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| Hey Insider! Welcome back to the Inside Cryptocurrency newsletter! Today’s issue again covers some of the biggest stories hitting the headlines within the day in the crypto industry, including Stanford University’s decision to return donations from FTX, Prime Trust’s plans for a mass layoff, Coinbase’s new grassroots advocacy campaign, 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 | | Stanford University, one of the largest universities in the U.S., has announced that it would return all the donations it received from the bankrupt crypto exchange FTX and its affiliates. A university spokesperson said the donations had been made by the FTX Foundation and FTX-related companies largely for pandemic-related prevention and research studies. More: - The decision came nearly a day after FTX's debtors filed a lawsuit against former CEO Sam Bankman-Fried's (SBF) parents, Allan Joseph Bankman and Barbara Fried, to recover funds fraudulently transferred and misappropriated.
- The filing accused Bankman and Fried of exploiting their access and influence within FTX to enrich themselves by millions of dollars.
- Among other allegations, the complaint also claimed that the parents spent tens of millions of dollars in customer funds on political and charitable contributions, including to Stanford University, to boost their status.
- Both Bankman and Fried are law school professors at Stanford University.
- The lawsuit pointed out that the university accepted around $5.5M in donations in total from FTX-related entities between November 2021 and May 2022.
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.
- In June, the Metropolitan Museum of Art in New York also decided to return $550,000 in donations received from the FTX's U.S. entity, West Realm Shires Services, in March and May 2022.
Q: Do you think it is right for the crypto companies to make political or charitable donations? Join the conversation here. |     | |
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What the numbers say: Recent data has shown that the trading volume on Binance.US, the U.S. arm of the largest crypto exchange by trading volume, has melted significantly since the beginning of the year. The volume retreated to as low as $286.1M in August. The figure represents an over 98% drop from the year's peak of $17.7B in March. The data also pointed out that the trading volume on the U.S. exchange is on track to decline further in September. The platform was able to host only $115.7M in volume as of Sept. 15. Relevance: The downward trend in Binance.US' trading volume mainly started after March when the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against the platform with allegations of regulatory violations in seven counts. The drop further accelerated after June following a 136-page complaint filed by the U.S. Securities and Exchange Commission (SEC) against Binance, its CEO Changpeng Zhao (CZ), and Binance.US with 13 charges. The company denied all the allegations from both the SEC and the CFTC and is currently in a fight with the regulators in court. However, the heightened regulatory scrutiny forced Binance.US to depart its ways with many senior executives, including the CEO Brian Shroder, to conduct two mass layoffs, cut ties with its banking partners, and suspend U.S. dollar (USD) deposits and withdrawals. All these setbacks caused the platform's trading volume to decline significantly, creating a risk perception in crypto investors. Brands that should care: On the other hand, the lawsuit against Binance has become the result of a wider crackdown by the SEC on the crypto industry in the U.S. Over the last several months alone, many other crypto exchanges, including Coinbase, Kraken, Bittrex, and Gemini, also came under increased scrutiny by the agency. | | | |
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| 3 | | Coinbase, the largest U.S. crypto exchange, has launched a new grassroots advocacy campaign to push for regulatory clarity for crypto in the U.S. The campaign mainly aims to encourage U.S. lawmakers to advance a Republican-led bill approved by the House Financial Services Committee in July to establish a clear regulatory framework for the crypto industry. More: - The proposed legislation defines when a cryptocurrency is classified as a security or commodity and determines when crypto firms must register with the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
- Coinbase hopes the campaign allows the bill to advance to a full vote in the House of Representatives.
- The campaign includes a comprehensive paid media campaign, advertisements in Washington, and calls on its own platform for crypto users to contact their members of Congress to ask them to pass the regulation.
- As part of the campaign, the company will also bring executives and developers from nearly 35 crypto-related companies together on Capitol Hill to meet lawmakers on Sept. 27.
- The move came around three months after Coinbase came under scrutiny by the SEC over alleged U.S. securities law violations.
- The SEC classifies all cryptocurrencies other than Bitcoin (BTC) as securities in the light of current chair Gary Gensler's approach, claiming jurisdiction over the digital asset market.
- Within the last several months alone, many other crypto exchanges, including Binance, Kraken, Gemini, and Bittrex, similarly faced an increased crackdown by the SEC.
Zoom Out: - Coinbase, which estimates there are 52 million crypto owners in the U.S., also recently launched a nonprofit organization dubbed Stand With Crypto with several other industry participants to advance pro-crypto policies.
- Besides, the company spent $39.9M on lobbying efforts during the 2022 election period to advocate the industry.
- In July, Coinbase CEO Brian Armstrong also met House Democrats privately to share his views on digital asset legislation and related issues, such as tax, privacy, national security, and climate.
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| 4 | | Hong Kong-based crypto exchange CoinEx has announced that it would resume all deposit and withdrawal services as of Sept. 21. The platform temporarily halted the related services after experiencing a cyberattack resulting in $70M of losses. More: - The company has warned its customers to avoid using old deposit addresses, underlining that those addresses would no longer work.
- The exchange added that any asset sent to old addresses would be permanently lost.
- The firm also said users could experience potential delays in processing due to a possible surge in withdrawal requests.
- CoinEx will initially resume withdrawals and deposits for 11 tokens, including Bitcoin (BTC), Ether (ETH), Tether (USDT), USD Coin (USDC), Dogecoin (DOGE), and Shiba Inu (SHIB).
- However, the platform plans to gradually reintroduce the services for more tokens in the upcoming weeks.
Zoom Out: - Last week, CoinEx was hacked by the North Korean cybercrime organization Lazarus Group for nearly $70M.
- The lost funds included $5.7M of BTC, $8M of ETH, $2.6M of Solana (SOL), and $11M of Tron (TRX).
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| 5 | | A recent filing submitted to the U.S. State of Nevada's Department of Employment, Training, and Rehabilitation (DETR) has shown that the bankrupt crypto custodian Prime Trust is preparing a new mass layoff. The document pointed out that the company warned its customers about the job cuts expected to impact 62 employees within the next two months. More: - The firm has yet to disclose what percentage of the company's headcount accounts for 62 employees.
- However, a bankruptcy filing showed that the firm had 70 full-time employees and contractors as of Aug. 14, 2023.
- Employers must inform their employees of mass layoffs or potential closings at least 60 days before they conduct the closure or job cuts in the U.S. under the Worker Adjustment and Retraining Notification (WARN) Act.
- The decision came more than a month after Prime Trust officially filed for Chapter 11 bankruptcy protection.
- The bankruptcy filing revealed that the company had $100M to $500M of liabilities as opposed to $50M to $100M assets in hand.
- Before going bankrupt, the troubled custodian was also put into receivership by Nevada's financial regulator, the Nevada Financial Institutions Division (NFID), in July.
- The NFID accused the company of using customer funds to buy cryptocurrency, cover lost deposits, and satisfy withdrawals from December 2021 to March 2022.
Zoom Out: - Prime Trust held funds in dollars and crypto on behalf of its customers, including FTX, Binance.US, and Celsius Network.
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| 6 | | The U.K.-based banking giant Standard Chartered's crypto arm, Zodia Custody, has announced its plans to offer a crypto staking service to its customers. The Zodia Custody Yield service will allow the firm's clients to earn annual interest on their crypto assets held in the firm. More: - Zodia Custody will launch the service in partnership with OpenEden.
- As part of the new offering, clients will pledge and lock up their crypto holdings in Zodia Custody to secure the blockchain while earning periodic rewards in return.
- Zodia Custody CEO Julian Sawyer said there is a lot in the world of traditional finance (TradFi) that can be moved to the digital asset market.
- The company also recently expanded its crypto custody service to Singapore.
Zoom Out: - Through the recent announcement, Zodia Custody has become the latest TradFi-backed firm to jump on the bandwagon of crypto staking.
- Most recently, Stuttgart Stock Exchange, Germany's second-largest stock exchange, also announced that it would start offering a fully insured crypto staking service in 2024 through its crypto-focused arm, Boerse Stuttgart Digital.
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- The U.S. Securities and Exchange Commission's (SEC) enforcement chief, David Hirsch, has stated that the agency would take more enforcement actions against crypto exchanges and decentralized finance (DeFi) platforms.
- A former employee of Deutsche Bank, Germany's largest bank, has pleaded guilty to his involvement in a fraudulent crypto trading scheme.
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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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