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| Here is a look at the hits from today's Inside Cryptocurrency briefing: - CleanSpark's plans to acquire four new Bitcoin mining facilities in the U.S.,
- Thailand's expansion of value-added tax exemption on crypto trading,
- A seven-year prison sentence served on Bitsonic's CEO, and more.
Enjoy your reading! Doğa
p/dogayurduneri | |
| 1 | | The U.S.-based digital asset firm Prometheum has announced that it picked Ether (ETH), the second-largest cryptocurrency by market cap, as the first offering in its crypto custody services. The decision will pave the way for the firm's subsidiary, Prometheum Capital LLC, to start keeping ETH holdings of its institutional clients under custody by the end of March. More: - Corporate customers will need to sign up for Prometheum's custody service to be able to hold their ETH holdings with the company.
- The firm aims to expand the service to retail clients in 2024.
- Prometheum's co-CEO, Aaron Kaplan, said the company's crypto custodial services were deliberately designed to align with regulatory requirements outlined by the U.S. securities laws.
- Kaplan also added that they aim to provide investors with a pathway for engaging with digital assets within the framework of the existing regulatory guidelines.
- In May last year, Prometheum became the first crypto company to obtain a special-purpose broker-dealer license under the U.S. Securities and Exchange Commission (SEC) guidelines.
- The Financial Industry Regulatory Authority (FINRA) also reviewed and approved the license in December, allowing the firm to custody securities in the form of digital assets on behalf of its individual and institutional clients.
- At the time, Prometheum did not specify the tokens it would support, saying its choice would depend on its internal determination of whether a digital asset is a security.
Zoom Out: - The SEC classifies all crypto assets other than Bitcoin (BTC) as securities in light of current chair Gary Gensler's approach by claiming jurisdiction over the digital asset market, which could contradict Prometheum's choice.
- Over the past years, many crypto firms, including Ripple, Coinbase, Binance, Gemini, Kraken, and Bittrex, came under increased crackdown by the SEC over alleged securities law violations and unregistered operations.
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| 2 | | 
What the numbers say: Crypto data platform CoinGecko's data has shown that Tether (USDT) is currently the largest stablecoin by a wide margin, with its market cap surpassing the $96B level. The data also revealed that the token has a market dominance of nearly 72%. In the top five, USDT is followed by USD Coin (USDC), Dai (DAI), First Digital USD (FDUSD), and TrueUSD (TUSD), respectively. The market cap of USDT's closest rival, USDC, only stands at the $27B mark, while it has a 20% share of the market. Relevance: In recent months, several industry experts have expressed concerns about USDT's increasing dominance as the token's market cap nears $100B. Most recently, a report from JPMorgan, the largest U.S. bank by assets, has pointed out that Tether's market dominance could pose a risk to the overall crypto industry. In the report, the banking giant's analysts have defined Tether's lack of regulatory compliance and transparency as an increasing risk for the market. The report forecasted that stablecoin issuers more aligned with existing regulations would probably benefit from the upcoming regulatory crackdown on stablecoins, increasing their market shares. In response, Tether CEO Paolo Ardoino said they have always worked closely with global regulators. Brands that should care: Tether hit the headlines with alleged regulatory incompliance once more last year when two U.S. lawmakers urged the Department of Justice (DOJ) to swiftly conclude their investigations against Tether and reach a decision on criminal charges related to the company's potential aid to terrorist groups. At the time, the lawmakers accused Tether of deliberately violating U.S. sanctions by failing to conduct proper due diligence for its customers. Binance, the largest crypto exchange by trading volume, was also named in the letter, with the allegations of providing material support and resources to contribute to terrorism. In late 2023, the exchange had to agree to pay a $4.3B fine, one of the largest corporate penalties in U.S. history, to settle U.S. authorities' charges related to these allegations. | | | |
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| 3 | | The U.S.-based crypto mining firm CleanSpark has announced that it would acquire four new mining facilities ahead of the much anticipated Bitcoin halving event. The company pointed out that the new facilities will potentially double its total hash rate, a type of computing power used by a blockchain network per second to process transactions and create new coins, within H1 2024. More: - The firm will buy three sites in Mississippi, which are all ready for operation, for $19.8M in cash.
- The acquisition deal will close within 21 days, and the revenue generated by these three facilities is expected to make up 14% of CleanSpark's total revenue.
- The miner will also acquire one more site in Georgia, increasing the number of its mining facilities in the state to three.
- The company will initially pay $3.4M in cash for the facility but later invest an additional $3.5M to make it ready for operation by April.
- The move came ahead of the fourth halving event in Bitcoin's history, which is expected to happen in April or May.
- The inflation-easing process will decrease the miners' Bitcoin mining reward by half, reducing the number of new Bitcoins entering the network by 50%.
- CleanSpark CEO Zachary Bradford previously said he expects some miners to halt their operations after the halving.
Zoom Out: - Last month, CleanSpark also purchased 160,000 new crypto mining machines.
- In recent months, many other crypto mining companies, including Marathon Digital, Riot Platforms, Canaan, and Hive Digital Technologies, have also made attempts to increase the computing power of their facilities and their total mining capacity ahead of halving to ensure that they are well-prepared for the drop in rewards, and indirectly, in revenue.
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| 4 | | The U.S.-based crypto custody software provider Fireblocks has recently reduced its headcount by 3%, laying off 21 employees, as part of its efforts to restructure its go-to-market and customer support operations. The company said the restructuring will allow it to provide its customers with a more efficient and streamlined service and expand its operations to the new regions. More: - Fireblocks underlined that all the impacted employees have been granted severance packages.
- The firm currently has 680 employees worldwide.
- The company has raised around $1.2B in funding so far, and its investors include some of the most well-known firms like Sequoia Capital and Coatue Management.
- In its latest funding round in January 2022, the software provider was valued at $8B.
Zoom Out: - Fireblocks develops software that allows institutions and crypto startups to hold their customers' crypto assets under custody securely.
- The company's staff cut came amid a time when many other crypto-related firms, including Polygon Labs, Block, Ava Labs, Near Foundation, OpenSea, Yuga Labs, Ledger, and Chainalysis, announced mass layoffs.
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| 5 | | The shuttered crypto exchange Bitsonic's CEO, Jinwook Shin, has been sentenced to seven years in prison in South Korea for stealing $7.5M of customer deposits. The platform's vice president of technology was also punished with one year in jail. More: - The CEO was arrested in August last year on charges of fraud, forging and falsifying records, and obstructing a business via computer.
- The Seoul District Court disclosed that Shin manipulated the transaction volume on Bitsonic and artificially inflated the price of its native token from January 2019 to May 2021 by using the platform's funds to buy its own token.
- The CEO also deposited the fake South Korean won (KRW) in the exchange to make it appear that he deposited cash.
- Shin further posted a fake notice on Bitsonic, announcing that the platform partnered with another international crypto exchange.
- Meanwhile, the vice president of technology developed software to support Shin's illegal activities and inflate the prices on the platform.
- The court stated that the duo is avoiding responsibility and shows no remorse, adding that a significant amount of customer funds could not be recovered.
Zoom Out: - Bitsonic halted its operations in August 2021, citing internal and external issues.
- Shortly before the platform's closure, users became unable to withdraw their funds on Bitsonic as Shin siphoned the deposits.
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| 6 | | Thailand's Ministry of Finance has eliminated all value-added taxes on crypto trading, extending its value-added tax exemption to include brokers and dealers in addition to digital asset exchanges. The ministry said the move aims to boost its efforts to make Thailand a digital asset hub. More: - As part of the decision, the requirement to pay a 7% value-added tax on incomes from digital asset trading was suspended in Thailand.
- The exemption period, which became effective on Jan. 1, currently has no expiration date.
- The exemption was previously only applicable to registered crypto exchanges, though it now also covers brokers and dealers regulated by the country's Securities and Exchange Commission.
- The transfer of digital assets to a third party has already been exempt from value-added tax in Thailand since May 2023.
Zoom Out: - The crypto-friendly environment in Thailand has made the country one of the most attractive jurisdictions for crypto firms in recent months, encouraging several major offshore crypto exchanges, including Binance, to start their operations in the region.
- On the other hand, countries implementing high taxes on crypto transactions, like India, have experienced a significant drop in crypto trading volume over the past years, which harms the operations of local crypto trading platforms.
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- The Federal Reserve (Fed), the U.S. central banking system, has dropped its enforcement action against Farmington State Bank, which has ties to the bankrupt crypto exchange FTX, since the firm no longer functions as a bank.
- The South Korean government has updated the country's Virtual Asset Users Protection Act to make criminals who earn more than $3.8M from illegal crypto trading activities face life imprisonment.
- Business intelligence firm MicroStrategy has purchased an additional $37.2M of Bitcoin (BTC), bringing its total reserve to 190,000 BTC.
- U.S. Judge Michael Kaplan has approved a counterclaim settlement deal between the bankrupt crypto hedge fund Three Arrows Capital (3AC) and the bankrupt crypto lender BlockFi, leaving the agreement's details under seal.
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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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