Coinbase ‘Crypto435’ Campaign Targets U.S. Lawmakers

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  • Coinbase has launched a campaign aimed at shaping U.S. crypto policy from a user point of view
  • Crypto435 targets all the Congressional Districts in the country and wants users to stand up for the space
  • Coinbase knows firsthand the way that crypto is being handled by authorities right now

Coinbase has launched a pro-crypto campaign targeting all 435 Congressional Districts across the U.S as it tried to start a grassroots pro-crypto movement. Coinbase says that Crypto435 is an important movement because “policymakers in Washington DC and state capitals across the US are making decisions about the future of crypto” which will determine the future of the space, and without input from those who support and use the space they will very likely make decisions that may be damaging to it.

Crypto435 Will Target all Congressional Districts

On its signup page of Crypto435, Coinbase warns that the decisions being by lawmakers made right now ”will determine how, when, and where YOU can build, buy, sell, and use crypto” and warns that it’s “more important than ever to advocate for pro-crypto policy in the U.S.” Coinbase of all companies knows just how hard regulators are clamping down on the space, having been on the end of various regulators’ fundamentally unsound accusations regarding stablecoins and staking in recent months.

As a result of its entanglements, Coinbase knows firsthand how certain regulators are refusing to honor their own offers to help those wanting to develop in the crypto space, with many accusing the Securities and Exchange Commissioner of taking a ‘regulation by enforcement’ approach.

Coinbase Outlines Battle Plan

The exchange also published a number of points it hopes to tackle through its campaign:

  • Crypto435 will influence laws and policies
  • Crypto435 will bring the crypto community together and there is strength in numbers
  • Crypto435 will promote innovation and protect jobs
  • Crypto435 will educate everyday Americans about the power of crypto

Hopefully Crypto435 can be a rallying cry to those who support crypto and the Web 3.0 space in the U.S., because without their involvement and pressure, things could get very nasty indeed for the crypto space in the country.

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FTX Director Pleads Guilty to Fraud Charges

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  • FTX’s former Director of Engineering, Nishad Singh, yesterday pleaded guilty to fraud charges brought by U.S. prosecutors
  • Singh has admitted one count of wire fraud, one count of conspiracy to commit wire fraud on FTX customers
  • Singh was instrumental in giving Alameda Research a “virtually unlimited line of credit”

FTX’s former Director of Engineering, Nishad Singh, yesterday pleaded guilty to fraud charges brought by U.S. prosecutors investigating the collapse of the exchange in another example of wrongdoing at the company. Singh’s lawyer announced to a Manhattan federal court that his client had agreed to admit one count of wire fraud, one count of conspiracy to commit wire fraud on FTX customers, and one count of conspiracy to commit commodities fraud. His admission will reduce his sentence, but it will still likely be many years in length.

Singh Instrumental in “Unlimited” Alameda Credit Line

Singh was reportedly a close friend of FTX founder Sam Bankman-Fried’s younger brother in high school, and became FTX’s director of engineering in 2019. However, in 2020, he allegedly modified FTX’s software to help Alameda, his former employer, avoid automatic liquidation – i.e. asset sales when it was losing too much borrowed money. This modification allowed Alameda to continue borrowing from FTX regardless of how much collateral secured its loans, resulting in a “virtually unlimited line of credit.”

As we know from previous filings on the matter, billions of dollars lent by FTX to Alameda over the next two years came from FTX customers.

“I Am Unbelievably Sorry”

Although Singh had been out of the public eye for a while compared to other FTX executives, he reappeared in January to participate in a proffer session at the United States Attorney’s office in the Southern District of New York. These are sessions where individuals may proffer information that prosecutors may find useful and which may result in partial protection for the individual.

Singh expressed remorse for his involvement in the FTX scandal, stating, “I am unbelievably sorry for my role in all of this.” He further admitted to being aware since mid-2022 that Bankman-Fried’s hedge fund, Alameda Research, had been borrowing funds from FTX customers without their knowledge. As a result, he has committed to forfeiting the proceeds gained from the scheme.

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Dookey Dash Winner Sells Key NFT for $1.63 Million

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  • The Dookey Dash winner has sold his winning key $1.63 million
  • Kyle “Mongraal” Jackson sold his prize for 1,000 ETH having initially asked for 3,333 ETH
  • The game’s success means that more will surely be on the cards

The winner of Yuga Labs’ Dookey Dash competition has sold his winning key NFT for 1,000 ETH, worth $1.63 million. Esports player Kyle “Mongraal” Jackson sold the NFT to billionaire entrepreneur Adam Weitsman, the 18-year-old gamer announced Monday, having previously tried to raise over five million dollars for it. Yuga Labs will net $81,500 in royalties over the sale, and the success of the game suggests that more will follow suit.

Jackson Wanted 3,333 ETH

Yuga Labs announced Dookey Dash in mid-January, the first game of its type in the NFT space, and Jackson was announced as the winner a month later. Fortnite aficionado Jackson was awarded a 1/1 NFT gold key as his prize, and was immediately urged to take precautions over its care. Many asked if he planned to sell or keep the key, but Jackson gave nothing away at the time.

However, he eventually listed the key for 3,333 ETH ($5.4 million) but accepted a bid for just under a third of that from Weitsman, telling the community via Twitter that Weitsman was a “super nice guy” and that he was “thrilled the sale went through with him”.

The First of Many?

Weitsman is best known for his scrap metal businesses and massive social media following, but the billionaire is also keen on the crypto and NFT sector, starting a crypto mining business, Viridium, in 2021.

The success of Dookey Dash suggests that more such games will be coming from the likes of Yuga Labs and copycat companies, potentially ushering in a sub-sector of the nascent web gaming space.

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UK Bank Regulator to Offer Crypto Storage Guidance

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  • The regulator of the UK’s banks has said that it is working with the Bank of England on institutional crypto rules
  • Vicky Saporta told the Bank of England yesterday that she wants to replace the “labyrinth” of existing regulation
  • The UK has said it wants to become a hub for crypto in Europe

The regulator of the UK’s banks is to publish rules and guidance for the issuance and holding of cryptocurrencies, according to its Executive Director. Vicky Saporta, Executive Director of the Prudential Policy Directorate at the Bank of England, said in a speech at the bank yesterday that the rules will be developed in line with the Basel III rules and the Financial Services and Markets (FSM) bill currently being considered by the British parliament, and represents another step along the UK’s path to becoming a cryptocurrency hub.

UK Ups Crypto Hub Stakes

The UK has been plotting a way to make itself Europe’s premiere crypto and blockchain hub ever since then chancellor (now Prime Minister) Rishi Sunak announced the move in April 2022, right at a time when its financial watchdog was telling people not to touch it. Since then however, the UK has taken several steps to back up this desire to encourage and adopt rather than ban, with then Prince Charles revealing in April last year that as part of the UK’s legislative agenda for the next parliamentary year was the “safe adoption of cryptocurrencies”.

Banks Can Have 1% in Crypto

Saporta said yesterday that the Bank of England and the banking regulator the Prudential Regulatory Authority are working with six other agencies to replace the “labyrinth” of regulations currently in force, many of which predate the UK leaving the EU, with a “regulatory grid setting out our plans in one place. This will be guided by the Basel banking standards which could mean that the exposure of banks to cryptocurrencies is limited to 1% of their capital, with a 1,250% risk premium.

Not everyone was thrilled with the development however, with the economics editor of the Financial Times calling the speech “very irritating” over its lack of clarity. However, if the Financial Times is irritated by it, then it’s probably good for crypto.

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Coinbase to Cease Support for BUSD

Reading Time: 2 minutes

  • Coinbase announced yesterday that it will cease support for BUSD
  • The move comes after the SEC labelled BUSD a security and essentially forced Paxos to stop minting it
  • SEC chair Gary Gensler recently said that all cryptocurrencies bar Bitcoin are securities

Coinbase has announced that it will cease supporting the Binance stablecoin BUSD following allegations from the Securities and Exchange Commission (SEC) that it constitutes a security. In a tweet posted yesterday, the company said that BUSD no longer met its “listing standards” and that as a result it is to be removed from trading on March 13. This move comes as no surprise, with Coinbase not wanting to rile the SEC anymore than it already has done, but with SEC Chair Gary Gensler saying recently that every coin other than Bitcoin is a security, one wonders where this might leave the crypto exchange industry in the months to come.

SEC Actions Causing Ripple Effect

The BUSD issue started two weeks ago when Paxos was told to stop minting BUSD by the New York Department of Financial Services (NYDFS) after the SEC said it believed that the stablecoin was a security. Paxos had no choice but to comply, despite saying publicly that it didn’t believe that BUSD should be classified in this way, leaving other exchanges to mull over the prospect of allowing U.S. traders to trade a coin that the chief regulator believed contravenes their rules.

Given that Binance said in the wake of Paxos stopping the printing press that it was going to move away from BUSD, it seems that a re-listing is highly unlikely and that we are witnessing the decline of BUSD.

Exchanges on Red Alert Following Gensler Comments

The situation is not dissimilar to XRP, which we also delisted for U.S. customers following the SEC’s action against it in 2021, and with SEC Chair Gary Gensler telling New York Magazine last week that all cryptocurrencies bar Bitcoin are securities, this must be a difficult moment for exchanges.

Of course there is no saying that Gensler is going to issue each and every coin with legal proceedings, but if some blanket policy were eventually to come out which wrapped up all the other cryptocurrencies into a securities bundle then it’s not entirely clear how exchanges would handle it.


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Robinhood Subpoenaed Over Crypto Listings and Custody

Reading Time: 2 minutes

  • Robinhood was subpoenaed by the SEC last year over its listing criteria and crypto storage
  • The exchange didn’t reveal any more details about the demand
  • Robinhood was fined $30 million last year for various failings

Robinhood has revealed in a Securities and Exchange Commission (SEC) filing that it was issued with a subpoena by the agency last year over its crypto listing and custody policies in the wake of the collapse of FTX and other high profile entities. Investigative subpoenas are issued by courts at the request of another person or entity in order to obtain information necessary to decide whether to pursue legal action against it, but Robinhood has not publicized what it was asked by the SEC or its responses.

10-K Form Reveals Small Insights

It doesn’t take a degree in rocket science to work out the rationale and timing of the subpoena, with the SEC presumably after information on how Robinhood choses the coins it lists and delists as well as how it stores them. With the spectacular collapses in 2022 of Celsius, Voyager Digital, and, of course, FTX, the SEC is very keen on seeing if another such catastrophe is round the corner.

In its 10-K form, Robinhood did note that it is not scared of decisions that it believes better protects customers but “might cause our customers to lose confidence in us or reduce their engagement on our platform”. It gives the example of the delisting of BSV last month, which it said was an example of a fork that “does not have support from a majority of the affiliated third-party miner and developer community” and could therefore lead to security issues and potential loss of funds.

Robinhood Was Fined $30 Million Last Year

What isn’t clear however is if the subpoena came as part of an existing lawsuit or is part of an action that is yet to be announced, but what we do know of course is that last August Robinhood’s crypto division was hit with a $30 million fine by the New York District of Financial Services for failing to “invest the proper resources and attention to develop and maintain a culture of compliance.”

It may be, then, that this subpoena is related to that case in some way to see if Robinhood is improving these areas as demanded by regulators.

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Texas Regulators Object to Binance.US-Voyager Takeover

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  • Two Texas regulators have formally objected to Binance U.S.’s proposed takeover of Voyager Digital
  • The Texas’ State Securities Board (TSSB) and the Department of Banking have raised a number of concerns regarding creditor safety
  • The SEC has already objected to the move, which has been given court approval

Two Texas regulators have objected to the proposed takeover of Voyager Digital by Binance U.S., citing “inadequate” disclosures, such as a reduced recovery amount and concerns over the transfer of personal data. The Texas’ State Securities Board (TSSB) and the Department of Banking submitted a joint opposition to the takeover on Friday, summarising Binance.US’s disclosure statement as “inadequate”. Binance.US was given initial court approval for its proposed purchase in January by the United States Bankruptcy Court for the Southern District of New York, but it seems that there will be several more hurdles to clear before it can pop the champagne cork.

Creditors Not Protected, Claim Regulators

The dual objections by the TSSB and the Department of Banking highlighted several shortcomings in Binance.US’s terms of service and restructuring plan which suggested that customers weren’t going to get what they thought they would. Firstly, the regulators state that claimants have not been adequately informed that they may only receive a 24%-26% recovery under the plan, as opposed to the 51% they would receive under Chapter 7 bankruptcy. 

Secondly, Binance.US’s disclosure statement allegedly failed to inform account holders that they are required to allow the transfer of personally sensitive information to any party in any part of the world, as dictated by Binance.US. The objection further noted that account holders will be stripped of any legal recourse for any issues that may arise as a result of this transfer of information, with the regulators saying that it gives them “absolutely no right to challenge the issue.”

Finally, the regulators say that the deal “unfairly discriminates against Texas consumers”, given that Texas is not a supported jurisdiction by Binance.US and therefore customers in the state would have their digital assets held by Voyager for six months after the agreement while Binance sought licensing in the state.

SEC Has Already Complained

The issues raised by the TSSB and the Department of Banking aren’t the only concerns over Binance US’s takeover of Voyager Digital; just a few days ago the Securities and Exchange Commission added its own objections, alleging securities law violations in some aspects of the restructuring plan.

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Bitcoin Stuck Under Important Resistance Area

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  • Bitcoin remains unable to break a key $23,700 barrier
  • This band of resistance has been keeping Bitcoin down since July last year
  • Another rejection here would likely send Bitcoin back down to the $22,000 region

Bitcoin has started the week underneath an important resistance area, with its reaction over the coming days dictating its short to medium term path. This $23,700 region has proved pivotal in keeping Bitcoin’s price down since July last year, and Bitcoin can forget any longer term gains until it can defeat it. However, with the U.S. Dollar Index looking topped out after its short run, it may get a chance soon.

Bitcoin Making Lower Highs and Lower Lows

Bitcoin has been in a downwards trend since it failed to break $25,000 at the third time of asking last week, finally bouncing at $22,700 and rebounding right into an area  of resistance that has been significant since last year. One look at the 4-hour chart shows us the situation clearly enough:

We can clearly see that Bitcoin has rejected at this resistance band, the same band from which it bounced last month. The importance of this area is emphasized when we look at the long term picture:

Each time Bitcoin has crossed this threshold it has rejected shortly afterwards, so crossing it and staying above it for a sustained period is clearly a critical step in its road to recovery. The other concerning factor is that Bitcoin had been putting in a series of lower highs and lower lows on the 4-hour for the past week, suggesting a downtrend is in play. If Bitcoin can’t reclaim this band of resistance and turn it into support then further declines towards the next support level of $21,700 are likely, unless it can double bottom at $22,700.

DXY Topping Out?

One factor which might work in Bitcoin’s favor is the U.S. Dollar Index, which is coming into its own area of resistance:

The DXY has been bouncing since the start of February, and is getting towards a point where we can expect a slowdown. However, should the dollar push through this region, either now or at some point in the future, this would indicate that it is in its own bull run, which would make for a very unpleasant rest of 2023 for Bitcoin indeed.


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IMF Won’t Push for Crypto Ban…Yet

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  • The International Monetary Fund has no current plans to ban cryptocurrencies
  • The IMF preferes strong regulation, its Managing Director Kristalina Georgieva said last week
  • However, it could consider a ban if regulations don’t protect users

The International Monetary Fund (IMF) won’t push for a ban on cryptocurrencies, but will insist on strong regulation, according to IMF Managing Director Kristalina Georgieva. Georgieva expressed her feelings on the crypto sector during an off-stage comment at the G20 finance ministers meetings in Bengaluru, India, where she said that the IMF is “very much in favor of regulating the world of digital money,” adding that it was a “top priority”. However, if regulations don’t prove sufficient to protect investors, then a ban might be considered.

IMF Has Warned Over Crypto Before

The IMF hasn’t had the greatest relationship with the crypto sector in the past, which isn’t really surprising. Back in 2018 it warned the Marshall Islands against adopting cryptocurrencies as legal tender, saying it would cut itself off from foreign aid if it did, a message it repeated to El Slavador in 2022.

In a 2021 report it said that the rapidly growing crypto ecosystem presented both “opportunities and challenges”, citing “operational and financial integrity risks” around the sector. It’s no surprise, then, to learn that it wants to play a part in regulating the crypto space. During an interview with Bloomberg during the G20, Georgieva said that while fully-backed stablecoins (including Central Bank Digital Currencies, which are backed by fiat currencies) create a “reasonably good space for the economy,” non-backed crypto assets are speculative and high risk, and should not be considered money. Which is a good thing, because no one says that they are.

Ban Not Out of the Question

Georgieva did however caution that the possibility of banning cryptocurrencies would be explored if they begin to pose a greater risk to financial stability. However, she stressed that implementing good regulations and consumer protections would be a preferable alternative, but stated that the primary catalyst to a potential ban would be an inability to safeguard consumers.

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Web 3.0 Woundup – 26/02/23

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This week’s Web 3.0 woundup sees Friendsies deny doing the dirty, the NFT of a seminal sci-fi work head to Sotheby’s, and Dapper Labs get courtside seats in its NBA Top Shots class action lawsuit.

It begins.

Snow Crash Novel Heads to Sotheby’s as NFT

Fine art broker Sotheby’s this week disclosed an upcoming auction of a manuscript of the 1991 novel Snow Crash, the first book to mention the metaverse, including an NFT version. The auction will also feature items linked to the popular fiction novel such as a tachi sword owned by Hiro, a protagonist in Neal Stephenson’s novel.

According to Sotheby’s, the auction will coincide with the launch of the Infocalypse NFT collection that features generative art NFTs linked to the Snow Crash novel.

Friendsies Creators Deny Rug Pull

The creators of the Friendsies NFT project this week refuted claims that they duped investors and collectors after the project said that it’ll be temporarily halting its development roadmap. The creators also deactivated the project’s Twitter account, increasing suspicion of a possible exit scam, considering the project had raised over $5 million last year.

Although the project has restored the Twitter account, some in its community are suggesting making it a community-owned project.

NBA Top Shot Case Heads to Court

A New York judge this week allowed a class action lawsuit against Dapper Labs over its NBA Top Shot NFT series to proceed to court after he rejected the creator’s attempt to dismiss the case. The plaintiff, Jeeun Friel, claims that Dapper Labs violated securities laws by offering NBA Top Shot Moments to customers without first registering with the Securities and Exchange Commission (SEC), and as such it constituted an unregistered sale of securities. 

The case could have ramifications for all NFT projects and will have the SEC licking its lips at the potential of having a court case to back up its prosecution efforts in the future.

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The Week in Crypto – Coinbase, Asia, and Sam Bankman-Fried

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This week in the crypto world we saw Sam Bankman-Fried charged over his political donations, the East open up to crypto, and Coinbase launch its own blockchain.

Are you asking? Then we’re dancing.

Sam Bankman-Fried Hit With Charges Over Donations

Sam Bankman-Fried just can’t catch a break…which upsets literally no one. This week the former FTX CEO was hit with a stack of new charges relating to his well known political donations, with federal prosecutors accusing him of making them using corporate funds, which allowed him to evade limits on individual contributions to candidates.

In total, a grand jury indicted Bankman-Fried on four fraud charges and eight conspiracy charges, potentially adding more years to his inevitable prison stay.

Aah, shame.

East Wind to Lift Crypto

In a turn of events that hardly anyone foresaw, it seems that the East could play a huge part in the next crypto bull run. That’s according to Cameron Winklevoss, and he has evidence – Hong Kong, which of course is controlled by China, is paving the way for crypto adoption with a rash of regulatory changes aimed at opening up crypto trading to the masses.

Given the fact that the West is by and large doing the exact opposite, it’s hardly rocket science to think that momentum will start to swing towards Asia.

Coinbase Launches ‘Base’ L2 Blockchian

Coinbase this week announced the launch of Base, a Layer 2 blockchain built on Ethereum’s Optimism scaling solution that the company hopes will help onboard users to multiple blockchains.

Coinbase hopes to onboard one billion users into the crypto economy through Base, which will begin in a partially centralized manner and will “progressively decentralize” over time. There will be no new token with Base, which no doubt will upset the Securities and Exchange Commission (SEC) which would have been licking its lips at another potentially illegal sale of securities, although there will be NFTs given away.


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Chamber of Digital Commerce Demands SEC Drop Coinbase Case

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  • The Chamber of Digital Commerce has demanded that the SEC withdraw its case against the Coinbase inside traders
  • The group claims that the SEC is acting beyond its purview and that it has no right to oversee the crypto space
  • Nikhil and Ishan Wahi have already pleaded guilty to insider trading through the exchange

The Chamber of Digital Commerce has demanded that the Securities and Exchange Commission (SEC) drop its insider trading claims against former Coinbase product manager Ishan Wahi, claiming that the agency lacks the authority to oversee the case. The group, a non-profit association that seeks to educate government officials on the use of crypto and blockchain, filed an amicus brief in the case in which it argued that the SEC has “never been granted” the powers to oversee the digital asset sphere, and that it likely never would. Their case is complicated by the fact that Ishan and his brother Nikhil have both pleaded guilty to the crimes.

SEC is Acting Beyond its Remit

Nikhil and Ishan Wahi and their associate Sameer Ramani were accused by the SEC of profiting from inside information about upcoming coin listings from Ishan, with the brothers arrested in July 2022. Nikhil pleaded guilty to conspiracy to commit wire fraud while Ishan initially chose to fight, before changing to a guilty plea earlier this month. Ramani is still at large.

However, the Chamber of Digital Commerce has called for the judge to throw out the case anyway, arguing that the SEC is acting beyond its means:

Under Supreme Court precedent, the agency’s authority to expand its regulatory writ to virtually all transactions touching upon a digital asset is a major question requiring clear Congressional authorization. But the SEC has never been granted such authority, and legislation pending before Congress makes very clear that it likely never will be.

“Unprecedented Stealth Attempt” Criticized

In a blog post explaining the filing, the group summarized the SEC’s move as an “unprecedented, stealth attempt to expand the agency’s jurisdictional reach” and that it represented “a new front in the SEC’s longstanding “regulation by enforcement” campaign”. The core of this claim comes partly from the fact that in its filing the SEC labeled nine of the cryptocurrencies involved as securities, despite it never actually ruling on the matter – it just said that they were, with no opportunity for the operators of these coins to defend the claim.

The blog post noted that the group was not trying to seek absolvement for the Wahi brothers, who should be punished for their crimes, but that the operators of the projects whose coins were abused should not also face their own form of punishment too.

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Former High School Employee Mined Bitcoin in School Crawlspace

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  • A former school assistant facilities director in Cohasset, Massachusetts has been accused of mining Bitcoin in the school’s crawlspace
  • Nadeam Nahas is said to have installed mining equipment under the school and hooked it up to the electricity circuit
  • Nahas’ operation ran for eight months until it was rumbled, police say

A former school assistant facilities director in Cohasset, Massachusetts, allegedly used the local high school’s electricity to mine Bitcoin in a crawlspace at the institution. Nadeam Nahas has been accused of stealing nearly $17,500 in electricity from Cohasset High School to power the enterprise, which included operating more than a dozen ASIC mining machines. The operation was unwound by the town’s IT director, with police alleging that Nahas’ mining spree had been running for eight months at the time of discovery.

Nahas Installed ASICs into Crawlspace

The investigation into the case began in December 2021 when the Director of Facilities was conducting a routine inspection of the school and noticed several things out of place in the crawl space under the school, such as electrical wires, temporary duct work, and multiple computers. The equipment was subsequently removed and analyzed forensically by the Cohasset police department, with the assistance of the Department of Homeland Security and the U.S. Coast Guard Investigative Service.

The IT director soon realized that the items were part of an illegal cryptocurrency mining operation that had been attached to the school’s electrical system, and during the three-month investigation that followed, authorities identified Nahas, who resigned from his position when he was issued with a criminal complaint over the matter. Nahas was set to appear in court on Thursday after being accused of fraudulent use of electricity and vandalizing a school, but he failed to show, leading to an arrest warrant being issued for him.

School’s Out for Miners

Nahas isn’t the first individual to try and mine Bitcoin in a school – in November 2018 a Chinese schoolteacher managed to get away with using the school’s electricity to mine Bitcoin in an abandoned classroom for two years before he was rumbled.


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Sam Bankman-Fried Hit With New Charges Over Political Donations

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  • Sam Bankman-Fried has been hit with new charges over alleged illegal political donations
  • Federal prosecutors believe that Bankman Fried and his co-conspirators made over 300 donations totaling tens of millions of dollars illegally
  • The crew used a “straw donor” to get around individual contribution caps

Just when Sam Bankman-Fried thought that things couldn’t get much worse, they have. The former FTX CEO has been hit with a stack of new charges relating to his well known political donations, with federal prosecutors accusing him of making them using corporate funds, which allowed him to evade limits on individual contributions to candidates. In total, a grand jury indicted Bankman-Fried on four fraud charges and eight conspiracy charges, potentially adding more years to his inevitable prison stay.

Bankman-Fried Alleged to Have Used “Straw Donor”

Bankman-Fried’s political contributions were well known, with the disgraced former CEO famously paying his way into the inner sanctum of Washington and putting himself up as a kind of crypto-regulator human bridge. However, it seems that all these efforts may not have been perfectly legal, shock horror, with the methods used to make the donations potentially breaking the law.

Details are thin on the ground, but it seems that the charges relate to a series of donations to a raft of candidates from Bankman-Fried and other co-conspirators that may have broken the law due to the fact that they were attributed to a “straw donor”. A straw donor is someone who allows someone else to donate to a political party through them, allowing the intended donor to use their legal contribution allocation.

Prison Sentence Inevitable if He’s Guilty

It’s not clear who or what Bankman-Fried and his accomplices used to make these donations on top of their own, but the charges state that some 300 donations were made in this way totaling tens of millions of dollars. Clearly this implies a large scale fraud, which is reflected in the number of charges, with a custodial sentence certain were he to be found guilty.

Last year a federal judge sentenced a former Indiana state senator and an Indianapolis casino executive to ten months two months in prison for perpetrating their own straw donor scam, as well as five-figure fines for each.


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Coinbase Announces Layer 2 ‘Base’ Blockchain

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  • Coinbase yesterday announced Base, a layer 2 blockchain based on Ethereum’s Optimism scaling solution
  • Coinbase hopes to onboard the next one billion crypto users through the platform
  • There will be no new token, as the blockchain will use ETH as gas

Coinbase yesterday announced the launch of Base, a Layer 2 blockchain built on Ethereum’s Optimism scaling solution that the company hopes will help onboard users to multiple blockchains. Coinbase hopes to onboard one billion users into the crypto economy through Base, which will begin in a partially centralized manner and will “progressively decentralize” over time. There will be no new token with Base, which no doubt will upset the Securities and Exchange Commission (SEC) which would have been licking its lips at another potentially illegal sale of securities.

Coinbase Wants Base to Become Industry Standard

Coinbase hopes that Base will provide a user-friendly and cost-effective means for developers to build decentralized apps onchain, also serving as a hub for its on-chain products and an open ecosystem for developers to create their own projects. The chain will utilize Optimism’s OP Stack to create a modular, rollup-agnostic Superchain that it hopes will become the industry standard, with the ultimate goal being to promote the cryptoeconomy and onboard one billion new users to the space.

Layer 2 solutions are those that use the architecture of an existing blockchain, in this case Ethereum, and increase throughout, taking the pressure off the main chain. Optimism launched two years ago this month, and Coinbase clearly feels that it is the scaling solution that will offer the company the best combination of speed and decentralization, the latter of which will be phased in over time.

No New Token (Sorry SEC)

Coinbase was quick to point out that it will not be issuing a new network token for Base and instead will use ETH as the native gas token. This will no doubt upset the SEC, who would have been hoping for another bumper ‘unregistered securities’ case, but it will be important to bear in mind in case any scammers launch coins predicted on the Base concept.


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Forsage Founders Indicted in $340 Million DeFi Ponzi Scheme

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  • The Forsage scammers will face a criminal trial after a grand jury indicted them over the $340 million swindle
  • Forsage is the first DeFi scam to form the basis of a prosecution in the U.S.
  • The four scammers face up to 20 years in prison for wire fraud

The founders of the Forsage Ponzi scheme have been indicted by a federal grand jury in the District of Oregon over the $340 million scam, the first in the U.S. involving a DeFi project. The defendants have been accused of coding and deploying smart contracts that systematized their combined Ponzi-pyramid scheme on the Ethereum, Binance Smart Chain, and Tron blockchains, falsely promoting Forsage to the public as a legitimate, low-risk, and lucrative investment opportunity. Most investors didn’t get back what they put into Forsage, while half got nothing back at all.

Forsage Used COVID-19 to Lure Investors

Forsage presented itself as an Ethereum dApp, but in reality it was a multi level marketing scheme, using phrases like “cash gifting scheme” and “matrix marketing program” to mask its true nature. Forsage used the COVID-19 pandemic to lure people into its scheme by promising them a way to make money during tough economic times, describing itself as a “100% decentralized international crowdfunding” platform with “zero risk factors”.

However, when authorities analyzed the computer code of Forsage’s smart contracts, it was discovered that the code operated in a manner consistent with that of a Ponzi scheme; when an investor purchased a “slot” in a Forsage smart contract, the code automatically redirected their funds to other Forsage investors. This meant that earlier investors received payouts using funds from later investors, creating the well-known cycle of dependence and perpetuating the scheme.

Prison Sentences Await

The four founders were charged by the Securities and Exchange Commission (SEC) in August last year with defrauding investors out of $300 million (at the time), with the latest indictments offering new details of the impact on victims; more than 80% of those who invested in Forsage did not receive the full amount of ETH that they had invested, while over 50% of investors did not receive any payouts at all.

Court documents further reveal that the defendants intentionally coded the “xGold” smart contract on the Ethereum blockchain in a fraudulent manner. This coding caused investors’ funds to be transferred out of the Forsage investment network and into accounts controlled by the founders, directly contradicting their promise that “100% of the income goes directly and transparently to the members of the project with zero risk.”

Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov, all Russian nationals, are each charged with conspiracy to commit wire fraud. If convicted, they face a maximum penalty of 20 years in prison.

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Judge Allows NBA Top Shot Securities Case To Go to Court

Reading Time: 2 minutes

  • A New York judge has rejected Dapper Labs’ motion to dismiss a class action lawsuit against it
  • The suit alleges that NBA Top Shot Moments NFTs represent a sale of unregistered securities
  • The judge ruled that the NFTS might constitute a security, and ordered a full trial

A New York judge has allowed a class action lawsuit against Dapper Labs over its NBA Top Shot NFT series to proceed to court after he rejected the creator’s attempt to dismiss the case. The plaintiff, Jeeun Friel, claims that Dapper Labs violated securities laws by offering NBA Top Shot Moments to customers without first registering with the Securities and Exchange Commission (SEC), and as such it constituted an unregistered sale of securities. The case could have ramifications for all NFT projects and will have the SEC licking its lips at the potential of having a court case to back up its prosecution efforts in the future.

Buyers Launched Class Action After Value Crashed

The lawsuit was filed in May 2021 on the back of a massive spike and collapse in the floor price of Top Shot NFTs, with Friel one of many disgruntled after the value of their holdings plummeted. To say that they launched the lawsuit in a desperate attempt to get their money back after an unwise investment may or may not be true, but the fact that it came after such a catastrophic loss speaks volumes.

Dapper Labs has been waiting since 2022 for its appeal to be heard, arguing that, “Basketball cards are not securities. Pokemon cards are not securities. Baseball cards are not securities. Common sense says so. The law says so.” However, it seems that District Judge Victor Marrero has disagreed with the Dapper Labs legal team’s definition of securities law however, and ruled that, in fact, NBA Top Shots satisfied enough prongs of the Howey Test to be worth investigating at trial.

This ruling doesn’t mean that Top Shot NFTs are securities, as some news outlets claimed, but rather that Friel’s case was strong enough to believe that they might be securities, but this can only be decided at trial.

SEC Licking Lips Over Case

It won’t just be Friel and the other members of the class action that are licking their lips over the prospect of this going to trial. The SEC will also be delighted with the ruling, because it means that it will be able to sit back and let someone else take the burden and legal costs of a case that will all but define whether NFTs are securities.

Should Judge Marrero decide that NBS Top Shots are securities, the likes of Yuga Labs will be looking nervously over their shoulders.

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Hong Kong Pushes Ahead with Crypto and Web 3.0 Adoption

Reading Time: 2 minutes

  • Hong Kong has accelerated its crypto and Web 3.0 adoption by setting up a task force and allocating it an annual $6.4 million budget
  • The news is the latest sign that Hong Kong is getting serious about crypto
  • The task force will look at broader adoption of the next generation of the internet

Hong Kong has accelerated its crypto and Web 3.0 adoption by setting up a digital asset task force and allocating it an annual $6.4 million budget. The country has been making moves in recent months to take a leading role in the digital asset space, formulating stablecoin regulations and putting in place a clear framework for crypto entities to follow. This news comes after Cameron Winklevoss claimed that the impetus for the next bull run will come from Asia.

Hong Kong Rolling Out the Red Carpet for Crypto

Hong Kong has had a busy week when it comes to its crypto ambitions, beginning with last week’s announcement that on June 1, 2023, it will officially make crypto trading fully legal for exchanges that are awarded one of its new licenses, licenses that the likes of Huobi have already applied for. This announcement came on the back of news at the start of the month that the country will launch stablecoin regulations later this year to avoid a repeat of the Terra USD collapse.

Broader Adoption Eyed

It’s not just facilitating crypto trading that excited Hong Kong, and presumably its Chinese overlords, with the country’s Financial Secretary Paul Chan saying as part of his 2023/24 fiscal year budget speech that a task force would be established to look further into the adoption of cryptocurrencies and blockchain technology:

For the next step, I will establish and lead a task force on virtual-asset development, with members from relevant policy bureaux, financial regulators and market participants, to provide recommendations on the sustainable and responsible development of the sector.

Chen added that the task force will be allocated a HK$50 million ($6.4 million) budget to develop its plans, including plans for a Web 3.0 ecosystem, which will go towards organizing major international seminars, cross-sectoral business co-operation and workshops for students and young people interested in the ecosystem.

Hong Kong joins the United Kingdom in the crypto hub race, and citizens of both nations will be hoping that they enjoy more luck than previous claimants to that title.


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Bosch and Team Up for Web 3.0 Utilization

Reading Time: 2 minutes

  • has teamed up with Bosch to explore Web 3.0 applications
  • The consumer giant will work with the blockchain company to develop its Economy of things initiative
  • Bosch has previously partnered with Iota in a similar vein

Consumer electronics giant Bosch announced yesterday that it has teamed up with blockchain AI firm to launch the Economy of Things. Bosch and will work together on joint projects to lay the groundwork for Bosch’s Economy of Things program, a new economy made possible through the advancements in Web 3.0. The FET token jumped 12% on the announcement, which represents yet another effort from Bosch to join the blockchain space following other trials in previous years.

Big Coup for gained notoriety in 2019 when it raised $6 million in just ten seconds following its launch on the Binance Launchpad, and the value of its FET token has been rocketing in recent weeks thanks to the AI battle between the likes of Microsoft and Google. It now has a partnership feather to put in its cap, thanks to the deal with Bosch, which will use AI, machine learning, and agent technology, combined with intelligent and semi-autonomous software, to allow technical objects to transform into economic subjects.

Bosch says that advantages of utilizing an Economy of Things are evident, as it allows individuals to offload numerous decisions to machines, resulting in individuals benefiting from networked, intelligent devices that continuously share and analyze data. These machines are capable of considering more factors than what human intellectual capacity can handle when making intricate decisions.

Bosch Has Previous With Blockchain Companies

Bosch and have been collaborating since 2019 when Bosch joined a test network, and as of 2021 the blockchain company has worked with Bosch Research to conduct research and development together, implementing Bosch’s solutions for mobility and smart homes on the platform.

Bosch has previously partnered with Iota, although it’s not clear if the company is still working on that aspect of blockchain technology, and it will hope that its move into Web 3.0 with is more fruitful.


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Paxos Ends Binance Relationship But Vows to Fight On

Reading Time: 2 minutes

  • Paxos has ended its relationship with Binance, but has vowed to fight its case over the BUSD stablecoin
  • The company maintains that BUSD is not a security as the SEC had claimed
  • The BUSD market cap has dropped 22% since Paxos was told to stop minting it

Paxos has ended its relationships with Binance following “constructive discussions” with the Securities and Exchange Commission (SEC). The New York-based crypto platform was last week forced to stop minting Binance’s BUSD stablecoin after the SEC sent it a Wells Notice, which suggested that a lawsuit over the minting of what it called an unregistered security was imminent. Paxos said that it will continue to redeem BUSD tokens through the end of February, but to all intents and purposes its relationship with Binance is over.

Paxos Stands by Claims That BUSD Isn’t a Stablecoin

BUSD launched in September 2019, with Paxos, a New York Department of Financial Services (NYDFS)-registered business chosen as the minting platform. Things had been going fine, with BUSD amassing a $16 billion market cap, until last week’s action by the SEC brought a halt to the relationship, with the agency informing Paxos that it considered the minting of BUSD an unregistered sale of securities.

Paxos said it had no choice but to comply, although it firmly denied the SEC’s allegations over BUSD being a security and insisted that it would fight its corner in court if it had to. This week it provided an update to employees, seen by The Block, with CEO Charles Cascarilla informing Paxos staff that it hoped that continued “constructive discussions” would bring about a resolution, but that “we will defend our position in litigation”.

Cascarilla added that the relationship with Binance “no longer aligns with our current strategic priorities”, although he claimed that this decision was independent from the action taken by the SEC and NYDFS. Paxos has fielded more than $2.8 billion in BUSD redemptions, with BUSD’s market cap dropping 22% since news of the action against Paxos broke.

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Coinbase Working on Federally Regulated Crypto Exchange

Reading Time: 2 minutes

  • Coinbase and IEX are said to be working on a federally regulated crypto exchange
  • IEX was previously in talks with the SEC over such a move last year, with FTX the initial party
  • Such a move would reveal a great deal about the SEC’s approach to specific coins

Coinbase is said to be working on a federally regulated cryptocurrency exchange in the U.S. in what would be an industry first, according to a Fox Business correspondent. Charles Gasparino tweeted yesterday to say that Coinbase is working with stock exchange IEX to build on the work done by Sam Bankman-Fried in bringing regulators such as the Securities and Exchange Commission (SEC) round to the idea of a crypto exchange that complies with the regulations set out by such bodies.

Building on Work Done by Sam Bankman-Fried

Bankman-Fried may have turned out to be an absolute charlatan, but it seems that those in the industry believe that his attempts to work with authorities to turn FTX into a regulated exchange might pay off, if others can build on it (and ignore what he was really doing behind the scenes). Bankman-Fried was known to have had lengthy discussions with the likes of SEC chair Gary Gensler over the way in which a crypto exchange could operate within federal financial law, and IEX and Coinbase are apparently hoping that they can carry on where he left off.

According to Gasparino, Brad Katsuyama, who founded IEX in 2012 and is still CEO, was party to the talks with Gensler and Bankman-Fried, and is clearly keen to carry on the work he started with a replacement exchange. Such an exchange may not be popular in traditional crypto circles, but it would go a long way to easing the concerns of many of those who stay out of the crypto space because of the Wild West that they still perceive it to be.

Which Coins Would Make the Cut?

What would be interesting, however, is which coins such an exchange would actually be able to list. The SEC has made no secret of the fact that it believes that practically every cryptocurrency other than Bitcoin is a security, even stablecoins such as Binance’s BUSD coin, so goodness knows what would actually be allowed onto the site. On the flip side, this might be the best way yet of actually getting to the bottom of the SEC’s criteria, assuming that Bitcoin isn’t the lone coin that it will allow such a platform to list.


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Creator of the Internet Believes that Crypto is “Only Speculative”

Reading Time: 2 minutes

  • The creator of the internet, Sir Tim Berners-Lee, believes that cryptocurrency is “only speculative” and that this creates a “dangerous” situation
  • Berners-Lee told a CNBC podcast that it reminded him of the dot-com boom
  • However, Berners-Lee allowed Sotheby’s to sell early internet code as an NFT in 2021

The man credited with creating the internet, Sir Tim Berners-Lee, believes that cryptocurrency is “only speculative” and that this creates a “dangerous” situation. Berners-Lee was speaking on CNBC’s Beyond the Valley podcast when the subject of cryptocurrencies was addressed, with the British scientist comparing it to the dot-com bubble of the late 1990s and the early 2000s. Berners-Lee’s comments may seem a little hypocritical however, given that he offered a physical depiction of the source code that created the World Wide Web to Sotheby’s in 2021 to be sold as an NFT.

Remittances are Crypto’s Only Utility

In the interview, Berners-Lee was disparaging of the cryptocurrency landscape, drawing a parallel between the crypto booms and busts and the dot-com boom and bust, the latter of which was, of course, a direct result of his invention:

Investing in certain things, which is purely speculative, isn’t […] where I want to spend my time.

The only positive application for cryptocurrencies according to Berners-Lee is in remittances, but only if the cryptocurrencies are immediately converted into fiat currencies after they arrive. There are plenty who would agree with this assessment, given that precious few cryptocurrency projects have real world usage.

Berners-Lee Gets into Web 3.0 Semantics

Berners-Lee also commented on the definition of Web 3.0, which he himself predicted during the creation of the internet, calling this smarter and more autonomous internet the ‘Semantic Web’. However, in the interview he was keen to point out the difference between ‘Web3’ and ‘Web 3.0’ – the former refers to his vision of an internet based on decentralized applications (dApps) and blockchain technology, while the latter he sees as a way to give users control of their own data, including how it’s accessed and stored.

Berners-Lee’s seemingly softer approach to this aspect of the digital landscape is perhaps reflective of his decision to gift a physical copy of the code for the WorldWideWeb to Sotheby’s in 2021, where it sold for $5.4 million as an NFT.

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Ordinals Comes to Litecoin

Reading Time: 2 minutes

  • Ordinals has been launched on the Litecoin network
  • The popular NFT inscription service will enjoy added privacy through Mimblewimble
  • A 22 LTC bounty was on offer to the developer who could achieve it

The massively popular Ordinals project has morphed to Litecoin having taken the Bitcoin blockchain by storm just 11 days after a bounty was offered to the developer who could accomplish the feat. Over 153,000 inscriptions have been made on the Ordinals blockchain and Litecoin supporters will be hoping for similar levels of success on their blockchain, the software for which was launched on Sunday.

Reward Grew From 5 LTC to 22 LTC

The suggestion of porting Ordinals to Litecoin was put forward by a coder by the Twitter handle of @indigo_nakamoto, who initially offered 5 LTC to the person who launched the NFT-creation tool on the 12-year-old network. Ordinals allows users to send and receive sats that carry optional extra data, which can be in the form of text, JPEGs, audio or videos. Their usage has split the community, with Bitcoin maximalists angry that the Bitcoin blockchain is being used for anything other than money, while others see it as a legitimate use of the blockchain and a great way to increase overall adoption.

Being a fork of Bitcoin, Litecoin had the capability of introducing the same features necessary for Ordinals to run – Segregated Witness (Segwit) and Taproot. Litecoin actually introduced Segwit three months before Bitcoin in May 2017, while Taproot was activated on the blockchain in May 2022.

Mimblewimble Adds Further Privacy

As the clamour for Ordinals on Litecoin increased, so did the bounty, with 22 LTC ($2,000) eventually offered as a reward. On Sunday, software engineer Anthony Guerrera launched the Litecoin Ordinals project on GitHub, but it wasn’t plain sailing – having forked the Ordinals code from Bitcoin, he found that it did not support the MimbleWimble Litecoin upgrade.

To overcome this he forked the programming language rust-Bitcoin and tweaked it to work with Mimblewimble, which now means that users have added privacy when they inscribe something.

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Galois Capital Shuts Down Following FTX Collapse

Reading Time: 2 minutes

  • Crypto hedge fund Galois Capital has told investors it has shut down after losing $200 million in FTX
  • The crypto-focused quantitative fund rescued half of its investment, but could still only offer investors 16 cents on the dollar
  • Another fund could be in the works from the founders

Galois Capital, a prominent hedge fund that fell victim to the collapse of FTX last year, has told investors it is closing down, having had around $200 million in assets trapped on the platform. Investors will get just 16 cents on the dollar back from the company, which has ceased all trading and liquidated all its positions, with co-founder Kevin Zhou expressing regret over the situation and explaining that it was financially and culturally untenable to continue operating the fund due to the severity of the FTX situation.

Galois Lost $200 Million in FTX

Galois had around $400 million on FTX when the problems began for the exchange in November, and managed to pull around half its funds out before the exchange filed for bankruptcy. In the investor letter, Galois stated that clients would receive 90% of their money that is not trapped on FTX, with the remaining 10% being held temporarily until discussions with the administrators and auditor were completed.

Zhou expressed a preference for selling the fund’s claim on FTX rather than engaging in a prolonged legal process, noting that bankruptcy proceedings could last a decade or more and that buyers of distressed claims were better equipped to pursue claims in bankruptcy court. According to the Financial Times, Galois has since sold its claim for roughly 16 cents on the dollar.

Sympathy in Short Supply

Galois itself put out a tweet thread where it said that, despite the huge loss, it was proud to be one of the few FTX victims that was “closing shop with an inception-to-date performance which is still positive.”

However, the news that a wealthy investment firm left nearly half a billion dollars of its clients money on one unregulated exchange was met with scorn by many in the crypto space, with sympathy soon in short supply:

The Galois thread ended with support for the crypto movement in general, and a suggestion that a new fund was already in the works…albeit one with possibly more risk management.

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What is Ethereum’s Shanghai Update?

Reading Time: 2 minutes

  • Ethereum’s Shanghai update is theoretically just a few weeks away
  • This is the first major update since the merge last year
  • What is the Shanghai update and how will it impact you?

Ethereum’s Shanghai update is due to take place next month, and there is great excitement over it from many in the crypto community, especially those who have signed up to stake it. Why exactly are they so excited, and what will the Shanghai update bring? Let’s find out.

What is the Shanghai Update?

In September 2022, Ethereum completed its transition from a Proof of Work (PoW) consensus mechanism to a Proof of Stake (PoS) mechanism. The merge of the Ethereum mainnet with the PoS Beacon Chain started the ball rolling for those who wanted to engage in the staking aspect of Ethereum’s new format, but all staking rewards have been locked ever since staking started.

This issue has been resolved with the Shanghai update (EIP-4895), which will introduce withdrawal functionality. This means that those who sent their coins to the Ethereum staking contract and those who signed up to a third-party service will receive their funds, five months after staking began. At-home stakers will receive their coins straight into their wallets, while those who signed up using third parties should wait for announcements from their staking provider as to how and when the coins will arrive.

Ethereum developers agreed on January 5, 2023, to implement the upgrade as a network hard fork in March 2023, with a public test network with the Shanghai update becoming available for users to test towards the end of February.

Will ETH Dump?

Some have been concerned that the mass release of some 16 million coins will result in the price of ETH dumping, but this is unlikely for a number of reasons. Firstly, these early stakers are Ethereum supporters, so they probably won’t just dump their tokens at the first opportunity. Secondly, the returns haven’t exactly been spectacular, and the vast majority of stalkers are small holders who will only receive a small amount each. They would have to sell en masse for a dump to occur.

Finally, if the crypto market is still in an uptrend when the coins are released then there is less chance of people selling the moment they get them, waiting for a higher price.


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Bitcoin Poised for More Upside, but Dollar Could Spoil the Party

Reading Time: 2 minutes

  • Bitcoin has started the week in a great position, having finally broken through a key resistance area
  • Both Bitcoin ad many alts look set to continue their rally
  • However, the DXY could have other ideas

It’s not exactly breaking news to say that the crypto market has been enjoying a resurgence of late, but expansion past $24,300 has been stifled for seven months. This has finally been broken, but right at a time when the U.S. Dollar Index, too, is showing signs of real strength. Let’s see how the land lies at the start of another week.

Bitcoin Finally Breaks Through

As we can see from the weekly chart, Bitcoin has started the week above the level of resistance at $24,300 that has been keeping it at bay since July last year:

This puts Bitcoin in a very promising position for a move further north, a sentiment echoed by the weekly view of the total market cap:

The momentum is definitely with bulls, with many alts enjoying double or even triple-digit gains on a daily basis. This is despite regulators such as the Securities and Exchange Commission coming after crypto on an almost daily basis, and mainstream media outlets echoing the negative sentiment. With the Ethereum Shanghai upgrade only weeks away, Ethereum and other related alts have an even more bullish narrative backing them.

DXY Looks Equally Strong

However, despite the good technical setup for Bitcoin and many alts during this bear market rally, there is a blot on the horizon in the shape of the U.S. Dollar Index:

Anyone with even the most rudimentary charting skills will be able to see that the DXY is on the verge of turning its own resistance, dating back to late 2016, into support, which is a big warning sign for Bitcoin and other risk-on assets. With the right narrative, the DXY could easily make a run back to 108, which would be devastating for Bitcoin. It may also be in the middle of its own bull run, in which case we could see something like this play out:

This would have the effect of sending Bitcoin back below $20,000, but it would need a special set of circumstances, such as the Federal Reserve to go even harder with its interest rate rises and crushing any hope that the mini-revival with the stock market is just that, to see it take place.

It just so happens that this week will see the release of the Federal Reserve’s preferred inflation measure and the minutes from its latest policy meeting, which will undoubtedly have an effect on both the DXY and legacy markets, which will, in turn, have an effect on Bitcoin. If the Fed hints that its recent slowing down of inflation increases was a mistake, then we can expect the DXY to enjoy a potentially damaging rally as risk-on investors flock to the safe haven of the dollar.

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Cameron Winklevoss: East Will Power Next Crypto Bull Run

Reading Time: 2 minutes

  • Cameron Winklevoss believes that the East is on the verge of taking control of the crypto economy
  • Winklevoss believes that the backward regulation in the U.S. is eroding its first mover advantage
  • Other prominent crypto stakeholders have agreed that China and Hong Kong are the countries to watch

Gemini co-founder Cameron Winklevoss believes that the East will power the next crypto bull run, with overly harsh regulation in the U.S. driving out talent and opportunities. There have been signs that such a movement is coming, such as Hong Kong on the verge of welcoming crypto trading thanks to a more sensible regulatory approach, and Winklevoss says that the huge growth in crypto over the past few years has left the U.S. with two options, embrace it or be left behind, and it is fast choosing the latter.

Winklevoss Warns U.S. Regulators

Winklevoss offered his thoughts through a Twitter thread on Sunday, in what can be taken as a warning to the U.S. government that it risks losing ground to the likes of China in the battle for the future of money. China is already far more advanced with its Central Bank Digital Currency, and Winklevoss is concerned that this is just the tip of the iceberg:

In the thread, Winklevoss criticized the way in which the crypto sector is being regulated in the country, claiming that a government that “doesn’t offer clear rules and sincere guidance will be left in the dust”, which is a pointed reference to the ‘regulation by enforcement’ that the likes of the Securities and Exchange Commission (SEC) have been accused of perpetrating. Such backward actions, which only serve to sow doubt and confusion among developers and investors, mean that the U.S. will miss out on “the greatest period of growth since the rise of the commercial Internet”, according to the Gemini co-founder.

Hayes and Armstrong Agree

Winklevoss’ thoughts echo those of Arthur Hayes and Brian Armstrong, both of who have voiced their concerns in prior months that the approach adopted by the U.S. risks leaving the country behind, especially with Hong Kong on the verge of launching a regulated crypto trading market. Hayes in particular believes that this is a move from China to re-enter the crypto market, claiming last year that it has not left the crypto scene but is instead remaining “dormant”, and that Hong Kong might be a kind of testing ground for Beijing to experiment with crypto markets, potentially acting as a hub for Chinese capital to find its way into the global crypto markets again.


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Web 3.0 Woundup – 19/02/23

Reading Time: < 1 minute

This week’s Web 3.0 woundup sees a Bored Ape move to Bitcoin, a Cryptopunk move to Paris, and Sony move in with Astar Network. Want to know what the devil we’re talking about? Read on.

Aster Signs Deal with Sony

This week saw a deal between Astar Network and the Sony Group, through its subsidiary Sony Network Communications, to develop an incubation program for Web 3.0 projects focusing on decentralized autonomous organizations (DAOs) and NFTs. Sony plans to use the partnership to get a deeper understanding of blockchain’s place in solving problems in the decentralized world.

The partnership adds to Sony’s interest in blockchain technology which includes investments in the space and a patent for crypto mining equipment.

Bored Ape Leaves Etherum for Bitcoin

An NFT collector this week moved Bored Ape #1626 from Ethereum to the Bitcoin blockchain by burning it. The collector used Ordinals’ Teleburn service to conduct the transfer, adding to the recent popularity of the Ordinals NFT project that has already split the Bitcoin community. 

However, Bored Ape creator Yuga Labs has weighed in on the matter noting that the burnt NFT is now an “illegitimate” Ape. That’s the law of the jungle for you.

Resignation Letter Becomes NFT

Yuga Labs this week donated CryptoPunk #110 for display at France’s top art museum, Centre Pompidou, in a show that the NFT collection is moving up in the world. The CryptoPunk will share the stage with Larva Labs’ Autoglyph #25 and 16 other NFTs from an array of digital artists, as the museum makes its first step in recognizing digital collectibles. 

The move represented Yuga Labs’ second punk donation in an initiative aiming to give CryptoPunks to top art institutions.

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The Week in Crypto – Paxos, BUSD, Bitcoin ATMs, and Celsius

Reading Time: 2 minutes

This week in the crypto world we saw British Bitcoin ATMs getting eradicated, Paxos doing the same to BUSD, and Celsius exiting bankruptcy through a deal with Novawulf. Nope, us neither.

Eyes down for a full house.

Police Raid UK Bitcoin ATM Sites

British police this week raided several sites in the northern city of Leeds and took away illegally operating Bitcoin ATM machines, 11 months after the country’s financial watchdog warned that many were not licensed.

As part of what is thought to be the UK’s first effort to clamp down on the illicit use of crypto ATMs, the sites suspected of housing the were raided by West Yorkshire police force’s digital intelligence and investigation unit police and the Financial Conduct Authority (FCA), in a sign that the FCA is taking unlicensed Bitcoin ATM operation seriously.

Celsius to Exit Bankruptcy Thanks to Novawulf Deal

Novawulf Digital Management was this week chosen by bankrupt crypto lender Celsius Network to act as the sponsor for its proposed Chapter 11 restructuring plan. The plan, which was endorsed by the Celsius Official Committee of Unsecured Creditors, will result in most creditors getting a one-time crypto payment while those with larger claims would receive equity in a new company.

Court documents indicate that approximately 85% of its users are expected to receive back 70% of their account balances in liquid cryptocurrencies such as BTC, ETH and stablecoins, which is more than many would have been fearing when it collapsed.

Paxos and BUSD Hit by U.S. Authorities

This week’s main story has been the multifaceted story regarding Binance’s BUSD stablecoin and the company that mints it, Paxos. There have been letters from the Securities and Exchange Commission that have since been denied, Circle snitching on Binance as a kind of revenge for Binance delisting USDC, and much more besides.

This is a story that will inevitably run and run, so get the lowdown to avoid getting left behind.

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SEC Sues Terraform Labs and Do Kwon for Securities Fraud

Reading Time: 2 minutes

  • The SEC has sued Terraform Labs and its co-founder Do Kwon for offering unregistered securities
  • The agency accuses Kwon of operating a fraudulent multi-billion dollar empire
  • Kwon is thought to be in Serbia following several other criminal and civil charges

The Securities and Exchange Commission (SEC) has opened proceedings against Terraform Labs and Do Kwon, accusing the co-founder of “orchestrating a multi-billion dollar crypto asset securities fraud.” The former CEO has been accused of hiding the truth over the stability of the UST stablecoin, with the SEC saying that Kwon knew it had the potential to be volatile, and also that he offered unregistered securities through the platform.

Anchor Interest was Unregistered Security

Terraform Lab’s Terra USD project famously imploded in May last year, losing investors $60 billion and acting as the spark that lit the crypto contagion meltdown. The SEC complaint says that Terraform and Kwon engaged in the promotion of crypto asset securities to investors who were seeking to profit, by repeatedly assuring them that the tokens would appreciate in value, for example through the Anchor Protocol which promised a 20% yield on the UST stablecoin.

Additionally, the SEC alleges that while promoting the LUNA token, Terraform and Kwon misled investors by falsely claiming that a prominent Korean mobile payment app utilized the Terra blockchain for transactions that would increase the value of LUNA. The complaint also asserts that Terraform and Kwon deceived investors about the stability of UST, which became evident when UST uncoupled from the US dollar in May 2022, resulting in the value of the tokens, including UST, plummeting nearly to zero.

Gensler Says Kwon Hid Potential Volatility

In a press release, SEC chair Gary Gensler outlined the core issues with the Terraform offer:

We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.

Do Kwon already faces criminal and civil charges over the collapse of Terra in multiple jurisdictions, but he has still not been apprehended, with Serbia being his last known whereabouts.

The post SEC Sues Terraform Labs and Do Kwon for Securities Fraud appeared first on FullyCrypto.