Important things to pay attention to this week: CPI on Tuesday which is expected to be 7.3% (0.3% MoM) and FOMC on Wednesday which has a 75% probability of 50bps.
In other news, welcome the Crypto Legal Saga. First we saw various entities blow up over the last year, now we're going to enter a multiyear legal saga as these various cases enter the legal sphere.
Ranging from repercussions of fraud to regulatory clarity, the judgements made in the coming cases will shape the industry.
A few things to keep an eye on: Binance money laundering and sanctions violations, Do Kwon/ Terra, Grayscale/SEC spot Bitcoin ETF, SBF/FTX, Class action lawsuit, Ripple/SEC resolution, CBDC implementation, Influencer promotions.
We're in for some interesting times.
Weekend Recap & Daily Bullets: Monday, December 12th
- Do Kwon said to be residing in Serbia
- Justice Department considering charging Binance for possible money laundering and criminal sanctions violations
- The Block CEO resigned after failing to disclose loans from Alameda Research
- SEC filed first legal brief in Grayscale lawsuit over rejection of spot bitcoin ETF
- Class-action suit against Yuga Labs and MoonPay claims they used celebrities to misleadingly promote NFTs
- News organizations filed a lawsuit seeking to unseal the creditor’s names in FTX bankruptcy case
- Uniswap fee switch governance voting begins
- The Tron network's algorithmic stablecoin USDD fell under $0.97 - lowest since June
- Lodestar Finance, a lending platform on Arbitrum, was attacked and exploited for about $6.5M
- Vast reduction in the number of Twitter bots due to clamp down on scammers and bot accounts
- Chinese authorities arrested 63 people in association with a scheme that allegedly laundered 12B yuan ($1.7B)
- The Bank of England is seeking a proof of concept for a sample wallet for a CBDC
- Institutional crypto trading platform FalconX has 18% of its "unencumbered cash equivalents" locked on FTX
Now for a more expanded and detailed look at the day for those who like sources…
Crypto News:
- Do Kwon, who is wanted internationally in connection with the collapse of the Terra ecosystem, is said to have moved to Serbia through Dubai
- The Block CEO Michael McCaffrey resigned after failing to disclose a series of loans from Alameda Research. He was allegedly the only person with knowledge of the funding at the company
- Grayscale Investments said the SEC 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. The SEC argued its rejection was “reasonable, reasonably explained, supported by substantial evidence.”
- The crypto community is reporting a vast reduction in the number of bots responding to their posts as Elon Musk announcing clamp down on scammers and bot accounts
- Cathie Wood's Ark Investment Management bought 78,982 shares in Coinbase (COIN) - brings holdings to 5.7M COIN shares
- Crypto trading firm 3Commas denied its employees' stole user's API keys, claims fake screenshots are circulating on social media and urging affected users to file police reports to stop the perpetrators from stealing their funds
- Bermuda-based Jewel Bank is issuing a fully-backed stablecoin called Jewel USD (JUSD) that can be accessed through the Polygon network
- Bitcoin Group to buy German bank Bankhaus von der Heydt for more than $15M
- Symbiont.io, which almost a decade ago joined the rush of startups trying to bring crypto's underlying blockchain technology into conventional finance, filed for Chapter 11 bankruptcy protection on Dec. 1
- Asian $70M VC fund Sora Ventures is moving to Taipei in Taiwan in favor of a more crypto-friendly environment
Economic/Government/Regulatory:
- The U.S. Justice Department is continuing to consider charging Binance for possible money laundering and criminal sanctions violations
- California class-action suit against almost 40 people and companies, including Yuga Labs and MoonPay, claims they used celebrities to misleadingly promote and sell its NFTs. Celebrities such as Justin Beiber, Paris Hilton, Jimmy Fallon and Madonna, among others, were named as plaintiffs in a class-action lawsuit
- The Financial Times, The Wall Street Journal, The New York Times and Bloomberg filed a lawsuit seeking to unseal the creditor’s names of FTX
- Former Alameda Research CEO Caroline Ellison hired a former crypto regulator, Stephanie Avakian, at the U.S. SEC to represent her in an ongoing federal probe
- Cryptocurrency payments app MoonPay secured registration with the U.K.'s Financial Conduct Authority (FCA), signifying compliance with local money laundering rules
- Chinese authorities in Inner Mongolia arrested 63 people in association with a scheme that allegedly laundered 12B yuan ($1.7B)
- The Bank of England is seeking a proof of concept for a sample wallet for a Central Bank digital currency and will take applications through Dec. 23
Exchange News:
- Credit investment firms are looking to buy claims from FTX’s customers who could otherwise wait years to see any money. Opting to collect money now means settling for massive losses, with claims selling for cents on the dollar
- Institutional crypto trading platform FalconX has 18% of its "unencumbered cash equivalents" locked on FTX
- Bybit releases Merkle Tree-verified proof of reserves
DeFi News:
- Lodestar Finance, a lending platform on Arbitrum, was attacked and exploited for about $6.5M by manipulating the exchange rate of the plvGLP token. Copied Mango Markets attacker's methods
- Uniswap fee switch governance voting begins
- The Tron network's algorithmic stablecoin USDD fell under $0.97
- 0xPlasma Labs proposal to deploy Uniswap v3 to BNB Chain, from which additional $1B of TVL and 1-2M new users can be obtained
- Uniswap proposal aims to reduce friction in governance by reframing the steps that bring proposals to votes
- SushiSwap lost $30M in the past 12 months on incentives for liquidity providers
- 0xngmi forked RPC/Metamask to prevent privacy leaks
- The ENS DAO voting to choose stewards for three working groups who will oversee the activities of these sub-groups within the DAO
- PSA to Solana stakers: The validator you stake with could be secretly rugging your staking rewards
- Ledger debut browser extension – Ledger Connect. Starting in early 2023, Ledger customers will be able to use their hardware wallets to connect with Web3 apps
- Active bug in one of Saddle Finance's contracts. Currently, at least $566k worth of funds on Arbitrum are vulnerable
NFT/Gaming/Metaverse News:
- Mirror improved NFT embeds - showcase PFPs, art and music in posts by adding the NFT contract and token ID
Fundraises:
- Nillion, a web3 startup aiming to build a non-blockchain decentralized network, closed an oversubscribed round of more than $20M led by Distributed Global. Other investors include AU21, Big Brain Holdings, Chapter One, GSR, HashKey, OP Crypto and SALT Fund
- Evertas, a cryptocurrency insurance firm, raised a $14M Series A round led by Polychain Capital and also included SinoGlobal Capital, CMT Digital Ventures, Foundation Capital, Morgan Creek, Bloccelerate, network0, Matrixport, and HashKey
- Bitcoin miner TeraWulf (WULF) has raised around $10M of new capital to repay certain debts while also agreeing to purchase 8,200 new miners from Bitmain
- EXEVerse Labs, an Asia-based NFT company, secured $7.5M in funding from Berkwood Capital to accelerate the growth of its metaverse & Web3 products
- Liquid Access, a provider of a software-as-a-service (SaaS) platform for organizations to create and manage Web3-enabled digital assets, raised $3M in seed funding led by Flintera
- NFT gaming platform BalthazarDao's latest Private Round Token Sale of $2M at a $60M valuation led by Hive Empire Capital
Early Stage Projects:
- Oasys mainnet launches, trading of OAS tokens begins on major CEXs
- Layer Zero is now officially live on Metis Andromeda Mainnet
- Thala documentation, covering Move Dollar ($MOD), Thala Swap
- Introducing the Crypto Volatility Index $CVOL. A decentralized $VIX for crypto that lets you hedge against market volatility and impermanent loss
- Hexagate is launching on Avalanche to help identify transaction risks when interacting with dApps
- Filecoin - announcing the Hack FEVM Finalists - over 400 hackers built and showcased 117 projects with over $50,000 awarded
- OmniBTC won the 34th Polkadot parachain auction
- Galxe integrated with Aptos Network. Projects can now run campaigns for Aptos users and track chain info
- Encode x StarkNet Autumn Hackathon: Prizewinners and Summary
- Arbitrum Nitro node version v2.0.9. This release includes support for consensus v10, and adds support for running a validator without archive mode
- Sphinx (prev. Stark X), a natively cross-chain order book DEX on StarkNet
- Introducing: Inevitable Ethereum. A new wiki-style site dedicated to Ethereum, the World Computer
Data:
TL;DR: Uniswap is voting to turn on its fee switch to capture a portion of fees being paid. We can see that in November, Uniswap brought in $53.5M in fees. We can also see that Lodestar Finance was exploited for ~ $6.5M and TVL completely drained with only $11 left. We can also see that USDD has been depegged since early November and never recovered.
Uniswap:
Lodestar Finance:
USDD:
Research/Reads:
- Arthur Hayes - PEMDAS - source
- Glassnode - 2022 The Year On-chain - source
- Inside Binance’s Fight Against Crypto Crime - source
- FTX Contagion: Impact on DeFi - source
- 3Commas update on investigation into API keys and attacks on exchanges - source
- Maple Finance's $54M of Sour Debt Shows Risks of Crypto Lending Without Collateral - source
- GameFi Tokenomics Deep Dive - source
- TreasureDAO Ecosystem Inventory: The Nintendo of the Crypto Metaverse? - source
- Asset Risk Assessment: ApeUSD - A look into ApeCoin’s stablecoin ApeUSD - source
- Features & Timeline Sketched for Shanghai Upgrade - source
- Research on Real Yield Protocols - source
- MEV's new chapter: Beyond Ethereum's borders - source
- Understanding "Towards a Theory of MEV I" - source
- Message traps in the Arbitrum bridge - source
- Fully-homomorphic encryption, zero-knowledge proofs, and multiparty computation - source
- ProbabilitySpace: A New AMM for Prediction Markets - source
Crypto Twitterverse:
CPI and FOMC together this week for the first time in a while, Tues and Wed respectively.
Expected:
-7.3% CPI (0.3% MoM), previous 7.7% (0.4% MoM)
-6.1% Core CPI (0.3% MoM), previous 6.3% (0.3% MoM)
-75% odds for 50BPS increase, 25% for 75BPS, previous 75BPS.A few things:
— Tree of Alpha (@Tree_of_Alpha)
Dec 12, 2022
Binance’s “proof of reserve” report doesn’t address effectiveness of internal financial controls, doesn’t express an opinion or assurance conclusion and doesn’t vouch for the numbers. I worked at SEC Enforcement for 18+ yrs. This is how I define “red flag.
— John Reed Stark (@JohnReedStark)
Dec 11, 2022
1/ On a recent episode of Unchained's The Chopping Block, @hosseeb makes a surprising comment about the $1.1 billion DCG-Genesis promissory note.
He says the 10 year note may have been structured as "callable" in the event of a Genesis liquidation.
Here's what that would mean:
— Ryan Selkis 🥷 (@twobitidiot)
Dec 11, 2022
we're in the middle of $BTC mining capitulation, In past cycles, some $BTC miners had to go bankrupt before things got better for market.
Crypto Mining Company Argo Blockchain Filled For Chapter 11 Bankruptcy Today
— Symph (@h_bitcoiner)
Dec 10, 2022
I think 2023 will be a bloodbath for crypto startups:
1. Most ‘21/22 seed startups run out of money
2. Some get acquired
3. A few raise new rounds (>80% downrounds)
4. Tech salaries come down
5. Tech job titles deflate
6. VCs invest in other sectors (AI etc)— Alex Svanevik 🐧 (@ASvanevik)
Dec 12, 2022
We are aware of the concept of too much intervention from the platform, “too centralized” attacks, etc. There is a balance to how much we should intervene. Sometimes, these happen in free market, and we need to let it play out. 🙏 3/3.
— CZ 🔶 Binance (@cz_binance)
Dec 11, 2022
Did we miss anything or is there anything you want to discuss? We’d Love to hear your feedback and engage with the community! Feel free to leave a comment and let us know your thoughts on the Crypto market!
Subscribe to receive our brief daily and extended weekly newsletter along with in-house research content!