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| Here is a quick look at the hits from the week's first Inside Cryptocurrency newsletter: - ❌ Honduras' ban on crypto trading for financial institutions,
- 💰 Y Combinator's plans to invest in startups building solutions around stablecoin finance,
- 🤝 Yuga Labs' acquisition of rival NFT firm Proof, and more.
Enjoy your reading! Doğa
p/dogayurduneri | |
| 1 | | Bankrupt crypto exchange FTX's creditors have filed a class-action lawsuit against Sullivan & Cromwell, the 900-attorney law firm overseeing the bankruptcy proceedings of FTX. The lawsuit accused the firm of actively participating in and benefiting financially from FTX's multi-billion-dollar fraud. More: - The class-action lawsuit claimed that Sullivan & Cromwell was closely working with FTX before the collapse, and hence, it should be partially held responsible for its wrongdoings.
- The case pointed out that the law firm gained knowledge about the wrongdoings of FTX while working as outside counsel for the exchange and still supported it in its fraudulent actions.
- The relationship between FTX and Sullivan & Cromwell started after Ryne Miller, a former partner of the law firm, joined FTX as general counsel in August 2021.
- The lawsuit alleged that Miller directed at least 20 cases from FTX to his former law firm, including the exchange's asset claim from the bankrupt crypto lender Voyager Digital and its acquisition of crypto derivatives exchange LedgerX.
- In the filing, the creditors also accused Miller of becoming aware of FTX's back door that allowed customer funds on FTX to be transferred to the sister company Alameda Research and of giving this information to multiple individuals at Sullivan & Cromwell.
- Besides, the case claimed that Sullivan & Cromwell generated more than $180M of income from matters related to FTX, which accounts for 10% of its total revenue in 2022.
- The lawsuit seeks damages for many counts, including civil conspiracy, aiding and abetting fraud, and aiding and abetting fiduciary breaches.
- In response, Sullivan & Cromwell denied any wrongdoing, stating that it had a limited and largely transactional relationship with FTX and its affiliates before the bankruptcy.
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 Alameda Research.
- A recent Bloomberg report pointed out that U.S. regulators appointed Sullivan & Cromwell as the independent monitor of Binance, the largest crypto exchange by trading volume, as part of their settlement deal with the platform.
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| 2 | | 
What the numbers say: OpenAI CEO Sam Altman's crypto project, Worldcoin, has experienced a 204% increase in the price of its native token, WLD, over the past week. The token's value reached as much as $7.98 on Monday, up from $2.61 a week earlier. The popular cryptocurrency later managed to hold on to the $7 level without seeing a major price decline. The latest rally also brought the WLD token's monthly price gain above 200%. Plus, Worldcoin's crypto wallet application, World App, recently surpassed 1 million in daily user numbers, pointing to an increase in adoption. Relevance: The price surge in the WLD token mainly accelerated after OpenAI launched its long-awaited text-to-video AI tool, Sora, on Feb. 16. The tool has become one of the most popular solutions of OpenAI after its famous AI-powered chatbot, ChatGPT. The hype around the launch of Sora and the high interest in the tool, especially on social media, caused a massive price jump in the token of another Sam Altman-linked project, Worldcoin. Sora allows users to create detailed videos from text prompts by extending existing videos forward or backward in time and generating scenes from still images. The tool, being still in its early stages, is considered a significant milestone in the generative AI space. Brands that should care: Another contributor to the price increase in WLD was a deal OpenAI recently completed, surging its valuation to above $80B. The deal will see OpenAI undertaking a tender offer led by the U.S.-based venture capital (VC) firm Thrive Capital. It will allow the AI firm's employees to sell their shares in OpenAI back to the company, providing it with additional funding. The increase in OpenAI's valuation was similarly reflected in the value of the WLD token. The cryptocurrency also previously reacted to the developments in OpenAI in November 2023 when the firm's board of directors briefly fired Sam Altman as the CEO. | | | |
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| 3 | | Y Combinator Management (YC), a U.S.-based technology startup accelerator, has added stablecoin finance as a category to its request for startups list. The move means that the accelerator would look to invest in and allocate funds to the startups focusing on stablecoin finance moving forward. More: - YC has been updating the list of areas in its request for startups list since 2009, sharing ideas it seeks to see materialized.
- The list also helps startups understand the areas in which YC would like to invest.
- A group partner at YC, Brad Flora, said they want to fund the teams building business-to-business (B2B) and consumer products related to stablecoins or tools and platforms that materialize stablecoin finance.
- Flora added that it is inevitable for traditional finance to jump on the bandwagon of stablecoins since their use is very simple, citing PayPal's move to issue its own stablecoin.
- In an official statement, YC compared the future of stablecoins to digital music, underlining that the latter emerged from outlawed file-sharing models.
- The firm also pointed out that there are only a handful of major stablecoin issuers and about seven million people engaged in stablecoin transactions, though $136B worth of stablecoins have been issued so far.
Zoom Out: - Stablecoins, whose value is pegged to another reference asset like a fiat currency, are generally used by customers to trade with different cryptocurrencies without converting their funds back into fiat currencies.
- Companies setting out their journey with YC include Airbnb, Coinbase, Cruise, DoorDash, Dropbox, Instacart, Reddit, Stripe, and Twitch.
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| 4 | | Yuga Labs, the firm behind the popular Bored Ape Yacht Club (BAYC) and CryptoPunks NFTs, has acquired rival NFT firm Proof. The financial details of the acquisition deal have not been disclosed. More: - Proof is best known for its Moonbirds NFT collection and Moonbirds' spinoff collections like Oddities, Mythics, and Grails.
- The acquisition will cover all the assets of Proof, including its team, intellectual property, and artistic portfolio.
- In an official statement, Yuga Labs said Proof's founder and CEO, Kevin Rose, will undergo a brief handover period before becoming an advisor to the company.
- Besides, the firm pointed out that it plans to integrate the Moonbirds collection into its native metaverse platform, Otherside.
- Yuga Labs CEO Daniel Alegre defined Moonbirds as a collection with great potential and many unifying brand elements.
Zoom Out: - Both Yuga Labs and Proof raised millions of dollars in investment in funding rounds led by the U.S.-based venture capital (VC) firm Andreessen Horowitz, also known as a16z, in 2022.
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| 5 | | Honduras' National Banking and Securities Commission (CNBS) has officially banned crypto trading for financial institutions, including banks, citing risks related to fraud, money laundering, and terrorism financing. The agency said the ban took effect immediately. More: - The prohibition will apply to any cryptocurrencies or virtual assets not issued or authorized by the Central American country's central bank.
- The decision will also block financial institutions from holding, investing in, or intermediating crypto in addition to trading.
- Currently, there is no crypto-specific provision in Honduran laws to regulate the digital asset market.
- The Central Bank of Honduras previously warned citizens that it is not responsible for any crypto transactions in the country and cannot guarantee the reliability of such transactions.
- In March 2022, the country's central bank also announced that it was exploring the technical and legal viability of issuing a digital currency that would be recognized as a legal tender.
Zoom Out: - Próspera Zone for Employment and Economic Development (ZEDE), a special economic zone in Honduras, accepted Bitcoin (BTC), the largest cryptocurrency by market cap, as legal tender in April 2022.
- The area also recognized Bitcoin as a unit of account last month, allowing the token to be used to measure the market value of goods and services as a legitimate currency in various financial, tax-related, and commercial transactions.
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| 6 | | The Ethereum blockchain network's co-founder, Vitalik Buterin, recently shared a new post on X, proposing another use case combining AI and crypto. In his post, Buterin implied that AI could help Ethereum developers identify bugs on the network and verify their codes. More: - In the tweet, the Ethereum co-founder said he is excited about these use cases.
- The co-founder also pointed out that the biggest risk related to Ethereum is currently bugs in its codes.
- The famous programmer added that anything potentially eliminating this risk and changing the game would be amazing, hinting that AI could help solve Ethereum's biggest technical risk.
Zoom Out: - Last month, Buterin also wrote a blog post on crypto and AI, listing four ways the two may overlap.
- In the same post, the Ethereum co-founder warned developers to be careful while fusing AI with blockchain technology.
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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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