| Here is a quick look at the hits from the week's first Inside Cryptocurrency newsletter: - GoDaddy's partnership with the Ethereum Name Service,
- FTX's new legal motion to sell its entire stake in the AI firm Anthropic,
- Former Terraform Labs executive's extradition from Montenegro to South Korea, and more.
Enjoy your reading! Doğa
p/dogayurduneri | |
| 1 | | Bankrupt crypto exchange FTX has filed a new legal motion, requesting the bankruptcy court to allow it to sell its 7.84% stake in Anthropic, an $18B AI firm launched by former OpenAI employees in 2021. If approved, the motion will see FTX offloading its entire stake in the firm through an auction or a private sale. More: - FTX and its sister company, Alameda Research, invested more than $500M in Anthropic in April 2022, nearly seven months before the bankruptcy.
- The bankrupt firm's stake in Anthropic was worth around $1.4B in December 2023, though FTX denied disclosing a reference price publicly since it could hinder the potential of obtaining higher and better offers from the bidders.
- The company also asked the court to shorten the review timeline for the sale motion so that it can be heard at the next hearing on Feb. 22.
- Besides, FTX filed a similar motion to sell its $175M claim against the bankrupt crypto lender Genesis Global earlier in February.
- The recent motions came as part of the new management's wider efforts to recover more funds and fully repay customers.
- FTX attorney Andrew Dietderich recently told the bankruptcy judge that they aim to fully reimburse customers and creditors who can prove their losses.
- FTX's previous attempt to sell its stake in Anthropic was paused in June 2023, shortly after the new management released a report showing that some of the company's venture capital (VC) investments were funded with commingled customer deposits.
Zoom Out: - FTX, previously the third-largest crypto exchange, filed for Chapter 11 bankruptcy in November 2022, with all 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.
- In November 2023, SBF was found guilty of all seven criminal charges brought against him by U.S. prosecutors, including money laundering and misappropriation of customer funds, after a month-long trial process.
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| 2 | | 
What the numbers say: A recent research report from the crypto data platform CoinGecko has revealed significant changes in the market shares of top blockchain networks by NFT trading volumes in December 2023. The report pointed out that Ethereum's share retreated to 34.6% last month, with a 53.1% decrease from 87.7% at the beginning of the year. The decline in Ethereum's share mainly stemmed from the increase in the Bitcoin and Solana networks' shares as they surged their pieces of the cake. The figures also showed that Bitcoin surpassed Ethereum in NFT trading volumes in December for the first time in 2023. Relevance: The increase in the shares of the Bitcoin and Solana blockchains was mainly triggered by the overall success of Bitcoin-based Ordinals NFTs and Solana-based tokens. The Ordinals protocol, launched in January 2023, allowed developers to inscribe various data file formats, including text, images, videos, and video games, onto the Bitcoin network. The protocol also paved the way for Bitcoin-based NFTs, gaining massive popularity within the year. The Solana network has also become one of the most successful blockchains in 2023, as its native token, SOL, gained more than 1,000% in value within the year, outperforming many popular cryptocurrencies like Bitcoin (BTC) and Ether (ETH). The innovations and outperformance on both networks increased investor interest in the NFTs minted on Bitcoin and Solana, triggering a notable surge in their NFT trading volumes. The rise of the two blockchains also dethroned Ethereum. Brands that should care: The Immutable X, BNB Chain, Flow, Arbitrum, Avalanche, and Flow networks have similarly managed to make the list of top 10 blockchains based on the NFT trading volumes in 2023, though their combined market share could not surpass 2.3% last month. | | | |
| 3 | | Terraform Labs' former chief financial officer (CFO), Han Chang-joon, has been recently extradited to his native South Korea after completing his four-month prison sentence in Montenegro for document forgery. The former executive was arrested at the Podgorica Airport in Montenegro in March 2022 with Terraform Labs co-founder Do Kwon while trying to fly to Dubai carrying falsified traveling documents. More: - The Montenegrin police said the decision to extradite Han Chang-joon was made by the country's Ministry of Justice.
- The police's statement also pointed out that the former CFO will now face criminal proceedings in South Korea for several criminal offenses, including fraud.
- The charges against Han Chang-joon in his home country confront him with life imprisonment.
- The duo's lawyers said Montenegrin officials have yet to make any final decision on the extradition of Do Kwon.
- Both the U.S. and South Korea seek Kwon's extradition to try him with various charges, including fraud, securities law violations, deceiving investors, racket collecting, and building a Ponzi scheme, though neither has a direct extradition treaty with Montenegro.
- However, the co-founder is currently serving his prison sentence for document forgery in Montenegro, and his detention term was extended in December by two months to Feb. 15 at the request of U.S. and South Korean officials.
Zoom Out: - The multibillion-dollar Terra ecosystem collapsed in 2022 after the prices of its native tokens, Luna and TerraUSD, plummeted nearly to zero in May and lost all their value against the U.S. dollar (USD).
- The downfall caused over $60B to be wiped off the crypto market and triggered a prolonged crypto winter.
- Terraform Labs, the firm behind the ecosystem, filed for bankruptcy last month, reporting both assets and liabilities in the range of $100M to $500M.
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| 4 | | The U.S. Securities and Exchange Commission (SEC) has announced that it resolved a case involving a fake crypto hedge fund by reaching a settlement deal with Brian Sewell, the founder of an online crypto trading course dubbed the American Bitcoin Academy. As part of the settlement deal, Sewell's company, Rockwell Capital Management, agreed to pay a $1.6M fine while the founder was ordered to pay $200,000. More: - In its enforcement action, the SEC accused Sewell of stealing $1.2M from 15 students in the course by persuading them to invest in the Rockwell Fund, which turned out to be fake.
- The fund originally promised to invest in digital assets using unique strategies and tools like AI.
- Sewell raised investments for the fund from December 2017 to April 2018.
- The SEC's action pointed out that Sewell converted those investments into Bitcoin (BTC) but lost all the holdings when the wallet he was using was hacked.
- The agency also claimed that the founder deceived investors about the fund's existence by sending them fake monthly account statements.
- Neither Sewell nor his company admitted or denied the allegations, though they both agreed to settle with the SEC.
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| 5 | | The U.S.-based domain registrar and web hosting company GoDaddy has partnered with the Ethereum Name Service (ENS), the domain name protocol running on the Ethereum blockchain. The partnership will allow users to link their ENS addresses with conventional internet domains for free. More: - The collaboration will enable the owners of the traditional Web2-based domains to set up an Ethereum wallet and enter their addresses through GoDaddy's page.
- The process will let users make their traditional domains ending with ".com" or ".net" their Web3 profile.
- The integration aims to eliminate the high gas fees users previously had to pay to bring their conventional domain names to the ENS.
- GoDaddy plans to integrate more blockchain-based domain name services into its infrastructure in addition to Ethereum's solution in the future.
Zoom Out: - The ENS mainly allows users to purchase a ".eth" domain that operates on Ethereum but does not work with commonly used internet tools like web browsers and email.
- This domain name ending with ".eth" replaces the complex and randomly generated letters and numbers of a standard Ethereum wallet address, converting them into more easily recognizable and readable words.
- The solution aims to make it easier to transfer funds between two parties on the Ethereum network.
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| 6 | | South Korea's financial market regulator, the Financial Services Commission (FSC), has proposed an amendment to require new executives at crypto companies to obtain regulatory approval before starting their duties. The agency said the amendment aims to improve the pain points of current laws governing the local digital asset market while giving it the authority to screen new executives joining crypto companies. More: - The proposal is still subject to revision by the Ministry of Government Legislation and a voting process by the FSC.
- The FSC will collect the public's feedback on the amendment until March 4.
- If approved, the rule will mandate crypto firms to report changes in their administrative staff to the FSC and prevent new executives from starting work until the regulator approves the personnel change application.
- The amendment will give the FSC the power to suspend the review of a crypto company's license registration if the firm or its employees are actively investigated by local or international authorities.
- If a crypto firm violates local laws by improperly recruiting an executive who has been sentenced to a penalty for any crime and has not completed five years since the execution of the sentence, the FSC will be able to revoke that company's registration.
- The proposed amendment is expected to come into effect at the end of March, meaning that it would apply to the virtual asset service provider license renewal reports to be submitted in H2 2024.
Zoom Out: - South Korean regulators have increased their crackdown on the crypto industry, especially after the country's National Assembly passed the Virtual Asset User Protection Act in June 2023 to better protect crypto investors.
- The legislation has authorized the FSC and the Bank of Korea, South Korea's central bank, to supervise the crypto service providers and virtual asset custodians and to enforce penalties in case of a potential violation.
- Since then, the FSC made amendments to the act several times, including mandating domestic companies to report their virtual assets in their financial statements and forcing local crypto exchanges to implement new reserve rules.
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- Binance, the largest crypto exchange by trading volume, has appointed its former executive, Steve Christie, as its new deputy chief compliance officer.
- El Salvador's Bitcoin advocate president, Nayib Bukele, has declared that he won the 2024 presidential elections by being reelected in the country where Bitcoin is a legal tender.
- A recent study conducted by the blockchain security firm SlowMist has shown that around 80% of comments under tweets posted by well-known crypto projects aim to conduct a phishing scam.
- An online hacker has started selling access to a law enforcement request account dubbed KodexGlobal, which allows buyers to request user data from various crypto-related platforms, such as Coinbase, Binance, and Chainlink.
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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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