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- Will Binance Founder Changpeng Zhao Go to Prison? 👮👨⚖️
Will Binance Founder Changpeng Zhao Go to Prison? 👮👨⚖️
PLUS: KyberSwap DEX exploited for $46 million, TVL tanks 68%. STP Launches AWNS Web3 Identity Solution Using NFT-Owned Wallet.
Snapshot Web3
November 23, 2023
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Regulatory and Legal News
Binance CEO Changpeng Zhao recently agreed to a settlement with federal prosecutors, pleading guilty to violating U.S. anti-money-laundering laws. This raises the possibility of him facing prison time, with violations carrying a maximum sentence of five years. Despite being barred from an executive role at Binance, Zhao can retain majority ownership. The Justice Department's willingness to reach a settlement suggests potential leniency. While prosecutors seek an 18-month sentence, historical precedents show such requests may not be definitive. Zhao, with no prior criminal record, might face a combination of probation, house arrest, and a $50 million fine. Despite uncertainties, Zhao's public statements suggest an optimistic outlook, including plans for a vacation and passive investing. Even if prison time occurs, it would likely be in a minimum-security facility. In contrast, rival Sam Bankman-Fried faces a longer sentence in a medium-security prison.
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Innovation and Launches
Belgium aims to fast-track the development of a European blockchain infrastructure during its 2024 presidency of the Council of the European Union. The proposal focuses on creating a public blockchain, potentially rebooting the European Blockchain Services Infrastructure (EBSI) project as "Europeum." This initiative aims to secure the storage of official documents like driving licenses and property titles, supporting public administration tasks across the EU. Mathieu Michel, Belgium’s Secretary of State for Digitization, emphasizes the importance of a public blockchain for security, transparency, and privacy, giving citizens control over their data. Several EU member states have already joined the Europeum plan.
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NFT, Gaming and Metaverse
STP has officially launched its Autonomous Worlds Naming Service (AWNS), a Web3 identity solution based on the ERC-6551 token standard. During the waitlist period, AWNS onboarded over 20 partners, including gaming studios like Adventure Gold and infrastructure providers like Biconomy. AWNS serves as a foundational identity component for Web3 and blockchain-based gaming, offering domains ending in .aw that integrate users into decentralized environments. Unlike traditional systems like ENS, AWNS binds identities to tokenbound accounts (TBAs), NFTs powered by ERC-6551. These TBAs have their wallets and can store various digital assets, enabling unique on-chain histories and provenance for each identity. AWNS's flexibility allows for applications in gaming, enabling characters to maintain records across platforms, and streamlines participation and token airdrops for decentralized autonomous organizations (DAOs).
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Scams and Hacks
KyberSwap, a decentralized exchange aggregator, suffered an exploit resulting in the theft of approximately $46 million in various crypto assets, including Wrapped Ether and Arbitrum. Users were urged to withdraw funds, and investigations are ongoing. The attacker left a message hinting at negotiations with protocol developers. The exploit led to a 68% decline in KyberSwap's total value locked (TVL), with about $78 million leaving the protocol. Current TVL is $27 million. Kyber Network Crystal (KNC) token prices briefly dropped but recovered to $0.74. A vulnerability had been identified in April, with no funds lost at that time.
HTX (formerly Huobi Global) experienced a loss of approximately $13.6 million in a hot wallet hack linked to an $86.6 million exploit on the HECO Chain bridge on November 22. The incident involved three compromised hot wallets, resulting in assets being swapped for Ether and distributed to various Ethereum addresses. The stolen assets included 1,240 ETH, 7.3 million USDT, 1.78 million USD Coin, and 62,200 LINK. Justin Sun, the de-facto owner of HTX and founder of Tron and BitTorrent, assured users that HTX would fully compensate for the hot wallet losses, and deposits and withdrawals were temporarily suspended. This follows a previous hack in September when HTX lost $8 million in another hot wallet exploit.
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Interesting Reads
Following the recent settlement with the U.S. Department of Justice, blockchain analytics firm Nansen reported that Binance did not experience a "mass exodus of funds." Despite a $956 million net outflow on Ethereum, Binance's total holdings increased to over $65 billion within 24 hours of the settlement announcement. Nansen noted ongoing withdrawals but highlighted that the situation contrasts with past instances of higher outflows during challenges such as the SEC lawsuit in June 2023 and insolvency rumors in December 2022. Tether holdings on Binance decreased by approximately $246 million, while XRP and TrueUSD holdings remained steady. Richard Teng, Binance's global head of regional markets, expressed confidence in the platform's strong fundamentals, despite the ongoing lawsuit from the U.S. Securities and Exchange Commission.
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Funding and Acquisitions
CoinGecko, a major cryptocurrency tracking website and CoinMarketCap rival, has acquired Zash, an NFT data infrastructure platform. The integration of Zash's NFT data into CoinGecko's API is planned for the second quarter of 2024. Users will be able to access both fungible and non-fungible token data seamlessly, enhancing crypto market insights. Front-end users of CoinGecko's web and mobile app will also gain access to on-chain NFT data through the NFT floor price tracker in the coming year. Zash, founded in 2021, operates an enterprise-grade NFT indexer and API, covering 87 unique marketplaces. Despite the current decline in the NFT market, CoinGecko remains optimistic about the industry's potential for innovation and new use cases. The terms of the acquisition deal were not disclosed.
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Miscellaneous
Some industry observers suggest that Binance's $4.3 billion settlement with U.S. authorities could clear the path for the approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). The settlement involves Binance agreeing to compliance monitors for up to five years, potentially reducing its market dominance. In a June tweet, Travis Kling, CIO of Ikigai Asset Management, predicted that spot Bitcoin ETFs wouldn't be approved with Binance in its current dominant position. BlackRock's spot BTC ETF application, along with others, is awaiting SEC approval. Some speculate that BlackRock may benefit from the Binance settlement, and the overall sentiment is seen as "super bullish" for the cryptocurrency industry.
Carl Erik Rinsch, director of Netflix's sci-fi series Conquest, reportedly used $4 million from the show's budget to invest in Dogecoin and made $27 million. Rinsch allegedly transferred the remaining funds from his stock market gambling to the crypto exchange Kraken and invested in Dogecoin, liquidating in May 2021. The director reportedly spent nearly $9 million on luxury items, including furniture, clothing, a watch, and several luxury cars. Rinsch is now seeking an additional $14 million from Netflix in a confidential arbitration proceeding, claiming the streaming service breached its contract. Netflix denies owing Rinsch anything and calls his demands a shakedown. A ruling is expected soon.
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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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