and wounded at least 2,700 others as of noon Thursday in Hong Kong. 

• In retaliation, Israeli warplanes have bombarded Gaza, a tiny strip of land some 40 km in length and home to over 2 million people. The air strikes have reduced large parts of the area to rubble, with 900 people reported killed and 4,500 injured. Reports indicate that the Israeli military has called up 350,000 reservists and may now be preparing for a ground assault on Gaza.
• In response to this humanitarian crisis, a consortium of Israeli crypto companies has launched Crypto Aid Israel. This emergency fund aims to support Israeli citizens affected by the ongoing conflict. It is spearheaded by local crypto industry figures and companies such as Fireblocks, 42Studio, Market Across and CryptoJungle. They have teamed up with non-profit organizations to receive and deliver humanitarian aid to affected Israeli communities using cryptocurrencies such as Bitcoin, Ether and stablecoins like USDT and USDC.

• Crypto has been used in conflict before. On-chain data shows that combatants and civilians on both sides of the Russo-Ukrainian war make use of cryptocurrencies as a way to receive and send funds. The use of crypto on both sides of the divide reveals crypto’s dual-edged nature as a tool designed to increase financial access, regardless of political affiliation, location, or intended use. 

• Six months into the conflict with Russia, Ukraine had already raised US$54 million in crypto donations, channeling it towards the provision of military essentials, medicine, and vehicles for their armed forces. On the flip side of that, pro-Russia militias also received over US$20 million in cryptocurrencies in the first year of the conflict.

2. Wake me up when September ends

The NFT production on Ethereum reached an all-time low of US$17.55 million in September, marking a 12.4% decline from August’s US$20.05 million, according to data from Forkast Labs.

• Prestigious NFT collections like Bored Ape Yacht Club and CryptoPunks saw a significant drop in their valuation, pointing to a potential shift in the broader market sentiment.
• Forkast ETH NFT Composite, an index tracking the top 250 NFTs on Ethereum, plunged 48% year-to-date, hitting its low of 715.22 points in September.
• Polygon’s NFT production experienced a dip, with September’s figures at a seven-month low of US$4.7 million. That was, nonetheless, an overall year-to-date increase of 219%.
• Anndy Lian, NFT author, suggests the NFT hype from 2021 has tapered off, leading to a selective and realistic approach from buyers.
• Major NFT marketplaces like OpenSea and Blur reported drops in monthly trading volumes by 31.8% and 38.3% respectively in September.
• While the market faces challenges, global brands like Starbucks are still adopting NFTs, showcasing new innovative use cases that could reignite interest in the sector.

3. Monetary system’s impending sunset

Joe Lubin, chief executive of blockchain technology platform Consensys and a co-founder of Ethereum, spoke to Forkast during the recent Token2049 conference in Singapore. He discussed the parallels between today’s crypto bear market and the dotcom bubble of the late ’90s. Lubin attributes the current crypto downturn to similar waves of unbridled enthusiasm followed by market corrections. He predicted that a marriage between AI and blockchain could be the crypto industry’s route back to prominence.

• Amid escalating global financial challenges, such as inflation and interest rate hikes, Lubin said that traditional monetary systems might be approaching their twilight.
• Regulators in the U.S. are scrutinizing the crypto industry. Lubin sees this as a veiled effort to either “slow-roll” or outright suppress the budding industry.
• Looking abroad, regions like Europe, Asia, and the Middle East are painting a contrasting picture. Those regions, he said, see decentralized tech as an equalizing force against the might of U.S. financial power.
• A tech marriage is on the horizon, Lubin said. He highlighted the importance of weaving artificial intelligence into the fabric of blockchain technology — and vice versa.
• There’s no need for society to be overly concerned about artificial intelligence, according to Lubin. He remains buoyant about AI’s potential, particularly in collaboration with decentralized protocols that prevent the concentration of AI control in a small number of hands.

https://forkast.news/sec-chair-gensler-bipartisan-backlash-crypto-regulations/

In this issue

1. SEC vs. Bitcoin ETFs: Lawmakers call
2. NFTs: Down but not dead
3. Mixin: US$200 million lost in crypto hack

1. Lawmakers enter the fray

The U.S. Securities and Exchange Commission (SEC) should stop rejecting Bitcoin exchange-traded fund applications “under inconsistent and discriminatory standards, four members of the House Financial Services Committee wrote in a Tuesday letter to SEC Chair Gary Gensler, after the U.S. financial regulator was ordered by a court last month to review Grayscale’s spot Bitcoin application.

• The letter was meant to ensure the SEC “does not continue to discriminate against” spot Bitcoin ETFs, the Tuesday letter said, urging the SEC to approve the multiple pending spot Bitcoin ETF applications immediately.

• The letter was written by Congress members Tom Emmer, who is the majority whip of the House of Representatives, Mike Flood, Ritchie Torres and Wiley Nickel.

• The letter cited a court decision on Aug. 29 that required the SEC to review Grayscale’s spot Bitcoin application it rejected earlier. The court’s finding underscores a “fundamental point” that a spot Bitcoin ETF is “indistinguishable” from a Bitcoin futures ETF that has already been approved by the SEC, thus the agency’s current stance against spot Bitcoin ETFs is “untenable moving forward,” said the letter.

• After the letter was sent on Tuesday, SEC delayed its decision on the Ark Investment Management and 21Shares spot Bitcoin ETF application from Nov. 11 to Jan. 10, 2024. The agency had earlier delayed multiple similar applications, including those from BlackRock, WisdomTree and Invesco Galaxy. BlackRock, the world’s largest asset management company, has its next Bitcoin ETF decision deadline on Oct. 17, which could be postponed again by the SEC.

• At a Wednesday hearing before the House Financial Services Committee, Gensler was questioned about his “crusade against the digital asset ecosystem,” given the agency’s enforcement actions against crypto firms for alleged securities law violations in the past few months. 

• Despite the Congress’ pressure, Gensler held to his point that “most crypto tokens are subject to the securities laws,” which makes most crypto intermediaries obliged to comply with securities laws as well. He also added that SEC was still considering what to do with the pending spot Bitcoin ETF applications, which could be further delayed due to a potential U.S. government shutdown in October.

2. Down but not out

A report came out last week stating that 95% of NFTs are now worthless. While true, the story has been spun into a narrative that NFTs are dead. This couldn’t be further from the truth. However, NFT’s value is down tremendously.

• The Forkast 500 NFT Index fell below 2,000 for the first time in the index’s history.
• The value of the NFT market is down 93.99% since the peak of the market in January 2022.
• The individual blockchain NFT Composites reflect similar all-time declines in NFT value with Solana NFTs down 94.34%, Polygon 93.53%, Ethereum 93.42% and Cardano NFTs performing the best, down just 74.49%. 
• In the past seven days, the index has lost 5.68%, indicating an increasing decline in value of NFTs across blockchains.

• Global NFT sales on CryptoSlam declined for the fifth week in a row, with just over US$69 million in total NFT sales in the week ended Sept. 24.

3. Yet another heist

Hong Kong’s crypto sector saw its second major blow in a month with Mixin Network, a cross-chain transaction network for digital assets, suffering a US$200 million exploit on Saturday.

• The database of Mixin Network’s cloud service provider was hacked last Saturday and caused the loss of around US$200 million worth of assets, Mixin announced on X (formerly known as Twitter) on Monday.

• Mixin said it has temporarily suspended its deposits and withdrawal services until the platform’s vulnerabilities are addressed, and has contacted Google and blockchain security firm SlowMist to assist with the investigation, according to the announcement.

• On Monday, Mixin Founder Feng Xiao-dong said Bitcoin was the main asset lost in the hack, and the platform will pay up to 50% of the customers’ losses for now. The rest of the losses will be compensated in the form of bonds and tokens, which the company will repurchase in the future, according to Chinese online news media BlockBeats.

• The hack added to negative sentiment in Hong Kong’s crypto industry. On Sept. 12, Hong Kong-headquartered global crypto exchange CoinEx lost approximately US$70 million from a cyberattack. Last week, Hong Kong police arrested multiple persons related to crypto exchange JPEX, which allegedly misled investors through social media promotions and suspended trading last Monday, charging high withdrawal fees.

• As of Monday, JPEX’s case has involved 11 arrests, at least 2,305 victims, and over US$180 million of investments, according to the South China Morning Post.

• Hong Kong has been implementing a slew of regulatory measures this year amid efforts to be a global hub of crypto trading while preparing guardrails for investors against bad actors. Its new rules, which went into effect on June 1, allowed licensed crypto trading platforms to offer services to retail investors.

https://forkast.news/us-sec-to-tighten-regulatory-enforcement-beyond-coinbase-binance-us/

In this issue

1. US SEC: Stepping up enforcement
2. NFTs: Gaming juggernaut Zynga moves into NFTs
3. JPEX exchange: Woes ahead as Hong Kong makes arrests

1. Warning bell

The U.S. Securities and Exchange Commission (SEC) will expand its regulatory enforcement beyond Coinbase and Binance.US to other cryptocurrency exchanges, intermediaries and decentralized finance (DeFi) entities, the agency’s head of crypto assets and cyber unit David Hirsch said Tuesday at a forum in Chicago.

• The SEC is currently investigating companies that have allegedly conducted similar breaches as Coinbase and Binance.US, Hirsch said at the Securities Enforcement Forum Central.

• “We’re going to continue to bring those charges,” said Hirsch, adding that intermediaries such as brokers, dealers and clearing agencies that are not fulfilling their obligations will not escape the regulator’s reach.

• The SEC sued Coinbase and Binance.US in June for allegedly offering unregistered securities, which deprived investors of protection against conflicts of interest and other risks. The agency also sued Ripple Labs in 2020, claiming the company’s sales of XRP constituted the unregistered offering of investment contracts. 

• Hirsch further added that adding a “DeFi” label to an operation will not help circumvent the SEC’s enforcement. 

• In the agency’s enforcement action against the Stoner Cats non-fungible token (NFT) project last week, enforcement director Gurbir Grewal said the “economic reality of the offering” determines an offering as a financial security, not its labels.

• In partnership with the U.S. SEC, the Philippines Securities and Exchange Commission held a workshop last week to enhance the two agencies’ enforcement capabilities on “securities-related crimes” that include crypto scams, according to a press release last Friday.

2. NFT gaming is here

Zynga’s entry into NFTs marks the intersection of mainstream gaming and Web3, and it is not the only major game studio entering Web3 this year. These major games arrive at a time when Web3 native games are beginning to launch, creating the perfect conditions for gaming NFTs to shine.

• Zynga’s first NFT was a free mint for a collection called Sugartown Oras. In just 7 days the collection has traded for over US$1.7 million on secondary markets, with 40% of the collection still waiting to be minted.
• Five of the top ten collections on CryptoSlam are gaming-related NFTs including Gods Unchained and DMarket, the top two collections this week, trading for US$8.1 million and US$5.2 million on secondary markets.
• DMarket’s CS:GO gaming skins boast over 1.7 million transactions in the past 30 days from 70,948 unique buyers.
• Konami unveiled its first NFT game, Project Zircon at the Tokyo Game Show on Sept. 21.
• Krafton, the developers behind PUBG, is releasing its own blockchain and an NFT-backed game called Overdare this year. The open-world sandbox game will host live events, and digital fashion and foster a Roblox-esque experience for gamers.
• Major Web3 native games including Yuga Labs’ HV-MTL Forge and Legend of the Mara, NWay’s WreckLeague, PixelVault’s BattlePlan!, and My Pet Hooligans have either launched this month or are launching in early access later this year.

3. Arrests in Hong Kong

Hong Kong police on Monday arrested six people connected with Dubai-based crypto exchange JPEX after receiving over 1,400 fraud-related complaints related to the company, according to the South China Morning Post (SCMP).

• The people arrested include two social media influencers Joseph Lam Chok and Chan Wing-yee, who have been detained on suspicion of conspiracy to defraud. The total losses involved in JPEX’s fraud complaints were estimated at HK$1 billion (US$128 million).

• The arrest followed a warning statement issued by the Hong Kong Securities and Futures Commission (SFC) on Sept. 15, which said JPEX had been “actively promoting its products and services to the Hong Kong public” without applying for a license to operate as a virtual asset trading platform (VATP), and that some influencers “have made false or misleading statements on social media” to suggest that JPEX had made its license application.

• “This incident reflects the elements of fraud, so the police took immediate action to arrest relevant individuals for suspected fraud,” said Hong Kong Chief Executive John Lee Ka-chiu on Tuesday. “This is why we have the licensing system to protect investors.”

• Following the arrest, JPEX said Monday its partnered third-party market makers had “maliciously frozen” the platforms funds due to “unfair treatment by relevant institutions in Hong Kong towards JPEX” and “a series of negative news,” and that the crypto exchange was negotiating with its partners to resolve the liquidity shortage.

• Hong Kong kicked off its new crypto exchange licensing regime in June, allowing licensed exchanges to provide certain crypto trading services to retail investors in the city. 

• JPEX’s case arises as Hong Kong ramps up its regulatory protections in the crypto industry. Apart from the SFC, Hong Kong Monetary Authority — the city’s de facto central bank institution — issued a warning last Friday that some crypto companies are purporting to provide “banking services” in their promotions to mislead investors.

https://forkast.news/binance-us-ceo-calls-it-quits-amid-major-layoffs/

In this issue

1. Shakeup at Binance.US
2. NFT: Ethereum projects at risk
3. India’s crypto stand: Decision looms

1. Winds of change

Brian Shroder, the chief executive officer of Binance U.S., has departed the company as the U.S. affiliate of the world’s largest cryptocurrency exchange laid off one-third of its staff, or more than 100 employees.

• This downsizing will provide Binance.US “more than seven years of financial runway,” a spokesperson of the firm told Forkast in an email statement. Norman Reed, the company’s chief legal officer, has assumed Shroder’s position on an interim basis.
• Schroder’s departure came amid regulatory challenges in the U.S., with the layoff being an “unfortunate example” of the impact from “the SEC’s aggressive attempts to cripple our industry,” the spokesperson added.
• Binance U.S. has been dealing with growing regulatory pressures in the U.S. this year. In June, the company was sued by the Securities and Exchange Commission (SEC) for allegedly violating securities regulations.
• Binance, the parent company, also faces regulatory scrutiny from the U.S. The Commodity Futures Trading Commission filed a civil suit against the exchange and founder Changpeng Zhao in March for operating an “intentionally opaque” business to take advantage of “regulatory arbitrage.” The exchange is also reportedly being investigated by the U.S. Department of Justice, which could pursue fraud charges against it. 
• Last week, Binance’s global head of product Mayur Kamat resigned from the company, according to Reuters.

2. On shaky ground

The declines in Ethereum’s NFT ecosystem have outpaced those in Polygon, Solana, and Cardano, with the impact of OpenSea’s creator fees policy, SEC charges against NFT projects, and controversy in major projects driving down the broader NFT market.

• Since Aug. 18 (the date of OpenSea’s policy announcement), the Forkast ETH NFT Composite has lost 12.9%, compared to declines of 7.28% on Cardano, 6.78% on Solana, and 3.9% on Polygon.
• The Forkast 500 NFT Index fell 15.27% in that period, reflecting the impact of Ethereum NFTs.
• The SEC’s war on NFTs has disproportionately impacted Ethereum, with the SEC’s first two lawsuits against Impact Theory and the Stoner Cats projects both being on Ethereum.
• Ethereum’s top collections were hit by negative news over the past few weeks, driving down the value of NFTs across the ecosystem. DeGods’ poor “downgraded art”, WreckLeague failing to mint out, the Nouns DAO fork, and US$1 million being stolen from the Milady Maker DAO’s treasury have had ripple effects across the Ethereum NFT landscape.

3. India to take a stand

India will decide its position on crypto assets in the coming months, and take reference from the international consensus formed at the recent G20 summit, said the South Asian nation’s Secretary of the Department of Economic Affairs, Ajay Seth.

• The G20 summit under India’s presidency has brought about a “very clear and comprehensive understanding” of the policy framework and risk assessment of crypto, as well as an endorsement from global leaders of India’s previous initiatives to regulate stablecoins and unbacked crypto assets, Seth said in an interview with CNBC TV18 on Sunday.
• “Based on the consensus which we have been able to achieve or rather build, we will be considering those recommendations very carefully and decide our own policies and thereafter take further action,” he said, noting that New Delhi’s position on crypto assets will be decided in coming months.
• India’s crypto industry has been troubled by a harsh stance from the government, which imposes a 30% tax on all crypto income and has expanded the anti-money laundering measures to the digital asset industry.
• The summit that ended on Sept.10 could signal a change in India’s crypto policies. When asked about the Reserve Bank of India’s 2022 proposal to outright ban cryptocurrencies, Seth said the crypto industry “is not to be seen in that binary,” and that the Indian government will now consider its own position in reference to what global leaders have agreed with.
• Meanwhile, some analysts questioned whether the G20 consensus could substantially impact crypto regulation in member states. “G20 is not powered to make binding regulations,” Amitendu Palit, senior research fellow at the National University of Singapore, told Forkast. 
• The bloc can, at best, provide policy suggestions and directions for global adoption and the regulations would have to be implemented by the member states, Palit said.

https://forkast.news/coinbase-wall-street-tradfi-crypto/

In this issue

1. Coinbase ventures into crypto lending
2. NFTs: Losses pile up
3. Singapore’s president-elect: What’s next for crypto?

1. Strategic offering

Following the vacuum left by collapsed crypto lenders such as Celsius Network, BlockFi and Genesis Global, which saw significant losses in 2022 that drove them into bankruptcies, crypto exchange Coinbase has launched a crypto lending program for institutional investors in the U.S., according to a filing with the U.S. SEC last Friday.

• The program will allow institutions to “lend digital assets to Coinbase under standardized terms in a product that qualifies for a Regulation D exemption,” a Coinbase spokesperson said in a Tuesday statement seen by Bloomberg. The exemption allows companies to offer a limited amount of securities without registering with the SEC.

• According to a filing with the SEC on Sept. 1, Coinbase has applied for the exemption through its subsidiary Coinbase Credit. The program saw its first sale on Aug. 28 and had already raised US$57 million from investors.

• The move followed a recent crackdown on the crypto exchange in the U.S., with the SEC charging Coinbase on June 6 for alleged securities law violations, saying the company’s staking-as-a-service program constitutes unregistered offer and sale of securities, which Coinbase “strongly disagreed” with.

• Coinbase also suspended its crypto staking services in the states of California, New Jersey, South Carolina, and Wisconsin on July 14, after the four states ordered the crypto exchange to ban retail customers from the services.

2. What’s the value of NFTs?

Traders are selling once prestigious non-fungible tokens at massive losses, signaling fear that most NFTs may never regain the value that they once held. The SEC’s charges against NFT project Impact Theory has injected fresh FUD (fear, uncertainty and doubt) into the markets, possibly leading to an increase in sellers realizing losses.

• Total NFT losses for the week of Aug. 28 showed that sellers were on the losing end of trades with over US$11.9 million in losses.
• Major losses on trades largely centered on the Bored Ape Yacht Club collection, highlighted in BAYC #8262, BAYC #8614, BAYC #2530, BAYC #9026, BAYC #5228, BAYC #966 that saw losses between US$212,000 and US$379,000.
• The Forkast 500 NFT Index declined 4.2% and the ETH NFT Composite lost 1.21% since the SEC’s charges were filed last week, reflecting a broader loss of value across the NFT markets.

3. A new beginning

The former chair of Singapore’s central bank, who once called the crypto industry “purely speculative” and “slightly crazy,” is now the city state’s president-elect after winning a three-way race on Saturday. Tharman Shanmugaratnam, who currently holds several international appointments, including chairman of the G20’s Eminent Persons Group on Global Financial Governance and member of the World Economic Forum’s board of trustees, will be sworn into the largely ceremonial presidential role on Sept. 14.

• Tharman has been a veteran in Singapore’s financial governance, serving as chair of the Monetary Authority of Singapore (MAS) — the country’s central bank — from 2011 to 2023. He was the country’s finance minister between 2007 and 2015, deputy prime minister from 2011-2019 and senior minister from 2019-2023.

• He said in February 2018 that cryptocurrencies were still an experiment and the MAS saw “no strong case to ban cryptocurrency trading.” 

• But as the industry developed — especially after the collapse of Terraform Labs and local crypto hedge fund Three Arrows Capital in 2022 — the MAS began to take a more restrictive approach to the industry, such as mandating crypto firms to segregate customer assets and proposing to block retail investors from crypto staking and lending services.

• At the World Economic Forum in January, Tharman said the crypto industry has to be regulated for illicit activities like money laundering. But beyond that, crypto firms should not be regulated in a similar way to banks and insurance firms as that would legitimize an industry that is “inherently purely speculative and, in fact, slightly crazy.” 

• He also sees the potential of blockchain technologies, saying in 2021 that “there may be a role for crypto in future finance that extends beyond pure speculation and illicit finance,” and that regulated stablecoins could play a “useful role” in the traditional payment system.

https://forkast.news/grayscale-sec-etf-crypto-arena-nft/

In this issue

1. SEC to review Grayscale’s ETF application
2. NFTs: Next on the SEC’s hit list?
3. Asia’s richest man eyes digital assets

1. Grayscale’s Bitcoin ETF dream revived

A U.S. Court of Appeals has sided with Grayscale in challenging the Securities and Exchange Commission’s (SEC) rejection of the firm’s Bitcoin exchange-traded fund (ETF) application, marking a victory for the world’s largest digital currency asset manager that could impact multiple pending Bitcoin ETF applications. 

• In June 2022, the SEC rejected Grayscale’s application to convert its Bitcoin trust product (GBTC) into a spot Bitcoin ETF. Grayscale then sued the SEC to demand a review of the application.

• In Tuesday’s court decision, the District of Columbia Court of Appeals said “the denial of Grayscale’s (Bitcoin ETF) proposal was arbitrary and capricious” and granted Grayscale’s petition, meaning the SEC now has to review the company’s application it rejected earlier.

• The court ruling is a “historic milestone for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper,” Grayscale Chief Executive Officer Michael Sonnenshein said in a Tuesday announcement.

• Following the court’s decision, Bitcoin price surged from around US$26,000 on Tuesday evening in Asia to about US$28,000 on Wednesday morning, the biggest daily gain for months, according to data from CoinMarketCap.

• “Undoubtedly this development is a strong positive signal for the market,” Matteo Greco, research analyst at Canada-based digital asset investment firm Fineqia International, said in an emailed comment. “However, final decisions on when and if Grayscale will be able to list its product as an ETF are yet to be made.”

2. SEC’s war on NFTs

The first shot in the SEC’s war against NFTs has been fired, beginning with charges against Web3 media studio Impact Theory for selling unregistered securities. Impact Theory quickly settled, but many are convinced that this is just the start of a much more calculated attack on NFTs by the U.S. government.

• Impact Theory, launched in October 2021, and offered three tiers of NFTs ranging from Legendary, Heroic, and Relentless. Each tier of NFTs offers a different level of access, discounts, and perks across projects in their ecosystem.
• A US$6.1 million fine has been levied against Impact Theory in “disgorgement, prejudgement interest, and a civil penalty.” The company is also required to “burn” all KeyNFTs in its possession, publish a notice on its website, revise its smart contract, remove royalties on any marketplace, and offer a refund to all primary sale buyers of its NFTs.
• Each NFT used the ERC-1155 token standard, making them semi-fungible with non-unique art and numbering across the tiers. About US$30 million was raised in Impact Theory’s primary sale, and its NFTs saw over US$39 million in sales on secondary markets. The highest-priced secondary sale was Founder’s Key #217, which sold for US$17,460.05 on Oct. 13, 2021
• The SEC said that Impact Theory planned to use funds raised from its NFT sale to develop products, bring on more teams, and create more projects.
• Key facts in the SEC’s case against Impact Theory were early statements that the company was “trying to build the next Disney,” had a goal of delivering “tremendous value to Founders Key Purchasers,” and that NFTs will “capture economic value from the growth of the company that they support,” among over a dozen direct comments about future NFT value and project plans.

3. Taking a chance

Reliance Industries – the largest private company in India – is exploring blockchain technologies and central bank digital currencies (CBDC), said Reliance’s chairman and managing director Mukesh Ambani who is also the richest person in Asia.

• Jio Financial Services (JFS) – a newly-launched financial branch of Reliance – “will not just compete with current industry benchmarks but also explore pathbreaking features such as blockchain-based platforms and CBDC,” said Ambani on Monday at Reliance’s annual shareholders’ meeting, according to CNBC.

• JFS marks Aliance’s entrance into the digital financial products space, which in July announced a partnership with the world’s leading asset manager BlackRock to form Jio BlackRock – a 50:50 joint venture where both are targeting an initial investment of US$150 million.

• In February, the retail branch of Reliance started to accept Digital Rupee payments, making it the largest Indian firm to adopt the nation’s retail CBDC that launched last December and is now piloted in over a dozen cities.

• Ambani has long shown interest in the blockchain space, saying in December 2021 that blockchain is a technology he believes in and has the potential to redefine the financial industry, according to local Indian media Business Standard.

• Meanwhile, at the G20 conference on Tuesday, India Prime Minister Narendra Modi highlighted the need for an international regulatory framework to regulate cryptocurrencies, after the country released a roadmap for global crypto regulation in early August.

https://forkast.news/headlines/bitcoin-etf-grayscale-ruling-d-c-court/

The District of Columbia Court of Appeals delivered a favorable verdict for Grayscale on Tuesday, reversing the Securities and Exchange Commission’s (SEC) earlier refusal to allow the company’s Grayscale Bitcoin Trust, known by its ticker GBTC, to become an exchange-traded fund (ETF).

See related article: SEC accepts BlackRock’s Bitcoin ETF application for review

Fast facts

• Following the court’s decision, the cryptocurrency market showed an upbeat response. Bitcoin surged more than 5%, trading at US$27,436 by 11:15 p.m. in Hong Kong, according to CoinMarketCap data. Meanwhile, STX, the token for the Bitcoin layer-2 solution, Stacks, saw a 14.6% jump to US$0.51.
• This pivotal ruling not only serves as a beacon of optimism for Grayscale but may also chart the course for other financial heavyweights, such as BlackRock and Fidelity, waiting in the wings for the SEC’s decision on their own spot Bitcoin ETF applications.
• Grayscale’s dispute with the SEC dates back to June 2022, following the commission’s approval of ProShares’ futures-based bitcoin ETF in October of the previous year. Grayscale aimed to launch its own ETF, uniquely underpinning the fund directly with Bitcoin rather than relying on Bitcoin derivatives.
• The SEC, however, dismissed their application in the subsequent summer, raising alarms over potential market manipulations and the robustness of investor safeguards.

See related article: Crypto gets a boost following reports of Fidelity’s imminent Bitcoin spot ETF filing

https://forkast.news/chinese-crypto-holders-markets-friendtech/

In this issue

1. China’s economic woes: Trouble brewing for crypto?
2. NFTs: Casualties and a new combatant
3. Rise of Friend.tech: Bright spot in a bear market

1. Bumpy road ahead?

China, the world’s second-largest economy, has seen a halting economic recovery in the post-pandemic era and faces deflationary pressure for the first time in two years. That, and the government’s inadequate stimulus policies so far, could spell trouble ahead for its economy and the crypto market.

• China’s consumer price index (CPI) in July declined by 0.3% on the year, in the index’s first fall since February 2021, while its producer price index (PPI) dropped 4.4% to book a 10th consecutive month of decline, according to the National Bureau of Statistics earlier this month.

• Apart from deflation pressure, China’s economic data in July also showed the fastest export decline since early 2020, an uptick in unemployment as well as weaker-than-expected domestic consumption.

• Despite the pressing economic turmoils, China’s central bank only cut its one-year loan prime rate (LPR) by 10 basis points to 3.45% on Monday – a policy stimulus much smaller than the analysts expectation of two 15-basis-point rate cuts in both one-year and five-year LPRs, according to Reuters on Monday.

• Concerns over currency stability could account for Chinese policymakers’ reluctance to deploy stronger policy supports, as the offshore Chinese yuan weakened to a low of under 7.3 per U.S. dollar last week, from the all-time low of 7.3749 in October 2022.

• “The biggest (macro risk for cryptocurrencies) is a potential devaluation of the Chinese Yuan, trading at the weakest level since 2007,” Markus Thielen, head of crypto research at digital asset service platform Matrixport, said in an emailed note last week. 

• “In August 2015, when China devalued the yuan for the last time, Bitcoin prices declined by 23% during the two weeks following the devaluation,” Thielen added.

2. Fear is in the air

Creator fees or royalties remain a hot topic in the non-fungible tokens ecosystem. In 2022, X2Y2 and the LooksRare marketplaces decided to no longer enforce creator fees, and soon after Blur carried the baton in the race towards zero fees. On Aug. 18, OpenSea announced its decision to no longer enforce royalties, and the NFT market had an immediate reaction. 

• The value of NFTs has plummeted by nearly 7.5% following OpenSea’s announcement to not enforce creator fees. 
• Creators argue that royalties are necessary to both drive innovation in Web3 and to support artists, while tech purists want no strings attached to the digital assets they now own.
• Mark Cuban, Yat Siu and Yuga Labs are just some of the biggest names to make statements opposing OpenSea’s decision, with Mark Cuban calling it a “HUGE mistake.” on messaging platform X, formerly known as Twitter.

  Trade profits have fallen to an average of -us$2.08 million daily since Aug. 18, and reflect the lowest average profits since the last week of June following Azuki’s disastrous mint. 

• Platforms like the Zora marketplace are innovating around royalties by sharing a percentage of platform fees with NFT creators.

3. Next big thing

Friend.tech, a new decentralized mobile application that integrates tokenomics with social media, has seen over 100,000 unique traders and 1.1 million transactions since its launch on Aug. 10, making it one of the top-earning protocols in the crypto ecosystem.

• Launched on Coinbase’s Base blockchain, Friend.tech allows its users to issue “key” tokens – previously known as “shares” – that are linked to their Twitter accounts and unlock engagements such as closed chat groups. The tokens can be bought and sold, and prices rise as their issuer’s fan bases grow.

• Friend.tech charges a 10% fee for every transaction, with 5% going to account holders and the other half to the platform. At press time, DefiLlama data showed Friend.tech had generated almost US$7 million in fees over the past two weeks.

• Some Friend.tech users have expanded their tokens’ usage beyond exclusive chat rooms and Twitter messages. Pseudonymous crypto trader and influencer RookieXBT is offering his “key” holders 33% of the revenue he receives on Friend.tech and other privileges such as free X (previously known as Twitter) premium subscriptions.

• The social media application has also attracted those outside the crypto space, with U.S. basketball player Grayson Allen launching his Friend.tech account over the weekend.

• On Tuesday, Friend.tech renamed its “share” token to “key,” explaining the new name “better illustrates their purpose as in-app items used to unlock your friends’ chatrooms.”

• However, some speculate the change of names might be driven by regulatory concerns. “(The move was made) probably to get around being called a security,” said Forkast Labs NFT strategist Yehudah Petscher on Tuesday, after U.S. regulators recently brought a spate of lawsuits against digital asset platforms.

https://forkast.news/will-singapore-steady-the-stablecoin-ship/

In this issue

1. Singapore: stablecoin rules in play
2. DeGods downgrades
3. HKVAX: lucky third

1. Finding stability

The Monetary Authority of Singapore (MAS) unveiled a regulatory framework for stablecoins on Tuesday as the Southeast Asian city-state positions itself as an aspiring global nexus for the crypto sector. 

• The framework delineates critical conditions for stablecoin issuers: ensuring value stability, maintaining a minimum base capital level, guaranteeing redemption at face value and assuring disclosure on matters like holder rights and audit findings of reserves. 

• “When well-regulated to preserve such value stability, stablecoins can serve as a trusted medium of exchange to support innovation, including the ‘on-chain’ purchase and sale of digital assets,” MAS said in its release.
• MAS said that the new regulations would be applicable to Singapore-issued single-currency stablecoins pegged to the Singapore dollar or a selection of 10 major currencies, such as the U.S. dollar, the euro and the U.K. pound. 

• Implementation of the regulation will begin once approval for amendments is received from the Singapore parliament. 

• Singapore is not alone in its pursuit of stablecoin regulation. Earlier in June, Hong Kong initiated its own regulatory framework for crypto exchanges and is now in the process of devising a licensing structure for stablecoin issuers, which could be revealed within the year. 

• Meanwhile, the U.S. Congress has been deliberating on a stablecoin bill introduced in April 2023. The bill mandates the U.S. Federal Reserve to draft stipulations for the issuance of stablecoins, while concurrently upholding the jurisdiction of state regulators.

2. DeGods Decline

One of the top non-fungible tokens collections, DeGods, kicked off their Season III event, delivering new art and fancy rewards to their NFT holders. But the execution was close to a disaster, with delays, bland art, and the omission of one major component — female avatars. Poorly received by collectors, the DeGods collection’s floor price nosedived with the sour sentiment of the broader NFT market seeping into the DeGods community.

• The daily average sales price of DeGods NFTs has fallen from as high as US$24,000 in July to now just above US$9,000.
• Sales have climbed 303% in the past week from old collectors exiting the collection and new ones entering, with trades on secondary markets exceeding US$7.8 million.
• Wash trading increased by over 1,782% with farmers taking advantage of the collection’s extra trading volume, and washing over US$21 million in NFTs.
• While most of the NFT market finds sellers on the losing end of trades, the DeGods collection has found sellers in profit by over US$661,000 in the past seven days. 
• DeGods holders need to pay 333 $DUST (US$333) to upgrade their NFT to Season III art, and $DUST lost half of its value since Season III
• DeGods companion project, the y00ts, will be moving from Polygon to Ethereum to join DeGods on the same chain. Y00ts experienced similar negative sentiment and declines in prices.
• Holders have been told to expect bugs in the art as last-minute changes can impact the final product. 

3. Hong Kong nears third licensed exchange

Hong Kong Virtual Asset Exchange (HKVAX) last Friday received an in-principle approval from the Hong Kong Securities and Futures Commission (SFC) to provide virtual asset trading services, making it the third licensed crypto exchange in the city.

• This preliminary approval permits HKVAX to operate “Type 1” and “Type 7” regulated activities in Hong Kong. Those activities include securities management and offering automated trading services to retail investors, as per a press release from the exchange. 

• Upon receiving final SFC clearances, HKVAX plans to introduce an over-the-counter brokerage, facilitating trades between fiat currencies and virtual assets. Additionally, they will launch an institutional-grade trading platform and provide a fully-insured custody solution. The timeline for these subsequent approvals remains undisclosed. 

• “Hopefully the full license would come out by the end of the year or hopefully early Q1,” HKVAX Chief Strategy Officer Matthew Cheung told Forkast.

• The development is a significant milestone in Hong Kong’s revamped cryptocurrency exchange licensing regime initiated this June. This framework permits approved “virtual asset trading platforms” to offer cryptocurrency trading services to retail investors.
• Notably, on August 4, HashKey Exchange and OSL, the first SFC-licensed cryptocurrency, were granted enhanced licenses, positioning them as the pioneering platforms authorized to cater to retail clientele. 

• Meanwhile, the SFC has cautioned against certain crypto exchanges that have misleadingly insinuated their submissions of license applications. The regulator said that any such deceit will be factored into their assessment if and when these platforms formally apply for licenses. 

https://forkast.news/paypal-stablecoin-watershed-moment-crypto/

In this issue

1. Paypal launches stablecoin: A watershed moment for crypto?
2. NFTs: Balancing NFTs and traditional gaming
3. Huobi’s woes: Investigations, market talk of insolvency

1. Efficient coexistence

California-based online payments giant PayPal on Monday launched an Ethereum blockchain-based stablecoin pegged to the U.S. dollar. PayPal, which reported US$7.3 billion in second-quarter revenue, said its fully-backed, regulated stablecoin can bridge the gap between fiat currencies and the blockchain for consumers, merchants and developers.

• “Considering PayPal’s role as one of the biggest market giants in the digital payment ecosystem, the stablecoin launch is a watershed moment in the history of the crypto ecosystem,” Alex Vasiliev, co-founder and chief commercial officer at U.K.-based fintech firm Mercuryo, said in an emailed comment. He added that the launch of PayPal USD is “a testament to the fact that both crypto and the TradFi ecosystem can indeed co-exist efficiently.”
• The new stablecoin, PayPal USD (PYUSD), is backed by U.S. dollar deposits, short-term U.S. Treasuries and similar cash equivalents. PayPal will roll out the token in the coming weeks and make it available on Venmo, a peer-to-peer payment application owned by PayPal, at an unspecified later date.

• PYUSD users will be able to transfer the stablecoin to compatible external wallets, and use the token for person-to-person transactions, funding purchases at checkouts and buying foreign currencies. Also, any cryptocurrencies supported by PayPal can be converted to and from PYUSD.

• PYUSD is issued by Paxos Trust Company, the U.S.-based issuer of Binance’s BUSD stablecoin. Paypal confirmed it was considering a stablecoin issuance as early as January 2022, but halted the project in February this year amid increased scrutiny from U.S. regulators toward stablecoins — including an order for Paxos to stop minting BUSD.

• “We are interested in cryptocurrencies because we do believe that they have the ability to transform the payment ecosystem,” Jose Fernandez da Ponte, the general manager for blockchain and digital currencies at PayPal, told Bloomberg on Wednesday. “In terms of the cost of transactions, in terms of the settlement time, in terms of the programmability of the tokens, you just can do things you couldn’t do with traditional payment.”

2. Game on

The popularity of games is surging in the non-fungible tokens market, with four of the top five NFT collections on CryptoSlam this week representing mainstream adoption of gaming NFTs. 

• Combined, the four collections traded for US$20.2 million and represented one-fifth of the week’s US$99.9 million in total NFT sales across blockchains. Coming from four unique blockchains — Mythos Chain, Polygon, ImmutableX and Ethereum — a multi-chain future for NFTs has never been more evident. 
• DMarket’s CS:GO, Dota 2, Rust and other game skins are driving over US$6 million in secondary sales volume and show the appeal of skins in mainstream video games.
• DraftKings Reinmakers Fantasy Football is seeing a major boost ahead of the NFL season, trading over US$5.6 million on the Polygon blockchain.
• Gods Unchained Cards haven’t left CryptoSlam’s top 10 collections since its listing on the Epic Game Store. This is the highest volume NFT collection on the ImmutableX blockchain.
• Sorare’s fantasy soccer and baseball has been leading the way for NFT utility in games since 2018 and together with DraftKings reflect a bright future for fantasy sports backed by NFTs.

3. Trouble ahead

Huobi Global’s stablecoin exchange balance declined by 51% in the past seven days, an outflow of over US$105 million, according to data from blockchain analytics firm Nansen, as the Seychelles-based crypto exchange faces market talk of insolvency and investigations of its executives by Chinese police.

• Crypto analyst Adam Cochran highlighted Sunday a potential insolvency issue in Huobi, and said Huobi advisor and stakeholder Justin Sun — who is also the founder of the Tron blockchain — had used Huobi “as a personal piggy bank to earn from user deposits.”

• Cochran’s insolvency allegation is based on stUSDT, an investment product launched by Tron, which claims to be backed by government bonds and allows investors to stake their USDTs to earn yields. However, on-chain data showed 98% of the staked USDTs were directly held by addresses related to Sun or Huobi, with a significant proportion sent into Sun’s other decentralized finance positions, according to Cochran.

• Although Huobi’s “Merkle Tree Audit” showed on July 1 that Huobi users held $630 million of USDT and the platform had a USDT balance of $631 million, the audit stopped updating last month and DefiLlama data showed the exchange only held a combined USDT and USDC balance of around US$93 million when Cochran posted his tweets over the weekend. This could put the exchange at risk of failing to honor customers’ withdrawal requests.

• Adding to Huobi’s headache, Hong Kong online media outlet Techub News reported Saturday that several of Huobi’s executives were detained by the Chinese police and were under investigation, citing unnamed sources. Cochran also pointed to the news as a sign of Huobi’s potential insolvency. 

• Huobi said in a Monday blog that “the Huobi platform is operating as usual,” but did not mention the alleged insolvency or investigation.

• On Tuesday, an address related to Sun transferred 200 million USDT to Huobi, according to crypto data tracker PeckShield Alert, which boosted the exchange’s USDT balance to 273.54 million. Huobi later received a single inflow of 5,000 ETH (over US$9.16 million) from another address linked to Sun. However, a Huobi spokesperson has denied Sun owned the above addresses.

https://forkast.news/japans-blockchain-group-lobbies-for-tax-change/

In this issue

1. Japan’s crypto tax law: An industry group urges tax change
2. Don’t write off Bitcoin NFTs
3. Litecoin’s halving: Prices fall

1. Call for change

Japan Blockchain Association (JBA), a non-government lobbying group of the blockchain industry, last Friday petitioned the Japanese government to revise tax on crypto assets — Japan’s biggest barrier for foreign Web3 companies — as Tokyo positions itself to become a global crypto hub and center of digital innovation.

• A crypto asset tax is the biggest barrier that Web3 companies face when setting up shop in Japan, followed by obstruction to crypto adoption among citizens, JBA said in its petition that called for three major changes to Japan’s tax system for crypto assets.

• The first change would be to abolish the year-end unrealized gains tax on corporations holding crypto assets, which refers to profits that occur on paper but have not been realized through transactions.

• In June, the Japanese government exempted cryptocurrency issuers from a 30% corporate tax on unrealized gains on tokens, and the petition seeks to expand the exemption to corporations holding crypto assets issued by third parties.

• The second requested change is a revision of the taxation method for personal crypto asset trading profits, which would switch the current aggregate taxation method to a separate self-assessment method that features a uniform tax of 20%.

• The petition also hopes to eradicate the income tax on profits generated by individual crypto asset transactions.

• “In the borderless Web3 era, there is a high possibility that the exchange of crypto-assets will become the mainstream of the economic zone, and due to the wide variety of transactions that occur and the types of crypto-assets that are exchanged, tax calculation will be extremely difficult,” said JBA.

• JBA’s suggested changes come as Japan seeks to become a global leader in the Web3 industry. At the WebX conference in Tokyo last week, Japanese policymakers reiterated their vision that Web3 would be a force in transforming the global social economy, and pledged more support for the industry.

2. Bitcoin NFTs, a sleeping juggernaut?

• NFT services on Bitcoin, a measure of marketplace fees and creator royalties, fell to a three-month low this week with just 2.96 BTC or US$86,760. 
• Bitcoin Ordinals and BRC-20’s seven-day volume fell 14.09% to US$4 million.
• Unique sellers on Bitcoin declined 62.53%, with 5,276 sellers over the past seven days.
• Total transactions decreased by 16.5%, with just 21,637 transactions in the past seven days.
• Average sales prices on Bitcoin fell to US$494.79 in July, the lowest monthly average in Ordinals since the first few Ordinals sales on Jan. 31.
• Noteworthy BRC-20 collections making moves are $SATS which rose 14.94%, $FRAM, which declined 72.05%, and $TRAC, which decreased 43.24%. The general Ordinals collection, representing most of Bitcoin’s Ordinals, lost 30.55%.

3. Litecoin completes halving

Litecoin prices fell after its third halving occurred Wednesday evening in Asia. The event cut the token’s mining rewards by half, reducing it from 12.5 LTC per new block mined to 6.25 LTC, slowing the issuance of new Litecoins.

• Following the halving, Litecoin prices slid 5.46% in the past 24 hours to US$87.36 as of 12:20 p.m. in Hong Kong on Thursday, according to data from CoinMarketCap.
• “Although the halving would normally be a positive event for the price of Litecoin, the current bearish market and recent negative industry news has had a larger impact on trader sentiment,” said Nick Ruck, chief operations officer at Singapore-based blockchain infrastructure platform ContentFi Labs. “Additionally, the halving as an event may already be priced in since traders have known about it for quite some time.”

• Traders with Litecoin holdings of US$9,500-950,000 have aggressively accumulated the token since the middle of July, as investors had expected the halving event to fuel a bull run in Litecoin, according to crypto analytics firm Santiment on July 30.

• Launched in 2011, Litecoin works on a proof-of-work mechanism similar to Bitcoin, where “miners” invest computing power to verify on-chain transactions and receive cryptocurrency rewards in the process known as mining. A Litecoin halving event takes place every 840,000 blocks mined, which takes about four years.

https://forkast.news/worldcoins-free-crypto-more-than-just-a-freebie/

In this issue

1.  Worldcoin’s free crypto: More than just a freebie?
2. Forkast 500 NFT Index: NFTs find ways to grow
3. Japan’s metaverse ambitions: More support ahead for Web3

1. No free lunch

Worldcoin, a cryptocurrency project co-founded in 2019 by OpenAI chief Sam Altman, launched its mainnet and WLD token on Monday, offering free crypto to eligible users for “simply for being human” in a move that is raising industry concerns over privacy, accessibility and security.

• Regulators are also venturing into the fold, with the U.K.’s Information Commissioner’s Office saying on Tuesday that it will be making enquiries on the Worldcoin project, according to Reuters. The project is also unavailable in the U.S. due to regulatory restrictions.

• Ethereum co-founder Vitalik Buterin expressed his concerns in a Monday blogpost, pointing out potential issues in privacy, accessibility, centralization and security. He added that the decentralized proof-of-personhood solution that Worldcoin works towards is “one of the most valuable gadgets that people in the Ethereum community have been trying to build.”

• On Worldcoin, which aims to build a global identity and financial network, users receive a World ID by scanning their iris through hardware named “Orb” to confirm their identity and receive WLD cryptocurrency as a reward. 

• Through this network, Worldcoin aims to build a universal basic income funded by artificial intelligence, which will be equally distributed to its users.

• Upon signing up for a World ID, users in countries that allow the operation of Worldcoin can receive 25 WLD tokens as a “genesis grant.” Each user can then claim a free WLD token each week with no cap on the total number of tokens, according to the Worldcoin website.

• After launching its application in May 2022, Worldcoin reached a milestone of 2 million World ID sign-ups on July 13, 2023, and now aims to increase the number of Orbs to 1,500 this summer and fall across some 35 cities in more than 20 countries.

• The WLD token is listed on some major crypto exchanges, including Binance, Bybit, Huobi and OKX. It peaked at US$3.58 on Monday and is trading at US$2.21, moving down 6.71% in the past 24 hours, according to data from CoinMarketCap.

2. Growth, but sideways

The summer slump continues in NFTs, with the Forkast 500 NFT Index reflecting an NFT market with weaker volumes and sales. This week, the index declined 2.5% to another new all-time low at 2,632.66. 

• Among blockchains tracked by Forkast Labs indexes, the Cardano NFT ecosystem was the sole chain to gain this week, with the CAR NFT Composite up 1.19%. The Ethereum, Solana and Polygon NFT Composites all declined.
• Blockchain sales volume mostly decreased from last week, with Ethereum, Polygon and ImmutableX all falling under 10%, as Bitcoin declined 67% and Solana lost 23.4%. BNB was the only top five blockchain with higher sales volumes this week, rising 8.48%
• Ethereum’s US$4.1 million in sales on July 21 stood at a daily low since June 10, 2021, when sales stood at US$3.3 million in sales.
• Global sales volume shrank 40.33% this week with US$74.7 million in sales, down from US$112.4 million last week.
• Average global sales prices declined 40.14% to US$43.17 from US$64.85 last week.
• Sellers were on the losing end of trades this week, losing US$8.1 million across blockchains.

3. Japan’s next big thing?

A major Japanese firm might be on the cusp of unveiling the nation’s next big metaverse project at the WebX conference in Tokyo, said Prime Minister Fumio Kishida as he pledged stronger policy support for the Web3 industry.

• “I have heard that a large Japanese company will take this opportunity to announce to the world a big, ambitious project that aims to create a valuable economic system in the metaverse,” said Kishida in a recorded video at the conference.
• Japan, an early believer in blockchain and cryptocurrencies, has become increasingly supportive of emerging metaverse technology as a pillar of the country’s economic future.
• Kishida also said that Web3 is part of “the New Form of Capitalism,” an economic strategy that he first revealed in June to boost government investment in areas including digital transformation, start-ups and technology. 

• “The administration is proactively supporting domestic startups including the Web3 industry,” Koichi Hagiuda, chairman of the Policy Research Council of the Liberal Democratic Party, said in his opening remarks at the conference.

• The conference is part of Japan’s efforts to become a global Web3 hub as it faces similar competition from regional economies such as Hong Kong, South Korea and Singapore.
• Managed by Japanese Web3 media firm CoinPost, WebX is a global Web3 conference that aims to position Japan as “the Web3 center of Asia” and accelerate the mass adoption of Web3 technologies.

• In April, a government-affiliated white paper discussed Japan’s path to widespread adoption of Web3 technology, including crypto. The East Asian nation also raised entry barriers to the crypto industry by introducing tougher anti-money laundering rules in June.

https://forkast.news/headlines/crypto-com-messaging-app-line-to-collaborate-on-crypto-solutions-in-asia/

Cryptocurrency exchange Crypto.com and Line Xenesis — the crypto asset and blockchain-related business developer of Japanese messenger app Line — have signed a memorandum of understanding to boost crypto innovation in Asia-Pacific and the global industry.

See related article: Singapore-based Crypto.com gets preparatory license to expand services in Dubai

Fast facts

• In a Wednesday announcement, Singapore-based Crypto.com said the collaboration will advance the exchange’s business solutions through Line’s network of some 200 million monthly active users.
• The collaboration will initially focus on enhancing Line Xenesis’ licensed crypto offerings in Japan, with plans to explore NFT integrations and crypto payment capabilities.
• “APAC and Japan are significant potential growth markets for crypto with high levels of interest and adoption already in place,” said Patrick Yoon, general manager of Crypto.com Korea.
• Japan, an early believer in blockchain and cryptocurrencies, has become increasingly supportive of emerging metaverse technology as a pillar of the country’s economic future. A government-affiliated white paper released in April detailed the country’s plans for adopting Web3 technologies.
• Crypto.com secured a digital token license in Singapore at the start of June. It received in-principle approval from the Monetary Authority of Singapore in June 2022.
• In April 2022, Line launched its NFT marketplace through its Osaka-based blockchain subsidiary LVC.

https://forkast.news/headlines/russia-to-launch-digital-ruble-cbdc-payments-on-august-1/

Russian President Vladimir Putin signed a digital ruble bill into law on Monday, approving the use of its central bank digital currency for payments starting from Aug. 1.

See related article: Russia delays CBDC pilot to await new law

Fast facts

• The Bank of Russia, the nation’s central bank, will directly manage and maintain the digital ruble infrastructure and will be responsible for all stored assets.
• The new law states that the digital ruble is to be used for payments and money transfers and not for investments.
• Head of Russia’s central bank Elvira Nabiullina said that the use of the currency will be optional but added that the bank hopes adoption will pick up as the currency aims to bring convenience and efficiency for businesses and consumers
• The development comes after Russia’s State Duma — the country’s lower house of parliament — passed the digital ruble bill on July 11. The Federation Council — the upper house — approved the bill on July 19.
• Last year, several Western nations imposed sanctions on Russia as a response to the Ukraine war.
• The sanctions prompted Russia to seek alternative ways to carry out cross-border transactions, said Anatoly Aksakov, head of the financial committee in Russia’s lower house of parliament last year, according to a Reuters report.
• See related article: Russia is 2nd biggest Bitcoin miner after U.S.: report 

https://forkast.news/xrp-sec-ripple-crypto-clarity/

In this issue

1. Ripple Labs: More turbulence ahead?
2. Forkast 500 NFT Index: Entering a historically slow period
3. Hong Kong’s goes back and forth

1. Think twice

In a Tuesday letter to SEC Chair Gary Gensler, a U.S. lawmaker urged the financial regulator to “reassess its regulatory assault on crypto assets” after the verdict on the Ripple-SEC case last week.

• “In a landmark legal opinion, Judge Torres resoundingly rejected the regulatory overreach of the SEC, which has been indiscriminately declaring all crypto assets, except Bitcoin, to be securities,” said Representative Ritchie Torres of New York in the letter posted on Twitter, adding that “(crypto) regulation by enforcement had a dreadful day in court.”

• Torres commented after U.S. District Court Judge Analisa Torres ruled on July 13 that Ripple Labs’ programmatic sales of its XRP cryptocurrency did not qualify as financial securities, marking a partial victory for Ripple in its almost three-year lawsuit against SEC, which accused the former of conducting unregistered securities offering. However, the summary judgment also ruled that Ripple’s direct sales of XRP to institutional clients violated the securities law.

• At a Monday event of the National Press Club in Washington, D.C., Gensler said he was “disappointed” with the court’s ruling regarding the retail investors, and his agency was still assessing the judge’s opinion.

• Boosted by the court ruling, the XRP price has surged over 68% since July 13 and rose past US$0.70 for the first time since April 2022, according to data from CoinMarketCap. The token traded at US$0.81 at press time.

• “The ruling is a big win for the industry overall, offering clarity to the status of digital assets,” Jeff Mei, chief operating officer of crypto exchange BTSE, said in an emailed comment on July 14. “Although the ruling decision was based on the specific details of the Ripple case, the results will definitely support other firms who are in legal battles with the SEC regarding the classification of their products in the U.S.”

• Despite the general optimism in the crypto industry, some advised caution as regulatory uncertainty persisted. “There will be further court proceedings on (Ripple’s XRP sales to institutional customers) … It is also not yet known if the SEC will appeal the ruling,” Caroline Bowler, chief executive officer of Australia-based crypto exchange BTC Markets, told Forkast in an email. “Potential for more insecurity ahead for Ripple.”

2. Who turned down the volume?

The non-fungible tokens market fell to another new low this week, even after positive news from across the blockchain industry following a U.S. judge’s ruling that XRP was not a security. Global NFT volumes fell to a seven-month low, with the Forkast 500 NFT Index slipping 0.64% to 2,689.33, reflecting the slow trading week.  

• Blockchain sales volume shows Ethereum increasing 6.63%, Polygon rising 11.05%, and ImmutableX gaining 5.8%, while Bitcoin declined 54.96% and Solana lost 21.25%.
• Global NFT sales volume shrank to a 39-week low, the lowest since October 10-16, 2022.
• NFT weekly trade profits strengthened 66.5%, while average sales prices declined 5.41%.
• Daily Ethereum and Solana transactions on July 16 neared a two-year low, with 13,992 total transactions on Ethereum, the lowest since the blockchain’s 13,560 transactions on July 24, 2021. Solana had 10,475 transactions, its lowest since 8,462 transactions on Sept. 19, 2021.
• The Solana and Cardano Composites gained 4.63% and 5.38%, respectively, boosted by the increase in their platform’s token, $SOL (+18.9%) and $ADA (+8.11%).
• The Polygon Composite declined 5.37%, with the number of unique sellers falling 50% and total transactions decreasing 12.02%.

3. Holding back

At least two global banks operating in Hong Kong have “ruled out any activity directly linked to crypto trading,” while others hesitate to open accounts for customers of crypto exchanges, the Wall Street Journal (WSJ) reported on Monday, citing anonymous sources, without naming the two banks.

• The banks’ reluctance to service crypto-related companies can be attributed to the money laundering risks in cryptocurrencies and a lack of risk-management frameworks in the crypto industry, according to the WSJ report.

• Local banks rejecting crypto companies could be an obstacle to Hong Kong’s economic ambition. Hong Kong aims to be a hub for the Web3 industry and in June, began its new licensing regime for virtual asset service providers.

• Hong Kong’s new licensing rules that require a crypto exchange to establish one or more segregated accounts with a financial institution, together with Hong Kong banks’ cautious attitudes, is an issue for crypto companies seeking to expand in the city.

• The banking issue has raised concerns among local regulators. In June, the Hong Kong Monetary Authority, the city’s central bank, reportedly pressed major lenders, including HSBC, Standard Chartered and Bank of China, to service local crypto exchanges, after issuing letters and commentaries to advise local banks not to reject crypto firms’ request to open accounts because of the industry.

• But not all lenders in Hong Kong are rejecting crypto companies. The WSJ report said an unnamed large global bank had changed its position and was considering opening basic accounts for crypto exchanges applying for licenses in Hong Kong, citing anonymous sources. Meanwhile, local banks such as ZA Bank and the Hong Kong branch of China’s Bank of Communications started servicing crypto firms earlier this year.

https://forkast.news/headlines/us-court-rules-in-favor-of-xrp-in-ripple-labs-case-against-sec-with-caveats/

U.S. District Court Judge Analisa Torres ruled on Thursday that Ripple Labs’ programmatic sales of the XRP cryptocurrency did not qualify as the offer and sale of investment contracts. This decision from the Southern District of New York brought relief to XRP investors worldwide, marking a significant milestone in the ongoing legal tussle between the San Francisco-based payments firm and the U.S. Securities and Exchange Commission (SEC).

See related article: What is XRP and what is Ripple?

Fast facts

• Programmatic sales are automated transactions involving the selling or buying of digital assets, like cryptocurrencies, based on predetermined parameters. In Ripple’s case, it includes XRP sales in cryptocurrency exchanges.
• The verdict came with a critical caveat that may keep Ripple and its top brass on their toes. According to the court’s document, Ripple’s institutional sales of XRP violated securities regulations.
• “Having considered the economic reality and totality of circumstances surrounding the Institutional Sales, the Court concludes that Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act,” the court filing said.
• In December 2020, the SEC initiated a lawsuit against Ripple, alleging that Ripple’s sale of XRP was an unregistered securities offering. The SEC also implicated Ripple’s executive chairman Chris Larsen and chief executive officer Brad Garlinghouse as co-defendants, accusing them of aiding and abetting Ripple’s alleged violations.
• The announcement of the court’s decision triggered a surge in XRP’s value. The cryptocurrency’s price jumped by 30% to US$0.61 shortly after the news became public. Prior to the announcement, XRP was trading at US$0.47, according to CoinGecko data.

We said in Dec 2020 that we were on the right side of the law, and will be on the right side of history. Thankful to everyone who helped us get to today’s decision – one that is for all crypto innovation in the US. More to come.

— Brad Garlinghouse (@bgarlinghouse) July 13, 2023

• The court added that it would release an order to establish the trial date and related pre-trial schedules at the appropriate time.

See related article: Ripple gets in-principle approval for Singapore digital payment license

https://forkast.news/bitcoin-standard-chartered-expectations-nft-sega/

In this issue

1. Bitcoin at US$120,000: Standard Chartered’s high hopes
2. Forkast 500 NFT Index: Another week, another low
3. Sega partners Line: From game to blockchain

1. Great expectations

Bitcoin prices could rise to US$50,000 by the end of 2023 and US$120,000 in 2024, U.K. bank Standard Chartered predicted in a Monday research report, an increase from its projection of US$100,000 in April.

• Higher miner profitability per Bitcoin is one of the major factors fueling Standard Chartered’s projection, allowing miners to “sell less while maintaining cash inflows, reducing net BTC supply and pushing BTC prices higher,” Geoff Kendrick, head of foreign exchange and digital assets research at Standard Chartered, wrote in the report.

• Kendrick noted that the 12 largest listed miners — which account for 20% of all global Bitcoin mining — sold 106% of mined Bitcoins in the first quarter of 2023, and estimated the proportion dropped to 100% in the second quarter, thanks to lower mining cost and higher Bitcoin prices that have gained over 85% since the start of the year.

• “If the BTC price rises to around US$50,000, which we expect by end-2023, the share of newly mined being sold should fall to 20-30%. That is a net annual reduction in selling of BTC 250,000 — a large number relative to Bitcoin market turnover,” wrote Kendrick.

• “While predicting the timing of market moves is always tricky, the case for a significant increase in the price of Bitcoin in the foreseeable future is clear,” said Bradley Duke, founder and chief strategy officer of crypto ETP provider ETC Group. 

• “With Blackrock filing for a spot Bitcoin ETF in the US, given their past success rate, the belief is that this application is likely to be approved. This will enable massive pent-up demand for Bitcoin in the US and elsewhere to finally be able to flow into the market, and it’s logical that the price of Bitcoin responds in a proportionate manner,” said Duke.

• Bitcoin supply inflow will also be further reduced by the token’s fourth halving event, expected to occur in April or May 2024, which would cut miners’ reward for mining new blocks and verifying transactions by 50%.

• “Prior halving cycles have resulted in significant industry consolidation. This drives down the average cost of production further, increasing average miner profitability,” the report said.

2. Refreshing new lows

After another week of declines, the NFT market has found a new low of 2,703.44. The Forkast 500 NFT Index lost 2.33%, while the ETH Composite declined 1.75%, Solana slipped 0.54%, Polygon inched down 0.37% and Cardano gained 0.86%.

• Blockchain sales volume shows Ethereum losing 13% to US$88,912,031 in sales, Bitcoin rising 13%, Solana declining 75.5%, Binance gaining 55.8%, and Polygon falling 29.75%.

• Noteworthy seven-day floor price changes include Moonbirds, Yuga Labs’ HV-MTL, BAYC and CryptoPunks that all posted double-digit gains, while The Captainz and Nakamigos posted double-digit declines.

• Average global sales prices across blockchains declined 32% to US$68.52 from US$99.42 in the previous week.

• Seven-day global sales volumes decreased 20%, with US$163 million in sales this week compared to US$196 million last week.

• Trade profits in the previous two weeks stood at a low for 2023, with traders losing US$28.4 million.

• July 9 had 254,031 transactions, the lowest daily total since 239,742 on May 21.

3. Buddy up

Sega Corp., the Japanese gaming giant behind hit IPs including Sonic the Hedgehog, will partner social media platform Line Corp. to bring one of its top game IPs onto the blockchain. The news on Monday came days after Sega was reported to be winding down its blockchain-based gaming business.

• Sega signed a memorandum of understanding with Line Next Inc., an NFT branch of Line, to license the latter to make one of Sega’s classic IPs into a Web3 game on Line’s Game Dosi platform. The IP in question has not been confirmed for the time being.

• Game Dosi is Line’s Web3 gaming platform launched on May 18. Line Next will support the NFT production, digital payments, and marketing activities of the Sega title when it launches on Game Dosi, according to the announcement.

• Days before the announcement, Bloomberg reported Sega would withhold its classic franchises from third-party blockchain-based gaming projects and pause its own plans for similar projects, citing an interview with Sega co-Chief Operating Officer Shuji Utsumi.

• However, Utsumi later said in an email response to Forkast that the company’s strategy around blockchain had been misconstrued, and the plans to invest in Web3 projects, which includes licensing the company’s certain game titles to blockchain-based developers that it trusts to maintain its quality standards and meet the expectations of fans.

• “We are not trying to be a Web3 company,” said Utsumi. Instead, Web3 technologies such as the blockchain and NFTs are “functions” that the company will continue to explore as a way to grow its business and expand the potential of its IPs, he said.

• The partnership with Line is not Sega’s first Web3 initiative. In September 2022, the firm announced a partnership with blockchain game developer Double Jump Tokyo and decentralized blockchain gaming platform Oasys to bring its digital card game IP Sangokushi Taisen onto the blockchain. Meanwhile, other Japanese gaming companies, including Square Enix and Konami are also expanding in the Web3 space.

https://forkast.news/no-surprise-as-singapore-thailand-step-up-regulation/

In this issue

1. Crypto regulation: Singapore, Thailand tighten measures
2. Forkast 500 NFT Index: Seemingly no end to declines
3. Voyager: Shrinking portfolio

1. Doubling down

Crypto regulations have tightened in Singapore and Thailand this week, in measures aimed at enhancing customer assets. The Monetary Authority of Singapore (MAS) now mandates crypto firms to hold customer assets in third-party trusts, while Thailand’s Securities and Exchange Commission (SEC) has introduced bans on crypto lending and staking services. 

• In a Monday press release, MAS stated that digital payment token service providers, — the term used by Singaporean officials for crypto assets — must safeguard customer assets under a segregated, statutory trust by year-end. The MAS said this move aims to “mitigate the risk of loss or misuse of customer assets” and facilitate asset recovery in the event of insolvency of a crypto service provider. 
• MAS also intends to prohibit crypto service providers from offering crypto asset-based lending and staking services to retail investors, considering such services “generally not suitable for retail public.”

• Also on Monday, Thailand’s SEC announced rules to ban crypto firms from providing custodial services that yield returns to depositors and lenders, which would cover both crypto lending and staking. 

• Effective from July 31, the rules also require crypto firms to display a disclaimer that reads, “Cryptocurrencies are high risk. Please study and understand the risks of cryptocurrencies thoroughly, because you may lose your entire investment.” 

• The moves by Singapore and Thailand came after a series of crypto lender insolvencies in the past year, including the collapses of Celsius Network, Voyager Digital, BlockFi and more, which involved multiple billions of U.S. dollars in crypto deposits.

• Beyond the two Southeast Asian nations, South Korean legislators approved a bill last week aimed at protecting cryptocurrency investors, marking the country’s first step towards establishing a legal framework dedicated to the asset class. The new legislation mandates crypto service providers to implement specific measures to safeguard customer assets and maintain comprehensive records of all transactions. 

2. No bottom in sight

The NFT market continued to refresh all-time lows, falling to 2,746.88 as the Forkast 500 NFT Index reflected troubling times in the world of blockchain collectibles. The index is down 2.48%, with Ethereum NFTs are seeing a 3.43% decline, outpacing Solana, which lost 2.86%, Polygon, which shrank 1.26% and Cardano, which decreased 3.09%.

• Solana’s sales volume hit a high of the year with US$26 million on June 30.

• The Solana Monkey Business Barrel Raffle was the top-selling NFT collection last week, bringing in over US$29 million in sales since June 30. But most of the amount will be refunded, as this was a designed mechanic of the NFT ticket raffle.
• Solana leapfrogged Bitcoin in seven-day sales with US$40 million compared to Bitcoin’s US$32 million. But refunded SMB Barrel Raffle sales will move Solana to third place, ahead of Polygon’s US$7.5 million.

• Bored Ape Yacht Club’s (BAYC) average sale price extended its decline to near a two-year low. This month’s average sale price of US$70,000 reflects a floor price drop of 17% to 29 ETH over the last seven days.

• Noteworthy seven-day floor price changes include Yuga Labs’ HV-MTL (-30%), BAYC (-17%), Azuki Beanz (-20%), Azuki (-17%), The Captainz (-14%), Nakamigos (+26%), Clone X (+20%), Doodles (+18%) and Moonbirds (+11%).

3. Precarious position

Bankrupt cryptocurrency lender Voyager has seen a US$113 million reduction in its portfolio since reopening customer withdrawals on June 23, data from Arkham Intelligence show. Prior to this reopening, Voyager held nearly US$413 million in cryptocurrencies, which was down to under US$300 million as of Thursday. 

• Last summer, Voyager, alongside several other crypto lenders and staking service providers, fell into bankruptcy following their exposure to the demise of Singapore crypto hedge fund Three Arrows Capital and Terra’s algorithmic stablecoin. Voyager froze customer withdrawals on July 1, 2022, but recently allowed a 30-day window for its customers to partially transfer their crypto holdings.

• Meanwhile, Celsius Network, another crypto lender that filed for bankruptcy in July 2022, received approval from a U.S. bankruptcy court last week to start conversion of its altcoin holdings into Bitcoin or Ether from July 1, marking another step towards the distribution of funds to the company’s creditors. 

• Arkham Intelligence data show more than US$625 million worth of cryptocurrencies still belonging to Celsius, down from the US$1.59 billion it held before initiating partial withdrawals in early May. 

• Over the past year, a string of crypto lenders including BlockFi and Genesis Global Capital have collapsed, largely due to their exposure to the failed hedge fund Three Arrows Capital and the Bahamas-based multibillion-dollar exchange, FTX. 

https://forkast.news/fidelitys-crypto-bitcoin-etf-azuki/

In this issue

1. Fidelity: Close to filing its own Bitcoin ETF
2. Forkast 500 NFT Index: Azuki disappoints
3. Asset tokenization in Singapore: One step closer

1. Bull run

Cryptocurrencies are receiving a significant push as Fidelity Investments is reportedly nearing the filing of its own spot Bitcoin exchange-traded fund (ETF), the Block reported Tuesday, citing people familiar with the matter.

• The move would not be Fidelity’s first attempt to file for a Bitcoin-backed ETF. In March 2021, the Wall Street giant filed for a spot Bitcoin ETF named the Wise Origin Bitcoin Trust, which was rejected by the U.S. Securities and Exchange Commission in January 2022. But it launched the Fidelity Advantage Bitcoin ETF in Canada in December 2021, which has risen 75% since the beginning of this year.
• According to the Block, Fidelity’s application will join the list of financial institutions that have recently submitted or updated their applications to issue spot Bitcoin ETFs, including BlackRock, WisdomTree, Invesco, Valkyrie and Bitwise.

• A spot Bitcoin ETF is a publicly traded investment vehicle tracking Bitcoin price, which allows investors to have Bitcoin exposure without directly handling the underlying cryptocurrency.

• “Bitcoin ETF applications have supported investors’ sentiment as institutional and retail investors could show increasing interest in the market through such investment vehicles,” said Denys Peleshok, head of Asia at Belize-based financial brokerage CPT Markets, in email comments.

• “If the SEC approves new applications, the market could record a surge in demand and in the number of buyers,” said Peleshok. “Due to the SEC’s legal stance over cryptocurrencies, the market could further concentrate on Bitcoin and Ethereum, the two largest assets in the market.”

• Since BlackRock filed for its Bitcoin ETF on June 15, Bitcoin is up by more than 22%, peaking at US$31,389 on June 23, the highest since June 2022. Bitcoin traded at US$30,433, at press time, according to data from CoinMarketCap.

2. Liquid dreams

The NFT markets saw another week of decline, and again, Ethereum’s NFT ecosystem is dragging the broader market down. The Forkast 500 NFT Index is down 1.32%, as Ethereum’s decline of 1.51% stands in stark contrast to Solana, Polygon, and Cardano’s gains in value of 1.7%, 1.23% and 5.75%, respectively.

• Ethereum sales volume rose 318% on Thursday following Azuki’s Elementals mint, which brought in US$38 million to the Azuki team in just 15 minutes.
• Azuki’s floor price decreased 45% to 9 Ether following the Elementals mint, and the average sales price declined to US$23,000, down from US$39,000 the previous seven days.
• Bored Ape Yacht Club’s average sales price is up in the past seven days to US$79,214. However large BAYC holders like Machi Big Brother and Franklin have combined to sell over 60 Bored Apes, applying downward pressure on the collection.
• Solana’s 98,917 transactions on June 25 were its single highest daily total of NFT transactions in over eight months. September 2022 was the last time the blockchain had this level of activity, when the Y00ts were still surging on Solana.
• Seven-day sales volume was up across several blockchains with Ethereum up 105%, Bitcoin 22%, Solana 24%, and Polygon 10%. Mythos Chain, BNB, and Flow were down 18%, 20% and 23%, respectively.
• DeGods is now the third most expensive PFP based on floor price following Azuki’s falling prices. Azuki’s cheapest NFTs are selling for as low as 8.5 ETH, while DeGods is nearly 1 ETH higher at 9.5 ETH. 

3. Singapore calling

The Monetary Authority of Singapore (MAS), the city state’s central bank, has proposed a framework to design open and interoperable networks for digital assets, as the country seeks to harness the power of asset tokenization to improve its traditional financial services.

• “The real value in the digital asset ecosystem” lies in the tokenization of real-world and financial assets through distributed ledger technologies and smart contracts,  which could “enhance the efficiency, accessibility, and affordability of financial services,” MAS wrote in its report.

• “Unless digital asset networks are interoperable, both with each other and with traditional financial market infrastructures, fragmentation would reduce the network benefits and can create frictions such as inaccessibility, increased liquidity requirements due to separation of liquidity pools, and pricing arbitrage,” noted MAS.

• MAS’ proposal – jointly developed with the Bank for International Settlements and other financial institutions – is part of Singapore’s Project Guardian initiatives announced in May 2022 to explore the adoption of asset tokenization and decentralized finance in the city state’s financial industry.

• MAS also announced an expansion of Project Guardian to test the potential of asset tokenization across more financial asset classes, enlisting 11 financial institutions — including banking giants Citi, HSBC, DBS and Standard Chartered — to form the Project Guardian Industry Group to lead industry pilots in asset and wealth management, foreign exchange and fixed income. 

• Japan Financial Services Agency, the first overseas financial regulator to join Project Guardian, will work with MAS on digital asset innovation while safeguarding against risks to financial stability and integrity.

• MAS’ move comes as Singapore seeks to utilize the power of blockchains in its financial system, while minimizing risks of crypto assets. Last Thursday, The Asia-Pacific branch of technology firm Ripple Labs said it would start offering crypto-enabled digital payment services in Singapore after receiving in-principle approval from the MAS.

• Also on Thursday, MAS released a whitepaper – jointly developed by the International Monetary Fund, Amazon, DBS Bank, and multiple other industry players.– for “purpose-bound” money, detailing a technical overview of digital currencies designed for specific purposes.

https://forkast.news/wall-street-crypto-secs-crackdown/

In this issue

1. EDX Markets: Interest despite crypto crackdown
2. Forkast 500 NFT Index: Cautious NFT traders
3. Alibaba: New leader eyes Web3

1. Lingering interest

EDX Markets, a new crypto exchange backed by major Wall Street players such as Fidelity Investments, Citadel Securities and Charles Schwab, will offer Bitcoin, Bitcoin Cash, Ethereum and Litecoin trading services. The launch, which echoes BlackRock’s Bitcoin exchange-traded fund (ETF) filing last week, reflects the institutional interest in cryptocurrencies despite SEC’s crackdown on the industry.

• Bitcoin, Bitcoin Cash, Ethereum and Litecoin are not named securities by the U.S. Securities and Exchange Commission. 

• New Jersey-based EDX has also completed a new funding round from investors, including options exchange operator Miami International Holdings and affiliates of proprietary trading firms DV Trading, GTS, GSR and Hudson River Trading, the exchange said in a press release Tuesday.

• Unlike other centralized crypto trading platforms, EDX said it adopts “non-custodial model designed to mitigate conflicts of interest,” which means the exchange does not directly handle customers’ digital assets. Instead, it operates similarly to traditional stock markets where brokerage firms book orders from investors, as reported by The Wall Street Journal Tuesday.

• EDX also plans to introduce a clearinghouse later this year to facilitate the transactions and exchange of payments, but will still refrain from directly holding investors’ assets.

• The risks intertwined with custodial models became evident last year with the collapse of the Bahamas-based exchange FTX. The U.S. SEC also leveled allegations against Binance, the largest cryptocurrency exchange in the world, accusing it of mixing customer assets.

2. NFT markets smile

The Forkast 500 NFT Index declined 1.24% this week, but following double-digit losses just one week ago, the current decline can be interpreted as positive.

This week has brought plenty of bullish news, and it’s beginning to counteract the recent FUD (fear, uncertainty and doubt) across the crypto industry. But traders remain cautious with their funds, spending their money on established projects instead of new mints.

• The Ethereum NFT Composite lost 4.31% from a lower index impacting the average sale price in some of the top NFT projects.
• The average sales price for Bored Ape Yacht Club (BAYC) in May dipped to a low of US$80,000, unseen since July 2021, with a slight improvement this month, averaging at US$84,000.
• BAYC spin-off Mutant Ape Yacht Club’s average sales price this week fell to US$15,000, its second lowest level since the collection’s inception in August 2021.
• Doodles’ average sales price stood just under US$4,000 over the past seven days, nearly even with last week but down from the beginning of June when it stood at US$4,300.
• Moonbirds’ average sales price decreased 17% from US$3,968 to US$3,364.

• Ethereum saw a 9% decrease in total U.S. dollar sales volume, as Polygon fell 20%, while the Solana blockchain’s total sales volume increased by 4.99%. The Solana NFT Composite strengthened 2.35%, also aided by SOL regaining some of its value following the scare of the SEC labeling it as a security. 

3. A friendly face

China’s e-commerce giant Alibaba Group Holding Limited’s incoming chairman Joseph Tsai is a vocal proponent of Web3 technologies and has multiple investments in the crypto space. In a leadership shuffle announced Tuesday, Tsai, who is currently Alibaba’s executive vice chairman, will succeed Daniel Zhang as chairman.

• Taobao and Tmall chairman Eddie Yongming Wu will take over from Zhang as chief executive officer, according to an Alibaba press release. The appointments will take effect on Sept. 10.
• Tsai was one of Alibaba’s co-founders in 1999. He holds citizenships in Taiwan and Canada, and is a permanent resident of Hong Kong.

• The crypto industry might be impacted by the appointment of Tsai, who tweeted “I like crypto” in December 2021.

• Blue Pool Capital, a Hong Kong-based investment firm that functions as Tsai’s family office, has invested in numerous Web 3.0 companies, including Polygon Technology and NFT firm Artifact Labs, according to business information platform Crunchbase. Blue Pool was also one of several Hong Kong backers of the now-collapsed crypto exchange FTX, according to SCMP.

• Tsai is also the governor of the Brooklyn Nets of the National Basketball Association that announced a partnership with blockchain-based fan engagement platform Socios.com in October 2021, and introduced Netaverse — a virtual reality broadcast service of basketball games — in January 2022. 

• Despite China’s restrictions on cryptocurrencies and non-fungible tokens (NFTs), Alibaba has been exploring the Web3 space. Ant Group, a financial services affiliate of Alibaba, launched its NFT trading platform Jingtan in June 2021, while Alibaba Cloud, the cloud computing branch of the corporation, launched a blockchain node service in Singapore in December 2022.

https://forkast.news/crypto-bitcoin-hackers-cockroaches/

This first-person account of a cryptocurrency hack was verified by Forkast. The writer requested not to be identified due to repeated phishing attacks.

First, let me tell you about the cockroaches.

The worst holiday I ever had started in Thailand, Phuket Island to be exact, more than two decades ago. I’d rented a motorbike, wasn’t paying attention, skidded on a patch of loose gravel — broke a collarbone and gashed up most of my left arm.

A doctor on the island dressed the scrapes and cuts, put me in a sling, but I didn’t need him to tell me the next week of what was a scuba diving holiday wouldn’t involve any time underwater. Still, I was traveling alone and had rented a bungalow on a beach at a nearby island for the next leg and decided I’d go there anyway and rest up.

The bungalow was basic, electricity fed from a garden generator, which was temperamental, said the lady at the reception hut, assuring me when the power went off, it would (eventually) come back on.

Sure enough, that night the power went out while I was reading in the room, so I dug out a dive flashlight. 

The Phuket doctor had told me to change the dressing on the gashed arm and also give the cuts time to breathe, so on the second night I took off the dressing, washed the gashes, put the sling back on and went to sleep planning to dress the injury again in the morning.

I woke up in the dark and realized something was moving and rustling under the bed sheet on my left side. I reached for the bedside light, but the power was out. I groped for the flashlight on the side table, turned it on, peeled back the bedsheet and saw a swarm of cockroaches feasting on my scraped and bloodied arm.

I reacted like I assume most people would by shouting something unprintable, jumping up and swiping and swatting at the arm. In the flashlight, roaches ran across the bed and careened across the floor. 

I spent the rest of the night in a chair by the door, dog-tired but sweeping the floor with the light every now and then to pick out roaches zipping across the room — whacking whatever came near with the sheet I pulled from the bed. The power never did come back, but when the sun eventually came up, I checked out.

In May this year — just two days before the worst birthday I ever had — two Bitcoin and a little more than two Ether I had spent about four years accumulating was stolen from a cold wallet through a phishing attack. 

Several more phishing emails and phone calls followed over the next several days. Sitting at home and shell shocked I found myself remembering that night in Thailand. Then the penny dropped: Hackers are like cockroaches. Once you are targeted, they stay in the dark, but come after you in swarms.  

I wrote this account to try and put down observations of how these hackers came at me and how I reacted (badly) to hopefully provide some red flag reminders for others. I claim no particular expertise in blockchain or cryptocurrency, but we all know the behavior of cockroaches.

After the collapse of the FTX crypto exchange last November I did what a lot of investors did and moved tokens into a cold wallet, in my case a Trezor. 

I also advised my daughter to move her Bitcoin being saved for university fees to my Trezor, thinking it would be safer.

After that, I didn’t really do anything with it — except to occasionally think how weird it was to have thousands of dollars sitting in a desk drawer. (Is this what financial freedom looks like? Should I put it in a bank safe deposit box?) 

But in December last year, I pulled the Trezor out to explore other functions and in the process, the crypto disappeared. 

That was freaky, but I messaged support at Satoshi Labs, the Trezor maker, with screenshots and they emailed back after a few days to walk me through what to do. This is the email from Satoshi Labs.

Apparently I had moved the tokens into a hidden wallet. After a reset, the missing crypto funds appeared again. I didn’t take this further, though being told by Trezor support they had “never seen wallet window” like in the screenshot I sent was troubling. 

I didn’t touch the Trezor for months after that, though I still had the occasional niggles about the crypto laying around as Bitcoin’s price jumped from the start of the year. 

Here is the phishing mail that arrived in my inbox in mid-May. It was sent to the email I used for Trezor communications, had the Trezor logo at the top, even seemed to mimic some of the lowercase lettering from Satoshi Labs. And while it has a new ticket ID, it referenced the “missing funds” which was the topic of my mail to Trezor in December.

The email arrived in the evening. I was tired, distracted, doing four things at once online. I looked at it, saw the reference to the missing funds, remembered I hadn’t opened the Trezor since the Ethereum hard fork, and did the thing we know to never, never do, clicked the link and it opened what looked like the Trezor site, I entered the seed phrase. I then watched in disbelief as the crypto was pumped out.

Beside loss of assets, theft is an act of psychological violence that leaves you in deep shock and in that state you become disoriented and in denial about what has happened. In other words, you are desperate and vulnerable, and a prime target for a second hack. 

(Binance has a link on that which I wish I’d seen at the time: How Not to Fall for a Scam Twice)

You also feel enormously stupid. Yes, “even monkeys fall from trees” but I imagine that the monkeys feel pretty stupid, too. 

I immediately messaged Trezor support in a panic, but the response was to expect a response in three days, not that they could have done anything. I went on Telegram — for reasons I still don’t understand other than desperation — seeking help and advice.  

One Telegram user was sympathetic and offered to help, wanted the transfer IDs for the hack and then asked for the seed phrase for another wallet I had, proposing to get back the stolen crypto and transfer it there.  

Of course, it was another cockroach (or maybe the same one) but I was in the state of wanting to believe there was help from the crypto community and that there was a way to get the stolen crypto back. As a result, I almost got taken a second time. 

(Telegram seems to host whole nests of these roaches. I messaged Telegram at abuse@telegram.org to flag this hacker and never heard back from them. Trezor later confirmed they do not have any support groups on Telegram. Neither does Binance.)

I continued looking online for other help and found a cybersecurity company that claimed to have teams of ethical hackers that can track and expose online thieves to law enforcement and then get the crypto back. 

Problem with those services is they want thousands of dollars upfront and, of course, there is no guarantee of any success. (See above on being in shock, vulnerable and getting scammed twice.) 

Using the transaction IDs for the hack, I could see the cockroach’s wallet and that it had interacted with a Binance wallet. I got online with Binance support, gave them the transaction IDs to ask if they could freeze the wallet. They checked and were very helpful, but it wasn’t a Binance wallet and they could do nothing. 

However, I did follow Binance support’s advice not to pay thousands of dollars up front to companies offering to get the crypto back. The only real option is file a report to law enforcement — search Google, “Report a Cyber Crime + (Your country)” — and hope.

More phishing attacks followed. I received an automated voicemail telling me I needed to call the Singapore immigration department immediately at a U.S. area code number because my details were inaccurate. I don’t live in either country.  

In early June, I noticed a story online detailing the huge extent of the cryptocurrency hacking and theft that took place in May alone.

Beside the major hacks of exchanges that result in millions of dollars of losses spread across thousands of individuals, the story says hackers are shifting their attention to ordinary users. 

So how many more hundreds or thousands of individuals are being targeted and ripped off every day in other scams? Are the roaches at the gates? 

Along with the financial devastation, one of the other damaging aspects of being hacked is blaming it on blockchain and cryptocurrencies per se. Confusing the technology, and its potential, with the thieves who exploit it.

Because of the transparency of transactions, I can track where the crypto stolen from my Trezor is, but it’s problematic to keep looking because it’s difficult to not see a cockroach with a grin staring back.

Phishing attacks on Trezor users are nothing new as the company’s customer emails were hacked in April last year and Trezor put out warnings about it. 

Because of widespread and ever more sophisticated phishing attacks, some crypto platforms have introduced specific codes for customers – usually a set of numbers chosen by the customer – so any email that arrives claiming to be from the company but lacks the code can be immediately identified as fake.    

I think it would be a good idea for Satoshi Labs and other exchanges and platforms to adopt that policy to better protect customers. However, the bottom line is I did the thing Satoshi Labs warns over and over again to never do: Punch a seed phrase into a computer. 

I’ve rebooted the Trezor to start rebuilding again, but I’m also looking at other storage options. We cannot let the roaches win.

https://forkast.news/xrp-sec-binance-trading-delist-cryptos/

In this issue

1. U.S. crypto crackdown: Collateral damage
2. Ripple: Mixed messages
3. Hong Kong: Courting Coinbase

1. Crypto-quake continues

Binance.US, a crypto exchange set up by Binance chief Changpeng “CZ” Zhao to serve U.S. clients, could see its operations “quickly grind to a halt” if a U.S. court rules in favor of a Securities and Exchange Commission (SEC) request to freeze its assets, the company has said in a court filing. Meanwhile, trading platforms eToro and Robinhood have delisted multiple cryptocurrencies named in SEC lawsuits as securities.

• In the filing, Binance.US urged the federal judge to deny the SEC’s motion last week to freeze the assets of the entities that operate Binance.US after the SEC sued Binance and Zhao on June 5 for alleged violations of securities laws.

• Binance.US said in the filing: “With a freeze of all corporate assets, banking partners would most likely cease to honor requests to transfer funds for any purpose, including customer redemptions.” The company said one of its banking partners had already informed it that it would halt services to Binance.US starting June 14.

• On Friday, Binance.US suspended U.S. dollar deposits to “protect customers” amid intensifying regulatory pressure. The exchange’s liquidity plunged nearly 80% in a week as market makers and traders “fled the exchange en masse,” according to a note published by crypto data analysis firm Kaiko on Monday.

• Investment platform eToro on Monday blocked its U.S. customers from opening new positions in Algorand (ALGO), Decentraland (MANA), Dash (DASH) and Polygon (MATIC), all of which have been named as securities by the SEC.

• Robinhood announced last week that it would stop supporting Cardano (ADA), Polygon (MATIC), and Solana (SOL) on June 27. After that deadline, all of the three cryptocurrencies still held in Robinhood accounts will be sold at their market value and the proceeds will be credited to holders’ Robinhood accounts.

• “It’s not surprising that when there is a lack of clarity, contradictory guidance, and a culture of fear instead of collaboration with regulators that some entities will choose to simply start leaving markets entirely,” Cardano founder Charles Hoskinson said in response to Robinhood’s delistings, according to a June 9 tweet by Fox Business journalist Eleanor Terrett.

• The crackdown by the SEC, which also sued crypto exchange Coinbase last Tuesday for allegedly breaching securities rules, has hit the crypto market hard. The price of Binance’s BNB has fallen more than 9.6% in the past seven days, and Cardano, Polygon and Solana have lost more than 20% over the same period, according to CoinMarketCap.

• The SEC’s enforcement actions have prompted some reaction among U.S. lawmakers. Representative Warren Davidson introduced a bill named the SEC Stabilization Act on Monday, seeking to restructure the regulator and remove Gary Gensler as its chair. 

2. Say one thing…

William Hinman, a former director of corporation finance at the U.S. Securities and Exchange Commission (SEC), said in a speech five years ago that Bitcoin and Ether were not securities, according to documents released on Tuesday as part of a lawsuit brought by the regulator against crypto company Ripple.

• “We do not need to see a need to regulate Ether, as it is currently offered, as a security,” Hinman said in a June 4, 2018, email in which he added that the regulator would hold a call with Ethereum co-founder Vitalik Buterin later that week, “to confirm our understanding of how the Ethereum Foundation operates.”

• Soon after the documents were released, Ripple Chief Executive Brad Garlinghouse tweeted Tuesday: “For the SEC to sue @chrislarsensf and me personally for allegedly selling unregistered securities when their own Division Head deliberately created confusion about this…well, I don’t have a single polite word to describe this deplorable, politically-motivated overreach.” 

• The documents were released at a fraught moment for the crypto industry as the SEC presented a motion to freeze the assets of Binance.US as part of a lawsuit against the exchange. The SEC and Binance.US have been ordered to compromise and avoid a complete asset freeze.
• In a speech, Hinman said that although cryptocurrencies such as Bitcoin and Ether may start off as securities, they could become more akin to commodities once they became “sufficiently decentralized.”

• Although Hinman has argued that the speech was his personal opinion, it was published on the SEC’s official website and “touted … as guidance,” with former SEC chair Jay Clayton publicly pointing to it, Ripple’s Chief Legal Officer Stuart Alderoty tweeted on Tuesday.

• The documents relating to the speech were published after an 18-month legal battle to have them released, according to Garlinghouse. XRP investors hope that Hinman’s remarks on Ether will mean that the XRP token would not be treated as a security.

• Alderoty tweeted that Hinman’s speech “contained made-up analysis with no basis in law … exposed regulatory gaps … and would create … not just confusion, but ‘greater confusion’ in the market.”

• Alderoty also said the speech should be removed from the SEC’s website, and he demanded an investigation of why the SEC had “touted” the speech, “knowing” the confusion to it would give rise.

• Despite the initial surge, XRP had fallen 12.6% since the release of the Hinman documents, when it was trading at US$0.47, according to CoinMarketCap.
• Gabriel Shapiro, a U.S.-based attorney and the general counsel at blockchain firm Delphi Labs, wrote on Twitter Tuesday: “​​Hinman emails are a nothingburger though great for Ether. No idea why Ripple thinks these emails help Ripple’s case.” Shapiro added that the documents were not the bombshell compared to the “huge hype” given to them.

3. Open for business

A legislator in Hong Kong has encouraged Coinbase and other international cryptocurrency exchanges to set up operations in the city, following the implementation of its new regulatory framework for retail crypto trading on June 1.

• Johnny Ng, a member of Hong Kong’s Legislative Council and the Chinese People’s Political Consultative Conference, an advisory body to China’s ruling Communist Party, tweeted Saturday that he welcomed all global virtual asset trading platform operators, citing Coinbase by name, to expand to Hong Kong.

• Ng, known for his advocacy of Web3, in January said that Hong Kong should consider developing the e-HKD, the city’s planned central bank digital currency, as a stablecoin linked to decentralized finance.

• Last week, the U.S. SEC sued Binance and Coinbase, two of the world’s biggest crypto exchanges, for allegedly breaching securities rules.

• As the U.S. regulator targets crypto, it has been suggested that Hong Kong might function as a sandbox in which China can assess the industry. 

• Bank of China International Holdings Limited, an investment bank wholly owned by state-owned Bank of China, has issued 200 million yuan (US$27.9 million) of digital structured notes on the Ethereum blockchain in Hong Kong, making it the first Chinese lender to issue a tokenized security in the city. Bank of China reportedly started to service crypto firms in Hong Kong in March, according to a Bloomberg report.

• Hong Kong’s rollout of new rules for virtual asset trading platform operators, otherwise known as crypto exchanges, could set an example for other jurisdictions looking to open up to retail crypto trading, according to Gary Tiu, executive director and head of regulatory affairs at Hong Kong-based crypto exchange OSL.

https://forkast.news/headlines/pudgy-penguins-licensing-nft-revenue-airdrops/

Luca Netz, the chief executive officer of intellectual property firm and non-fungible token (NFT) collection Pudgy Penguins, is set to launch a Web3 licensing marketplace named Overpass as early as late June.

See related article: Japan’s ANA airline launches NFT marketplace, sees future in metaverse projects

Fast facts

• Netz unveiled his plans for the platform in a recent interview with Web3-focused media firm nft now, claiming NFT licensing will shift the industry from the “Ponzinomics” model and foster sustainable growth by focusing on tangible, real-world revenue.
• Overpass has been developed as a solution to the complex and often cumbersome licensing procedures currently in place, according to Netz. The platform aims to streamline licensing in the NFT space by leveraging blockchain technology, allowing the process to be completed in “a couple of clicks.”
• In contrast to creating virtual assets and airdrops, which Netz claims are liabilities, the Overpass model represents a paradigm shift. The platform allows companies to license the IP directly from holders for use in their products and tools, providing holders with a scalable means of deriving monetary gain.
• “So the only way I can give monetary gain right now is through the floor price going up, which I also can’t control outside of me just executing and showing up every day,” Netz said. “The only other option is to create a real business and share that revenue… through licensing because [holders] own their digital asset.”
• Pudgy Penguins is an Ethereum-based NFT collection of 8,888 unique digital assets. It is the 19th largest collection in all-time sales, with more than US$257 million traded, according to CryptoSlam data. Netz acquired the company for roughly US$2.5 million in April 2022. 

See related article: New owner gives Pudgy Penguins NFTs happy feet