Block 1: Essential news
- Happy Birthday Bitcoins!
The cryptocurrency market leader blew out its 14th birthday this week. And yes, it has already been 14 years since the first block on the Bitcoin blockchain, called Genesis, was mined on January 3, 2009. Hovering around $0.001 when it first took its first steps, Satoshi Nakamoto’s work has since grown well with all its share of speculation, monetary ambition, decentralized spirit and has also given direction to the 20,000 cryptocurrencies in existence today.
- Coinbase has reached a $100 million settlement with regulators
The largest US cryptocurrency platform was forced to pay $100 million with the New York Department of Financial Services for negligence of anti-money laundering and know-your-customer standards within the firm. Specifically, Coinbase will pay a $50 million fine and invest another $50 million in strengthening internal compliance programs.
- Binance alone leads the race in the cryptosphere
While the past year has been particularly challenging for all players in the cryptocurrency ecosystem, Binance, the world’s largest cryptocurrency exchange, has continued to consolidate its leadership position. Binance can claim to have recorded 77.8% of spot cryptocurrency trading volume against only 9.8% for Coinbase, the main competitor. Binance also captured 92% of bitcoin spot trading in 2022.
- Gemini’s attack on Digital Currency Group to recover $900 million
To give you some context, Digital Currency Group is a very large entity comprising CoinDesk media, asset management firm Grayscale Investments, and the Genesis platform. In the wake of FTX’s collapse, Genesis announced it was halting customer withdrawals as $175 million evaporated in the Sam Bankman-Fried case. But the company also held Gemini client assets on one of its services that offer annual returns, Gemini Earn. These assets have also been frozen since Genesis. In the an open letter on TwitterGemini CEO Cameron Winklevoss says DCG (Digital Currency Group which owns Genesis) CEO Barry Silbert is running away from his responsibilities by refusing to pay $900 million to reimburse Gemini customers. The icing on the cake, the CEO of Winklevoss estimates that he has to repay a debt of 1.7 billion dollars to Genesis, which would allow him to pay the 900 million dollars to Gemini. The two leaders are expected to meet on January 8, 2023 to put this matter in order.
- BONK, the new crypto-canine jumped by 4400%
It is yet another copy of DOGE and SHIB. This cryptocurrency is displayed on his Official site : “BONK is the first dog-like cryptocurrency on Solana for the people and by the people.” It generated several tens of millions of dollars in trading volume within hours which accounted for 40% of the total volume traded on the Solana blockchain for a short period of time. This allowed him to multiply his course by 10 over the course of a week. Attention however, the concentration of tokens is in order given that only 20 addresses, out of more than 50,000 BONK holders, hold more than 50% of the total supply in circulation. Since the price peak of BONK on January 5, the price has already dropped by 70%. This crypto-meme is not based on anything concrete, the team remains unknown and has no fundamentals. The interest is purely speculative. This event will have at least allowed the Solana blockchain to regain some interest, but not for a good cause…
Block 2: Cryptic analysis of the week
It’s been hard lately to finish writing an article on the latest trending disaster before another game-changing disaster arrives. For this first week of 2023, we will focus on Sam Bankman-Fried. Yes again, but this may be the last cryptic analysis on the former FTX boss before October 2, 2023.
SBF is coming soon. pic.twitter.com/XYHmfud45H
— Dan Held (@danheld) January 3, 2023
Sam Bankman-Fried appeared in Manhattan court Tuesday to plead not guilty to several alleged felonies, including wire fraud and conspiracy.
Although some of his former colleagues at the now defunct FTX and Alameda Research have already pleaded guilty to their own fraud charges, the fact that Sam Bankman-Fried has continued to defend his version of events, which is to say that he “knew nothing of what had happened on the trading platform in which he held 90% of the shares and that he had made a mistake but had not knowingly committed any wrongdoing, did not surprise the court observers.They just raised their eyebrows.
Indeed, his defense has been heavily featured on his Twitter since FTX filed for bankruptcy in November, along with a whirlwind media tour during which Bankman-Fried has given numerous in-person and virtual interviews. Also, when we learned late last week that suspicious movements had appeared between the portfolios of Sam Bankman-Fried and Alameda Research, he again took to social media to defend himself: “None of them’ are me. I cannot and could not move any of these funds; I no longer have access to it. We are still waiting for light to be shed on these operations.
None of these are me. I am not and could not move any of those funds; I no longer have access to them.https://t.co/5Gkin30Ny5
— SBF (@SBF_FTX) December 30, 2022
Especially in the crypto arena, using tweets as a means of self-defense – or to promote the merits of a new cryptocurrency – seems to be the preferred option of the bosses of these crypto-banks. This was the case for Binance CEO Changpeng Zhao, who defended himself on Twitter when his platform’s financial strength was in doubt. Or, as we saw in Block 1, this was the case with the Gemini CEO’s open letter to lobby the DCG CEO. All of this is of course covered in considerable media hype which adds a layer of pressure to the gladiators defending themselves within the 140-character limit authorized by Twitter. The network that becomes the 3.0 arena of the cryptosphere.
Returning to FTX, the lawsuits against Sam Bankman-Fried showed that authorities are “increasingly comfortable” with classifying cryptocurrency crimes under the existing categories of securities, securities or commodities fraud. John J. Ray, the new CEO of FTX, said SBF’s stock was nothing special or new, just “good old-fashioned embezzlement.”
Will the Bankman-Fried trial — shaping up to be one of the most high-profile white-collar fraud trials in recent history — set by Presiding Judge Lewis Kaplan for October 2, 2023 change for cryptocurrency? In the meantime he will be free but will be under house arrest with mom and dad in Palo Alto, California, with an electronic bracelet, thanks to the highest bail ever asked in the United States: 250 million dollars.
But watch out, Lewis Kaplan has called SBF to order! You will not have the right to access accounts linked to FTX and Alameda Research, under penalty of withdrawing parole. Do you believe that he won’t find a subterfuge, or an innocent hand, to tamper with certain hidden accounts or funds in the next nine months?
Block 3: tops and flops
The evolution of the top 20 cryptocurrencies in terms of capitalization over a week.
(Click to enlarge)
Block 4: Readings of the week:
Sam Bankman-Fried’s troubles in Alameda began long before the cryptocurrency crash (Wall Street Journal)
Are Meta’s Horizon Labs up to par? Customers say yes… and no (wired)
Microsoft and OpenAI are working on a ChatGPT-based Bing to challenge Google (The Information)