| Here is a quick look at the hits from the week's latest Inside Cryptocurrency newsletter: - 📝 Joint amicus brief from U.S. state attorneys general to oppose the top U.S. securities regulator in its case against Kraken,
- 🚀 The much-hyped launch of Blast's main network,
- 💸 The restart of a crypto hedge fund formerly linked to FTX, and more.
Enjoy your reading, and have a great weekend! Doğa
p/dogayurduneri | |
| 1 | | Bitcoin (BTC) has become the world's 14th-largest currency by BTC-denominated market cap, surpassing the Russian ruble on the ranking. Bitcoin's rise on the currency list followed a price rally that caused the popular token to see the highest monthly value gain in its history in February. More: - Throughout the latest upward trend, Bitcoin's price surpassed $63,000 for the first time since November 2021 and hit as much as $63,913 before experiencing a slight decline.
- The massive price increase in Bitcoin was mainly triggered by the huge investor interest in spot Bitcoin exchange-traded funds (ETFs) in the U.S., which were approved by the U.S. Securities and Exchange Commission (SEC) and began trading in January.
- The U.S.-based spot Bitcoin ETFs saw a record $7.69B daily trading volume on Wednesday.
- The new investment products allow retail and institutional investors to get exposure to Bitcoin through traditional brokerage accounts without dealing with crypto-native platforms that have come under scrutiny by regulators over the past few years.
- The enthusiasm around the upcoming Bitcoin halving event, expected to happen sometime in April or May, also became one of the main igniters of the price increase.
- The inflation-easing procedure will decrease miners' Bitcoin mining reward by half, reducing the number of new Bitcoins entering the network by 50%.
Zoom Out: - Bitcoin is also currently the largest cryptocurrency with a $1.2T market cap.
- The popular token reached its all-time high of around $69,000 in November 2021.
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| 2 | | 
What the numbers say: A research report from the blockchain data analysis platform Chainalysis showed that Hong Kong is among the top five crypto markets in East Asia. The region ranked fifth on the list, with $64B of crypto transactions it hosted from July 2022 to June 2023. South Korea, Japan, China, and Taiwan came ahead of Hong Kong, respectively. Relevance: Hong Kong announced its plans to turn the region into a crypto hub in late 2022. To achieve this goal, the region's regulators approved a new licensing regime for crypto exchanges in May 2023, allowing retail investors to trade major tokens such as Bitcoin (BTC) and Ether (ETH) on licensed platforms. As part of the new regime, Hong Kong's Securities and Futures Commission (SFC) started accepting license applications from crypto exchanges in June last year. The application period ended on Thursday, with a total of 24 applicants showing interest in offering their crypto services to users in Hong Kong. Those failing to apply for a license by Feb. 29 will face a notice from the government. The notice will require firms to cease operations in the region by May 31 or three months after receiving the note. Brands that should care: On the other hand, HashKey and OSL are currently the only two licensed crypto exchanges in Hong Kong. The 24 license applicants include some of the most well-known crypto exchanges, such as Bybit, OKX, Crypto.com, Gate.io, HTX, and Bullish. However, Binance, Coinbase, and Kraken, three crypto exchanges with notable trading volumes, are absent from the applicant list, suggesting that they do not plan to establish a presence in Hong Kong for now. | | | |
| 3 | | Attorneys general of eight U.S. states have filed a joint amicus brief in the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against the U.S.-based crypto exchange Kraken. In their joint statement, the top law enforcement officials of the states argued that the SEC exceeded its authority by suing the exchange. More: - The states whose attorneys general signed the brief are Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota, and Texas.
- The filing underlined that the state officials do not support either party but oppose the SEC's attempt to regulate cryptocurrencies without investment contracts as securities, pointing out that U.S. Congress has not given this authority to the agency.
- The attorneys general further stated that the SEC is expanding the definition of investment contracts, adding that every cryptocurrency cannot automatically be classified as a security.
- Besides, the brief underlined that the SEC's win in the case could prevent state officials from implementing state laws, including consumer protection laws, and some state laws protect consumers more than federal securities laws.
- The joint amicus brief came a week after Kraken asked a U.S. court to dismiss the SEC's lawsuit, similarly arguing that the agency went beyond the limits of its jurisdiction through the case.
- In its motion, Kraken also stated that the SEC does not have the authority to regulate all speculative investments, but its approach classifies a broad range of ordinary assets as securities by granting the agency boundless authority over commerce.
Zoom Out: - Investment contracts, which are required to classify an asset as a security, establish a financial agreement between two parties in which one party invests capital in a project while the other commits to providing a return on investment to the investor.
- The SEC sued Kraken in November last year, accusing it of commingling up to $33B of customer funds with its own corporate assets and operating without registration.
- The filing claimed that Kraken paid its expenses from bank accounts holding customer funds at certain times in the past.
- The regulator also argued that the platform operates as an exchange, broker-dealer, and clearinghouse at the same time without registration, although these three functions should be separated as required by law.
- Besides, the agency labeled a range of tokens listed on Kraken as unregistered securities.
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| 4 | | Binance, the largest crypto exchange by trading volume, has disclosed that it recovered $4.4B of crypto mishandled by users while being deposited in the past two years. The platform listed entering wrong wallet addresses, depositing incompatible tokens, and problems related to the blockchain upgrades as some of the reasons behind the fund mishandling. More: - The firm pointed out that it resolved 381,616 cases in which users deposited cryptocurrencies but could not transfer into an account in 2022 and 2023.
- The exchange also stressed its ongoing efforts to deal with hackers and financial crime actors.
- The move came shortly after a U.S. judge, who approved Binance's $4.3B settlement deal with U.S. authorities, stated that Binance left participants in the financial system vulnerable to exploitation by bad actors.
- In November 2023, Binance and its CEO, Changpeng Zhao (CZ), pleaded guilty to violating anti-money laundering requirements and sanctions in the U.S. by allowing terrorist groups to make crypto transactions on its platform.
- At the time, the platform agreed to pay a $4.3B fine, one of the largest corporate penalties in U.S. history, to settle U.S. regulators' money laundering, unlicensed money-transmitting business operations, and sanction violation charges.
- Besides, the exchange pledged to review its ethics programs, policies, procedures, and systems as part of the settlement deal, agreeing to be monitored by an independent entity for up to five years.
- Binance's latest report also followed a strong upward trend in the crypto market, which caused leading cryptocurrencies, such as Bitcoin (BTC), Ether (ETH), and Dogecoin (DOGE), to skyrocket in price.
- The exchange's chief security officer, Jimmy Su, said fund mishandling will probably continue as beginners seek to enter the market amid the rally.
Zoom Out: - Over the past year, Binance also faced heightened regulatory scrutiny in several other countries, including Australia, France, Belgium, and Brazil.
- Besides, the company had to withdraw from many markets in recent months, such as Russia, Canada, Austria, the Netherlands, Cyprus, the U.K., and Germany, mainly due to compliance issues.
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| 5 | | LedgerPrime, a crypto hedge fund formerly linked to the bankrupt crypto exchange FTX, has started its operations again under the name MNNC Group. The fund also announced that it raised new funding from investors involving those who invested in LedgerPrime, though it did not manage to attract all its previous investors. More: - The firm has declined to disclose the exact amount of the funding since the capital has yet to be fully deployed to its funds.
- LedgerPrime was initially a subsidiary of Ledger Holdings.
- However, the firm later moved under the roof of FTX after the exchange's U.S. arm, FTX US, acquired Ledger Holdings in 2021.
- At its peak, the hedge fund had $400M of assets under management (AUM).
- Following FTX's bankruptcy, the firm was forced to wind down its operations.
- MNNC Group's chief operating officer, Ayesha Kiani, underlined that LedgerPrime returned all outside capitals to investors in 2022.
- MNNC Group currently has 11 employees, of whom most are from LedgerPrime, and plans to hire a few more new staff members.
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 the sister company Alameda Research.
- LedgerPrime's former portfolio manager, Zaheer Ebtikar, similarly later started running a new crypto fund dubbed Split Capital.
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| 6 | | The much-hyped Ethereum Layer-2 blockchain network Blast has recently launched its main network, allowing users to start withdrawing their funds. At the launch, the total value locked (TVL) on the network stood at $2.3B, and the number of community members surpassed 180,000. More: - Assets on the platform included 469,000 Ether (ETH), 77.3 million USD Coin (USDC), 67.1 million Tether (USDT), 148,000 Lido Staked ETH (stETH), and 24.7 million Dai (DAI).
- However, the figure declined by over 75% to $535.7M within the first 24 hours of going live, which was triggered by the users seeking to withdraw unlocked funds.
- Blast was developed by the popular NFT marketplace Blur's founder, Tieshun Roquerre, and raised $20M in November 2023 in a financing round led by the crypto-focused venture capital (VC) firms Paradigm and Standard Crypto.
- The network offers 4% and 5% interest rates to the users who bridge their Ethers and stablecoins to Blast, respectively.
- Early access to the network was launched in November last year, letting users start earning yields by bridging their tokens and Blast Points, the rewards given to users for bridging their assets to other networks and referring new users.
Zoom Out: - TVL is a metric used to measure the total value of digital assets locked or staked in a network.
- The higher TVL causes a network to be perceived as more trustworthy and healthy by the investors.
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| 7 | | Quick Hits: - Business Owners who took Visa or Mastercard from Jan. 1, 2004, to Jan. 25, 2019, apply to see if you are entitled to a portion of a $5.6B payout.*
- Crossmint, a blockchain platform that enables companies to integrate digital assets into their businesses, has acquired the NFT payments infrastructure startup Winter for an undisclosed amount in cash.
- Nigerian authorities have detained two executives of Binance, the largest crypto exchange by trading volume, after they flew into the country on the grounds that the platform operates illegally in Nigeria.
- The U.S. House Financial Services Committee has voted to advance a measure that would overturn the U.S. Securities and Exchange Commission's guideline preventing banks from engaging in crypto custody.
- Uncover the trends shaping the business landscape in 2024. From building trust to leveraging tech, our report shares crucial developments for success.*
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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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