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| Hey Insider! Welcome to the week's first Inside Cryptocurrency newsletter! Today's issue covers some of the biggest stories hitting the headlines in the crypto market over the weekend and within the day, including Coinbase's new license in Singapore, Honda's decision to accept crypto payments, the claims that the former FTX CEO considered paying Donald Trump $5B, 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 | | Several leading industry players, including crypto investment fund Paradigm and stablecoin issuer Circle, have submitted new legal filings, intervening in a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Binance, the largest crypto exchange by trading volume. In their motions, both Paradigm and Circle have argued that the SEC overstepped its authority when it filed a complaint against Binance over alleged U.S. law violations. More: - Paradigm, filing an amicus brief in support of Binance, has stated that the SEC showed an incoherent approach to crypto regulations by asserting that crypto assets fall within the remit of existing laws.
- In the filing, the crypto investment fund also underlined that it has no financial interest in Binance.
- Circle, best known as the issuer of the USD Coin stablecoin (USDC), said it supports neither party.
- However, Circle's filing was submitted as a way of protesting the SEC's decision to classify Binance's dollar-pegged stablecoin, Binance USD (BUSD), as an unregistered security.
- The stablecoin issuer pointed out that the lawsuit marked the first time the SEC took enforcement action against a true payment stablecoin.
- Besides, the company argued that payment stablecoins do not have the essential features of a security, underlining that the court's decision could have significant consequences for stablecoin issuers, the digital asset ecosystem, and the U.S. economy.
- Binance also recently made a similar move by asking the court to dismiss the SEC's lawsuit against it with the claim that the agency overstepped its authority through the complaint.
Zoom Out: - The SEC filed a 136-page complaint against Binance, the CEO Changpeng Zhao (CZ), and the company's U.S. arm, Binance.US, in June with 13 charges.
- The allegations in the lawsuit 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.
- At the time, Binance defined the complaint as disappointing and said the SEC was not able to provide clarity over rules for digital assets, adding that they intend to defend the platform vigorously.
Q: Do you think opinion declarations from industry players will impact the fate of the lawsuit against Binance? Join the conversation here. |     | |
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What the numbers say: The Crypto Losses Report from the blockchain security firm Immunefi for Q3 2023 has shown that the year's third three-month period saw $685.5M of losses in crypto through cybersecurity incidents. The figure has brought the total losses since the beginning of the year to $1.38B. It also represents a 59.9% increase from $428.7M in the same period of last year. Besides, the nearly $700M losses have made Q3 the quarter with the highest loss of the year. The top five cyberattacks targeted Mixin Network, Multichain, CoinEx, Alphapo, and Stake.com. The two major exploits of the quarter, Mixin Network and Multichain attacks, caused $326M of losses alone, accounting for nearly half of all stolen funds in Q3. Relevance: On the other hand, North Korean cybercrime organization Lazarus Group has been identified as the attacker behind three of the top five incidents of last quarter. The hacks targeting the largest crypto gambling site, Stake.com, the crypto exchange CoinEx, and the crypto payment provider Alphapo resulted in $41.3M, $70M, and $60M of crypto loss, respectively. Another major attack targeting the crypto payment gateway CoinsPaid also caused one of the highest losses in Q3, with $37.3M. The Lazarus Group was responsible for all these four major attacks in the last quarter, representing 30% of the total losses. Brands that should care: The North Korean hacker group also previously attacked many other crypto-related platforms and protocols, including Ronin Network, Atomic Wallet, and Horizon Bridge, causing millions of dollars of crypto funds to be lost. | | | |
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| 3 | | The U.S. Securities and Exchange Commission (SEC) has recently added Slack chat records from September 2019 among the evidence in its lawsuit against Do Kwon, the co-founder of the collapsed Terra ecosystem. In response, Kwon has denied accepting the chat history as evidence, arguing that they are irrelevant and taken out of context. More: - The leaked chat records revealed that Do Kwon discussed the idea of creating fake transactions with another co-founder, Daniel Shin, to boost Chai, a payment provider company similarly co-founded by Kwon and Shin.
- In the conversation, Kwon implied that the fake transactions would attract investor interest in Chai by making the firm look like it was generating a high number of transactions and fees.
- The Terra co-founder further told Shin that he would make the fake transactions unidentifiable so that it would be complicated to find out about them.
- Chai and Terraform Labs, the firm behind the Terra ecosystem, shared the same offices and staff until the two firms departed in 2020.
- Lawyers for Do Kwon have stated that the co-founders talked about staking Luna tokens with validators instead of fake Chai transactions in the chat, pointing out that the records have nothing to do with the merits of the SEC's case.
- The SEC filed a lawsuit against Kwon and Terraform Labs in February, accusing them of defrauding customers and selling billions of dollars in digital assets that were unregistered securities.
- In the lawsuit, the regulator also claimed that the firm misled investors about the stability of its stablecoin pegged to the U.S. dollar (USD), TerraUSD (UST), and promised a value increase in its tokens.
Zoom Out: - The multibillion-dollar Terra ecosystem collapsed last year after the prices of its native tokens, Luna and TerraUSD, plummeted nearly to zero in May and lost all their value against USD, triggering a prolonged crypto winter.
- The downfall caused over $60B to be wiped off the crypto market.
- Kwon was arrested at the Podgorica Airport in Montenegro in March while trying to fly to Dubai carrying falsified traveling documents and then released on bail, being put under house arrest in the country pending trial.
- Both the U.S. and Kwon's native South Korea seek his extradition, though they do not have a direct extradition treaty with Montenegro.
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| 4 | | Speaking in a recent interview, author Michael Lewis stated that the bankrupt crypto exchange FTX's former CEO, Sam Bankman-Fried (SBF), considered paying Donald Trump $5B in 2020 to dissuade him from running for reelection as president. Lewis, who is preparing for the debut of his book on SBF, said the former executive believed that Trump posed a risk to U.S. democracy. More: - The popular author pointed out that SBF did not make that payment since his firm collapsed afterward, and he could not make sure whether such a payment would be legal.
- Lewis' book on SBF, Going Infinite: The Rise and Fall of a New Tycoon, will be released on Oct. 3, coinciding with the same day SBF's criminal trial will start with a jury selection.
- The book focuses on a year of SBF's life and covers the process involving his rise, downfall, arrest in the Bahamas, and extradition to the U.S.
- On the other hand, the former FTX CEO was once regarded as one of the most active political donors.
- The 31-year-old former executive even previously faced illegal campaign donation charges brought by U.S. prosecutors.
- At the time, the prosecutors alleged SBF of contributing more than $100M to Democratic and Republican political campaigns using customer funds to influence crypto regulations and to maximize FTX's political impact.
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 former CEO will soon appear in court to defend himself against seven charges, including money laundering and misappropriation of customer funds, to which he pleaded not guilty.
- The seven charges confront SBF with a statutory maximum of 110 years in prison.
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| 5 | | Coinbase, the largest U.S. crypto exchange, has obtained a major payment institution license in Singapore through its arm in the city-state. The license will allow the platform to offer digital payment token services to both retail and institutional investors in Singapore. More: - The approval was granted by the region's financial market regulator, the Monetary Authority of Singapore (MAS).
- The full approval came exactly a year after Coinbase received an in-principle approval from the MAS in October 2022.
- The exchange said Singapore is a vital market for the company, citing a survey revealing that 32% of Singaporeans own crypto or did so in the past.
- Crypto firms must feature strong anti-money laundering measures to obtain a license from the MAS in Singapore, which could not be achieved by most applicants.
Zoom Out: - The MAS is responsible for overseeing the financial industry in Singapore and implementing regulations related to money, banking, insurance, securities, and currency issuance.
- The agency is most famous for its strict stance on the crypto market and stingy attitude toward approving a license.
- However, several other crypto-related firms have also managed to obtain full approval in the city-state, including Crypto.com, Blockchain.com, and Circle.
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| 6 | | Japanese car manufacturing giant Honda has announced that it will start accepting payments with cryptocurrencies for its products. The carmaker will offer the new crypto payment service in partnership with the blockchain-based payments processor FCF Pay. More: - The move will allow customers to lease or purchase Honda products with digital assets instead of fiat currencies.
- The new payment option will support many popular cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Ripple (XRP), Shiba Inu (SHIB), Binance Coin (BNB), Polkadot (DOT), Pepe Coin (PEPE), Floki Inu (FLOKI), Bone ShibaSwap (BONE), and Doge Killer (LEASH), among others.
- Through the move, Honda has jumped on the bandwagon of crypto payments in the automotive industry, which was first ignited by the electric vehicle (EV) giant Tesla.
- In 2021, Tesla also began accepting Bitcoin as a payment method for the purchases of Tesla vehicles shortly after it bought $1.5B in BTC as part of its new investment strategy.
- At the time, the move helped the leading cryptocurrency's price reach its all-time high at the $69,000 level.
- However, two months after the investment, the company stopped accepting Bitcoin as payment due to its adverse environmental impacts amid the concerns around the use of fossil fuels for BTC mining and transactions.
Zoom Out: - FCF Pay also recently partnered with HSBC, one of the largest banks in the world, to allow bank customers to pay their mortgage bills and loans with cryptocurrencies.
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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.*
- NFT artist Trevor Jones has raised nearly $140,000 at an auction to donate to Maggie's Edinburgh, an institution dedicated to free cancer treatment.
- UBS Asset Management, one of the largest asset managers, has launched the live pilot of a tokenized money market fund on the Ethereum blockchain network.
- The digital wallet associated with a hack targeting the bankrupt crypto exchange FTX has transferred around $38M in Ether (ETH) to other wallets over the weekend after ten months of inactivity.
- 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 Institutional investor: An institutional investor is an organization that invests in financial securities and alternative assets on behalf of other people. Question of the Week Do you share details about your salary with your coworkers? Join the conversation |
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 | 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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