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| Hey Insider! Welcome back to the Inside Cryptocurrency newsletter! The developments around the legal battle between the U.S. securities regulator and Binance hit the headlines today as the litigation proceeds. Today’s issue covers the latest developments in the case as well as several other prominent stories in the crypto market, including FTX debtors suing Sam Bankman-Fried’s parents, the 40% jump in Toncoin’s price over the past week, New York’s new proposed rules for coin listings, 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 | | Crypto-focused venture capital (VC) firm Blockchain Capital has raised $580M to invest in infrastructure, gaming, crypto, blockchain, decentralized finance (DeFi), consumer technologies, and social technologies. The firm said the funding will be split between two funds. More: - The $380M of the funding will go to Blockchain Capital's sixth early-stage fund focusing on newer companies and projects in pre-seed, seed, and Series A fundraising rounds.
- The remaining $200M will be spent on the firm's first opportunity fund aimed at late-stage startups that have already secured major funding elsewhere.
- The $580M figure marked one of the highest fundings ever accrued by Blockchain Capital.
- The investment firm's fifth early-stage fund saw several high-profile investors like payment infrastructure giants Visa and PayPal in 2021.
Zoom Out: - On the other hand, earlier in September, the data compiled by The Block showed that the VC funding to crypto and blockchain startups decreased to less than $500M in August, hitting a two-and-a-half-year low.
- The figure also meant that the investment in Web3 projects did not see any increase for four consecutive months.
Q: Do you think the new $580M funding raised by Blockchain Capital will reverse the downward trend in investments in the crypto industry? Join the conversation here. |     | |
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What the numbers say: Blockchain project The Open Network's native token, Toncoin (TON), increased by more than 40% in value over the past week. The token's price surged to as much as $2.55, up from the $1.80 level a week earlier. Toncoin's market cap also experienced a similar jump, growing from $6.24B to $8.55B. Relevance: The surge in Toncoin's key metrics was mainly triggered by the popular instant messaging app Telegram's integration of a self-custodial crypto wallet, TON Space, built on The Open Network. The platform said the wallet would allow its 800 million monthly active users worldwide to store and manage their digital assets through the jointly developed infrastructure. Following the announcement on Sept. 13, Toncoin entered into an upward trend, increasing its value by over 40% in only a week. Brands that should care: In May, The Open Network also launched a $25M accelerator program to support projects built on its blockchain ecosystem, pledging to invest $50,000 to $250,000 in each participant project. The program partners included Gotbit, Web3Port, Tonstarter, TEB, and Cypher Capital. Last year, The Open Network ecosystem itself also raised $250M in funding from investors, such as the venture capital (VC) arms of the crypto exchanges Huobi and KuCoin, to support projects built on its network. | | | |
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| 3 | | U.S. Magistrate Judge Zia Faruqui has denied the U.S. Securities and Exchange Commission's (SEC) request to access the software of Binance.US, the American arm of the largest crypto exchange by trading volume, to inspect its technological infrastructure. Faruqui said the SEC should make more tailored requests and speak with additional witnesses instead of conducting an inspection. More: - The SEC filed a 136-page complaint against Binance, its CEO Changpeng Zhao (CZ), and Binance.US with 13 charges in June.
- 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.
- The agency also recently claimed that Binance.US was not cooperating with it in the ongoing investigation.
- At the time, the regulator said Binance.US' operating company, BAM Trading Services, provided only 220 documents during the discovery process, with many consisting of incomprehensible screenshots and documents without dates or signatures.
- Binance also refused to offer its top executives for depositions, arguing that they did not have firsthand knowledge about the security and customer asset custody.
- The SEC believed that an inspection could help it access more evidence about its allegations and understand Binance.US' possible links to Binance, which are meant to be separate entities under U.S. law.
Zoom Out: - The company is also under scrutiny by the Commodity Futures Trading Commission (CFTC), the Internal Revenue Service (IRS), and federal prosecutors in the U.S.
- The heightened regulatory scrutiny forced Binance.US to depart its ways with many senior executives, including the CEO Brian Shroder, to conduct a mass layoff impacting one-third of its workforce and to suspend U.S. dollar (USD) deposits and withdrawals.
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| 4 | | Bankrupt crypto exchange FTX's debtors have filed a lawsuit against the parents of its former CEO, Sam Bankman-Fried (SBF), Joseph Bankman and Barbara Fried, to recover funds fraudulently transferred and misappropriated. The filing has accused Bankman and Fried of exploiting their access and influence within FTX to enrich themselves by millions of dollars. More: - The debtors claimed that FTX Group was a self-described family business, though it presented itself as a sophisticated group of crypto exchanges to the public.
- The lawsuit added that Bankman and Fried siphoned millions of dollars out of FTX for their own personal benefits.
- According to the filing, SBF's parents bought a 30,000-square-foot luxury property, referred to as Blue Water, in the Bahamas in 2018, and the property cost $18.9M in cash with all of its fees and taxes.
- Neither Bankman nor Fried allegedly paid any money from their holdings to purchase the property, and all the funds were sourced from cash held in FTX.
- The complaint further alleged the family of flying on privately chartered jets and staying in hotels by paying $1,200 per night through customer funds.
- Besides, the debtors claimed that the parents spent tens of millions of dollars in debtors' funds on political and charitable contributions, including to Stanford University, where they are law school professors, to boost their status.
- In July, FTX also sued SBF himself to recover more than $1B of funds in doubtful transactions.
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 SBF used customer funds in FTX to compensate for losses at the sister company Alameda Research.
- The 31-year-old former executive will appear in court in October to defend himself against a bunch of charges, including money laundering and misappropriation of customer funds, to which he pleaded not guilty.
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| 5 | | The New York State Department of Financial Services (NYDFS), the U.S. state's financial regulator, has proposed stricter rules for cryptocurrency listings of the digital asset firms operating in the state. As part of the proposed plan, the crypto firms licensed by the state will have to inform regulators of the tokens they plan to offer in advance. More: - The proposed rule will also apply to the firms on the NYDFS' greenlist.
- Also, the new regulation will require crypto companies to obtain approval from the NYDFS for policies around token delistings.
- The proposal has already been presented to the public consultation.
- The agency's superintendent, Adrienne Harris, said the proposed rules aim to help the state keep up with industry developments to protect consumers and markets.
Zoom Out: - The NYDFS has made moves to regulate the digital asset market since 2015, when it started issuing BitLicense to allow a company to run virtual currency activities in the state.
- The license has been criticized many times for restrictive measures, long wait times, and high compliance costs.
- In April, the regulator also began enforcing rules used while assessing crypto companies, forcing virtual asset firms to adhere to strict guidelines in terms of capitalization, cybersecurity, and anti-money laundering (AML) measures.
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| 6 | | The U.S.-based retail giant Walmart has launched a new gamified metaverse experience dubbed The Cultureverse to celebrate the golden anniversary of hip-hop music in partnership with Web3 creative studio People of Crypto (POC) Lab. The new experience was built on Spatial, a metaverse platform supporting Ethereum-based NFTs. More: - The Cultureverse features exhibits and art galleries where visitors can access digital art and artist stories.
- Users can also visit panels at the Walmart-sponsored Main Stage to hear influential voices in hip-hop.
- The platform allows visitors to review hip-hop fashion history in a dedicated space.
- POC Labs co-founder Simone Berry said highlighting both the music and the brands in hip-hop culture was very important to them while developing the experience.
Zoom Out: - In September 2022, Walmart launched two other metaverse experiences, dubbed Walmart Land and Universe of Play, on Roblox.
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- Laser Digital Asset Management, the crypto-focused subsidiary of Japan's largest investment bank, Nomura, has launched a Bitcoin (BTC) fund for institutional investors.
- Several major NFT marketplaces, including OpenSea, Rarible, and Blur, have restricted trading for the Stoner Cats NFTs after the U.S. Securities and Exchange Commission (SEC) took enforcement action against the collection's creators.
- U.S. judges have started weighing a potential early release from jail for the bankrupt crypto exchange FTX's former CEO, Sam Bankman-Fried (SBF).
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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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