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| Hey Insider! Welcome back to the Inside Cryptocurrency newsletter! Today's issue again brings some of the most prominent stories in the crypto market to your inbox, including Chainalysis' decision to cut staff by 15%, Ledger's partnership with Sotheby's, the decline in the trading volumes of decentralized exchanges, 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
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| 1 | | A new class action lawsuit has accused Binance, the largest crypto exchange by trading volume, and its CEO Changpeng Zhao (CZ) of triggering the collapse of the rival crypto exchange FTX by competing unfairly and manipulating the market. The lawsuit was filed by an FTX user who lost assets after the exchange collapsed last year on behalf of other investors. More: - Other allegations in the case include fraudulent practices and making false statements.
- In 2019, Binance invested in FTX's native token, FTT, and owned 5% of the token's total supply.
- In November 2022, CZ announced that Binance would sell its FTT holdings due to recent revelations, causing a 14% price decrease in the token within 24 hours.
- However, the lawsuit claimed that Binance had already sold $530M of FTT one day before CZ's announcement.
- At the time, Binance CEO also said the company signed a nonbinding letter of intent to acquire FTX before tweeting that they gave up on the acquisition plans.
- The class action lawsuit defined this move as misleading, too, since it undermined confidence in FTX, caused FTT's price to drop again, and forced FTX into bankruptcy.
- The filing also pointed out that Binance's market share significantly increased after eliminating its biggest rival, FTX.
- The lawsuit seeks to compensate for damages of FTX users who are unable to access their funds and demands that Binance's alleged ill-gotten gains from the collapse be repaid.
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.
Q: Do you believe Binance had any involvement in the downfall of its rival FTX? Join the conversation here. |     | |
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What the numbers say: The data compiled by DefiLlama has shown that decentralized exchanges (DEXs) saw a steady decrease in trading volumes for six consecutive months. In September, the figure declined to as low as $44.28B, with a 68% decrease from the year's record of $140.62B in March when the volumes last saw an increase. September's volume also represents a 40% decrease from the levels at the beginning of the year. It's the lowest trading volume on DEX platforms since January 2021. Relevance: On the other hand, the ups and downs in the DEX trading volumes have shown parallelism with the crackdowns by regulators. In early 2023, the decentralized trading platforms experienced a surge in volumes while U.S. regulators increased their scrutiny on centralized exchanges (CEXs), such as Binance, Kraken, Bittrex, and Gemini. The heightened scrutiny moved many crypto traders to decentralized platforms, which were less of the focus at the time. However, the broader market conditions and the increased cybersecurity incidents targeting DEXs started a downward trend in volumes. Besides, a recent intensified crackdown on decentralized finance (DeFi) platforms by the U.S. Commodity Futures Trading Commission (CFTC), the top derivatives market regulator in the U.S., accelerated this decline even more. Brands that should care: In August alone, the CFTC simultaneously took enforcement actions against three separate DeFi platforms, including Opyn Inc., ZeroEx Inc., and Deridex Inc. At the time, the three companies were accused of violating the agency's rules by illegally allowing customers in the U.S. to trade digital asset derivatives without registration. The regulator's chair, Rostin Behnam, also recently stressed a need for overseeing DeFi platforms in a speech. The agency's crackdown caused trading volumes on DEXs to drop by nearly 25% in September, retreating to the lowest levels in two years and eight months. | | | |
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| 3 | | U.S. judicial authorities have recently set Sept. 17, 2024, as the date of the criminal trial of the bankrupt crypto lender Celsius Network's former CEO, Alex Mashinsky. The move came nearly three months after the former executive was arrested by U.S. law enforcement agencies with the allegations related to his potential involvement in Celsius' collapse. More: - The charges against Mashinsky include securities fraud, commodities fraud, wire fraud, misleading investors, and conspiracy to manipulate the value of Celsius' native token, CEL.
- At a recent hearing, lawyers for Mashinsky said their defense would focus on whether a cryptocurrency is a security in the trial.
- Attorney Robert Frenchman also stated that the law determining the definition of a security is fluid.
- Shortly after being arrested, Mashinsky pleaded not guilty to charges brought by U.S. prosecutors against him in seven counts and was released on a $40M bail pending trial.
- The former CEO's assets, including the funds in bank accounts and real estate, have also been frozen through a court order until the prosecutors' litigation against him ends.
- The U.S. Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Trade Commission (FTC) also simultaneously filed lawsuits against Mashinsky and Celsius.
- Meanwhile, Celsius' former chief revenue officer, Roni Cohen-Pavon, pleaded guilty to four criminal charges brought against him in September, agreeing to cooperate with prosecutors in their case against Mashinsky.
Zoom Out: - Celsius offered loans and paid high interest rates on crypto deposits.
- The company filed for Chapter 11 bankruptcy protection in July 2022 with more than $1B in debt, mainly due to its liquidity issues and the crypto market downturn triggered by the multi-billion-dollar Terra ecosystem's collapse.
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| 4 | | Blockchain data analysis firm Chainalysis has reduced its headcount by 15%, citing current market conditions. The move marked the second round of layoffs in the company this year after the one conducted in February. More: - Before the latest mass layoff, the company had around 900 employees.
- A company spokesperson said they believed they needed to reduce the company's expenses to better focus on growing efficiently.
- The spokesperson also added that they would remain committed to their mission to build trust in blockchains among government agencies, financial institutions, and crypto companies.
- The previous mass layoff had reduced the company's staff by 5%.
Zoom Out: - Chainalysis, specializing in tracking digital asset transactions and the entities behind them, was founded in 2014.
- The platform gained massive popularity after it started collaborating with governments in various countries, including the U.S., to clarify issues in crypto-related investigations.
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| 5 | | Crypto hardware wallet provider Ledger has partnered with the centuries-old luxury art auction house Sotheby's to offer exclusive benefits to the latter's top NFT collectors as of the beginning of 2024. As part of the collaboration, top collectors buying the most valuable NFT pieces sold through Sotheby's will receive a limited-edition, co-branded Nano X wallet for free. More: - Through the partnership, Sotheby's will aim to merge its new interest in the digital art space with higher security standards offered by Ledger.
- In the future, the collaboration will also feature a special-edition version of the Ledger Stax wallet product.
- Ledger will cover the costs of the wallets for a year, which means that the collectors will use the wallets for free for a limited time.
- The standard Ledger Nano X and Ledger Stax products currently have a price tag of $149 and $279, respectively.
- The partnership will also see Ledger providing onboarding services to Sotheby's clients by integrating them into the Ledger Academy's educational resources.
- The offering will help the collectors better understand the self-custody practice for digital assets and other Web3 concepts.
Zoom Out: - Sotheby's made its first foray into the NFT market in April 2021 by auctioning off the work of a pseudonymous digital artist, Pak.
- Since then, the famous art house has carried through many record-breaking NFT sales, generating millions of dollars.
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| 6 | | Executives of eight major local crypto mining entities in Kazakhstan have written an open letter to President Kassym-Jomart Tokayev. In the letter, the mining operators said the crypto mining industry is in a very distressful situation due to the high energy prices for miners. More: - The crypto mining operators signing the letter include BCD Company, TT TECH Limited, KZ Systems, AI Solutions, Green Power Solution, VerCom, and Kinur Invest.
- The letter pointed out that all major industry players have suspended their activities and plan to completely cease their operations in Kazakhstan by the end of the year.
- Kazakh miners stated that the problem stems from the decision to raise taxes on energy usage for crypto miners.
- The open letter also underlined that the country has already lost its position among crypto mining leaders such as the U.S., China, and Russia due to the high taxes.
- Kazakhstan is currently the world's third-largest market by Bitcoin mining hash rate, a sort of computing power used to mine new tokens.
- The miners further indicated that the local crypto mining industry would not be able to survive if the government does not take urgent measures.
Zoom Out: - The Kazakh government started implementing taxes on digital asset mining for electricity consumption on Jan. 1, 2022, following the concerns that crypto miners were undertaxed from using the national power grid.
- In 2022, the government collected around $7M in tax payments from crypto mining entities.
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| 7 | | Quick Hits: - It's been 150 years since the last great leap in engine technology. Invest in LiquidPiston to be part of the next one.*
- A group of investors has dropped their class action lawsuit against Terraform Labs and co-founder Do Kwon over fraud allegations without stating any reason.
- Japanese banking giant Nomura's crypto unit, Laser Digital, has opened a new office in Tokyo, appointing Hideaki Kudo as the new office's head.
- A parliamentary committee of Kenya's government has recommended regulators shut down the operations of OpenAI CEO Sam Altman's crypto project, Worldcoin, in the country.
- Even the best engineers can run into challenges. Straight from the cloud experts at DoiT, here are 5 core strategies for cloud innovation.*
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Term of the Day Large language models: Large language models (LLMs) are a statistical method that helps predict the following outcome in a given sequence of input. Question of the Week Do you share details about your salary with your coworkers? 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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