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| Hey Insider! Welcome back to the Inside Cryptocurrency newsletter! As the week nears to close, the top U.S. securities regulator's second major enforcement action targeting NFTs came to the agenda, frightening investors. Today's issue covers the impact of this move as well as some of the most thrilling stories in the crypto market, including Deutsche Bank's new institutional crypto custody service, FTX's plans to sell its crypto assets, Singaporean financial market regulator's nine-year ban on Three Arrow Capital founders, and more. Enjoy your reading, and if you find this newsletter useful, please do not forget to share it with your friends and colleagues! Doğa
p/dogayurduneri | |
| 1 | | Deutsche Bank, Germany's largest bank with its $1.4T of assets under management (AUM), has announced that it would start offering crypto custody services to institutional clients in partnership with Swiss crypto firm Taurus. The new offering will see the financial services giant holding cryptocurrencies and tokenized versions of traditional financial assets on behalf of its corporate customers. More: - The move will mark the first time Deutsche Bank holds digital assets.
- The bank's global head of securities services, Paul Maley, said a crypto custody service inevitably became a priority for investors and corporations as the digital asset space is expected to encompass trillions of dollars in assets.
- The new service came nearly three months after Deutsche Bank applied for a digital asset license to BaFin, Germany's financial market regulator, to offer custody services for cryptocurrencies.
- The banking giant first announced its plans to offer a crypto custody service in late 2020.
- A spokesperson for Deutsche Bank said crypto trading is not currently among their immediate plans, though the bank stated that it planned to offer digital asset trading services back in 2020.
Zoom Out: - Several other traditional financial institutions worldwide, including Standard Chartered, BNY Mellon, and Société Générale, also offer crypto custody services to their customers.
Q: Do you expect more banking institutions from traditional finance to influx to the crypto industry through new digital asset-focused services? Join the conversation here. |     | |
| 2 | | 
What the numbers say: The floor price of the Stoner Cats NFTs jumped by 347% within the day. The figure increased to as much as 0.085 ETH, up from 0.018 ETH. Then, it retreated to the 0.060 ETH level with a slight decline. The collection's 24-hour sales also saw a nearly 250% increase. Relevance: The massive increase in the floor price of the Stoner Cats NFTs followed an enforcement action by the U.S. Securities and Exchange Commission (SEC) against the creator of Stoner Cats, an adult animated series about house cats. The six-episode series was released from July 2021 to December 2022, and its cast included several well-known actors, such as Mila Kunis, Chris Rock, and Ashton Kutcher. Before the debut, the creators of the popular series launched a 10,420-piece NFT collection offering holders exclusive access to watch Stoner Cats online earlier, just like a ticket. The NFTs sold out in 35 minutes, generating $8.2M. However, the SEC classified the offering as an unregistered sale of crypto asset securities. Stoner Cats 2 LLC, the company behind the show, agreed to pay a $1M civil fine to settle the agency's allegations without admitting or denying any wrongdoing. Brands that should care: On the other hand, the SEC's move marked its second major enforcement action targeting NFTs. In August, the securities regulator also accused Los Angeles-based media and entertainment company Impact Theory LLC of offering unregistered securities in the form of NFT. At the time, the agency stated that Impact Theory generated around $30M from hundreds of investors through its NFTs sales. Impact Theory similarly agreed to pay more than $6M and accepted a cease-and-desist order to settle the SEC's allegations. | | | |
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| 3 | | U.S. bankruptcy court has approved the bankrupt crypto exchange FTX to sell its $3.4B of crypto assets. The proceeds from the sales will be used to repay creditors claiming that they are owed tens of billions of dollars by FTX. More: - As part of an agreement between FTX and its creditors, the firm will be able to sell as much as $100M of crypto a week, depending on the market prices.
- The move will see FTX's crypto assets being converted into U.S. dollars (USD) to be distributed to the creditors after the company obtains final approval for the repayment plan from the court.
- In a recent court filing, FTX disclosed that it has recovered around $7B in assets to date, with $3.4B denominated in cryptocurrencies.
- The firm's crypto assets include $1.16B in Solana (SOL), $560M in Bitcoin (BTC), $192M in Ether (ETH), $120M in Tether (USDT), and $119M in Ripple (XRP).
- FTX attorney Andrew Dietderich said they plan to land the sales without rush based on the market opportunities as the bankruptcy case proceeds.
- Before approving, U.S. Bankruptcy Judge John Dorsey argued if FTX should be authorized to sell the crypto assets since some creditors claimed that those assets were their property rather than the bankrupt company.
- However, lawyers for both U.S. and foreign creditors said waiting longer could undermine the amount creditors would recover, hurting prices.
- Also, Judge Dorsey offered FTX creditors the opportunity to watch the hearing via Zoom, but any objection did not appear.
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 the sister company Alameda Research.
- The bankrupt company also recently outlined its plans for a potential relaunch of its crypto exchange, with expectations to receive confirmation for an ultimate plan with one of the bidders within Q2 2024.
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| 4 | | Bankrupt crypto lender Genesis Global has informed its clients that it would halt offering crypto derivatives trading services through GGC International, a trading-focused unit owned by Genesis Bermuda Holdco, as of Sept. 21. The move marked the end of the company's all trading services. More: - The company said the decision was made voluntarily for business reasons.
- All the open derivatives positions at GGC International will be maintained until the expiry date.
- During the termination process, Genesis will help customers conduct transactions to close or manage their open positions.
- The decision came nearly five days after Genesis Global announced that it would halt the operations of its U.S.-focused spot crypto trading business, Genesis Global Trading (GGT), as of Sept. 18.
- That's why the latest move will see Genesis Global no longer offering crypto trading services through any of its business units.
Zoom Out: - Genesis Global filed for bankruptcy in January after freezing withdrawals in November 2022, mainly due to its exposure to the collapses of the crypto exchange FTX and crypto hedge fund Three Arrows Capital (3AC).
- GGT and GGC International were some of the several Genesis-related companies that have managed to escape the bankruptcy of the crypto lender and continue their operations.
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| 5 | | Stablecoin issuer and crypto services provider Paxos, best known for PayPal USD (PYUSD) and Binance USD (BUSD), has confirmed that it was the entity paying around $500,000 in transaction fees to move just $200 of Bitcoin (BTC), accounting for 0.074 BTC, by mistake on Sept. 10. The company said the incident stemmed from a bug on a single transfer, which has been fixed. More: - The stablecoin issuer underlined that end users have not been affected by the incident, adding that all customer funds are safe.
- The error marked the most expensive transaction fee paid in U.S. dollars (USD) for a single Bitcoin transaction.
- At the time, the transfer was attributed to a crypto exchange or payment processor with buggy software.
- F2Pool, the mining pool that received the fee since it mined the block containing the transaction, said they would put the 20 BTC fee on hold for three days, giving time for the user to contact them to claim the fund.
- The mining pool added that if the fee remains unclaimed after three days, the fund would go to its Bitcoin miner pool.
- In its official statement, Paxos stated that it contacted the miner to recover the lost funds.
- However, the pseudonym miner Chun declared that he decided to reconsider paying the fund back, though he initially agreed to do that, and launched a Twitter poll to receive the advice of the crypto community.
Zoom Out: - The average Bitcoin transaction fee is currently lower than $3.
- Users can pay any amount they wish for transaction fees, though the lower fees could result in miners not accepting the transaction, or higher ones could pave the way for immediate processing.
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| 6 | | Singapore's financial market regulator, the Monetary Authority of Singapore (MAS), has issued a nine-year ban on the bankrupt crypto hedge fund Three Arrow Capital (3AC) co-founders Su Zhu and Kyle Davies for their roles in the collapse of the company. The move has blocked both founders from engaging in any regulated financial activity in the city-state for nine years. More: - Zhu and Davies were also prohibited from managing, being directors of, and becoming substantial shareholders of any capital market services company operating under the Securities and Futures Act.
- The MAS accused the two of providing false information and failing to implement an appropriate risk management strategy while the firm was collapsing.
- 3AC filed for bankruptcy in July 2022 due in part to the prolonged crypto winter triggered by the multi-billion dollar collapse of Terra in May.
- Founders Kyle Davies and Su Zhu were heavily held responsible for the failure and the billions of dollars of losses suffered by many people after the bankruptcy.
- The bankruptcy filings showed that the collapsed fund owed around $2.8B to more than 20 firms.
- The liquidators also accused two founders of failing to cooperate with their investigation, seeking to recover $1.3B from them, who allegedly received the same amount of money from the company within a few months before the collapse.
Zoom Out: - Zhu and Davies launched a new crypto exchange dubbed OPNX, which is not available in certain regions like the U.S. and Canada, in April this year.
- Shortly after the launch, the exchange was served a $2.7M fine by Dubai's Virtual Assets Regulatory Authority (VARA) for failing to comply with the local rules.
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- Crypto exchange Bybit's CEO, Ben Zhou, has stated that they might have to exit the U.K. market very soon due to the recent regulatory changes in the country.
- Stablecoin issuer Circle has announced its plans to pilot a Web3 wallet for Singaporean users on Grab, a super-app for ride-hailing, food delivery, and digital payments.
- The U.S.-based crypto conglomerate Digital Currency Group (DCG) has proposed a new plan that would pave the way for the claims of the users of Gemini Earn, formerly run by its bankrupt crypto lender Genesis Global and the crypto exchange Gemini, to be fully repaid.
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Term of the Day Keyword stuffing: Keyword stuffing involves the inclusion of keywords into a website’s content unnaturally or repetitively to manipulate search engine algorithms. Question of the Week Do you share details about your salary with your coworkers? Join the conversation |
INSIDE CRYPTOCURRENCY LEADERBOARD (ALL-TIME) |
 | 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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