| Here is a quick look at the hits from the week's latest Inside Cryptocurrency newsletter: - Genesis Global's $21M settlement deal with the top U.S. securities regulator,
- Polygon Labs' decision to reduce its headcount by 19%,
- The regulatory hurdles Binance faces while seeking to re-enter the U.K. market, and more.
Enjoy your reading, and have a great weekend! Doğa
p/dogayurduneri | |
| 1 | | Bankrupt crypto lender Genesis Global has agreed to pay a $21M civil penalty to settle the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against it for violating securities laws. In its complaint, the regulator claimed that the firm offered unregistered securities to hundreds of thousands of investors through the Gemini Earn crypto lending program, which Genesis Global operated jointly with the U.S.-based crypto exchange Gemini. More: - As part of the settlement agreement, Genesis Global will only pay the fine if it can fully repay its customers and creditors in its ongoing bankruptcy proceedings.
- The agreement is still subject to the approval by a bankruptcy judge.
- Genesis Global said the settlement will allow it to save cash and avoid risks by preventing further litigation with the SEC as it seeks to receive approval from the bankruptcy court for its repayment plan on Feb. 14.
- The Gemini Earn service, launched in 2021, allowed Gemini users to lend their crypto assets to Genesis to earn interest.
- However, Genesis Global filed for bankruptcy in January last year after freezing withdrawals in November 2022, mainly due to its exposure to the collapses of the crypto exchange FTX and crypto hedge fund Three Arrows Capital (3AC).
- The joint program was halted following the bankruptcy, causing some customer funds to be stuck.
Zoom Out: - In July 2023, Gemini similarly sued Genesis Global's parent company, Digital Currency Group (DCG), and its CEO, Barry Silbert, over the failure of the Earn program, accusing the two of fraud and deception.
- Gemini, Genesis Global, and DCG together also face another lawsuit by New York Attorney General Letitia James, who accused the three firms of defrauding customers for $1.1B by failing to disclose the risks of Gemini Earn to investors.
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| 2 | | 
What the numbers say: OX, the native token of the crypto exchange OPNX launched by co-founders of the bankrupt crypto hedge fund Three Arrows Capital (3AC), recently experienced a strong price decline, plummeting by 38%. The token's value retreated to as low as $0.00726719 within the day, down from the $0.0118 level a few hours earlier. The popular cryptocurrency later started hovering around the $0.0077 level and failed to return to yesterday's prices, though it saw a slight recovery. Another OPNX-related token, FLEX, also declined significantly in price over the past 24-hour period. Relevance: The plummet in the OX and FLEX tokens' prices came shortly after the Dubai-based crypto derivatives and bankruptcy claims exchange OPNX announced that it would officially halt its operations and shut down its platform in February. The platform was launched by 3AC co-founders Su Zhu and Kyle Davies in April last year, being rebranded from the crypto exchange CoinFLEX in collaboration with its CEO, Mark Lamb. It was mainly designed to allow users to trade creditor claims of bankrupt crypto companies in the form of tokens. The exchange said users should close their existing positions before Feb. 7, and it would automatically settle the remaining ones after this deadline. Besides, the platform added that users will have time until Feb. 14 to withdraw their funds on the platform and export their historical data. During its lifetime, OPNX came under fire many times since Davies and Zhu were heavily held responsible for the 3AC's bankruptcy in July 2022 and the billions of dollars of losses suffered by many people after the collapse. Brands that should care: On the other hand, Su Zhu said the platform was mainly shut down since creditor claims of the bankrupt crypto exchange FTX reached recovery, and this recovery marks the end of crypto claims estates. Earlier this week, FTX attorneys told a bankruptcy judge that customers and creditors who can prove their losses will probably receive all their money back and be fully repaid. The firm will value the claims based on the crypto prices on Nov. 11, 2022, the day it filed for bankruptcy. | | | |
| 3 | | Binance, the largest crypto exchange by trading volume, has faced hurdles in its efforts to re-enter the U.K. market since potential local partners deny working with the platform amid the increased regulatory crackdown worldwide on the exchange, according to a recent Bloomberg report. The report pointed out that at least three U.K. firms with regulatory permission have refused Binance's request for partnership in recent months. More: - Sources said the consecutive rejections came after the Financial Conduct Authority (FCA), the U.K.'s financial market regulator, expressed concerns about Binance's recent regulatory status to the businesses inquiring about the exchange.
- In 2021, the FCA also warned citizens against using Binance's services, stating that the company was not capable of being effectively regulated due to its unclear global structure.
- Binance temporarily stopped accepting new customers in the U.K. in October 2023 after the FCA terminated its agreement with its local partner, Rebuildingsociety.com.
- Since then, the firm has been attempting to turn back to the U.K. by partnering with another FCA-authorized firm that would approve its financial promotions.
- The firm said it continues its conversations with potential partners and is confident that it will be able to provide a positive update soon.
- The FCA introduced new rules on crypto promotions last year, classifying crypto as restricted mass market investments, a category for high-risk investment products.
- Along with other requirements, the new rules mandate digital asset service providers to work with a third-party company to offer their services in the U.K. and receive approval for their communications with clients.
Zoom Out: - Several other crypto-related platforms, including Bybit, Bitfinex, PayPal, Luno, CoinCorner, and Revolut, also had to restrict or halt their crypto trading services in the U.K. after the FCA introduced new rules on crypto promotions.
- However, some crypto exchanges, such as OKX and Coinbase, have adopted additional measures to meet the new regulatory requirements in the country.
- Over the past year alone, Binance faced increased scrutiny by regulators in many countries, including the U.S., Australia, Belgium, Brazil, and France.
- The company also recently had to withdraw from several markets worldwide, such as Russia, Canada, Austria, the Netherlands, Cyprus, and Germany, mainly due to compliance issues.
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| 4 | | Polygon Labs, the firm behind the Polygon blockchain network, has announced that it would reduce its headcount by 19%, which accounts for 60 employees, to enhance performance. The company's CEO, Marc Boiron, said the layoffs aim to create an efficient team with significantly less bureaucracy. More: - Boiron added that the team's rapid growth in the last bull market started hindering the company's ability to pursue its mission.
- However, the CEO underlined that the staff cut does not stem from any financial reasons.
- The firm executive also stated that all the remaining employees would see a 15% increase in their total compensation, and they would eliminate the traditional geo-pay model in which employees in different locations receive different wages.
- The move came exactly a year after Polygon Labs reduced its workforce by 20%, laying off around 100 staff members as part of its internal restructuring efforts.
Zoom Out: - Through the latest staff cut, Polygon Labs joined several other crypto-related firms, including Block, Ava Labs, Near Foundation, OpenSea, Yuga Labs, Ledger, and Chainalysis, announcing mass layoffs recently.
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| 5 | | Hong Kong's Secretary for Financial Services and the Treasury, Christopher Hui, has recently issued a reminder of the approaching deadline to submit a license application for crypto firms. The agency has pointed out that the virtual asset service providers have until Feb. 29 to submit their applications to the region's Securities and Exchange Commission (SFC). More: - Those failing to apply for a license will have to halt their operations in Hong Kong by May 31.
- Hui said since some firms were operating before the SFC established a licensing regime, there will be a transitional period, allowing the service providers to apply for a license.
- Those failing to meet the regulatory requirements of the SFC or submit a license application by Feb. 29 will face a notice from the government.
- The notice will require firms to cease their operations by May 31 or three months after receiving the note.
- Hui also warned investors about the volatility of virtual assets, saying many digital assets have no intrinsic value.
- Besides, the government official advised citizens to use only SFC-licensed platforms, underlining that unlicensed ones might have been involved in fraud.
Zoom Out: - Hong Kong's regulators officially approved a new licensing regime for crypto exchanges in May 2023 to turn the region into a crypto hub, allowing retail investors to trade major tokens such as Bitcoin (BTC) and Ether (ETH) on licensed platforms.
- The SFC has been accepting applications from crypto exchanges as part of the new regime since June last year.
- HashKey and OSL are the only two licensed crypto exchanges in Hong Kong, and the SFC is currently reviewing 14 license applications.
- Several leading crypto firms, such as Bybit, OKX, HTX, and Amber Group, previously revealed their plans to apply for a license under Hong Kong's new regime.
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| 6 | | Stablecoin issuer Tether has launched a new educational arm dubbed Tether Edu to offer a smart education environment with experts and pioneers in various crypto-related fields. The branch will provide courses, workshops, and resources to develop new talent in blockchain technology. More: - Tether Edu will particularly focus on emerging markets in Africa, Latin America, the Middle East, Europe, the Commonwealth of Independent States, and Asia.
- The arm's educational content will cover additional topics like design, AI, and coding.
- The new unit will be integrated into the firm's existing educational initiatives.
- The branch has yet to launch its operations and is currently seeking to hire new employees and executives for its human resources and financial departments.
Zoom Out: - Tether is the issuer of the largest stablecoin, USDT, having a $96.1B market cap.
- 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.
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- The U.S. Department of Justice (DOJ) has identified three people responsible for a SIM-swapping attack that siphoned more than $400M from the collapsed crypto exchange FTX hours after the firm filed for bankruptcy.
- Binance, the largest crypto exchange by trading volume, has announced that it froze $4.2M of XRP stolen from the account of one of the executives of the blockchain-based payment protocol Ripple.
- The Ethereum blockchain's developers have revealed that they will deploy the long-awaited Dencun upgrade on the main network on Feb. 8.
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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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