Friday, 8 September 2023

Market Summary

Market Summary 8 September 2023

Bitcoin Price: US$ 26,255.00 (+1.92%)
Ethereum Price: US$ 1,648.11 (+0.92%)  


On September 7th, Binance, the world’s leading cryptocurrency exchange, announced the successful integration of Ethereum (ETH) on the zkSync Era network, allowing for the opening of deposits and withdrawals for Ethereum tokens on this network. Meanwhile, the U.S. Commodity Futures Trading Commission (CFTC) has initiated legal action against three decentralised finance (DeFi) entities—Opyn, Inc., ZeroEx (0x), Inc., and Deridex, Inc.—for offering illegal derivatives trading via blockchain-based protocols and smart contracts. The CFTC has imposed penalties of $250,000, $200,000, and $100,000 on Opyn, ZeroEx, and Deridex, respectively, and emphasised that DeFi operators cannot evade regulatory scrutiny by relying on smart contracts. Notably, Jason Somensatto, formerly from 0x Labs, is now head of policy in North America for Chainalysis, possibly indicating a connection between the CFTC and ZeroEx. Furthermore, a lawsuit filed in California against Michael Egorov, CEO of DeFi powerhouse Curve Finance, was dismissed due to jurisdictional issues, as Egorov had not resided in California during the alleged misdeeds in 2020. The plaintiffs, venture capital firms ParaFi Capital, Framework Ventures, and 1kx, have been pursuing a breach-of-contract case against Egorov in Switzerland and have accused him of moving to Switzerland to evade legal consequences. This development comes as Curve Finance maintains its position as a prominent DeFi trading platform, with approximately $4.07 billion in total locked value on the Ethereum blockchain. Legal representatives on both sides express their differing views on the jurisdictional matters.

Caroline Pham, a member of the Commodity Futures Trading Commission (CFTC), has proposed the creation of a limited pilot program to regulate cryptocurrencies in the United States. Pham suggests that the CFTC should establish this time-limited initiative to facilitate compliant digital asset markets and tokenisation. The program would incorporate various components from past pilot programs, including registration and eligibility requirements, financial resources, risk management, product and contract terms, as well as disclosures and reporting. Pham has been active in advocating for crypto initiatives, including joint roundtables with the Securities and Exchange Commission (SEC). However, the CFTC’s leadership under Chairman Rostin Behnam, a Democratic appointee, has not shown a strong pro-crypto stance, leaving the industry awaiting potential Congressional regulations. Meanwhile, a policy paper commissioned by the G20, featuring input from the Financial Stability Board (FSB) and the International Monetary Fund (IMF), emphasises that blanket bans on cryptocurrencies are not effective in mitigating risks. Instead, the report advocates comprehensive regulatory oversight to address macroeconomic and financial stability risks associated with crypto-assets. It highlights the importance of strengthening monetary policy frameworks, addressing capital flow volatility, and establishing clear tax treatment for cryptocurrencies. The IMF and FSB suggest that jurisdictions could consider targeted and temporary restrictions to manage specific risk factors during stressful times or while they develop internal solutions. In a related development, Coinbase has identified the European Union, United Kingdom, Canada, Brazil, Singapore, and Australia as near-term priority markets due to their clearer crypto regulations. Coinbase intends to focus on acquiring licenses, registering, and strengthening its operations in these regions. The exchange sees progress in global crypto regulation but expresses concern over the U.S.’s approach, characterised by enforcement and legal actions. Coinbase is facing regulatory scrutiny in the U.S., with the Securities and Exchange Commission (SEC) accusing it of selling unregistered securities and operating illegally. This international expansion aligns with Coinbase’s “Go Broad, Go Deep” phase, involving partnerships with global and local banks and payment providers to enhance its fiat onramps and ensure regulatory compliance.

Binance CEO Changpeng ‘CZ’ Zhao has addressed recent concerns about the exchange, emphasising that the company’s financial position remains strong and there are no liquidity issues. He attributed the negative sentiment, or FUD (fear, uncertainty, doubt), to various factors such as rumors, lawsuits, employee departures, and regulatory challenges. Despite some key executive departures, CZ explained that employee turnovers are commonplace in a rapidly evolving industry like cryptocurrency. CZ also highlighted Binance’s achievements, including new product launches, fiat channel openings, market expansions, and legal victories. Meanwhile, ARK Invest, a firm led by crypto advocate Cathie Wood, has expressed caution about the remainder of 2023, citing concerns related to interest rates, GDP estimates, unemployment, and inflation. ARK points out that the Federal Reserve’s restrictive monetary policy and the divergence between GDP and GDI (income) could impact the crypto market’s prospects for a bullish run. Additionally, Cisco’s Talos Intelligence has revealed that hackers have been using a Windows tool to deploy cryptocurrency-mining malware since November 2021. The attackers exploit Windows Advanced Installer to execute malicious scripts on infected computers primarily used for 3D modeling and graphic design. The attacks predominantly affect users in French-language-dominant countries like France and Switzerland but have also been detected in other countries. The attackers establish backdoors to mine cryptocurrencies using programs like PhoenixMiner and lolMiner, which rely on the victim’s GPU capabilities. This type of attack, known as cryptojacking, involves secretly using a device’s resources for unauthorised cryptocurrency mining.

In a recent announcement, the FBI has identified the North Korean Lazarus Group as responsible for the $41 million hack of the crypto gambling platform Stake, attributing it to a group that has already stolen over $200 million in cryptocurrencies in 2023. Stake, a crypto gambling site, was targeted in a cyberattack on September 4, resulting in the theft of cryptocurrency from its hot wallets. The FBI has provided information on the addresses where the stolen funds are held, spanning Bitcoin, Ethereum, BNB Smart Chain, and Polygon networks, advising caution in transactions involving these addresses. Additionally, the FBI linked Lazarus to other recent hacks, totaling over $200 million in losses. Meanwhile, Chinese tech giant Tencent has unveiled its AI system “Hunyuan,” similar to OpenAI’s ChatGPT, marking its entry into foundational AI models. The system aims to provide a comprehensive suite of AI tools and has been integrated into Tencent’s ecosystem of applications and services. This development comes amid ongoing US-China tensions, including an export ban on certain computer chips used in AI development. Lastly, seven leaders in decentralised finance (DeFi) have formed the Tokenized Asset Coalition (TAC), with Aave Companies, Centrifuge, Circle, Coinbase, Base, Credix, Goldfinch, and as founding members. TAC’s mission is to promote public blockchains, asset tokenisation, and institutional DeFi. It will engage in various activities, including member calls, publications, events, and the creation of working groups, to advance the tokenisation of real-world assets and enhance financial system efficiency through blockchain technology.




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