Quick Take

• Following the announcement of the SEC suing Binance, we saw very similar behaviors to when the CFTC announced they were suing Binance.
• Kaiko’s research shows the Bitcoin price move between the CFTC and SEC lawsuit announcement in the chart below. Bitcoin recovered from the CFTC suit in a shorter amount of time than the current drawdown.
• Yesterday, over 20,000 Bitcoin were sold from short-term holders; almost as many were sold during the SVB (Silicon Valley Bank) collapse, which saw 23,000 Bitcoin sold.
• After accounting for inflows and outflows, roughly 12,000 Bitcoin left exchanges yesterday, primarily driven by whales with transactions as large as $1 million to $10 million.

The post Dissecting the SEC lawsuit through on-chain analysis appeared first on CryptoSlate.

The total crypto market cap fell $53 billion as news of the U.S. Securities and Exchange Commission (SEC) filing against Binance came through.

On June 5, the SEC charged Binance, its CEO Changpeng Zhao, and related entities with 13 violations, including wash trading, evasion of regulations, and offering unregistered securities.

Binance said it was disappointed with the complaint and had always worked cooperatively with regulator’s inquiries. However, it disputed the enforcement action and intended to “vigorously” defend the charges.

A key component of Binance’s defense centers on the SEC’s purported unwillingness to provide regulatory clarity. It further claimed that the company was a victim of the ongoing “regulatory tug-of-war,” in which government agencies seek to “claim jurisdictional ground from other regulators.”

“Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.“

Crypto markets crash

Markets tanked on the news of the SEC filing against Binance.

On June 5, at 16:00 BST, just before the news broke, the total crypto market cap was valued at $1.13 trillion. As word spread, the ensuing dump bottomed at $1.08 trillion approximately an hour later – equating to a $52.7 billion, or 4.7%, drawdown.

A bounce followed to top out at $1.1 trillion. The market has since traded flat as participants consider the gravity of the situation, particularly the allegations that several third-party tokens were named as securities in the SEC filing, including ADA, SOL, and MATIC.

Biggest winners and losers

Of the top 100, the biggest losers over the last 24 hours were Pepe, The Sandbox, and Sui, which lost 15.2%, 14.8%, and 12.7%, respectively. The Sandbox was named as an unregistered security in the SEC filing.

Kava was the only top 100 token (excluding stablecoins) to stay green over the period, which grew 9.6%.

Market leader Bitcoin suffered a peak-to-trough loss of 5% to find support at $25,400. It has since peaked at $25,890 but is shaping to retest $25,600 support.

The post SEC-induced panic saw $53 billion wiped from crypto market appeared first on CryptoSlate.

On June 5, the U.S. Securities and Exchange Commission (SEC) filed extensive charges against leading cryptocurrency exchange Binance and related parties, alleging securities law violations.

The filing represents one of the most comprehensive sets of charges filed by the SEC against a cryptocurrency company to date. Below are the most important allegations and facts.

1. BNB and BUSD are securities

The SEC declared Binance’s cryptocurrencies, including the BNB exchange token (BNB) and the Binance USD stablecoin (BUSD), as securities.

The regulator stated that Binance’s BNB Vault, Binance’s Simple Earn program, and Binance.US’s staking services are securities as well. It said the company’s offerings and sales were all conducted illegally and without registration.

The SEC more broadly said that Binance and its U.S. counterparts failed to register as an exchange, broker-clearer, or clearing agency though they were required to do so.

2. Several third-party tokens are securities

The SEC said that several tokens listed by Binance are securities, including Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and Coti (COTI).

These tokens were “sold as an investment contract and, therefore, [were] a security” from their first sale, the SEC said. Though Binance did not issue the above tokens, the SEC complained that Binance did not restrict the trading of the assets on its platform.

3. SEC wants Zhao, others enjoined

The SEC said that Binance CEO Changpeng Zhao, Binance, Binance.US parent BAM firm Trading, and associated parties should be permanently enjoined — or prevented — from violating relevant sections of the Securities Act and Exchange Act. It also said those parties should be ordered to pay disgorgement and civil penalties.

The regulator added that Zhao should be barred from certain leadership roles. It stated that Binance and its related companies should be barred from dealing in securities, crypto asset securities, and engaging in related business.

4. Binance evaded U.S. regulations

The SEC said that Binance explicitly marketed its services to U.S. customers after its 2017 launch and covertly after nominally restricting U.S. access in 2019.

One consultant told Binance to create a “Tai Chi” entity in the U.S. tasked with publishing reports and engaging with the SEC “solely to pause potential enforcement efforts.” The consultant also encouraged Binance to block U.S. users on its main exchange while privately telling some of those users how to bypass restrictions.

Binance and its executives did not accept the Tai Chi plan entirely, but many expressed interest in continuing to work with the consultant.

5. Executives were aware of the situation

Binance’s CCO — unnamed by the SEC — made statements indicating that he was aware of wrongdoing. In 2018, the CCO said: “We are operating as a fking unlicensed securities exchange in the USA, bro.” In 2020, he said that Binance “[does] not want [Binance].com to be regulated ever” and said this led to the creation of local entities.

Zhao and others were also involved in discussions of the Tai Chi plan. Zhao recognized that there were “safer” alternatives but proceeded with much of the plan regardless. Zhao personally directed Binance to create a plan advising users to bypass geo-block VPNs; he also told Binance to encourage VIP users to bypass KYC checks.

The SEC said that Zhao and Binance were aware of the exchange’s large number of U.S. users, as evidenced by internal presentations estimating the firm had 1.47 million American users in 2019.

6. CZ-owned companies, controlled U.S. funds

The SEC said that Binance CEO Changpeng Zhao, along with other entities owned by Zhao, had 100% ownership of several Binance-related companies.

Though Zhao did not have 100% ownership of U.S. companies under BAM, he and Binance had significant control over their bank accounts and user crypto deposits. Furthermore, Zhao’s Merit Peak and Sigma Chain “were used in the transfer of tens of billions of U.S. dollars” between Binance and its U.S. counterparts, the SEC said.

Zhao and Binance were also involved in the design, launch, hiring, trading activities, and operations of U.S.-based companies, according to the regulator.

7. Wash trading ran rampant

Finally, the SEC said that Binance’s U.S. companies misled users by overstating protections against wash trading and the accuracy of trading volumes.

Significant wash trading took place due to Sigma Chain’s role as a market maker, the SEC said. At one point, Sigma Chain accounts wash-traded 48 of 51 of the newly listed assets; at another point, those accounts wash-traded 51 out of 58 listed assets.

Despite earlier promises that the feature existed, Binance’s U.S. firms had no trade surveillance mechanisms until at least February 2022. Executives were allegedly aware of wash trading but took no action to stop the activity.

The SEC said that trading data is material information for users and equity investors and that Binance’s U.S. companies profited from these misleading statements. Therefore, the firms’ actions constitute fraud and deceit, the regulator declared.

The post Seven key points from the SEC’s charges against Binance and Binance.US appeared first on CryptoSlate.

A judge in Genesis’ bankruptcy case has extended the date by which the company must file a recovery plan, according to a June 5 filing.

Genesis receives a plan extension

Genesis is currently in bankruptcy proceedings. On May 19, the company requested a 100-day extension to the deadline for filing its recovery plan.

Now, U.S. Bankruptcy Judge Sean Lane has granted that request. The relevant June 5 court filing indicates that Genesis now has through August 2, 2023 to file its plan. The company originally intended to extend the period until August 27.

The extended deadine is dependent on the company’s continued cooperation with its Official Committee of Unsecured Creditors toward a plan. The Committee can request a motion to terminate the extended filing period with seven days’ notice if discussions break down.

Additionally, Genesis’ exclusive solicitation period has been extended to Oct. 1 (rather than Oct. 26 as originally requested). Genesis can also seek further extensions going forward.

FTX can’t join mediation talks

FTX, a creditor in Genesis’ bankruptcy, recently filed an objection to Genesis’ request for an extension. FTX also complained about its exclusion from mediation talks.

Bloomberg reported on June 5 that Judge Lane has now overruled FTX’s request. The judge said that there must be “a certain amount of radio silence” in any mediation process. He also said that reducing the length of mediation will not help the case end sooner.

Genesis’ mediation discussions are highly private. Bloomberg’s report suggests that Genesis is primarily engaged with its parent company, Digital Currency Group.

During its earlier complaint, FTX also claimed that Genesis owes it nearly $4 billion, contrary to Genesis’ $0.00 estimate. The judge will reach a decision on that matter during a future hearing, according to Bloomberg’s latest report.

The post Genesis granted plan extension; judge says FTX can’t take part in mediation appeared first on CryptoSlate.

The U.S. Securities and Exchange Commission (SEC) filed suit against Binance today in a move that has rocked the cryptocurrency industry. 

The complaint notably includes language in which the SEC clearly elucidates that it considers many of the tokens that traded on Binance to be unregistered securities and lays out its case against several it considers notable offenders. The SEC identifies these “crypto asset securities” as including (but not limited to) Solana, Cardano, Polygon, Filecoin, Cosmos, The Sandbox, Decentraland, Algorand, Axie Infinity, and Coti. 

Today’s filing contains some of the SEC’s most explicit language to date in clarifying its judgment, but once again avoids taking on the big question: is Ethereum a security or not? If so, why is the SEC silent on it? And if not, what is it?

“Crypto Asset Securities”

The SEC’s argument for designating these tokens as “crypto asset securities” is exhaustively outlined in Section VIII of the complaint (pages 85 through 123). Notable patterns emerge from the filing: the process of initial coin offerings (ICOs), vesting of tokens, allocations for the core team, and the promotion of profit generation through ownership of these tokens, are all repeated themes. 

But Ethereum is not listed among these. Gensler has remained consistently vague on the question of whether Ethereum and its namesake coin count as securities. ETH is commonly held as an investment, suggesting it could be classified as a security, but it is also extensively used day-to-day as a medium of exchange across protocols, making its function more akin to cash or ACH settlement. 

Gensler has previously suggested that “everything other than Bitcoin” in the crypto space could be seen as a security, but has notably refused to clearly state as much about Ethereum. When pressed to say the words, “I believe Ethereum is a security,” the Hon. Chair just will not do it. Gensler’s reluctance to classify Ether is curious when his SEC is so eager to claim as much for others. Why?

The Ethereum problem

It might be a simple matter of intragovernmental contention. Ethereum could potentially fall under the purview of the Commodity Futures Trading Commission (CFTC), which regards Bitcoin, Ethereum, and Tether as commodities, not securities. Not only do the two categories differ wildly from one another, this overlap could create a regulatory tug-of-war that would Gensler’s public stance on Ethereum while trying to avoid the appearance of infighting within the federal government.

Another analysis from Protos, argues that Gensler’s evasion on the matter may be a consequence of the SEC’s earlier inaction following the infamous DAO hack, which saw the blockchain fork into Ethereum Classic and put the entire ecosystem at risk. However, at the time the SEC did nothing, and now Gensler finds himself in the unenviable position of making up for his predecessors’ oversights. Now that the Ethereum ecosystem has spent years recovering and building credibility, retroactively declaring it an unregistered security would have unforeseen, but no doubt disastrous, consequences for investors.

In other words, protecting investors in this case would mean protecting them from the protector.

However, perhaps another reason could lie beneath Gensler’s reluctance to clearly classify Ethereum: he may not know.

Cryptocurrencies and their underlying technologies are innovative and novel. They represent a fundamental shift in how we understand finance and asset ownership, and in the case of decentralized ecosystems like Ethereum, they introduce entirely new paradigms.

If this is true, it’s not unreasonable to suspect that most people—even those deeply involved in the space—may not fully understand the implications of these innovations just yet. Anything that is fundamentally new will resist categorization, and Ethereum does so—this lack of a concrete “concept” that both defines Ethereum but fits into previous understandings is the core problem around regulating it.

This regulatory ambiguity presents a complex challenge for Ethereum, but it does not lessen the urgency to address it. The advancement of the crypto industry hinges on obtaining clear legal definitions for Layer 1 (L1) tokens, such as Ethereum, that function simultaneously as mediums of daily exchange and investment vehicles within their respective ecosystems. The ambiguity in their status poses a significant hurdle, stalling progress and fostering uncertainty in a space that is ripe for growth and innovation.

The dichotomy of these tokens’ roles blurs the boundary between conventional asset classes, forcing us to confront inadequacies in existing legal structures. To propel the crypto industry forward, regulators must acknowledge and address this nuanced reality. Until a refined framework emerges that accurately captures the dual functionality of these L1 tokens, regulatory ambiguity will continue to shroud the industry, stifling its full potential and deterring mainstream adoption. This unique crypto space requires equally unique rules—ones that can encapsulate its dynamism and complexity.

Making meaningful progress

The path towards comprehensive crypto regulation is obscured by two significant obstacles, which must be addressed urgently for the sector’s responsible advancement.

Firstly, the U.S. Securities and Exchange Commission (SEC) must establish a formal position on Ethereum. Given the SEC’s historical inaction in restraining Ethereum’s growth when opportunities were present, it has inadvertently fostered an environment where investors are left in regulatory limbo. The SEC, as the protector of investors, has a duty to provide some form of regulatory guidance—even if it proves to be temporary—to offer a foundational starting point and eliminate the current state of speculation. The lack of clear regulation is not merely an inconvenience; it is a failure to provide the necessary protections for participants in an increasingly significant market.

Secondly, authentic, open-ended discussions about the nature of digital assets are crucial. This implies engaging in conversations devoid of preconceived notions, biases, ideological posturing, or empty rhetoric. We often speak of making space to “have the conversation,” but acknowledging that conversation needs to take place and actually having one are two very different exercises indeed.  Perhaps everyone in the industry—as well as those watching over it—would benefit from practicing the latter.

The post The Ethereum Question: Why does the SEC avoid taking action against Ethereum when all else are fair game? appeared first on CryptoSlate.

Binance attracted support from other members of the cryptocurrency industry on June 5 after receiving charges of securities violations on the same day.

TRON founder expresses support

The U.S. Securities and Exchange Commission (SEC) filed charges against Binance CEO Changpeng Zhao and various associated companies.

Following that news, Huobi advisor and former TRON CEO Justin Sun expressed support for Zhao. In a Twitter message, Sun wrote:

“I wanted to take a moment to express my unwavering support for you. As one of my friends, I trust you and believe in your integrity. We are here for you!”

Sun said that Zhao’s “abilities and ethics are beyond reproach” and called Zhao an “honest and upright person.” He also praised Zhao’s leadership skills.

Sun said he believes that Zhao will be able to handle the lawsuit and prove his innocence. Binance has said it plans to defend itself against the SEC, opting not to settle without admitting or denying wrongdoing, as many other companies have done.

The extent of Sun and Zhao’s relationship is unknown. While the two individuals say they have a limited business relationship, some reports suggest that Binance provided preferential treatment for Sun’s TRX token and that the two have been seen together in person. Incidentally, a conflict arose over Sun’s use of Binance in May 2023.

Sun and his related projects — including TRON — faced their own set of SEC charges in March. That case has not yet reached a settlement.

Hoskinson warns of broader action

Charles Hoskinson, the creator of Cardano and CEO of IOHK, also commented on Binance’s situation. He warned that events could be a sign of wider action. He said:

“[It] seems like the next in a series of steps to implement chokepoint 2.0 … The end goal is a agenda-based [Central Bank Digital Currency] partnered with a handful of massive banks and control over every aspect of your financial life.”

Hoskinson said that, whereas regulatory events include a debate about compliance with law or guidance, the SEC’s latest action is an expression of the regulator’s “political, philosophical disagreement” with the existence of cryptocurrency itself.

Hoskinson also complained that the SEC is unelected. However, SEC members are appointed by the elected government under the advice of Senate members.

Despite his concerns, Hoskinson said that he believes the cryptocurrency industry is “going to be fine” and said that this sort of conflict is not entirely new.

The post TRON’s Justin Sun, Cardano’s Charles Hoskinson side with Binance in SEC case appeared first on CryptoSlate.

Terra LUNA co-founder Do Kwon successfully appealed against the prosecution’s request to keep him in custody, and is out on bail as of June 5.

The Podriga Basic court overseeing the case granted the bail request and accepted the initial amount of $400,000. The high court had previously annulled the bail on May 18 after prosecutors alleged the bail amount was not a sufficient indicator of Kwon’s assets.

Prosecutors had requested the bail be denied on the basis that Kwon had not declared the full extent of his assets, and as such, the bail amount was too low.

However, the Basic court ruled that the disclosures were sufficient after verifying the information provided on the basis that Kwon and former Terra executive Han Chang-Joon are not citizens of the country. Additionally, it concluded that the bail amount was adequate to dissuade the two from fleeing.

As part of the bail, the court set conditions of house arrest and close monitoring. The two are not allowed to leave their apartment until the case is concluded. If found guilty, they face a prison sentence of three to five years in Montenegro.

The court also said that the fake documents need further verification from Belgian authorities and instructed prosecutors to do so.

The next hearing is slated for June 16.

Extradition

Kwon’s home country South Korea and the U.S. are both looking to extradite and prosecute him locally for his part in the collapse of Terra LUNA and the billions in losses investors suffered because of it.

Both countries have filed requests for extradition with Montenegrin authorities. However, the country has rejected the initial requests and intends to prosecute Kwon for his local criminal offenses first.

It is unclear whether Montenegro will extradite Kwon to the U.S. or South Korea afterward.

The Montenegrin government said it will entertain extradition requests after he has been cleared of all charges or served the appropriate sentence in the country.

Arrest

Kwon was arrested at an airport in Podriga, Montenegro in late March. He was detained by local authorities over using fake identifications documents to board a plane from Podriga to Dubai.

Authorities found three different passports on Kwon’s person, including a Belgian one.

He was subsequently arrested and later put on trial for his alleged criminal offenses within the country. Kwon has plead not guilty to all charges.

The post Do Kwon out on bail under house arrest after successful appeal appeared first on CryptoSlate.

Apple Inc. revealed its eagerly anticipated augmented reality/virtual reality (AR/VR) headset, named Apple Vision Pro,  at its annual Worldwide Developers Conference (WWDC) on June 5, marking a significant shakeup of the company’s lineup of consumer electronics.

The device, which is a standalone computing device and not just a headset, includes a 3D camera and spatial audio, and is geared towards revolutionizing user interaction with the digital world, blurring the lines between reality and digital experiences.

Tim Cook touted the new headset, noting that “You’re no longer limited by a display.”

More details to follow…

The post Apple unveils hotly-anticipated VR headset Apple Vision Pro at WWDC appeared first on CryptoSlate.

Binance.US, the United States subsidiary of the embattled Binance exchange, described the Securities and Exchange Commission’s (SEC) lawsuit against its platform as “baseless.”

In a June 5 statement, Binance.US said the lawsuit was the latest example of the financial regulator’s regulation-by-enforcement approach towards the crypto industry.

According to the exchange, the SEC “seeks a near eradication [of the crypto] industry” as it had taken similar actions against rival platforms like Coinbase, Kraken, and Gemini.

Binance.US said:

“Today’s filing is unjustified by the facts, by the law, or by the Commission’s own precedent. The relief sought by the Commission would harm the very investors the SEC is charged with protecting. It would also stifle innovation and punish our company and industry rather than working to allow American businesses to thrive.”

The platform said it intends to defend itself against the lawsuit and urged “Congress to step in and pass bipartisan legislation that creates a workable regulatory regime for digital assets and reins in the bureaucratic overreach.”

Disappointment with lawsuit

In its statement, the parent company Binance stated that it was disappointed with the SEC’s decision to file a lawsuit against its firm despite its “extensive good-faith discussions” and “cooperation” with the SEC’s investigations.

According to Binance, the regulator’s failure to productively engage with the platform showed “the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry.”

“The Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology. Unilaterally labeling certain tokens and services as securities – even ones over which other U.S. authorities have asserted jurisdiction – only compounds these problems.”

Additionally, Binance said the lawsuit showed that the SEC was not interested in protecting investors. Instead, the regulator was rushing to claim jurisdictional ground from other regulators.

In March, Binance was sued by the Commodity Futures Trading Commission (CFTC) over allegations of regulatory commodity violations.

Binance added that its size and global name recognition made it an easy target, and it is now “caught in the middle of a U.S. regulatory tug-of-war.”

The post Binance.US deems SEC lawsuit ‘baseless’; plans to defend self appeared first on CryptoSlate.

A wave of regulatory pressure rippling through the U.S. crypto market has pushed traders away from Bitcoin (BTC) and Ethereum (ETH) and towards the seeming safety of stablecoins.

This shift aligns with the emergence of a burgeoning political movement in the U.S. aiming to impose stringent controls on the crypto and mining sectors. Proponents of the new regulation argue that the disruptive nature of cryptocurrencies demands a tighter regulatory grip to ensure stability and security in the financial ecosystem.

On the other hand, critics express concerns that heavy-handed regulation could stifle innovation and drive the industry offshore. This polarizing debate has created an atmosphere of uncertainty that is reshaping trading behaviors.

These regulatory pressures seem to be nudging traders toward the stability of stablecoins. This is distinctly observed in the behavior of Tether’s USDT, whose supply reached an all-time high of $83.2 billion on June 3rd. Around $17 billion of this figure has been added to Tether’s market cap in 2023 alone.

However, despite Tether’s growing market capitalization, its trading volume is experiencing a downward trend. Data from Kaiko showed that on both CEXs and DEXs, daily USDT volume averaged around $7 billion in May, reaching multi-year lows. This seeming contradiction indicates that while the overall supply is increasing, active trading of the asset is decreasing.

Conversely, other significant players in the stablecoin market, USDC, and BUSD, witnessed their supply drop to multi-year lows.

Analyzing exchange inflows reveals an exciting trend. Since April, demand for stablecoins on exchanges has weakened, with BTC and ETH inflows compensating for this. Despite the sustained inflow, the two cryptocurrencies have been mainly trading sideways or experiencing adverse price action, indicating that most inflows are likely sell-side.

Stablecoins, being non-interest bearing and exempt from capital gains taxes, offer a certain allure to traders. Their nature doesn’t generate the taxable events integral to trading BTC or ETH, which is particularly attractive to U.S. traders starting to feel the squeeze of increased regulatory scrutiny and potential enforcement actions.

The post Traders turn to stablecoins as regulatory pressure in the US ramps up appeared first on CryptoSlate.

The U.S. Securities and Exchange’s (SEC) lawsuit against Binance wiped off over $200 million within one hour from crypto traders who held positions on the market.

Following the news, CryptoSlate’s data showed that the total market cap of digital assets declined 2.87% to $1.12 trillion.

Nearly $300M in the last 24 hours

The crypto market saw $298.51 million liquidated in the past 24 hours, with more than 110,000 traders affected.

Data from Coinglass showed that long traders lost $275.31 million, with Bitcoin and Ethereum accounting for $130.46  million of these losses.

Meanwhile, short traders experienced $23.2 million in liquidations. The top two digital assets were responsible for around 49.5% of these losses.

Other assets such as BNB, Chainlink, XRP, Litecoin, and Solana experienced less than $2 million in liquidations, respectively.

Across exchanges, most of the liquidations occurred on OKX, Binance, and ByBit. These three exchanges accounted for 75% of the overall liquidations, with 92% being long positions. Other exchanges like Huobi, Deribit, and Bitmex also recorded a sizeable amount of the total liquidations.

The most significant liquidation occurred on Bitmex – XBTUSD, valued at $9.94 million.

Red market

Bitcoin dipped from over $27,000 to below $26,000 within one hour and was trading at $25,859 as of 16:36 UTC — its lowest value since March 17, according to CryptoSlate’s data.

The price of Bitcoin is down overall by almost 5% over the past 24 hours.

Binance-related BNB saw the highest loss, plunging by nearly 10% to $281, while Ethereum (ETH) fell 3%. Other top digital assets like XRP, Cardano (ADA), Dogecoin (DOGE), and others also reported significant losses during the reporting period.

The post Liquidations surpass $200M in 1 hour after SEC’s Binance lawsuit appeared first on CryptoSlate.

El Salvador continues its dedication to becoming a global leader in the Bitcoin mining industry through the development of its ambitious Volcano Energy project.

The country plans to add 241 MW of renewables and 1.3 Eh/s of Bitcoin mining, marking a further step towards “economic freedom,” energy competitiveness, and “self-reliance,” as shared on Twitter by Bitcoin advocate Dennis Porter.

Bitcoin Volcano

Harnessing the country’s renewable resources, the project aims to establish one of the world’s largest Bitcoin mining farms, accompanied by the creation of Volcano Tokens.

The Volcano Energy project focuses on developing a 241 MW renewable power generation park in the Metapan region of El Salvador. This park will showcase the “exceptional solar and wind energy yields available in the country,” with 169 MW of photovoltaic solar and 72 MW of wind energy.

The initial computational power of the Bitcoin mining farm will surpass 1.3 EH/s, funded by a total commitment of $1 billion for the project from “Bitcoin industry leaders.” In addition, the Government of El Salvador will play a role in the project, securing a “preferred participation equivalent to 23% of the revenues.” Furthermore, investors will own 27%, and the remaining 50% will be reinvested in “expanding energy production capacity and advancing Bitcoin mining.”

For comparison, Hashrate Index lists the top mining pools by hashrate, indicating that El Salvador would be a top 20 mining pool by comparison. The largest pool is Foundry with 111.2 EH/s, followed by AntPool, F2Pool, Binance Pool, and ViaBTC pool with 85 EH/s, 50 EH/s, 33 EH/s, and 32 EH/s respectively. At 1.3 EH/s, Volcano Energy would have an equivalent hashrate to NiceHash and KuCoin.

Volcano Tokens

In an April 2022 interview with CryptoSlate, Bitfinex & Tether CTO Paolo Ardoino discussed the revolutionary Bitcoin-backed Volcano Token (VT), representing the first tokenization of a sovereign bond.

He explained that the token serves as a capital raise for El Salvador’s sovereign debt. Half the $1 billion raised will be used to buy and hold Bitcoin for five years, with profits split between infrastructure development and distribution to Volcano Token holders.

Ardoino also revealed that the underlying blockchain for the Volcano Token issuance would be Liquid, chosen for its allow listing feature, helping meet strong KYC and AML requirements from regulators.

Bitfinex Securities will trade the token once the necessary legislative approval is obtained and the company secures a license in El Salvador.

According to Ardoino, he stated that this process could be completed in a matter of weeks. However, a recent Bloomberg report noted that the token is expected sometime in 2023.

The post El Salvador’s Bitcoin Volcano in sight appeared first on CryptoSlate.

Binance top executive, Guangying Chen, reportedly controlled five bank accounts of its independent U.S. subsidiary between 2019 and 2020, Reuters reported on June 5, citing bank records.

The defunct bank Silvergate Bank reportedly authorized Chen as the “Primary Admin User” of the five bank accounts, including one that held American customers’ funds and an account for corporate clients.

During this period, Binance.US staff sought the Chen team’s approval to process payments and cover its payroll, Reuters cited company messages.

Reuters reported that Binance commingled user funds with corporate funds in 2020 and 2021. Binance denied this report, calling it a “conspiracy theory.”

Binance.US’ contradictory statements

The new report contradicts earlier claims made by Binance.US that it operates independently of Binance. In April, Binance.US’s head of legal, Krishna Juvvadi, told Reuters that staff of the exchange’s operator, BAM Trading, had exclusive control of the platform’s bank account since 2019.

With the new revelations, Reuters reported that a Binance.US spokesperson said that the current CEO, Brian Shroder, has had complete control and access to the accounts since he took over in 2021.

Binance and Binance.US were yet to respond to CryptoSlate’s request for comment as of press time.

Regulatory struggles

Binance faces increased scrutiny from several regulatory authorities in the United States over its compliance with local regulations.

The Commodity Futures Trading Commission (CFTC) sued Binance and its CEO over commodities law violations. The regulator alleged that the exchange illegally facilitated trading derivative orders on commodities for U.S. citizens.

The Department of Justice (DOJ) is also investigating the crypto exchange to determine whether Binance or its executives circumvented sanctions around Russia’s invasion of Ukraine.

Meanwhile, the exchange has denied wrongdoing and labeled the CFTC’s lawsuit as “unexpected and disappointing.” The exchange added that it complies with regulations and would continue cooperating with regulators.

The post Binance top exec reportedly controlled US subsidiary’s bank accounts between 2019 and 2020 appeared first on CryptoSlate.

The Crypto and Digital Assets All Party Parliamentary Group published a report on June 5 offering 53 recommendations to regulate cryptocurrency.

Among these recommendations, the parliamentary group suggested creating the role of a ‘Crypto Tsar.’ The Tsar’s duties would involve coordinating among different departments to ensure a “consistent approach” to crypto regulation, the party noted in the report.

The UK aims to become a global cryptocurrency hub and the party recommended the government to weigh the risks carefully. At present, cryptocurrencies do not pose any “systemic risk,” the report noted. But the party advised the government to continue to monitor the industry’s growth and take appropriate risk management actions as and when the industry scales.

The party also said that the UK stands to risk “falling behind other countries” in the race to reign in the crypto sector. The party, therefore, advised the government to provide legal and regulatory clarity within the next 12 to 18 months. But the party also noted that it was important to strike a balance in regulation to ensure consumer protection without stifling innovation.

The report highlighted that crypto firms in the UK are struggling to secure banking services and urged the government to find a solution soon. The party also said that for stablecoins to emerge as a trusted new payment system, regulators will have to ensure they are backed by fiat currencies and other high-quality assets.

To tackle scams and crimes, the party said that it is important for the government to be agile and adapt to the latest techniques used by criminals. And law enforcement agencies need to be properly equipped with resources to tackle crypto-related crimes, the report noted.

But most importantly, there is a need to raise awareness among consumers. There needs to be a “coordinated and concerted effort by all players including industry, regulators, law enforcement and government to clamp down on scams,” the party said.

The post UK group suggests ‘Crypto Tsar’ role to coordinate regulation among departments appeared first on CryptoSlate.

Quick Take

• A futures contract is an agreement between two parties to buy or sell an asset (in this case Bitcoin) at a predetermined price at a specific future date. These are used for hedging risk or speculating on price changes.
• Open interest is the total number of these contracts that are currently “open” — that is, contracts that have been created but have not yet been exercised, offset, or delivered.
• In the past 24 hours, we have seen a 7% surge in futures open contracts, currently at 449,000 Bitcoin, equivalent to roughly $500 million, according to Coinglass data.
• This surge in open interest is coming from Binance, which currently has 158,000 Bitcoin in open interest contracts.
• This suggests volatility could be on the horizon, which the crypto market has been short of lately. According to Kaiko research, Bitcoin long-term volatility has been steadily declining since November 2022 and hit its lowest level in more than two years.
• In addition, SEC sues Binance for breaching securities law. Following the news, the market has seen $50 million in liquidations in 1 hour. Liquidations over the past 24 hours are over $100 million.

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The U.S. Securities and Exchange Commission (SEC) has filed a court action against Binance and company CEO Changpeng Zhao, Bloomberg reported June 5

A copy of the filing detailed accusations of ignoring federal securities law and placing investors at risk. It stated that the Defendants had profited in the billions by soliciting U.S. investors to buy, sell, and trade using its unregistered platform.

Charges are also filed against BAM Trading Services Inc and BAM Management – who Binance partnered with in June 2019 to launch Binance U.S. In response to the allegations, CZ said:

“We will issue a response once we see the complaint. Haven’t seen it yet. Media gets the info before we do.“

CFTC has pending action with Binance

In March, Binance was sued by the Commodity Futures Trading Commission (CFTC) over allegations of regulatory commodity violations, including allowing U.S. citizens to use its cryptocurrency platform without registering with the agency.

CZ commented that the CFTC’s action was “unexpected and disappointing.”

More details on the SEC filing will follow as information is released.

The post Binance and CZ sued by SEC for breaching securities law appeared first on CryptoSlate.

Speculation is mounting over which Central Asian country has added Bitcoin to its treasury.

On June 4, Crypto Lawyer Irina Heaver said a country in Central Asia would soon announce holding BTC as a treasury asset.

When pressed on who, Heaver said client confidentiality prohibits her from naming the country. But the announcement will be made when they are ready.

Speculative prods had Heaver disclose that her client ends in the word “stan” and is also “one of the largest oil reserve holders.”

Seven Central Asian countries end in the word stan. They are Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Afghanistan, and Pakistan.

Of those, Kazakhstan, Turkmenistan, and Uzbekistan have an abundance of oil and gas reserves.

Bitcoin adoption strategy

Heaver held firm in telling CryptoSlate that the client would make the announcement at their convenience.

She mentioned that Central Asia is often overlooked as a region for Bitcoin activity and has many well-educated young people due to the “old school Soviet education” system.

As examples of Bitcoin activity in Central Asia, Heaver named Kyrgyzstan’s heavy involvement with hydroelectric mining, Uzbekistan’s pro-Bitcoin mining laws since 2018, and Kazakhstan’s ambitions to emulate the Dubai International Finance Centre (DIFC) – a financial hub that houses more than 4,300 businesses.

In April, Jan3 CEO Samson Mow told a press conference held in Mexico that there are three paths a country can take for a BTC adoption strategy – making Bitcoin legal tender, issuing a bond backed by BTC, or the easiest path is simply holding it as a treasury asset.

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Data shows that the decentralized exchange (DEX) to centralized exchange (CEX) trading volume ratio is up.

Commenting on the trend, the founder of Your Crypto Community Duo Nine, stated, “DEXs are eating CEXs market share.” He attributed this to “more regulation,” which meant “DEXs are exploding.”

Signing off, he wrote, “The future is decentralized.”

The chart below shows the DEX to CEX trade volume ratio since January 2019. The ratio began moving higher around May 2020, as the market moved into “DeFi summer,” which was the period when DeFi applications supporting yield farming, lending, and borrowing, first took off, to peak at 16% by September 2020.

The ratio reached a new top by January 2022 of approximately 17%. Likely due to participants realizing the market top was in, a general downturn followed, causing the ratio to fall and bottom at 8% by September 2022.

Since then, the ratio has been climbing, with a sharp acceleration in April 2023 pushing it past the previous peak to its current level of 22%.

Crypto sentiment

On June 1, CryptoSlate reported a significant decrease in daily CEX trade volume to levels last observed in late 2020, suggesting market apathy.

Analysis of the Total Value Locked (TVL) in DeFi protocols for comparison showed a minor uptick to peak at $53 billion on April 16. Nonetheless, the TVL chart depicted a relatively flat pattern since the start of the year.

The rising DEX to CEX trade volume ratio is supported by falling CEX activity and flat TVL in DeFi protocols. However, rather than a flight to DEXs, and a flood of new DEX users, the flat TVL pattern indicates DEX users are holding their own amid market uncertainty.

The post Decentralized-to-centralized exchange trade volume ratio sets new all-time high at 22% appeared first on CryptoSlate.

JPMorgan Chase & Co is launching a pilot project on June 5 that will enable banks to settle interbank dollar transactions on a blockchain-based platform, Bloomberg reported today.

JPMorgan has joined hands with six major private banks in India to participate in the pilot project. The banks include HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, and IndusInd Bank Ltd, along with JPMorgan’s banking unit in Gujarat International Finance Tec-City (GIFT City), the report noted.

Kaustubh Kulkarni, senior country officer in India, and vice chairman of Asia Pacific at JPMorgan told Bloomberg that the pilot project will be running for the “next few months.” The project will help assess the performance and user experience of the banks using the blockchain platform, Kulkarni said.

The pilot project is set to go live upon receiving approval from the International Financial Services Center Authority, as stated in the report. The project will use JPMorgan’s Onyx blockchain platform, launched in 2020, to facilitate wholesale payment transactions.

Under the current system, dollar trade settlement takes a few hours. But transactions are not settled on the weekends and public holidays. The blockchain-based system aims to eliminate these constraints and enable round-the-clock trade settlements, according to the report. Kulkarni said:

“By leveraging blockchain technology to facilitate transactions on a 24×7 basis, processing is instantaneous and enables GIFT City banks to support their own time-zone and operating hours.”

The post Six Indian banks to use JPMorgan’s Onyx blockchain to settle dollar trades appeared first on CryptoSlate.

This weekend in crypto saw several peculiar events unfolding, from a thought-provoking fake summit to prominent Twitter account hacks and discussions on potential technological advancements.

Uniswap fake event

In an extraordinary display of deception, a group in Shenzhen, China, staged an event under the guise of the “First Uniswap Asian Summit” and had a so-called “CEO of Uniswap” in attendance. However, as Hayden Adams, ‘inventor of the Uniswap Protocol,’ stated on Twitter, the event was not associated with Uniswap or Uniswap Foundation and was likely a scam. The scammers even went as far as creating a fork of the Uniswap website, adding Chinese community content while linking to the legitimate Uniswap app.

Peter Schiff’s fake $GOLD token

Peter Schiff, CEO of Euro Pacific Capital and renowned Bitcoin antagonist, had his Twitter account hacked, with the hacker promoting an alleged launch of a new cryptocurrency. The tweet encouraged followers to “Claim your $GOLD,” a fake crypto project linked to Schiff’s favorite asset class. Schiff’s son, Spencer Schiff, quickly alerted followers, urging them not to click the link and emphasizing that his father was likely hacked.

XRP fake $LAW token

Pro-XRP lawyer, John Deaton, suffered a phone hack on June 4 amid a relentless cyberattack over several days. CryptoLaw, an account created by the attorney representing XRP token holders in the Ripple SEC lawsuit, responded to the hacker’s tweet from the attorney’s account.

Deaton took proactive measures to communicate with his Twitter followers, utilizing his daughter Jordan Deaton’s Twitter account to notify people of the hack, stating, ” I still do not have access to my Twitter account. Twitter informed me that it could take 1-3 days.”

OpenAI fake $OPENAI token

In another surprising turn, Mira Murati, CTO of OpenAI, fell victim to a hacking incident aimed at promoting a fraudulent cryptocurrency. Trace Cohen, a serial entrepreneur, and investor, shared the news on Twitter, highlighting that AI and technology are only as strong as their weakest link, which often tends to be “a human” element.

The deleted tweet claimed the introduction of a groundbreaking token called “$OPENAI” driven by artificial intelligence-based language models. It encouraged users to visit a link to check their eligibility for an airdrop to their Ethereum addresses.

Respite for Crypto Twitter

Elsewhere across Crypto Twitter, scams were less of a priority as Twitter Spaces in the crypto space continued to thrive. For example, Binance CEO Changpeng Zhao (CZ) held a Twitter Spaces AMA on May 31, where he discussed various topics, from Binance layoffs to potential support for the Lightning Network on Binance’s platform.

A breakdown released on June 2 recorded that he acknowledged that implementing the Lightning Network would require significant adjustments to their secure wallet infrastructure. However, he expressed optimism about the possibility of the network being supported, especially for Binance Pay and different wallet services.

Another day, another scam

As the world of cryptocurrency continues to expand, the events unfolding this weekend on Crypto Twitter serve as a potent reminder of the challenges and risks accompanying rapid innovation. The cultural influence of Crypto Twitter is undeniable, fostering a community that thrives on knowledge sharing, spirited discussion, and real-time updates.

However, alongside the positive developments, the space has become a breeding ground for hackers and scammers seeking to exploit users’ trust, leading to an increased demand for security and vigilance.

The multiple high-profile hacks over the weekend highlight the need for the broader industry to invest in addressing security concerns and ensuring the integrity of the ecosystem while maintaining the open discussion and collaboration that have come to define our industry.

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