What the numbers say: The U.S.-based crypto exchange Coinbase recently published its earnings report for Q1 2023. The company's financial results showed that the exchange generated $736.4M in net revenue in the first three-month period of the year, a 22% increase. The firm beat analyst expectations of $654.2M in net revenue, causing over a 7% increase in the company's shares. The popular crypto exchange also reported a $79M net loss in Q1, down from $557M in the previous quarter. The shareholder letter defined Q1 2023 as a turning point toward building a more efficient and financially disciplined company. Relevance: A recent report from the crypto data website CoinGecko pointed out that Coinbase closed March with a 5.05% share in the centralized crypto exchange market, down from nearly 8% at the end of 2022. Within Q1, the platform's market share showed a slight decline after a steady increase for three consecutive months in Q4 last year. The slight decrease in the market share was attributed to Coinbase's recent conflict with the U.S. regulators, which led to a risk perception in investors. The conflict ended up with Coinbase entering into a legal battle with the U.S. Securities and Exchange Commission (SEC). The SEC mainly claims that Coinbase could violate the securities laws through its exchange and staking services, while the popular crypto exchange complains about the lack of regulatory clarity in the U.S. that it holds the agency responsible for. Brands that should care: CoinGecko's report also revealed that Binance dominated the centralized exchange market with its market share both in Q4 2022 and Q1 2023. The platform closed the first three-month period of the year with an overwhelming 62% share. In the top three of March, Binance was respectively followed by Upbit and OKX, with 7% and 6% shares. During the two quarters, the largest crypto exchange hosted more than 50% of the total spot trading volume.
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Twitter founder Jack Dorsey's digital payments company, Block, recently revealed its Q1 earnings, substantially beating analyst expectations. The firm reported a $931M quarterly gross profit for its mobile payment service Cash App, up 49% from the same period last year. More: - Cash App's gross profit surpassed analysts' expectations of $871M for Q1.
- The company's financial services platform, Square, recorded a $770M gross profit in the first three-month period of the year.
- Square's gross profit similarly came higher than expected, increasing by 16% YoY, though it decreased by 3.8% compared to the previous quarter.
- Block's combined gross profit was $1.71B, rising 32% compared to Q1 2022, and outperformed the average analyst forecast of $1.65B.
- Cash App's revenue from Bitcoin (BTC) sales to customers also increased to $2.16B, with an 18% rise from $1.83B in the previous quarter and 25% from Q1 2022.
- At the company's earnings conference call, Block CEO Jack Dorsey named AI and open protocols as the technologies that would help the company proactively respond to the significant changes in the global financial system.
- Dorsey also showed the U.S. banking crisis and the other countries' de-dollarization efforts as the primary reasons for the negative aspects of the balance sheet.
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New York Attorney General Letitia James has proposed new legislation dubbed the Crypto Regulation, Protection, Transparency, and Oversight Act (CRPTO) to increase state regulators' enforcement authority over the crypto industry. James' office will submit the bill to the New York State Senate and Assembly for consideration within the 2023 legislative session that will continue until June 8. More: - The proposed bill codifies the New York State Department of Financial Services' (NYDFS) authority to issue licenses to crypto firms seeking to operate in the state.
- CRPTO also gives the New York Attorney General's office the authority to enforce, issue subpoenas, and impose civil penalties against the crypto firms engaging in law violations.
- The legislation proposes a $10,000 civil penalty per violation for each individual and $100,000 per violation for each crypto firm.
- In addition, James aims to obtain authorization to close companies accused of fraud and illegal actions.
- Other details in the proposed legislation include requiring crypto exchanges to have independent public audits of their financial statements, compensate defrauded customers, and mandate Know Your Customer (KYC) procedures.
- The bill also bans the use of the stablecoin term for virtual currencies whose value is not pegged to the dollar in a one-to-one ratio.
- The New York Attorney General's office has been famous for its strict approach toward the crypto industry and filed lawsuits against many crypto platforms, including KuCoin and CoinEx, over the last several months.
Zoom Out: - The NYDFS, the state's financial regulator, has issued a license dubbed BitLicense for eight years to let a company run virtual currency activities under regulations in the state.
- The license has been criticized many times over the years for restrictive measures, long wait times, and high compliance costs.
- The NYDFS also recently enforced new rules that would be adopted while assessing crypto companies and force virtual asset firms to adhere to strict guidelines for capitalization, cybersecurity, and anti-money laundering (AML) measures.
- KYC is a common regulatory process generally implemented by financial services providers, including banks and crypto exchanges, to identify and verify their customers by asking for some key personal information and documents.
- The process aims to improve trust in the industry, help service providers to assess the risks, and combat AML and terrorism financing.
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A recent court filing in a New York bankruptcy court has revealed that the bankrupt crypto exchange FTX is trying to recover $3.9B in cash and crypto from the bankrupt crypto lender Genesis and a non-bankrupt affiliate GGC International. The company's lawyers aim to benefit from certain bankruptcy rules that prevent some creditors from being given preference over others. More: - The bankruptcy rules allow a company to recover transfers that occur within 90 days before going bankrupt.
- However, attempts to recover funds through bankruptcy could sometimes be unsuccessful.
- FTX lawyers mainly want to recover $1.8B in loans and $273M of collateral given to Genesis by FTX's sister company Alameda Research.
- The funds also include $1.6B withdrawn by Genesis from FTX's trading platform and $213M taken out by GGC International.
- The move came nearly one month after FTX attorney Andy Dietderich revealed that the company recovered over $7.3B of crypto assets in cash and liquid.
- At the time, Dietderich also said the company was assessing the possibility of relaunching the exchange with its stakeholders and would make a final decision on the issue within the current quarter, adding that a possible restart would require a significant amount of capital.
Zoom Out: - FTX, previously the third-largest crypto exchange, filed for Chapter 11 bankruptcy in November 2022, with all the 130 entities under the roof of FTX Group.
- The downfall followed the claims that the former CEO Sam Bankman-Fried (SBF) used customer funds in FTX to compensate for losses at Alameda Research.
- SBF currently faces trial with 13 charges, including bank fraud, money laundering, and bribery, to which he pleaded not guilty.
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The Voyager Official Committee of Unsecured Creditors (UCC) said the bankrupt crypto lender Voyager Digital is about to finalize the bankruptcy liquidation procedures. The committee also stated that it believes the lender will begin initial distributions of the funds to the creditors within a few weeks. More: - The announcement came nearly 10 days after Binance.US, the U.S. arm of the largest crypto exchange by trading volume, terminated its $1.3B acquisition deal with Voyager, citing the hostile and uncertain regulatory climate in the U.S.
- The deal included an option allowing Voyager to proceed with self-liquidation if Binance.US pulls out of the agreement.
- At the time of termination, Voyager said it would proceed with this option, distributing funds in cash and crypto directly to customers via its own platform.
- Voyager must now submit the liquidation proceedings with the U.S. Bankruptcy Court for the Southern District of New York.
- After the submission, the parties will have 10 days to file an objection regarding the liquidation.
- If an objection is filed, the court will hear arguments before approving the process.
Zoom Out: - Voyager Digital filed for Chapter 11 bankruptcy in July 2022, nearly four years after its launch.
- The sales deal with Binance was expected to result in a $100M larger gain for customers than a possible liquidation.
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Chinese e-commerce giant Alibaba's cloud computing division, Alibaba Cloud, has created a metaverse launchpad dubbed Cloudverse in collaboration with the Avalanche blockchain. The launchpad will facilitate businesses to build metaverse platforms on Avalanche. More: - Alibaba's Cloudverse will mainly allow companies to access an end-to-end platform where they can build and customize their metaverse spaces.
- As part of the collaboration, Avalanche will offer the main infrastructure and technology to build a metaverse.
- Meanwhile, Alibaba Cloud will provide the computing power and storage needed.
- The move marked Alibaba Cloud's second partnership with a blockchain network after the one with Mysten Labs, the firm behind the Layer-1 blockchain Sui.
- The partnership saw Alibaba Cloud offering node services for the validators on Sui's testnet, reducing time spent on operation and maintenance for developers building and deploying new products on the network.
Zoom Out: - Mysten Labs was founded by former executives of tech giant Meta's now-abandoned blockchain project, Diem.
- The node in the blockchain ecosystem refers to a type of computer that operates a blockchain's software to verify and store the transaction history.
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- Kenya’s government has revealed its plans to impose a 3% tax on digital assets, including cryptocurrencies and NFTs, in the budget proposal presented to lawmakers.
- The collapsed crypto exchange FTX's bankruptcy judge has approved the sale of the firm's crypto derivatives exchange LedgerX to M7 Holdings, an affiliate of the U.S.-based exchange conglomerate Miami International Holdings (MIH).
- Israel has seized around 190 crypto accounts at the crypto exchange Binance since 2021 over alleged terrorism ties, according to a recent Reuters report.
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 |  | Doga is a tech and science editor who has been writing news for nearly 10 years. She worked for leading tech platforms and mainstrem media channels as an editor and presenter throughout his career. Then, she carried her know-how to more than one platform. She is a part-time cat lover and binge-watcher, and also fond of science, space, and emerging tech. She always has a story to tell. She is a bit addict to the laughter and -unfortunately- the '90s culture. |  | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 and 1972 Fords. | |
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