Top Stories of Last Week

Regulatory

  • U.S. Department of Justice and CFTC filed charges against BitMEX and owner-operators. CEO Arthur Hayes, along with co-founders Ben Delo and Samuel Reed, are accused of operating an unregistered trading platform as well as violating CFTC rules, including anti-money laundering and KYC regulations. In a separate action, Department of Justice filed criminal charges against Hayes, Delo, Reed and head of business development Greg Dwyer with violating Bank Secrecy Act.
  • European Central Bank published comprehensive report on digital euro, saying it needs to be prepared to issue digital currency if and when need arises. 50-page report, prepared by Eurosystem High-Level Task Force on CBDC and approved by Governing Council, said digital euro would complement cash, not replace it. Central bank identified four possible scenarios that would require issuance of digital currency: An increased demand for electronic payments, a “significant” decline in use of cash, launch of global private means of payment, and “a broad take-up of CBDCs issued by foreign central banks.”
  • Salt Lending ordered by SEC to create process by which investors in $47 million ICO can seek refunds. SEC ruled Salt violated Securities act when Salt offered and sold tokens without having registration statement filed or in effect with SEC.
  • ConsenSys chosen by Hong Kong Monetary Authority to assist in Hong Kong and Thailand’s cross-border CBDC pilot. Announcement stated ConsenSys will work on second implementation stage of Project Inthanon-LionRock CBDC alongside PricewaterhouseCoopers and Forms.
  • Central Bank of the Bahamas announced it will begin gradual national release of “Sand Dollar” digital currency on Oct. 20. In first phase, private-sector banks and credit unions will ready systems with KYC and other compliance checks across wallets. Sand Dollar’s second phase, slated for 2021, will focus on preparing essential infrastructure services in government and private sectors for CBDC.

Project Development

  • Filecoin announced live mainnet network to launch at block 148,888, currently expected on Oct. 15. More than 400 miners participated in “Space Race” testnet phase where network data capacity increased by more than 325+ pebibytes. In coming weeks, project said it will continue adding storage, optimize operations and undergo final tests, as well as allow community members to prepare their own systems ahead of launch.
  • Grayscale Investments increased reserves by 17,100 Bitcoin, an increase of $186.5 million. GBTC Bitcoin Trust now amounts to nearly 450,000 BTC, or $4.7 billion, and corresponds to 2.5% of amount of Bitcoin in circulation.
  • Ant Group unveiled global trade platform for SMEs called Trusple, which aims to streamline process of cross-border trading. Trusple will use Ant Group’s recently launched blockchain solution, AntChain, to allow buyers and sellers to upload trading orders to platform, which automatically generates a smart contract with information critical to deal.
  • EY released Ethereum-based solution called OpsChain Network Procurement platform, which aims to streamline enterprise resource planning and enable companies to run private end-to-end procurement activities. Product is designed to support enterprise networks, allowing buyers and sellers to operate as networks, while automatically tracking volumes and spend, and utilizing agreed terms and pricing. Companies can now plug into EY’s beta platform and enable direct integration with their own ERP systems via APIs.
  • Bitwise’s amended filing with SEC showed asset manager raised just under $8.9 million for its Bitcoin Fund, which provides accredited U.S. investors with exposure to bitcoin through a traditional product. A filing from 2019 shows Bitcoin Fund had attracted $4.1 million in investment.
  • Samsung SDS will conduct series of pilot projects in November to test blockchain-powered medicine distribution management, with goal of tests to guarantee transparency in process of tracking pharmaceutical drugs. Pilot program named “Disruptive innovation technology for tracking drug distribution history” has reportedly received several participation applications for pilots from pharmaceutical firms, distributors, and medical institutions in South Korea.

Exchanges

  • KuCoin detected large withdrawals of bitcoin and ethereum tokens to unknown wallet, stating that hackers obtained private keys to exchange’s hot wallets. KuCoin released list of wallet addresses where stolen funds were transferred, with estimates coming in that put total figure over $200 million. More recently, KuCoin CEO Johnny Lyu stated that exchange was on trail of suspects and that law enforcement officials and police were officially involved. Lyu also said another $64 million of stolen assets were recovered, bringing total value of recovered assets to $204 million.
  • Coinbase offered package for employees who want to exit after release of blog post from Brian Armstrong outlining why crypto exchange operator will take on an apolitical mission and focus on crypto mission versus social activism. Armstrong explained why firm should be focused on mission to build an open financial system while focusing minimally on broader societal issues and political causes.

Mining

  • MicroBT announced development of first overseas production center in partnership with Foundry Digital LLC and a Southeast Asian company in order to improve supply chain efficiencies for North American buyers of mining equipment. The unnamed Southeast Asian company is contracted to produce and deliver WhatsMiner equipment to U.S. investors, who would otherwise pay an additional 25% tax if they receive shipments directly from China due to U.S. tariffs.

Fundraising

  • European crypto brokerage Bitpanda announced completion of $52 million Series A led by Peter Thiel’s Valar Ventures. Bitpanda co-CEOs Eric Demuth and Paul Klanschek said this raise, which included additional funds from SeedInvest, plus a seed round in 2016 and an initial exchange offering in 2019, means company raised roughly $100 million to date.
  • DODO raised $5 million via private sale of its new DODO exchange token. Ethereum-based “on-chain liquidity provider,” which uses what it calls a “proactive market maker” algorithm to mimic human market maker behaviors and effectively allocate funds near market price, launched in August.
  • Braintrust, a freelance talent market set to be powered by ERC-20 token, raised $18 million in round led by ACME and Blockchange, with participation from Pantera, Multicoin, Omidyar Technology Ventures, Variant and Hashkey. 

Defi

  • Eminence.Finance, the unfinished DeFi protocol by Yearn.Finance founder Andre Cronje, was exploited and drained of $15 million, although hacker eventually would return $8 million to YFI.

Things to Watch This Week

  • Eth Testnet Results and Second Testnet announcement
    • The Spadina testnet dress rehearsal launched last week got off to a rough start, with Eth dev Danny Ryan stating it was “not as smooth sailing as it could have been.” Although not a complete failure, it was noted that several errors existed that made for a difficult environment for validator participation, with many users experiencing critical issues getting their nodes up and running. 
    • A second eth2 testnet launch schedule, known as Zinken, has been announced, with the aim to give client teams a chance to iron out issues in their release process and validators a chance to experience a smoother genesis prior to mainnet. Zinken Launchpad is already live and genesis deposits are due by Thursday, October 8th,12 UTC. Genesis time is expected to be approximately Monday, October 12th, 12 UTC. The results of this testnet will be important to keep an eye on, as it will factor in to the expectation of Eth 2.0’s upcoming launch schedule. 
  • Trump Covid Updates
    • Traditional markets could weigh on cryptocurrencies this week as we wait to hear more about the development of Trump’s battle with the coronavirus. As we get closer to the U.S. elections and see how Trump’s most recent situation plays out, equities will be braced for volatility and in turn, will continue to influence crypto markets as well. We’ll be keeping an eye on whether Bitcoin and crypto markets can effectively “decouple” from traditional markets at some point going forward. 
    • Byzantine General @ByzGeneral
      My bull case for #bitcoin thread. This will be a summary of some of the more interesting reasons why I’m bullish mid to long term. TLDR at tweet 25. $BTC 1/

      First of all there is funding. One of the best indicators to gauge market sentiment. After the drop from 12k it has been consistantly negative or baseline at best. 3/

      Ari Paul   @AriDavidPaul
      I get the same feeling explaining NFTs to people in crypto as I used to get explaining bitcoin to finance types pre-2017. “But how can zeros and ones on a computer be valuable?” …”you realize they already are, right? Most of fiat is already zeroes and ones. /1

      2/ we already see centralized scarcity as valuable in fiat. We rely on central banks to prevent forgeries of cash and of the zeroes and ones of digital fiat. Why not use cryptography and decentralized consensus instead?

      3/ similarly, people obviously already value the centrally enforced scarcity of baseball cards, art prints, rolexes, Supreme t-shirts, and in-game items. Why not ensure that scarcity with cryptography and decentralized consensus?

      4/ for money, collectibles, and brand name watches and clothing, cost of duplication has almost nothing to do with value. The cost of forking bitcoin is irrelevant. Some people want the real thing. Same with art, collectibles, watches, etc

      5/ the amazing thing is that people have held fiat and non-NFT collectibles and brand products as so valuable *despite* the lack of transparent scarcity. People value gold bars despite tungsten fakes. They value Supreme shirts despite $5 knock-offs. Now add provable scarcity.

      Chris Burniske@cburniske
      As much as I love #Ethereum, crypto innovation will not be constrained to $ETH, just as it wasn’t constrained to $BTC.

      The ~year since writing the below piece has been full of fires for up-and-coming smart contract protocols. For the quality SC protocols, on the horizon is a period of massive growth, alongside #Ethereum‘s own scaling journey. placeholder.vc/blog/2019/10/2…

      #Ethereum will scale, but that doesn’t mean it will capture every middleware protocol & crypto application interface built forevermore.

      #Ethereum‘s #DeFi boom, and the current #NFT craze, are fueling the need for other SC protocols to take some of the load. As much as high gas fees signal the value of Ethereum, they also signal the need for things other than Ethereum. Layer-2s + 2.0 won’t fix this entirely.

      Crypto’s 2017 was built upon the back of two major innovation environments (#Bitcoin#Ethereum). Crypto’s 2021 will be built upon the back of at least 5 major innovation environments. Try not to be tribal about it.

      But do put your resources into those that align with your values, and if centralized innovation environments get to scale, work with them to better spread the wealth + power (admittedly, my plug for my values ).

      Su Zhu@zhusu
      the majority of DeFi TVL growth is actually BTC-denominated players they came for the yields and will leave as the farms run dry permissionless af

      I predict many projects will try to revamp tokenomics, make rewards partially or even fully vesting, only to have the pump not even last half a day before getting nuked into

       
      Meltem Demirors@Melt_Dem
      everything about this is just WILD
      CFTC and DoJ charging @BitMEX and key executives. one exec is already in federal custody. FBI director Sweeney says “they will soon learn the price of their alleged crimes will not be paid with tropical fruit”
      Image

      Larry Cermak@lawmaster
      “HAYES, DELO, and DWYER remain at large.” God damn

      The implications of this will be massive. Some large foreign exchanges still allow US customers to use the exchange without KYC and VPN. That will change VERY quickly

      SBF@SBF_Alameda
      1) @arjunblj wrote up a piece on his thoughts on the future of crypto. Some responses to that below.
      https://arjun.af/crypto-market-structure…

      2) I mostly agree with the 2.0 section: new liquidity/maturity coming from: –derivatives –borrow/lending –automated OTC –stablecoins A few disagreements: (a) @arjunblj mentions institutional products. While they are growing, they are still small and not important.

      3) This might change soon — some of them (e.g. @FireblocksHQ) are showing promise — but so far it’s mostly just promise, not adoption. (b) lending + stablecoins as reserve asset misses something key. where are the loans coming from? who’s the ultimate lender?

      4) This is not widely known, though it’s also not exactly a secret. Ask any borrow/lend desk what capital is cheapest. It’s not stablecoins. It’s BTC. Stablecoins are the trading/exchange reserve; BTC is still the ultimate reserve. Why?

      5) Well I’ll leave it up to the reader, but *some* groups seem to have a very large and every increasing supply of BTC to lend out, combined with USD payroll demand. They are powering the backend of crypto liquidity: unsung heroes of modernization.
      READ MORE

      Future Fund@FUTURE_FUND_
      Quite often when you want to sell it is the time to buy. Our goal is 10% of the total supply of $YFI 25% of tokens are staking in governance. 3000 YFI supply would net you 40% of the $100,000 + daily rewards. That’s $40,000 + per day, in USD. regardless of the price of $YFI

      $YFI is limited to 30,000 tokens. Let me reframe this, $YFI also allows Vault strategist to vote in their strategy and earn several million per year per vault. With V2 around the corner this will be operational very soon.

      $YFI token is not a consumer product, $yUSD and yVaults is. So choose your yearn wisely. At these prices the next few days will be a fight amongst the crypto funds to accumulate more $YFI.

      We value highly @AndreCronjeTech not just for his innovation and drive to create, but as all of you already know, he’s a really good guy willing to help everyone in the industry. The friendships and partnerships he has built is a testament to who he is. Look out for #yOctober

      Amber Group@ambergroup_io
      1) Pain points around institutional custody and DeFi participation cannot be understated. Retail can interact with DeFi from Metamask or any Ethereum wallet, but institutions are under a larger set of constraints – namely around signing policies and operational setup.

      2) Remember “Goldman Sachs is not going to buy your Binance bags”? Well, they’re not going to buy your Uniswap bags either – imagine a row of GS traders furiously clicking buttons on Metamask trying to push a Tx through… yeah not gonna happen (entertaining thought though).

      3) Btw – not saying GS is relevant to where we want to be in the future. Prop firms and major trading desks are already interacting with DeFi, but major funds that manage institutional capital usually have a lot of hurdles to overcome.

      4) If you manage hundreds of millions – you spend a lot of time thinking about OpSec and logistics, which also needs to fall into a specific framework. Fund admins – can they sign off on it? Can auditors reconcile on-chain accounting? With new protocols launching everyday…

      5)..how often do you update PPM risk disclosures? Can LPs underwrite this risk? Having spoken to many funds recently – this is the biggest reason why “institutional” investors have been sidelined. They want to interact w DeFi within their existing operational setup, but can’t.

      6) Solutions are coming.@FireblocksHQ@CopperHQ@Ledger@Anchorage are all working on enterprise tools to address these issues, allowing for customizable signing policies with multiple dependencies that fit into workflows for funds and larger market participants.

      7) Don’t’ be surprised to see an influx of institutional capital into DeFi over the forthcoming months.

      moon is tweeting@MoonOverlord
      $150M altcoin hack (one of the largest crypto hacks ever) Bitmex indicted (the largest margin exchange for years) If this doesn’t tank bitcoin or crypto we’re going to the literal moon.