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| Hey Insider! Welcome to the week's latest Inside Cryptocurrency newsletter! Today's issue covers some of the most thrilling stories hitting the headlines in the crypto market as the week closes, including FTX co-founder's testimony against Sam Bankman-Fried, Kraken's plans to acquire the Dutch exchange BCM, U.S. regulators' probe into the former Voyager Digital CEO's potential involvement in the company's downfall, 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 | | Investigators in the U.S. Commodity Futures Trading Commission's (CFTC) enforcement division have recommended the agency accuse the bankrupt crypto lender Voyager Digital's former CEO, Stephen Ehrlich, of breaking derivatives laws by misleading customers about the safety of their assets. The CFTC staff's probe has determined that the former executive broke the rules before the firm's collapse last year. More: - The CFTC commissioners will next vote on whether to approve an enforcement action against Ehrlich within several days.
- The CFTC's probe pointed out that hundreds of millions of dollars of customer assets were transferred to high-risk companies, such as now-defunct crypto hedge funds Alameda Research and Three Arrows Capital (3AC), at the direction of Ehrlich, putting the funds at risk.
- The agency also determined that Ehrlich did not conduct proper due diligence on these firms while telling customers their assets would be safe.
- The loans given to Alameda Research and 3AC have never been repaid and played a significant role in Voyager Digital's downfall.
Zoom Out: - Voyager Digital filed for Chapter 11 bankruptcy in Jul. 2022, nearly four years after its launch, citing volatility in the crypto market and its exposure to 3AC.
- The firm also previously came under scrutiny by the U.S. Federal Trade Commission (FTC) following its bankruptcy.
Q: Do you expect the U.S. regulatory agencies to increase their retrospective crackdown on the former CEOs of the bankrupt crypto firms? Join the conversation here. |     | |
| 2 | |  What the numbers say: The data compiled by CCData has shown that the market share of Binance, the largest crypto exchange by trading volume, in spot trading dropped for seven consecutive months. The platform's share retreated to 34.3% in September, down from the year's peak of 56.9% in February. The latest figure represents a 22.6% decline for the seven-month period and a 20.9% drop since the beginning of the year.
Relevance: The downward trend in Binance's market share first arose in March after the platform halted its zero-fee trading campaign launched in June last year. The lawsuit filed by the U.S. Commodity Futures Trading Commission (CFTC) against the exchange with allegations of law violations in seven counts also contributed to the drop, creating a risk perception in investors towards Binance and causing them to gravitate towards other alternatives. The decline in market share further accelerated after June following a 136-page complaint filed by the U.S. Securities and Exchange Commission (SEC) against the company, its CEO Changpeng Zhao (CZ), and Binance.US with 13 charges. The company also faced increased crackdowns by regulators in many other countries, including Australia, Belgium, and France, and had to withdraw from several markets in the West, such as Canada, Austria, the Netherlands, Cyprus, the U.K., and Germany, mainly due to compliance issues over the last several months. All these challenges threatening the exchange caused a steady decline in its market share. Brands that should care: Binance's several rivals in the centralized spot exchange market, including Coinbase, OKX, Kraken, and Upbit, saw a slight increase in their market share, taking over the platform's pieces of the cake. | | | |
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| 3 | | Bankrupt crypto exchange FTX's co-founder and former chief technology officer (CTO), Gary Wang, has recently taken the stand in court to testify against the former CEO, Sam Bankman-Fried (SBF), in ongoing criminal trial related to the exchange's downfall. Wang was already among the names who pleaded guilty to charges over their involvement in the collapse, along with the former Alameda Research CEO Caroline Ellison and FTX's former engineering director Nishad Singh. More: - In his testimony, Wang said he committed wire, securities, and commodities fraud with SBF, Ellison, and Singh.
- The co-founder stated that FTX allowed Alameda Research to withdraw unlimited funds from the exchange by giving special privileges and lied about it.
- Adam Yedidia, a former FTX software developer testifying for the prosecution with immunity, also pointed out that FTX customer deposits went to an account controlled by Alameda Research since the exchange had trouble opening a bank account.
- Yedidia's testimony further revealed that the core group of FTX used Signal, a messaging app designed to automatically delete messages after a certain time, to communicate since SBF implied that regulators learning something they did not like in the messages would be bad for the company.
Zoom Out: - FTX, previously the third-largest crypto exchange, filed for Chapter 11 bankruptcy in Nov. 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 CEO is currently being tried with seven charges, including money laundering and misappropriation of customer funds, to which he pleaded not guilty, facing a statutory maximum of 110 years in prison.
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| 4 | | The U.S.-based crypto exchange Kraken has announced its plans to acquire the Netherlands-based crypto exchange Coin Meester B.V. (BCM) as part of its European expansion plans. The financial details of the pending deal have yet to be disclosed. More: - Kraken CEO David Ripley cited the strong economy, the high level of crypto adoption, and the innovation culture in the Netherlands while explaining their decision to establish a presence in the country.
- Ripley also said the acquisition would give Kraken a sizable position in the Dutch market while allowing BCM clients to benefit from Kraken's product offerings.
- BCM, recently rebranded from Bitcoin Meester, was founded in 2017. The platform offers crypto trading and staking services, with support for more than 170 cryptocurrencies.
- Kraken will proceed with the acquisition once the deal receives regulatory approval in the Netherlands.
Zoom Out: - Over the past year, U.S. regulators have significantly increased their crackdown on the crypto exchanges.
- The heightened scrutiny forced many U.S.-based crypto trading platforms, including Coinbase, Kraken, and Gemini, to set their eyes on Europe for expansion as they seek more regulatory clarity.
- European regulators have shown a strong effort to establish a legal framework for the digital asset industry within the last few years, which recently came to life with the approval of the European Union's (EU) region-wide crypto regulations, Markets in Crypto Assets (MiCA).
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| 5 | | New images shared on X, formerly known as Twitter, have revealed the beta version of a Bitcoin (BTC) wallet, BitKey, developed by Twitter founder Jack Dorsey's digital payments company, Block. The details on the post have pointed out that the product's beta version is moving to the distribution phase. More: - Jesse Dorogusker, Bitcoin hardware lead at Block, also shared an image containing several versions of BitKey in 2022.
- In June, Block announced that it would start accepting applications for BitKey's beta version in a month.
- The hardware wallet will offer its users self-custody to fully control their crypto assets without needing any third party.
- The product is also expected to come with various secondary features, including fingerprint verification and a built-in rechargeable battery.
Zoom Out: - Block has been working on BitKey since 2021.
- The company also previously announced some leading crypto trading platforms, such as its own Cash App and the U.S.-based crypto exchange Coinbase, as partners for BitKey.
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| 6 | | El Salvador-based renewable energy and crypto mining firm Volcano Energy has launched the first crypto mining pool in El Salvador, Lava Pool, in partnership with Bitcoin mining software provider Luxor Technology. The pool will mine Bitcoin (BTC) using the country's rich geothermal energy resources to make crypto mining operations more environmentally friendly. More: - Lava Pool will contribute 23% of its net income to the El Salvador government as part of a public-private partnership initiative.
- The mining pool will also support the government's efforts to integrate Bitcoin into its energy infrastructure.
- The country's government plans to reinvest the mining profits from the initiative back into El Salvador's energy infrastructure to boost economic growth.
- Luxor Technology's chief operating officer (COO), Ethan Vera, said the mining pool in El Salvador will support the Bitcoin ethos revolving around geographical decentralization.
- The launch of the pool came four months after Tether, the issuer of the largest stablecoin USDT, invested in Volcano Energy in its first $250M funding round.
Zoom Out: - El Salvador became the first country to accept Bitcoin as a legal tender in September 2021 under the leadership of its Bitcoin-advocate president, Nayib Bukele.
- In the same year, the country also started mining Bitcoin using geothermal energy from its volcanoes for the first time.
- A mining pool refers to a facility hosting a group of crypto miners who combine their computational power to increase their chances of finding a block on the blockchain to create new tokens.
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- In a recent research report, JP Morgan, the largest U.S. bank by asset, stated that the Ethereum blockchain network has become more centralized after shifting to the proof-of-stake (PoS) model.
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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 Vibha Chapparike | |
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