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- SEC still looking for potential FTX-style fraud at Binance 👨⚖️🪙
SEC still looking for potential FTX-style fraud at Binance 👨⚖️🪙
PLUS: Inflows into Bitcoin investment products reach $1.5B year-to-date. Google Cloud confirms participation in EigenLayer testnet.
Manan Vora
November 28, 2023
Snapshot Web3
November 28, 2023
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Regulatory and Legal News
The U.S. Securities and Exchange Commission (SEC) is reportedly still investigating potential fraud at Binance.US, seeking evidence that the exchange had a backdoor to control customer assets similar to FTX. Binance.US attorney Matthew Laroche has urged a federal judge to halt the SEC's investigation, arguing lack of evidence and citing the substantial costs incurred during the legal proceedings. This development comes as Binance and its founder, CZ, agreed to plead guilty to violating U.S. anti-money laundering laws in a $4.3 billion settlement. The judge has requested the parties to resolve the dispute and provide an update by December 15.
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Innovation and Launches
OKX, a global cryptocurrency exchange and Web3 service provider, has expanded its services in Brazil by launching a local crypto exchange and Web3 wallet platform. With a focus on providing a gateway to decentralized finance (DeFi) and crypto trading, the company aims to tap into Brazil's growing crypto adoption and DeFi potential. The move comes as a response to the preferences of Brazilian users for fast, liquid trading, and secure self-custody wallet solutions. A recent survey cited by OKX revealed that 92% of Brazilian respondents seek clear and transparent information about investment security. The expansion reflects the cryptocurrency market's increasing interest and activity in Brazil, which ranked ninth globally in overall crypto adoption in 2023, according to Chainalysis data.
Google Cloud has confirmed its participation in EigenLayer's testnet by joining the "Operator Working Group" alongside more than 65 other operators and solo stakers. As a node operator on the Goerli testnet for EigenLayer, a restaking protocol enabling the staking of ether (ETH) on multiple platforms simultaneously, Google Cloud's involvement signifies its continued foray into Web3. While the company did not comment on potential plans for EigenLayer's mainnet or integration into Google Cloud’s Blockchain Node Engine, EigenLabs expects Google Cloud's support to persist as the testnet prepares for the mainnet launch in the first half of 2024. Google Cloud has been steadily expanding into Web3 since the establishment of its blockchain division in January 2022.
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NFT, Gaming and Metaverse
Pudgy Penguins, a resilient NFT collection, released an exclusive "influencer box" on Walmart.com for Cyber Monday. The $25 bundle includes a 12-inch plush toy, an action figure, a clip-on plush, an igloo toy, and a certificate for a free NFT on the Pudgy World gaming platform. Pudgy Penguins, which has maintained value and popularity, previously partnered with Walmart to feature its plush line in over 2,000 stores. The NFT project, once part of the 2021 craze, was revitalized under new ownership in 2022, raising $9 million and achieving substantial NFT value growth post the May 2022 market crash.
Gaming-related crypto tokens have experienced significant gains in the past week, with Axie Infinity (AXS) rising 12%, reaching a six-month high of $7.55. Axie's rebound is attributed to the growing momentum around Ronin, its Ethereum sidechain network. The RON token on Ronin surged 27% in the past week to $1.06, doubling in value over the last 30 days. ApeCoin (APE), linked to the Bored Ape Yacht Club NFT ecosystem, rose 7% to $1.63, hitting its highest price in over three months. Other notable performers include Stepn (GMT), Illuvium (ILV), and Treasure (MAGIC), which experienced price increases of 11%, 9%, and 24%, respectively.
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Funding
Bitcoin exchange-traded products (ETPs) saw $312 million in inflows for the week ending November 24, bringing year-to-date inflows to $1.5 billion, reports CoinShares. This marks the ninth straight week of positive net flows in digital asset products. Canadian and German ETPs constituted 87% of the weekly inflows, while total weekly inflows for all cryptocurrencies reached $346 million. The surge is speculated to be linked to optimism about the potential approval of a U.S. spot Bitcoin ETF. Crypto funds now hold $45.4 billion in assets under management, the highest in 18 months.
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Interesting Reads
The "WAGMI" (We're all going to make it) mentality in the crypto space is contributing to chaos, according to an opinion piece. The article suggests that greed, anxiety, and irrationality among Web3 participants are undermining the industry, leading to frustration and disillusionment. The impact of greed is highlighted, with buyers often paying high prices for NFTs and then experiencing disappointment when the utility doesn't match expectations. Anxiety also plays a role, as unrealistic expectations for quick progress put pressure on builders and founders, leading to continual announcements and a toxic climate. The article emphasizes the importance of addressing these issues for the industry's success.
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Miscellaneous
Coinbase (COIN) shares reached an 18-month high, closing at $119.77 on November 27, following rival exchange Binance's guilty plea and settlement with the U.S. authorities for money laundering and sanctions violations. Coinbase shares have surged around 256.5% year-to-date but are still down 65% from their all-time high in November 2021. The increase is attributed to traders pricing in Coinbase's custodian agreements for pending spot crypto exchange-traded funds (ETFs). Coinbase is the custodian for 70% of the 19 spot crypto funds currently pending with the U.S. Securities and Exchange Commission (SEC). However, Coinbase faces an SEC lawsuit alleging violations of securities laws.
According to Japan's National Tax Agency (NTA), the average value of undeclared income in cryptocurrency dropped by 19% in 2022. The NTA's annual summary of tax investigations revealed that it initiated 615 investigations into citizens' crypto holdings based on their tax declarations for 2022, up from 444 in 2021. In 548 cases, the agency found tax violations, marking a 35% increase in crypto tax evasion cases compared to the previous year. Despite the increase in cases, the average value of undeclared crypto holdings decreased from ¥36,590,000 (around $245,000) in 2021 to ¥30,770,000 ($206,000) in 2022.
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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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