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US SEC investigates Binance’s ICO, metaverse crypto assets up 400% YoY, and STEPN faces DDoS attacks: Hodler’s Digest, June 5-11

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US SEC investigates Binance’s ICO, metaverse crypto assets up 400% YoY, and STEPN faces DDoS attacks: Hodler’s Digest, June 5-11

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Anonymous hacker served with restraining order via NFT

In what’s perhaps an industry first, an anonymous defendant in an exchange-hacking legal case has received a temporary restraining order via NFT. The defendant is part of legal proceedings surrounding the January 2022 LCX exchange hack. Two legal firms served the “service token” NFT to the defendant as a restraining order, with the event touted as the first official NFT usage in the legal world.

FTX will not freeze hiring amid layoffs at other crypto firms, CEO states

As the crypto bear market presses on, some industry players have chosen to reevaluate staff numbers, but not FTX. The derivatives exchange will continue to add personnel, according to CEO Sam Bankman-Fried. In contrast, recent weeks have seen Gemini decrease its employee headcount and Coinbase curb new staff pickups. The last major crypto bear market in 2018 was worse in terms of employee cuts, however.

Lummis-Gillibrand bill establishes SEC-CFTC balance of power over crypto markets

A new bill from U.S. Senators Kirsten Gillibrand and Cynthia Lummis, subject to appropriate approvals, aims to regulate the crypto industry on a number of levels under the shared watch of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission. “Understanding that most digital assets are much more similar to commodities than securities, the bill gives the CFTC clear authority over applicable digital asset spot markets,” a government statement detailed. However, later comments from the two senators seem to contradict this view, with Lummis and Gillibrand seeing altcoins largely as securities.

Metaverse tokens up 400% year on year despite altcoin bloodbath

Although the overall crypto market has floundered in terms of price action, assets related to the Metaverse are up about 400% on average compared to May 2021, according to a Kraken Intelligence report. Despite the year-on-year gains, metaverse assets are down significantly in price over the last 30 days (as of Kraken’s May report). All crypto-asset sectors that Kraken evaluated showed a decline in price in the last 30 and 90 days. Over the course of 2022 thus far, NFT and blockchain-powered metaverse games have seen continued participation.

PayPal enables transfer of digital currencies to external wallets

In the latter half of 2020, PayPal’s platform welcomed crypto buying and selling, but the experience was restricted to the platform. Now, PayPal has made the move to allow the transfer of certain crypto assets to and from its platform, typically pending one-time verification of identity. Armed with a New York BitLicense, PayPal has opened the feature to certain customers but aims to broaden the availability in the weeks ahead.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $29,066, Ether (ETH) at $1,682 and XRP at $0.38. The total market cap is at $1.18 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Helium (HNT) at 35.12%, Chainlink (LINK) at 22.63% and UNUS SED LEO (LEO) at 12.29%. 

The top three altcoin losers of the week are Elrond (EGLD) at -25.25%, Waves (WAVES) at -25.02% and Convex Finance (CVX) at -24.90%.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“I thought [Anchor Protocol] was going to collapse from the beginning (I designed it), but it collapsed 100%.”

Mr. B, Anchor Protocol developer

“The idea of absolute fixed money is something that we’ve never seen in history.”

Ali Hamam, chief marketing officer and co-founder of Tahini’s

“The approach is very simple: We aren’t going to ignore [the crypto] market. We want to extract the maximum profit from the innovative potential these technologies give us.”

Galymzhan Pirmatov, chairman of the Kazakhstan National Bank

“For wealth management firms, digital assets are a US$54bn revenue opportunity— that most are ignoring.”

Accenture

“[Myself and my wife] believe that kids should learn things that will be needed in the future, rather than what we think is needed now.”

Marcin, father of Amelia (creator of Ami’s Cats NFT collection)

“What’s incredible about crypto is that it has the potential to decentralize power and give rise to economies that are struggling.”

Nikki Farb, venture partner at Headline

Prediction of the Week 

Bitcoin will finish 2022 ‘flat, possibly up’ says analyst as Saylor bets on $1M BTC

Bitcoin’s price traded mostly sideways this week, largely between $29,000 and $32,000, according to Cointelegraph’s BTC price index.

A historically bullish figure in the crypto space, Fundstrat co-founder Thomas Lee spoke about Bitcoin’s price with less exuberance, seeing the potential for sideways action to close out 2022, although he left the door open for it going “possibly up.”

Meanwhile, the ever-bullish CEO of MicroStrategy, Michael Saylor, ultimately sees BTC in terms of an all-or-nothing outcome — $0 or $1 million per coin. He, however, thinks BTC has already counted out $0 as an outcome, leaving his $1 million expectation on the table.

FUD of the Week 

Lithuania aims to tighten crypto regulation and ban anonymous accounts

Additional government-approved crypto regulatory requirements could come into play in Lithuania, pending parliamentary action. Among other details, the requirements include banning anonymous crypto accounts. The rationale behind this move is to decrease money laundering and prevent Russian elites from evading sanctions. The start of 2023 would see the brunt of the new rules come into play.

Blockchain-based move-to-earn app STEPN under DDoS attacks after upgrade

STEPN, a crypto project game rewarding users for physical activity, recently added a mechanism called STEPN’s Model for Anti-Cheating (SMAC) to its platform. The upgrade aims to cut down on cheating in the game. A number of difficulties ensued after the upgrade, however, including denial-of-service (DDoS) attacks. The project aimed to correct its servers within a specific timeframe, although the self-imposed deadline passed with no updates announced.

Bad day for Binance with SEC investigation and Reuters exposé

Binance is the subject of an investigation by the U.S. Securities and Exchange Commission. The probe questions if the exchange’s 2017 initial coin offering of its BNB asset was in line with regulatory standards. 

An article from Reuters additionally claimed that a significant amount of funds tied to nefarious activities filtered through Binance’s platform between 2017 and 2021. A spokesperson from Binance denied the article’s allegations. Binance also refuted the claims in a detailed blog post.

Best Cointelegraph Features

Thailand’s crypto islands: Working in paradise, Part 1

Increasing numbers of crypto digital nomads are heading to live and work on tropical islands such as Thailand’s Koh Pha-ngan. Maybe you should join them.

A life after crime: What happens to crypto seized in criminal investigations?

Like with any kind of property, law enforcement has the right to sell your coins and spend the money.

Crypto 401(k): Sound financial planning or gambling with the future?

Cryptocurrencies may be coming to Americans’ retirement plans. Some see it as a sound financial strategy, while others remain skeptical.

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Record Investment Outflows of $423 Million Led to Crypto Bloodbath

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Record Investment Outflows of $423 Million Led to Crypto Bloodbath

Last week saw record outflows of $423 million from crypto assets, according to CoinShares.

The report found that the outflows last weekend were likely responsible for bitcoin’s decline to $17,760. Analyst James Butterfill said: “The outflows were solely focussed on bitcoin, which saw net outflows for the week totaling US$453m.”

BTC outflows bring down institutional investments 

Therefore, if bitcoin is removed from the calculations, Ethereum contributed an inflow of around $11 million while other alts also added minor positive flows, aggregating inflows to the extent of $70 million. 

This was Ethereum’s first inflow after 11 consecutive negative sessions according to CoinShares.

In the past week, the BTC market has slid under the $20,000 level twice. Short-bitcoin saw inflows of $15 million due to the launch of the first U.S.-based short investment product in the week in question, the report noted.

[1/5] This week’s Digital Asset Fund Flows Report is now available! Written by @jbutterfill, the headline for this week is: Record US$423m outflows last week while Short-Bitcoin saw inflows of US$15m. Read on for the highlights -> pic.twitter.com/eIalnFhacv

— CoinShares 👩‍🚀 (@CoinSharesCo) June 27, 2022

Benefits of a crypto bear market

Similar wide margins were last seen in the previous negative peak, in terms of outflows, in Jan at $198 million.

However, in relative terms, Butterfill remarked that the week did not witness the largest negative flows against total assets under management (AuM). 

“This record occurred during the bear market in Feb 2018 where outflows representing 1.6% of AuM were witnessed, while the outflows last week were the third largest on record, representing 1.2% of AuM,” the report noted.

According to FTX CEO Sam Bankman-Fried, the Federal Reserve’s decision to aggressively increase interest rates was the main reason behind the market crash.

But despite the bearish sentiments, some crypto bosses are optimistic about the results of a market downturn. Charlie Silver, founder of Permission.io told Insider: ” There are hundreds of firms that are built on hype and not substance. It will be good for the industry to have them go away.”

“Bear markets are healthy because it resets valuations to reality and flushes out the bad actors. There are many cryptos that are true Ponzi schemes, that pay investors only with new investor money. When the new money dries up the project falls apart,” Silver added.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Uzbekistan warms up to Bitcoin mining, but there’s a catch

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Uzbekistan warms up to Bitcoin mining, but there’s a catch

The executive order spares all the mined assets from taxation and bans mining anonymous currencies.

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Uzbekistan warms up to Bitcoin mining, but there’s a catch

The National Agency of Prospective Projects (NAPP) in Uzbekistan announced its demands toward crypto mining operators. It would only allow the companies that use solar energy to mine Bitcoin (BTC) or other cryptocurrencies. 

The normative act on the government page, dated June 24, describes the confirmation of “Guidelines on the registration of the crypto assets mining,” and sets the finalization date on July 9. The second article of the document offers an uncompromising wording:

“Mining is being carried out only by the legal entity with the use of electric energy, provided by a solar photovoltaic power plant.”

As a further complication, the miners should own the solar photovoltaic power plant that they will use for energy.

The executive order also obliges any mining operator to obtain a certificate and register in the national registry of crypto mining companies. This procedure demands a brief list of documents, and should take no more than 20 days from submitting to the final decision to the licensing body. The certificates would be valid for one year after the registration.

Related: Go green or die? Bitcoin miners aim for carbon neutrality by mining near data centers

All the currency generated from mining activities would be spared taxation, though the mining farms would face the special tariffs on the consumed energy set by the Uzbekistan government. But, the trade operations with mined assets would have to be conducted only on the exchange platforms that are registered in Uzbekistan. The mining of anonymous cryptocurrencies would be prohibited.

In April 2022, the freshly-restructured NAPP became Uzbekistan’s exclusive crypto regulator with the mission to adopt a special crypto regulation regime in the country. This move came in a row of initiatives launched by the Uzbekistan President Shavkat Mirziyoyev to provide the regulatory framework for crypto. In September 2018, Mirziyoyev signed a law prohibiting local firms from launching their crypto exchanges in Uzbekistan. The law only offered legal status to crypto exchanges established by foreign legal entities.

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Celsius denies allegations on Alex Mashinsky trying to flee US

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Celsius denies allegations on Alex Mashinsky trying to flee US

Celsius CEO Alex Mashinsky wasn’t trying to leave the U.S. last week but has continued to work on recovering liquidity and operations, the company has claimed.

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Celsius denies allegations on Alex Mashinsky trying to flee US

Troubled crypto lending firm Celsius is putting their best foot forward to recover operations alongside CEO Alex Mashinsky, who currently stays in the United States, the company has claimed.

A spokesperson for Celsius has denied rumors that the company’s CEO tried to flee the U.S. last week amid the ongoing liquidity crisis of the Celsius Network.

The representative told Cointelegraph on Monday that the firm continues working on restoring liquidity, stating:

“All Celsius employees — including our CEO — are focused and hard at work in an effort to stabilize liquidity and operations. To that end, any reports that the Celsius CEO has attempted to leave the U.S. are false.”

Celsius’ statement came shortly after Mike Alfred, co-founder of the crypto analytics firm Digital Assets Data, took to Twitter on Sunday to claim that Mashinsky attempted to leave the country last week via Morristown Airport in New Jersey.

Citing an anonymous source, Alfred alleged that Celsius’s CEO was trying to go to Israel. “Unclear at this moment whether he was arrested or simply barred from leaving,” he added.

Alfred’s claims followed a massive GameStop-like “short squeeze” of Celsius, with Celsius’ native token Celsius (CEL) jumping 300% in one week by June 21. CEL price also abruptly rallied more than 600% on June 14, with analysts attributing the event to an exchange glitch or liquidation of short traders.

At the time of writing, CEL is trading at $0.741, down around 5% over the past 24 hours, according to CoinGecko. Celsius’ native token is still up more than 160% over the past 14 days.

Celsius Network token (CEL) 30-day price chart. Source: CoinGecko

Some industry observers in the crypto community have expressed skepticism about Alfred’s tweets about Mashinsky, with many considering his allegations as FUD.

If @Mashinsky attempted to leave the country this week, why are you reporting it now exactly when the CEL price is going down? Seems very coincidental Mike Alfud. And why no mainstream media or crypto media is reporting this? #CelShortSqueeze https://t.co/ynJbzWib9o

— Otis — #CelShortSqueeze ©️ ⚡️ (@otisa502) June 27, 2022

As previously reported by Cointelegraph, Celsius officially announced that it would be “pausing all withdrawals, swaps and transfers between accounts” on June 13. United States regulators subsequently started an investigation into Celsius as multiple accounts on the network were frozen.

Related: South Korean prosecutors ban Terraform Labs employees from exiting the country: Report

According to some analysts, Celsius’ liquidity issues should be attributed to shortcomings of the existing crypto lending model in general, as other lenders in the market have faced similar problems recently.

Celsius has been working hard to fix the consequences of the platform’s liquidity crisis, reportedly onboarding advisers and restructuring consultants to help the platform handle potential filing for bankruptcy. On June 18, Celsius’ lead investor BnkToTheFuture and its co-founder Simon Dixon offered to assist the network by deploying a recovery plan.

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