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- Binance says it’s 'truly compliance-led’ in positive year-end report 🪙📈
Binance says it’s 'truly compliance-led’ in positive year-end report 🪙📈
PLUS: Avalanche Foundation is about to start buying memecoins for the ‘culture’. Vitalik Buterin wants to ‘make Ethereum cypherpunk again’.
Manan Vora
December 29, 2023
Snapshot Web3
December 29, 2023
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Regulatory and Legal News
A U.S. federal judge has ruled in favor of the Securities and Exchange Commission (SEC) in a case against Terraform Labs and its former CEO, Do Kwon. The SEC claimed that Terraform Labs and Kwon offered and sold two unregistered securities, LUNA and MIR. The court granted summary judgment in favor of the SEC regarding the unregistered securities but granted summary judgment for the defendants on the alleged unregistered offer and sale of security-based swaps. The court ruled that mAssets, created and maintained through the Mirror Protocol, don't meet the statutory definition of a security-based swap. The fraud claims will be decided in a jury trial starting in January 2024.
The Argentine government, led by President Javier Milei, has introduced the Law of Bases and Starting Points for the Freedom of Argentines, which includes provisions for the regularization of crypto holdings. Under this legislation, taxpayers will have the opportunity to declare and legalize their undeclared crypto assets without providing additional documentation on their origin. The regularization scheme involves a flat tax on assets, with rates of 5% if holdings are declared by the end of March 2024, 10% from April to June 2024, and 15% from July to September 2024. The move is part of the government's broader reformist agenda.
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NFT, Gaming and Metaverse
The blockchain gaming industry is expected to see growth in 2024, with predictions of successful Web3 games, increased adoption, and improved user experiences. NFT marketplace Magic Eden's Chief Gaming Officer predicts that three Web3 games released in 2024 will be successful enough for traditional game studios to take notice. Alec M. Wantoch, head of product at HyperPlay, expects a surge in blockchain games' release, with a focus on optimizing for fun and increased interest in Asia. Other predictions include a move towards user-generated content, de-jargonizing blockchain terminology, and the evolution of fully on-chain games.
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Scams and Hacks
The Pink Drainer hacking group has reportedly stolen $4.4 million worth of Chainlink (LINK) from a single victim. The victim fell victim to a phishing attack, signing an "Increase Approval" function that led to the draining of 275,700 LINK in two transactions within a minute. Blockchain security firm Scam Sniffer confirmed the connection to Pink Drainer, which has been linked to various Discord and Twitter hacks, including those targeting Evomos, Pika Protocol, OpenAI CTO Mira Murati, and Orbiter Finance. The group has also been involved in scams impersonating crypto journalists. The recent theft is part of a series of attacks that have netted Pink Drainer over $18 million from more than 9,000 victims.
Canadian crypto exchange Catalyx has temporarily halted withdrawals and suspended all trading activity due to a security breach. The exchange suspects that the breach, resulting in the loss of a portion of crypto assets held for clients, may involve one of its employees. The extent of the losses has not been disclosed. Catalyx is currently investigating the incident and has enlisted consulting firm Deloitte to assist in the investigation. The Alberta Securities Commission ordered the exchange to cease trading activities on December 21 and is conducting its own investigation into the security breach.
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Funding and Acquisitions
The Avalanche Foundation has announced plans to buy meme coins using its $100 million NFT incubator fund. As part of its "Culture Catalyst" initiative, the foundation intends to purchase select Avalanche-based meme coins, recognizing and encouraging the culture and fun associated with these tokens. The move is seen as an effort to cultivate and support the creativity, culture, and lifestyle enabled by blockchain. The selection process for adding meme coins to the foundation's collection will consider criteria such as the number of holders, liquidity thresholds, project maturity, fair launch principles, and overall social sentiment. Avalanche's move comes amid a broader market frenzy for meme coins.
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Interesting Reads
Ethereum co-founder Vitalik Buterin has called for a revival of Ethereum's original "cypherpunk" vision, emphasizing values like decentralization and censorship resistance that were overshadowed by financialization in 2017. Buterin expressed hope for a return to non-financial applications on Ethereum and highlighted technical advancements such as rollups and zero-knowledge proofs to support cypherpunk principles. He urged the community to resist centralization pressures and avoid replicating the inefficiencies of the current web2 ecosystem. Additionally, Buterin proposed streamlining the Ethereum proof-of-stake chain for increased efficiency.
In a podcast episode, Mark Smargon, CEO of Fuse, discusses the significance of layer-2 networks in the cryptocurrency space as they address scalability issues of major layer-1 blockchains. Smargon emphasizes the need for improvement in the current state of bridging infrastructure, considering it a critical aspect for the success of layer-2 networks. He acknowledges the role of zero-knowledge (ZK) technology in enhancing privacy and reducing storage costs, anticipating a trend of layer-2 networks adopting ZK technology. Smargon emphasizes the importance of making off-chain transactions more efficient to compete with traditional payment systems like Visa. He also highlights Fuse's plans to build a ZK-powered layer-2 solution for payments.
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Resource of the Day
The tokenomics of a cryptocurrency, including whether it is inflationary or deflationary, plays a crucial role in market liquidity. Inflationary tokens, which increase the token supply over time, tend to have higher liquidity as they are intended for daily activities. Examples include Dogecoin, which has no fixed supply cap. On the other hand, deflationary tokens aim to reduce the token supply, potentially leading to scarcity and increased value. Examples include Binance Coin (BNB), which undergoes regular burning events. The impact on liquidity varies, with inflationary tokens generally having higher liquidity due to their flexible supply mechanisms. Deflationary tokens, while preserving value, may experience reduced liquidity. Various factors, such as supply regulation, staking, token burns, and yield farming, contribute to the liquidity dynamics of both types of tokens.
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Miscellaneous
The world’s largest crypto exchange made progress on a number of fronts in 2023 and only has one U.S. regulator still pursuing it.
In addition, users are capped at a notional value of $90,000 for all 10x contracts.
If approved, the 300 million token reduction, worth $1.074 billion, will take effect on Jan. 4, 2024.
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The information provided in this newsletter is for informational purposes only and should not be interpreted as investment advice, endorsement, or recommendation. Cryptocurrency investments carry significant risk due to their volatility. You should consider your financial situation, investment goals, and risk tolerance before making any investments. We strongly recommend consulting a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
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