- Snapshot Web3
- Posts
- Breaking: FTX Digital Assets Sale Approved 👩⚖️💰
Breaking: FTX Digital Assets Sale Approved 👩⚖️💰
PLUS: $15M crypto theft from Fortress Trust. Paxos confirms responsibility for $500k mistaken BTC transaction.
Manan Vora
September 14, 2023
Snapshot Web3
September 14, 2023
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Regulatory and Legal News
The Delaware Bankruptcy Court has approved the sale of FTX digital assets, with special provisions for Bitcoin, Ether, and certain insider-affiliated tokens. The assets will be sold weekly through an investment adviser, with initial limits of $50 million, increasing to $100 million, or potentially $200 million with court approval. Bitcoin, Ether, and insider-affiliated tokens can be sold separately after 10 days' notice. Confidentiality measures are in place, and objections can delay sales. These measures aim to ensure market stability amid the influx of FTX assets, though their impact may be limited given FTX's substantial holdings of $833 million in Bitcoin and Ether. FTX Token cannot be sold without additional court authorization.
The European Parliament overwhelmingly supported the eighth iteration of the Directive on Administrative Cooperation (DAC8), a cryptocurrency tax reporting rule, with 535 votes in favor, 57 against, and 60 abstentions. DAC8 empowers tax authorities to track and assess cryptocurrency transactions, aiming to reduce tax fraud and evasion. The measure is set to be implemented by EU member states by January 1, 2026. Some critics argue that DAC8 doesn't significantly differ from previous frameworks and may centralize oversight. Concerns also include the challenge of determining reportable crypto-assets and potential duplicate reporting.
Singapore's central bank, MAS, has issued a nine-year ban on Three Arrows Capital founders Kyle Davies and Su Zhu for alleged securities law violations. They are barred from regulated activities and top positions in financial firms in Singapore. MAS found further violations during investigations into the bankrupt hedge fund, including failure to report a new representative and inadequate risk management. Three Arrows Capital faced insolvency after the crypto market crash last year, with creditors claiming up to $3.5 billion in debt. Liquidators are seeking to recover around $1.3 billion from Zhu and Davies.
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Innovation and Launches
SWIFT has enlisted three central banks in its beta phase for testing central bank digital currency (CBDC) interoperability. The Hong Kong Monetary Authority, the Central Bank of Kazakhstan, and an unnamed central bank are using SWIFT's "CBDC connector solution" for direct testing. The sandbox testing, which began in March with 18 participants, including major institutions like HSBC and Deutsche Bundesbank, will now expand to over 30 participants. SWIFT, with over 11,500 connected financial institutions worldwide, is striving for faster transaction processing, with 89% of its transactions now settling within an hour.
Telegram has teamed up with the Open Network Foundation to launch a self-custodial crypto wallet, TON Space, for its 800 million users. Projects on the Open Network (TON) will receive priority access to Telegram Ads. The wallet is currently accessible in Telegram's settings and will roll out globally in November, except in the U.S. This marks a significant development after Telegram abandoned its $1.7 billion crypto project, TON, in 2020 due to a lawsuit from the SEC. TON was initially designed to enable crypto transactions within chats.
BNB Chain launches opBNB, an Ethereum layer-2 scaling platform using Optimism's rollup tech. opBNB aims for lower fees and faster transactions in its ecosystem. During testing, it handled 35 million transactions and hosted 150+ DApps. The platform achieved 4,000 transactions per second. It prioritizes scalability, security, and reduced gas costs. opBNB is EVM-compatible, enabling interaction with Ethereum contracts and tokens. Optimism's rollup technology has proven valuable for Ethereum's scalability. Major DeFi protocols like Uniswap and Aave have deployed on Optimism.
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Market Pulse
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NFT, Gaming and Metaverse
Gods Unchained, a web3 game, introduces "Sealed Mode," emulating sealed deck tournaments from physical trading card games. Players pay an entry fee in tokens to receive random cards and select three gods to build a deck. They compete until winning seven matches or losing three, earning rewards based on performance. This mode is unique due to each card being represented by a nonfungible token on the Immutable X network.
Stoner Cats 2 LLC, the creators of the "Stoner Cats" animated series, has been charged by the SEC for selling NFTs as unregistered securities. They sold over 10,000 NFTs for $800 each to fund the show. The NFTs allowed access to the series, which featured celebrities like Mila Kunis and Vitalik Buterin. SC2 agreed to a cease-and-desist order, a $1 million civil penalty, and will create a fund to reimburse investors. They will also destroy all NFTs they hold.
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Scams and Hacks
Fortress Trust experienced a $15 million cryptocurrency theft due to a phishing attack on their third-party vendor, Retool. The San Francisco-based company, serving Fortune 500 clients, created the portal for Fortress clients. The attackers targeted specific crypto-related customers, but those who configured the software as advised were unaffected. Ripple stepped in to cover affected customers, expediting their acquisition of Fortress. BitGo and Fireblocks, the wallet providers, were not breached. The incident highlights the potential vulnerabilities in the cryptocurrency market and traditional finance industry.
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Interesting Reads
Islamic Coin has partnered with CoinDesk Indices to explore the creation of Shariah-compliant crypto benchmarks for the Middle East and North Africa markets. The collaboration also includes licensing CoinDesk Indices benchmarks for exchange-traded financial products and providing HAQQ, a blockchain focused on Shariah-compliant finance and home to Islamic Coin, with access to CDI's API for selected digital assets, including its digital asset exchange.
The Blockchain Association, marking its five-year milestone, outlines three pivotal factors that will shape the future of the digital asset industry in the United States. First, anti-money laundering efforts are expected to remain a significant concern, with law enforcement agencies becoming adept at tracking illicit transactions on blockchain networks. Second, the fate of crypto-specific legislation, which has made progress in committees, will hinge on congressional consensus. Encouraging pro-crypto candidates for office is seen as crucial in influencing regulatory perspectives. Lastly, potential shifts in regulatory agencies due to the 2024 presidential election could bring fresh faces with more enlightened views on digital assets, potentially leading to a more favorable regulatory environment.
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Quick Links
Paxos has confirmed responsibility for the mistaken $500,000 Bitcoin transaction fee on September 10. The company stated that the error, which involved a Paxos server, only impacted its corporate operations and did not affect clients or end users, assuring that all customer funds are safe. The overpayment was attributed to a bug in a single transfer, which has since been fixed. Paxos is now in contact with the miner to reclaim the funds. This revelation dispels speculation that PayPal may have been involved in the transaction due to an identified wallet account.
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Miscellaneous
Zilliqa, a leading blockchain platform, is partnering with Google Cloud to boost scalability for Web3 services and decentralized applications. Google Cloud will act as a staked seed node operator, providing infrastructure and transaction validation. This collaboration aims to enhance decentralization, security, and governance. Zilliqa, known for sharding technology and secure smart contract language Scilla, offers an ideal platform for high-speed, low-fee transactions and secure contracts. Sharding allows concurrent processing of transactions by dividing the network into smaller nodes.
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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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