This week saw some big stories in the crypto world. Kraken, one of the largest crypto exchanges, reached a settlement with the U.S. Securities and Exchange Commission (SEC) over staking services, and the IRS is now seeking user information from the exchange. Meanwhile, FTX CEO John Ray testified on the “pure hell” post-bankruptcy days at the exchange, and Binance temporarily suspended bank transfers in U.S. dollars.
The settlement between Kraken and the SEC has sparked controversy within the agency, with Commissioner Hester Peirce publicly rebuking her own agency over the shutdown, arguing that regulation by enforcement “is not an efficient or fair way of regulating” an emerging industry. The SEC claimed that Kraken failed to register its staking program as a securities offering.
The bankruptcy proceedings of crypto exchange FTX have been ongoing, with the names of two guarantors who signed off on part of Bankman-Fried’s $250 million bail bond being withheld for now after a last-minute appeal. In another headline, a federal judge denied a joint agreement between Bankman-Fried’s legal team and prosecutors that would allow him to use certain messaging apps, including Facebook Messenger.
Binance also made headlines this week, as the crypto exchange giant temporarily suspended deposits and withdrawals of United States dollars (USD) through bank accounts. The suspension was not explained, and no other trading methods will be affected. The freeze applies only to international users, as Binance.US claims that its customers will not be affected. This comes as Binance has been facing banking challenges in the U.S., with its SWIFT transfer partner, Signature Bank, saying it would only process trades by users with USD bank accounts over $100,000.
Genesis Global, a crypto trading and market-making arm, reached an “agreement in principle” with Digital Currency Group and its creditors, aiming to return at least 80% of their funds. The agreement will eventually see Genesis’ crypto trading and market-making arm sold as part of restructuring efforts. The effects of Genesis’ bankruptcy also reached Cash Cloud, an automatic teller machine operator in the United States and Brazil. Genesis is Cash Cloud’s biggest creditor, with a $108 million unsecured loan. Cash Cloud has liabilities between $100 million to $500 million.
Ethereum co-founder Joe Lubin is confident that Ether won’t be classified as a security in the United States, saying that it’s “as likely, and would have the same impact, as if Uber was made illegal.” This comes after SEC chair Gary Gensler suggested that Ethereum’s transition to a proof-of-stake (PoS) consensus model might have brought ETH into regulatory spotlight.
At the end of the week, Bitcoin (BTC) is at $21,707, Ether (ETH) at $1,525 and XRP at $0.38. The total market cap is at $1.01 trillion, according to CoinMarketCap. Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are The Graph (GRT) at 74.43%, SingularityNET (AGIX) at 65.51% and Rocket Pool (RPL) at 15.155%.The top three altcoin losers of the week are Fantom (FTM) at -31.15%, Optimism (OP) at -23.79% and Aptos (APT) at -22.28%.
Crypto recruiting is a minefield, with fake employees and social attacks being some of the issues. Australia’s world-leading crypto laws are also at the crossroads, and Aligned Incentives: Accelerating Passive Crypto Adoption is an in-depth look at how to make crypto adoption easier.
The crypto world also saw some notable quotes this week, with Michael Demissie, head of digital assets at BNY Mellon, saying “what we see is clients are absolutely interested in digital assets, broadly.” Bank of England and HM Treasury also said “the digital pound could exist alongside other forms of money, including stablecoins,” while Robert Joyce, chief technology officer at Nokia Oceania, said “clearly if you want integrity within a metaverse, then blockchain will play a part.” Aaron Kaplan, co-CEO of Prometheum and of counsel at Gusrae Kaplan Nusbaum, said “banks [in the U.S.] are reevaluating whether continuing to provide these [crypto] services is worth the risk,” while Alex Jupiter, product manager of accounts and key management at MetaMask, said “MetaMask has historically been an Ethereum wallet. We need to start moving beyond that. The multichain future is very clear.” Soramitsu, a Japanese financial software developer, said “CBDC is a way to advance the sophistication of payment systems, as well as ensuring economic security through a local currency that does not depend on other countries.”
Ethereum price risks 20% correction amid SEC’s crackdown on crypto staking, according to Bitwise Asset Management’s chief investment officer, Matt Hougan. The SEC crackdown on crypto staking begins as Ethereum’s key network upgrade, Shanghai, is set for release in March.
SEC chair Gary Gensler issued a warning to crypto companies to “come in and follow the law” after the agency announced a settlement with crypto exchange Kraken. This is the latest effort by the country’s authorities to crack down on crypto firms, as banks have allegedly been discouraged from dealing with crypto firms in recent weeks by U.S. officials, aiming to make crypto business “completely unbanked,” sources told Cointelegraph.
The New York State Department of Financial Services is reportedly investigating Paxos Trust Company, the stablecoin issuer behind Binance USD (BUSD) and Pax Dollar (USDP). The department is reportedly seeking to protect customers from the risks associated with cryptocurrency investments.
The launch of the exchange project backed by the bankrupt hedge fund Three Arrows Capital (3AC) also attracted a mob of angry community members. Open Exchange, a crypto exchange project that 3AC and CoinFLEX initially proposed, launched a website on Feb. 9. 3AC co-founder Su Zhu pointed out that the project is a way to make up for his past mistakes. 3AC went bankrupt in July, after suffering losses from Terra’s collapse two months earlier.
Cointelegraph Magazine also featured some interesting stories this week. Justin Aversano’s journey into NFTs began with a personal story of loss and recovery, while China airdropped 180 million digital yuan to celebrate Lunar New Year, boosting consumption. APAC crypto exchanges also donated to Turkey after a devastating earthquake, and Laos and Soramitsu launched a proof-of-concept for a CBDC. 2023 is a make-or-break year for blockchain gaming: Play-to-own is an in-depth look at how to make crypto gaming easier, and Interoperability is one thorny issue for the industry.
This week was an eventful one in the crypto world, and it’s clear that the industry is continuing to evolve and grow. From the Kraken settlement to the launch of the Open Exchange project, the news this week shows that the crypto world is still very much in flux. With the SEC’s crackdown on crypto staking, the New York State Department of Financial Services’ investigation into Paxos Trust Company, and the various other news stories this week, it’s clear that the crypto world is a dynamic one, with regulations and legal issues changing all the time.
As the industry continues to grow, it’s important to stay informed about the latest developments in the crypto world. With the news this week, it’s clear that the industry is continuing to evolve and grow, and that there are still many challenges and opportunities ahead. From the Kraken settlement to the launch of the Open Exchange project, this week has seen some big stories in the crypto world, and it’s important to stay informed about the latest developments in the industry.
