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| Hey Insider! Bankrupt crypto exchange FTX’s reorganization plan hit the headlines today, triggering a sudden jump in the price of the FTX token (FTT) by over 18%. Today’s Inside Cryptocurrency newsletter also covers several of the most important stories from the crypto market, including Yuga Labs’ acquisition of Roar Studios, the U.S. tax authority’s new ruling on crypto staking rewards, a blockchain-based service created to verify cultural artifacts, and more. Enjoy reading! Doğa
p/dogayurduneri | |
| 1 | | U.S. District Judge Jed Rakoff has recently rejected Terraform Labs' legal motion to dismiss the fraud allegations brought by the U.S. Securities and Exchange Commission (SEC) against the firm behind the collapsed Terra ecosystem. Rakoff ruled that the SEC could move forward with its allegations in the case. More: - In its lawsuit against Terraform Labs, the SEC accused the company of defrauding customers and selling billions of dollars in digital assets that were unregistered securities.
- The regulator also claimed that Terraform Labs misled investors about the stability of its stablecoin pegged to the U.S. dollar (USD), TerraUSD (UST), and promised a value increase in its tokens.
- A spokesperson for Terraform Labs said the firm would continue to fight the SEC's misguided and deeply flawed allegations and legal theories.
- Rakoff also disagreed with a precedent ruling by U.S. District Judge Analisa Torres in the SEC's case against the payment protocol Ripple.
- Judge Torres ruled that Ripple's native token, XRP, is not a security when sold to the general public, which was considered a partial victory for Ripple since the SEC classified XRP as a security in a lawsuit filed in December 2020.
Zoom Out: - The multibillion-dollar Terra ecosystem collapsed last year after the prices of its native tokens, Luna and TerraUSD, plummeted nearly to zero in May and lost all their value against USD, triggering a prolonged crypto winter.
- The collapse caused over $60B to be wiped off the crypto market.
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| 2 | |  What the numbers say: Bankrupt crypto exchange FTX's native token, FTT, jumped by over 18% within the day. The token's price increased to $1.59, up from $1.34 in an hour. Following the sudden jump, the popular cryptocurrency fixated on the $1.40 level for a while before retreating to the $1.30 level again.
Relevance: The sudden surge in FTT's price followed a draft reorganization plan filed by FTX's new management. The filing has revealed the firm's plans to establish a rebooted international crypto exchange that would cater to users outside the U.S. The new management also shared its intention to divide the claimants into two groups of "dotcom users" for FTX.com offshore exchange users and "U.S. customers" for FTX US users. For the dotcom customer pool, the company proposed establishing a new company with third-party investors to operate an offshore platform that would not be available to U.S. customers. Brands that should care: Since FTX's relaunch plans were first disclosed by the firm's attorney Andy Dietderich in April, the bankrupt company has filed many legal motions to recover funds from several entities, including the bankrupt crypto lender Genesis. A Bloomberg report also previously revealed that the potential restart saw attention from Tribe Capital, a San Francisco-based venture capital (VC) firm. At the time, the report claimed that the firm was preparing to lead a $250M fundraising campaign to revive the collapsed exchange. | | | |
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| 3 | | The U.S. tax authority, the Internal Revenue Service (IRS), has issued a new ruling that requires crypto investors to report their crypto staking rewards as gross income in the year they receive. The ruling clarified how the income earned by staking digital assets will be treated. More: - In the blockchain networks based on the Proof-of-Stake (PoS) model, users pledge their existing coins to validate transactions.
- In return, a kind of income, known as a staking reward, is paid to crypto owners as staked cryptocurrency.
- In the PoS model, investing and staking more coins increases the rewards to be paid.
- The IRS' new ruling applies to cash-method taxpayers involved in this process by validating transactions.
- Besides, the treatment covers direct crypto and staking through a centralized crypto exchange.
- The tax authority also previously subjected rewards earned from crypto mining activities to income and capital gains taxes.
Zoom Out: - Over the last several years, the tax has become a significant subject matter creating tension between crypto investors and the U.S. government.
- U.S. President Joe Biden repeatedly urged authorities to remove tax loopholes that only help wealthy crypto investors.
- Biden's fiscal 2024 budget proposal, revealed in March, also suggested doubling the capital gains tax rate for crypto investors.
- Besides, the White House published a blog post in May, reiterating the U.S. government's plans to impose a 30% federal tax for electricity usage from all digital asset mining.
- Last month, the U.S. Senate Committee on Finance also wrote a letter seeking comments from the crypto industry to better understand that Congress should address tax challenges and opportunities posed by digital assets.
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| 4 | | Yuga Labs, the firm behind the famous CryptoPunks and Bored Ape Yacht Club (BAYC) NFTs, has announced that it will acquire a Los Angeles-based gaming and music startup, Roar Studios. The acquisition will help Yuga Labs expand its forthcoming metaverse platform, Otherside, and create other entertaining social experiences for its community and ecosystem. More: - As part of the acquisition, Roar Studios founder Eric Reid will join Yuga Labs as the new general manager of Otherside to oversee the platform's development.
- Roar Studios, founded in 2021, works on the intersection of music, gaming, social media, and AI.
- The sale will see Roar Studios contributing its innovative technology, specialized expertise, and leadership to Yuga Labs, accelerating its ambitious plans for Otherside.
- The financial details of the acquisition deal have yet to be disclosed.
Zoom Out: - Roar Studios raised $7M in funding from leading firms, including Galaxy Interactive, in October 2021 to build a music metaverse that would allow artists worldwide to play music with their virtual avatars collaboratively.
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| 5 | | Crypto mining firm Genesis Digital Assets (GDA) has opened three new data centers for Bitcoin (BTC) mining in North Carolina as part of its expansion plans across the U.S. The move aims to help the company use South Carolina's renewable energy resources to power its data centers. More: - GDA CEO Andrey Kim said the launch of the latest data centers perfectly complies with the company's commitment to expand its fleet on clean energy resources.
- Kim also added that their goal is to show the world that Bitcoin mining can be eco-friendly.
- One of the facilities will use dry-type distribution transformers, while another will run on hydroelectric energy.
Zoom Out: - GDA currently operates 20 crypto mining farms across North America, Europe, and Central Asia.
- The company's farms have more than 400 megawatts (MW) of total power capacity.
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| 6 | | Computer scientist Adel Khelifi from the University of Abu Dhabi and archaeologist Mark Altaweel from University College London have developed a new blockchain-based verification service dubbed Salsal to validate and record the authenticity of cultural artifacts. The duo said they would offer the system specifically to cultural heritage organizations. More: - To build Salsal, Khelifi and Altaweel have created a protocol for identifying, grading, and recording information about certain artifacts using various technological tools.
- The cultural heritage organizations will upload images and descriptions of an artifact to the system.
- Then, an expert group will grade the artifacts on a five-point scale using a similar process to the one adopted by the Museums Association.
- After the artifacts are proven to be legitimate through the system, the collector will be able to turn the item into an NFT, allowing for the documentation of the ownership transfer accurately.
- The service will provide a unified database running on a blockchain for historical artifacts instead of the existing databases containing separate information.
- The system aims to combat common issues seen in items with historical significance, including theft and looting, by requiring sellers and curators to document authenticity.
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- Japanese investment bank Nomura's Dubai-based crypto arm, Laser Digital Middle East FZE, has obtained a crypto license in Dubai to legally offer the region's virtual asset broker-dealer and investment management services.
- Decentralized exchange (DEX) LeetSwap on crypto exchange Coinbase's Base network has halted trading, citing concerns around a potential exploit.
- U.S. presidential candidate Ron DeSantis has stated that he would end the Biden administration's war on Bitcoin and cryptocurrencies if elected in 2024.
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Term of the Day Short (position): A short position involves one party borrowing a security, selling, and then repurchasing the security in the future. Question of the Week Have you ever regretted a career decision? What would you have done differently? 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 Christopher Hachey | |
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