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| Hey Insider! It's been a day full of court filings as the regulatory tension heightened in the U.S. following the high-profile collapses in the crypto industry. Today's issue includes Binance's recent complaint rejected by the federal judge, the new FTX management's claims about the company's suspicious activities, Robinhood's new mass layoff, and more. I hope you enjoy your reading! Doğa
p/dogayurduneri | |
| 1 | | U.S. Judge Amy Berman Jackson has rejected a request from Binance, the largest crypto exchange by trading volume, to restrict the language in the U.S. Securities and Exchange Commission's (SEC) public statements about the case. Jackson said there is no need for the court to interfere to curtail the statements from either party. More: - The federal judge also added that the SEC's public relations efforts did not affect proceedings in the case so far.
- The legal team of Binance recently filed a motion, claiming that the SEC's public statements related to the case are misleading and have the potential to affect the jury, create confusion in the market, and harm the customers rather than protect them.
- Also, the firm's lawyers said there is no evidence that customer assets on Binance.US, the U.S. arm of Binance, have been commingled or misused in any way.
- Binance's complaint followed a statement from the SEC's enforcement director, Gurbir Grewal, who claimed that Binance and its CEO, Changpeng Zhao (CZ), could commingle or misuse customer assets as they wish.
Zoom Out: - Binance and the SEC have entered into a legal battle after the agency filed a 136-page complaint against the exchange and CEO Zhao over alleged U.S. law violations.
- The allegations in the complaint include mishandling customer funds, misleading investors and regulators, violating securities laws, creating an extensive web of deception, conflicts of interest, lack of disclosure, wash trading, and calculated evasion of the law.
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| 2 | | 
What the numbers say: Bitcoin (BTC), the largest cryptocurrency by market cap, has come close to passing the $31,000 mark again, reaching $30,834. The popular token jumped to this level from $30,196 seen the previous day. Ether (ETH), the second-largest cryptocurrency, also experienced a similar surge, surpassing the $1,900 level. Relevance: The jump in Bitcoin's price followed the claims that $4.2T asset manager Fidelity is preparing to submit an application for a spot Bitcoin exchange-traded fund (ETF). The move would see the asset management giant join other multi-billion dollar asset managers, including BlackRock, WisdomTree, and Invesco. Earlier in June, the trio consecutively filed a similar application, causing Bitcoin to hit a one-year high. The investment firm Valkyrie also recently jumped on the bandwagon. Brands that should care: Over the last few months, several other leading figures from traditional finance (TradFi), including the largest German bank Deutsche Bank, the French asset manager CACEIS, the U.S.' oldest bank BNY Mellon, and the stock exchange giant Nasdaq, also demonstrated their intention to have a presence in the crypto industry. | | | |
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| 3 | | In a recent report shared with a U.S. bankruptcy court, the new management of the bankrupt crypto exchange FTX has claimed that the company lied to banks about accounts commingling customer funds while it was active. The firm's new CEO and chief restructuring officer, John J. Ray III, said FTX mixed customer deposits with corporate funds under the management of former senior executives since the exchange's launch. More: - The report pointed out that some banks questioned the suspicious activities at its sister company Alameda Research in 2020 and started rejecting transfers.
- At the time, FTX used the accounts at Alameda Research for customer transactions at FTX.com and made false statements about this activity to the banks.
- In one instance, an Alameda Research employee told a bank that customers occasionally confused FTX and Alameda.
- According to the report, FTX also founded a shell company dubbed North Dimension Inc. to receive customer deposits and fund withdrawals for the exchange, describing it as a crypto trading firm.
- Further, the company fired a senior attorney raising concerns about the North Dimension accounts used to fund customer withdrawals at FTX.
- Besides, the current management reported that it recovered around $7B in liquid assets so far.
- The report also showed that the firm owed customers nearly $8.7B, with more than $6.4B of it in fiat currencies and stablecoins misused by the former management.
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.
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| 4 | | Recently launched crypto exchange EDX Markets has entered into final talks with Anchorage Digital about a new partnership for the custody service. The platform has abandoned a previous plan to use stablecoin issuer Paxos as a third-party custodian. More: - A potential partnership with Paxos would have allowed customer funds in the exchange to be taken under custody by Paxos and given Paxos customers direct access to EDX Markets.
- Anchorage Digital has already been included in the list of partners as one of the vendors, while Paxos was excluded.
- EDX Markets only caters to institutional clients, and unlike existing crypto exchanges, it does not keep customer assets under its custody during trading.
- Instead, the platform aims to work with a third-party custodian, separating the crypto trading services from broker-dealer functions as in traditional finance (TradFi).
- Existing crypto exchanges, including Coinbase and Binance, frequently come under fire from regulators for failing to separate parts of their business like custody and trading.
- The companies backing EDX Markets include major TradFi giants, such as Citadel Securities, Fidelity Digital Assets, and Charles Schwab Corp.
Zoom Out: - EDX Markets officially went live earlier in June, nearly nine months after being announced.
- The exchange offers trading only in Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and Bitcoin Cash (BCH).
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| 5 | | Crypto and stock trading app Robinhood has laid off 7% of its full-time workforce, accounting for nearly 150 employees, according to a recent report from The Wall Street Journal citing an internal company message. The move marked Robinhood's third round of mass layoffs in just over a year. More: - In the internal message, the firm's chief financial officer (CFO), Jason Warnick, said the layoffs aim to better coordinate team structures and adapt to volumes.
- A Robinhood spokesperson also recently stated that the teams sometimes make changes based on several factors, including volume and workload.
- Robinhood had nearly 2,300 full-time employees at the end of 2022.
- The recent layoff has affected roles in the departments of customer experience and platform shared services, customer trust and safety, and safety and productivity.
- The company reduced its headcount by over 1,000 employees in the two previous mass layoffs combined.
- Following these staff cuts, the firm also experienced an increase in employees voluntarily leaving the company.
Zoom Out: - The latest layoff followed a 30% decline in the company's crypto trading revenue in Q1.
- Robinhood also recently reported that its crypto trading volume decreased by 68% in May compared to the same month in 2022.
NOTE: Inside.com founder and CEO Jason Calacanis is an investor in Robinhood. | | | |
| 6 | | Crypto exchange Bitfinex has launched a new peer-to-peer (P2P) crypto trading platform in Argentina, Colombia, and Venezuela to consolidate its roots in Latin America. The platform will allow users to purchase and sell the two leading cryptocurrencies, Bitcoin (BTC) and Ether (ETH). More: - The new trading platform will also support Tether's stablecoins pegged to euros, U.S. dollars, and gold: EURT, USDT, and XAUT.
- The payments will be able to be made through domestic currencies based on the users' choice.
- The move came nearly one month after Bitfinex invested in a Chilean crypto exchange, OrionX, with an undisclosed amount to expand its presence in Latin America.
Zoom Out: - In April, the platform also received El Salvador's first digital asset service provider license through its arm in the crypto-friendly Central American country, Bitfinex Securities El Salvador.
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- Crypto mining company Riot Platforms has bought 33,280 mining rigs for $162.9M.
- An FTX creditor has converted the claim to a token on the Ethereum blockchain to sell it as an NFT.
- Binance, the largest crypto exchange by trading volume, has reportedly withdrawn its license application in Austria.
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Term of the Day Assessed value: The assessed value is an official estimate of a property's worth that is used to determine the appropriate tax rate for the property. Question of the Week How do you feel about the phrase "The customer is always right"? Join the conversation |
INSIDE CRYPTOCURRENCY LEADERBOARD (30 DAYS) |
 | Staff Writer | | 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. | | This newsletter was edited by Aaron Crutchfield | |
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