Monday, 12 December 2022

Market Summary

Market Summary 12 December 2022

Bitcoin Price: US$ 17,085.05 (-0.25%)
Ethereum Price: US$ 1,263.01 (-0.26%) 


Binance locks withdrawals for some accounts amid what CEO calls ‘just market behavior’

  • Abnormal price movements on Binance, the leading crypto exchange by volume, sparked an internal investigation that led to CEO Changpeng Zhao concluding the movements were “just market behavior” — despite temporarily freezing withdrawals for some profiting accounts.
  • Binance’s official Twitter account announced the investigation at 3:10 a.m. ET. It later concluded that the odd price movements were not the result of compromised accounts or stolen API keys. The trading pairs involved included Sun Token, Ardor, Osmosis, FUNToken and Golem. 
  • “Based on our investigations so far, this appears to be just market behavior,” Zhao, who goes by “CZ,” tweeted before explaining: “One guy deposited funds and started buying. (Hackers don’t deposit). Other guys followed. Can’t see linkage between the accounts.”
  • Still, Binance “temporarily locked withdrawals on some of the profiting accounts,” according to its CEO — sparking debates about the role of centralized exchanges and how much they should intervene.
  • “We are aware of the concept of too much intervention from the platform,” CZ tweeted, adding: “There is a balance to how much we should intervene. Sometimes, these happen in free market, and we need to let it play out.”


Grayscale says SEC filed first legal brief in ongoing bitcoin futures ETF lawsuit

  • Grayscale Investments said the U.S. Securities Exchange Commission has filed its first legal brief in the lawsuit the crypto asset manager filed over the rejection of its application for a spot bitcoin exchange-traded fund.
  • “This is the next milestone in our ongoing litigation following the filing of our opening brief on October 11 and the supporting amicus briefs shortly after,” the company said Friday in a statement.


Chinese authorities break up billion-dollar crypto money laundering ring: China News

  • Police in Inner Mongolia have arrested 63 people in association with a scheme that allegedly laundered 12 billion yuan ($1.7 billion), China News reports.
  • Following an investigation into unusual money flows from construction firm Shi Mouyuan, authorities reportedly discovered a wide network that operated internationally and “converted funds suspected of online pyramid schemes, fraud, gambling and other crimes into virtual digital currency.”
  • Led by the Horqin Branch of Tongliao Public Security Bureau, the investigation spanned 17 provinces. One suspect, Zhang Mou, has fled to Bangkok.


Why Some SushiSwap Stakers Are Jumping Ship

  • SushiSwap, the popular decentralized exchange, made a tough call this week as it navigates the ongoing bear market.
  • On December 5, project lead Jared Grey proposed that all staking fees on the platform be redirected to the project’s treasury for a year. He added that a new tokeonomics model for the project is also “on the horizon,” suggesting quite a shake-up for SushiSwap.
  • Currently, users that stake their SUSHI—the project’s native governance token—get the xSUSHI token in return and also trading fees on the platform for doing so. Grey’s proposal would put an end to that, with those trading fees being redirected to the project’s treasury.
  • Fees on the platform, by the way, amount to 0.3% of each trade, with 0.25% given to the liquidity provider sustaining the pool and the remaining 0.5% going to those SUSHI stakers. If passed, this proposal would divert that 0.5% back to SushiSwap’s coffers.


Lawsuit Alleges Yuga Labs Conspired With Celebs Like Justin Bieber to Push Bored Ape NFTs

  • A class action lawsuit filed Thursday alleges that a slew of celebrities—including Justin Bieber, Madonna, Steph Curry, and Paris Hilton—violated state and federal laws when they promoted Bored Ape Yacht Club NFTs while failing to disclose their financial relationships to Yuga Labs.
  • The suit, filed yesterday in the U.S. District Court’s Central District of California, named no less than 37 co-defendants—ranging from Yuga leadership to celebrities and executives. It also names MoonPay, the crypto payments startup that allegedly facilitated those endorsements. 
  • Though the suit lists 10 charges ranging from violations of California’s consumer protection laws to violations of federal securities laws, its 100-page filing tells, more or less, a single story. Releases Data to Assure Clients It Holds One-to-One Reserves

  • Digital asset exchange today released a proof of reserves study in support of its ability to cover client balances. 
  • In a Friday statement, the Singapore-based platform said it used international audit, tax and advisory firm Mazars to demonstrate—using “advanced cryptographic procedures”—the availability and backing of customer balances. 
  • Mazars released the study for on Friday. Earlier this week, Mazars also said that Binance, the world’s biggest crypto exchange, held enough Bitcoin needed to cover customer deposits. 
  • “It is now easy for our existing users to verify that has a 1:1 reserve of all customer crypto assets deposited on its platform, and users can confirm the assets in their account are responsibly backed and accessible, both for the App and Exchange,” said Friday. 


Shares of Bitcoin Miner Argo Blockchain Suspended in UK and US

  • Trading in shares of London-based Argo Blockchain (ARBK) was suspended in the U.K. and U.S. on Friday. The exact reason for the suspension was not disclosed, but it typically is due to the pending release of news.
  • At the end of October, Argo said that a deal to raise $27 million from a strategic investor had fallen through, sending its shares tumbling more than 70%.
  • “Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations,” the company said at the time in a statement to the London Stock Exchange.
  • In its November operational update released Friday, Argo said it was continuing to engage in financing discussions to “provide the company with working capital sufficient for its present requirements.” It added that “a further announcement will be made in due course.”
  • Argo and many other publicly traded bitcoin miners have been suffering lately from the combination of falling crypto prices and rising energy costs.


Binance’s proof of reserves raises red flags: Report

  • Binance’s efforts to improve transparency of its reserves also exposed red flags in the crypto exchange’s finances, according to accounting and financial specialists consulted by The Wall Street Journal. 
  • As noted by a former Financial Accounting Standards Board (FASB) member and investment manager, the report released by the audit firm Mazars give not bring investors confidence about the exchange’s finances, as it lacks information related to the quality of internal controls and how Binance’s systems liquidate assets to cover margin loans.
  • Another red flag raised by the newspaper’s sources regards the lack of information about Binance’s corporate structure. According to the report, Binance’s chief strategy officer, Patrick Hillmann, was unable name Binance’s parent company, as Binance has been going through a corporate reorganization for almost two years.
  • Differences between the total Bitcoin liabilities were also highlighted. The exchange’s proof of reserves shows that Binance was 97% collateralized, excluding assets lended to users through loans or margin accounts, indicating that the 1:1 ratio of reserves to customer assets was not achieved. Mazars’ letter states about the difference:
  • “We found that Binance was 97% collateralized without taking into account the Out-Of-Scope Assets pledged by customers as collateral for the In-Scope-Assets lent through the margin and loans service offering resulting in negative balances on the Customer Liability Report. With the inclusion of In-Scope Assets lent to customers through margin and loans which are overcollateralized by Out-Of-Scope Assets, we found that Binance was 101% collateralized.”


AI-Related Tokens Surge as Maple, Ren Fall: CoinDesk Market Index Week in Review

  • (FET), a blockchain-based project focused on artificial intelligence (AI), was the top performer this week among the 167 digital assets in the CoinDesk Market Index (CMI).
  • The FET token’s price has jumped from 6 cents at the start of the week to now 11 cents, surging 80% in the five days since Sunday and 30% in the past 24 hours alone.
  • The price jump came after the release of an upgrade to the wallet with features including “more easy-to-use messaging,” “fewer server interactions” and “faster load times.”
  • Numerai, a blockchain-based software that provides stock market forecasts and makes investments based on AI and machine learning, also saw its native token NMR’s price leaping from $11.6 to now $15.8, up nearly 40% in the past five days.
  • Cartesi (CTSI) and Adventure Gold (AGLD) both surged roughly 20% this week, respectively.
  • Losers included blockchain-based lending platform Maple Finance’s MPL token, which fell over 35% in the past five days as crypto firm Orthogonal Trading reportedly defaulted on loans on Maple Finance. MPL was recently trading at $4.50, up 2% in the past 24 hours.


Polygon Studios CEO: Our Company Is a ‘Funnel’ for Big Brand Partnerships

  • Polygon Studios, a subsidiary of the India-based blockchain creator, is a “funnel” for consumer-facing brands that want to jump into Web3, according to the media production company’s CEO, Ryan Wyatt.
  • Wyatt, previously head of gaming at YouTube, told CoinDesk TV’s “First Mover” on Friday the West Hollywood, California, company is leveraging its team of veteran developers, who understand “the polish of Web2 and the excitement, enthusiasm and nuance of Web3.”
  • “We’ve built this great funnel for partners to come through and make the onboarding to Polygon really seamless,” Wyatt said, referring to Polygon’s partnerships with companies including Nike, Reddit and Starbucks.


The Block CEO resigns after failure to disclose loans from Bankman-Fried’s Alameda

  • The Block Chief Executive Officer Michael McCaffrey resigned after failing to disclose a series of loans from disgraced former FTX head Sam Bankman-Fried’s Alameda Research. He was the only person with knowledge of the funding at the company.
  • Bobby Moran, The Block’s chief revenue officer, will step into the role of CEO, effective immediately, according to a company statement.
  • “No one at The Block had any knowledge of this financial arrangement besides Mike,” Moran said in a statement. “From our own experience, we have seen no evidence that Mike ever sought to improperly influence the newsroom or research teams, particularly in their coverage of SBF, FTX and Alameda Research.”
  • McCaffrey received three loans in total, the first of which was in the amount of $12 million and was used in 2021 to buy out other investors in the crypto news, data and research provider. He took over day-to-day operations as the CEO at that time. A second $15 million loan in January was used to help fund day-to-day operations, while another $16 million earlier this year was used to purchase personal real estate in the Bahamas.


Bitcoin’s Lightning Network Could Be Getting a Privacy Upgrade

  • The Lightning Network, Bitcoin’s layer 2 scaling platform, has a privacy problem. Receiving payments, requesting refunds, and opening and closing payment channels (connections between Lightning nodes) – all raise privacy concerns for users of the payment network.
  • Those concerns have inspired protocol-based solutions like “Basis of Lightning Technology 12” (BOLT 12), a proposed system that not only enhances privacy but also introduces many other useful features. (BOLTs are Lightning draft proposals similar to Bitcoin improvement proposals or BIP.)
  • Independent systems have also sprung up – notably, lnproxy, an invoice privacy tool (invoices are simply payment requests), and LNURL, a suite of tools for enabling communication between various Lightning applications and services over the web.
  • “BOLT 12 adds a ton of functionality to Lightning invoices. It also adds privacy,” said Jack Sweeney, communications manager at LN Capital, creators of Torq – capital management software for Lightning routing nodes – in an interview with CoinDesk. “The real difference between BOLT 12 and something like lnproxy is that BOLT 12 is a protocol-based solution, whereas something like lnproxy is an application layer solution.”
  • BOLT 12 introduces “offers” to the Lightning Network. According to the official BOLT 12 website, “offers are a precursor to an invoice” that enable key functionality such as reusable QR codes, the ability to both send and receive payments and of course, enhanced privacy.

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