FTX Customers, Investors Will Testify Against Sam Bankman-Fried, DOJ Says

Federal prosecutors want to call former FTX customers, investors and employees in its upcoming trial against onetime crypto executive Sam Bankman-Fried, the Department of Justice confirmed in a pair of Saturday filings.

The customers and investors who owned FTX shares can speak to their expectations of how FTX would hold their funds, while the cooperating witnesses can speak to “their interactions with the defendant and their understanding of the purpose of certain statements and actions of the defendant,” a letter signed by Assistant U.S. Attorney Thane Rehn said.

“In each of these cases, the anticipated testimony about how the witnesses understood their relationship with the defendant and his companies, and their interpretation of statements made by the defendant and his agents, is directly relevant to the issues in dispute at trial, and is probative of how reasonable persons would have interpreted and understood representations made by the defendant regarding FTX’s treatment of customer assets and other issues,” the letter said.

The DOJ intends to call retail customers who “transferred tens of thousands of dollars worth of assets” and institutional clients who moved “tens of millions of dollars worth of assets” to FTX, with the expectation that the exchange would custody these funds, the letter said.

The letter did not identify any of the prospective witnesses or say how many the DOJ intends to call. A second letter said the customer witnesses are likely to testify for less than 30 minutes each “and will involve minimal, if any, exhibits.” The DOJ identified former FTX Chief Technology Officer Gary Wang, former FTX Head of Engineering Nishad Singh and former Alameda Research CEO Caroline Ellison as three cooperating witnesses who all pled guilty to charges tied to the exchange and will testify. Another former FTX executive, Ryan Salame, pleaded guilty to charges but hadn’t agreed to testify as of a few weeks ago. The DOJ is also planning to call forward at least another two witnesses to testify under a grant of immunity, but has not publicly identified them yet.

Ukrainian customer

One of the customer witnesses, which the DOJ identified as “FTX Customer-1,” lives in Ukraine and cannot easily travel to the U.S. for both legal and logistical reasons, the second letter said. Because of the war in Ukraine, the customer needs permission from the government to leave the country. Should that permission be granted, the logistics of getting the customer to the U.S. would “take at least approximately three days” (and another three days back) and require multiple forms of travel.

The DOJ is asking the judge to approve testimony via video conference, supervised by a U.S. government official possibly at the embassy, instead of requiring in-person testimony. The defense does not agree to the motion, the DOJ said.

“To obtain likely less than 30 minutes of testimony from overseas FTX customer witnesses, however, requires, for at least some countries, coordinating with local authorities, arranging multi-day travel itineraries to accommodate varying time changes and travel delays, and incurring significant costs associated with such arrangements. Notwithstanding those hurdles, the Government is in the process of arranging for some overseas FTX customers to travel to New York to testify,” the letter said.

Inner City Press first reported on the letter about a Ukrainian witness.

Bankman-Fried’s trial starts next week, with voir dire – the jury selection process – kicking off on Oct. 3. Opening statements may then begin as soon as Oct. 4.

Millions in Ether Tied to FTX Account Drainer on The Move

Around 2,500 ether (ETH), worth just over $4 million, tied to last year’s apparent exploit of the FTX exchange started moving early Saturday, blockchain data shows.

Railgun is a privacy wallet that lets users store tokens and use funds for decentralized financial services, such as lending and borrowing. These transactions are shielded, meaning the exact use of such funds is not known.

On the other hand, Thorchain is a bridge that lets users swap tokens between different blockchains without revealing their wallets.

There is still 12,500 ETH (worth around $21 million at current prices) sitting in the original wallet.

Accounts tied to FTX and FTX US were drained on Nov. 11, 2022, mere hours after the company filed for bankruptcy and founder Sam Bankman-Fried resigned from the crypto empire he ran. The attacker took over $600 million worth of ether at the time. In a since-deleted tweet, the-then FTX general counsel Ryne Miller said the exchange was taking “precautionary steps” to secure funds from other FTX wallets.

The attacker(s) who made off with the funds was(were) never identified. Some 21,500 ETH, worth $27 million at the time, were converted into the stablecoin DAI a few days after the hack. Another 288,000 ETH remained in some of the addresses affiliated with the attacker.

Saturday’s transactions come days before Bankman-Fried goes on trial in the U.S. over fraud and conspiracy to commit fraud charges filed by federal prosecutors last December. Bankman-Fried has pleaded not guilty to all charges, though other former FTX and Alameda Research executives have pleaded guilty; some are expected to testify against their former boss.

DOJ’s Proposed Jury Questions ‘Risks Tainting’ Bankman-Fried’s Panel, Defense Says

Some of the U.S. Department of Justice’s proposed juror questions could bias either miss juror biases or prejudice potential jurors into thinking Sam Bankman-Fried was guilty before the trial begins, the FTX founder’s defense team charged in a late Friday filing.

“As a general matter, the Government’s proposed voir dire discourages full disclosure from potential jurors, fails to elicit sufficient information to allow the defense to ascertain potential juror bias, and risks tainting the jury by presenting the allegations in a prejudicial manner,” attorney Mark Cohen wrote.

Specifically, the defense team believes that omitting the word “allegedly” when describing the crimes Bankman-Fried is accused of “improperly suggests that fraud by Mr. Bankman-Fried is an established fact,” Cohen wrote. Other questions are too limited and may not reveal if the potential jurors might be predisposed to agreeing with prosecutors just because they’re part of the federal government or if they lost money in crypto “that they believe was the result of wrongdoing.”

Other proposed questions would provide potential jurors with instructions, Cohen wrote.

“Finally, we specifically object to Question 31, which seeks to elicit irrelevant information,” he concluded. “The question asks whether potential jurors or their close friends or relatives have ‘ever been stopped or questioned’ by law enforcement. This question appears designed to elicit information concerning potential jurors’ encounters with law enforcement and law enforcement practices that disproportionately affect people of color. Neither race nor police misconduct are relevant to the instant case, and this question risks improperly excluding potential jurors on the basis of race.”

The DOJ and defense both proposed voir dire questions to the judge on Sept. 11. Attorneys with the DOJ objected to Bankman-Fried’s proposed questions a few days later, saying some of them are “unnecessarily intrusive” about the potential jurors’ existing thoughts on FTX and its related companies, as well as the case.

Like Friday’s filing from the defense, the DOJ objections also alleged that some of the proposed questions seemed designed to prime potential jurors into believing certain defense arguments and otherwise bias them toward Bankman-Fried prior to trial.

Voir dire is set to begin on Oct. 3. CoinDesk asked New Yorkers in lower Manhattan if they’d heard of FTX or Bankman-Fried earlier this month to gauge what a random selection of individuals might say.

As of this writing, a court schedule expects jury selection to last no longer than a day.

In a separate filing earlier on Friday, the defense team said it had no problems with the judge granting immunity to two unnamed witnesses. Judge Kaplan asked if the defense would ask that the witnesses first invoke their Fifth Amendment right to not potentially incriminate themselves first during a hearing on Thursday.

BlockFi Says It’s Taken Major Step Toward Emerging From Bankruptcy

BlockFi’s creditors have approved its bankruptcy restructuring plan, clearing one of the final hurdles in a months-long process to wind down the firm’s business and reimburse its clients, a Friday email from BlockFi to its creditors shows.

The beleaguered crypto lender was among a rash of digital asset companies that froze their customers’ accounts and eventually collapsed after FTX blew up last fall. The restructuring plan, which more than 90% of creditors approved, will enable BlockFi to recover the assets it lost to crypto exchange FTX and failed hedge fund Three Arrows Capital, allowing the lender to put more money in creditors’ pockets, the company said.

“Success in this [process] could increase client recoveries, depending on the product and jurisdiction,” according to the notice sent to creditors.

Lawyers for BlockFi did not immediately respond to CoinDesk’s request for comment.

A bankruptcy court must greenlight the plan to finalize it, BlockFi said in the email. Once it’s approved, the company will be cleared to distribute the related funds to its creditors.

Customers holding funds in BlockFi Interest Accounts or BlockFi Retail Loans should get their funds back within the next few months, the company said. The company will also continue to distribute funds to BlockFi Wallet clients, it said.

Edited by Jesse Hamilton.

The Most Pressing Issue on Ethereum is Validator Size Growth

On Thursday, September 14, Ethereum protocol developers made a last-minute decision to include an additional code change in the forthcoming Cancun/Deneb upgrade as a stopgap to the issue of validator set size growth. The short timeframe under which this decision was made has sparked controversy in the Ethereum community. Anthony Sassano, the creator of Ethereum-focused media site The Daily Gwei, said the decision “needed a lot more discussion, research, and thought.” Ryan Berckmans, founder of Ethereum payments app 3cities, tweeted that in his view the situation was not urgent enough to warrant a change to the Cancun/Deneb upgrade.

Christine Kim is a Vice President on the Research team at Galaxy Digital. This op-ed, part of CoinDesk’s “Staking Week,” is based on information and data from a Galaxy Research report called “Paths Toward Reducing Validator Set Size Growth.” To read the full report, visit galaxy.com/research.

Though it only took one week for Ethereum protocol developers to come to consensus about making a change to Cancun/Deneb, the larger issue of Ethereum’s validator set size growth has been a major topic of discussion and concern among developers for months. On July 13, when the proposal to cap the validator churn limit in Cancun/Deneb was first raised by “Dapplion,” a pseudonymous developer for the Lodestar client, on ACDC #113, developers acknowledged the time-sensitive nature of the matter. “The [validator attestation] aggregation is almost at its capacity today. If we drop more validators on the network, it can really get worse,” said Mikhail Kalinin, a developer for the Teku client, on the call.

During testing for a new Ethereum test network called Holesky, developers noticed that at 2.1mn validators, which was three times the size of Ethereum’s mainnet validator set at the time, the testnet struggled to finalize due to an excessive number of attestations (messages) being propagated through Ethereum’s peer-to-peer network. Eventually, developers settled on designing Holesky to support two times the size of Ethereum’s mainnet validator set, or 1.4 million validators. Once Holesky launches, it will be an invaluable resource for developers to monitor and assess both the health of Ethereum, as well as future code changes, on a large validator set.

However, the rate at which Ethereum’s validator set size is growing will soon make Holesky’s value obsolete. As of September 15, 2023, there are 806,759 active validators on Ethereum. Since the activation of staked ETH withdrawals in the Shanghai/Capella upgrade on April 12, the number of active validators has increased 43%. Without developer intervention, the number of Ethereum validators is set to exceed 1 million by the end of this year, assuming the maximum number of validators are activated on Ethereum, and no validators exit the network. Ethereum mainnet will reach a validator set size of 1.4 million under these same assumptions by March 2023.

Ethereum Improvement Proposal (EIP) 7514 caps the growth of the validator set to eight validator entries per epoch (~6.4 mins). The addition of EIP 7514 to Cancun/Deneb buys developers a few more months to address the issue of validator set size growth, as the following chart shows:

(Galaxy Digital)

Notice from the chart, though, that this upgrade only buys developers roughly two more months of time before Ethereum’s validator set size grows beyond the size of its largest testnet Holesky. Projections about the validator set featured in the chart above are based on two key assumptions. The first assumption is that Cancun/Deneb is activated in January 2024. The second assumption is that the staking appetite by Ethereum holders is sustained above the maximum churn for the next several months. This may not be the case given that the number of validators in the entry queue has been declining. The following chart depicts the total number of Ethereum validators in the entry queue since the Merge upgrade last year:

(Galaxy Digital)(Galaxy Digital)

Though it is difficult to predict how quickly the Ethereum validator set will grow, it is likely to grow by some measure over the next several months because of the proliferation of liquid staking solutions. Liquid staking solutions lower the barrier to entry for many users to stake their ETH by allowing ETH holders to stake under the 32 ETH threshold and do so without giving up the full liquidity of their asset. Therefore, it’s likely that the problem of a growing validator set is an issue that will only continue to get worse over time if left unaddressed.

Despite the rather last-minute nature of the decision on September 14, developers have acted prudently by including EIP 7514 in Cancun/Deneb. Instead of gambling with the future of Ethereum, developers are correcting their lack of foresight by including a code change that will ensure a predictable maximum growth rate for the validator set of Ethereum while buying time to work on a more significant upgrade that will almost certainly be necessary. One week before the decision on EIP 7514 was made, protocol developers were not aligned on the severity of Ethereum’s validator set size issue, but the rapid turnaround time for consensus on this decision highlights how developers have agreed that this change is the safest to protect a network worth billions of dollars.

And the conversation about Ethereum’s validator set size growth does not end with EIP 7514. As discussed, EIP 7514 simply buys Ethereum developers more time to design long-term solutions, but not that much time. If appetite for staking on Ethereum does not meaningfully abate over the next several months, the size of Ethereum’s validator set will become problematic with or without EIP 7514. Whether developers should consider a more aggressive cap on validator churn, devote more time to researching ways to increase the effective validator balance, or consider different long-term solutions, are all topics of conversations that protocol developers will have in the months ahead.

It is of utmost importance that the broader Ethereum community participates in these discussions, and this time, the broader Ethereum community should not be caught off guard. Awareness about EIP 7514 may be the starting point for many in the Ethereum community about the issue of validator set size growth but it certainly should not be the last time the community speaks up about this issue. There are more radical changes to validator economics and network monetary policy that protocol developers are exploring to address validator growth in the medium to long run.

The Ethereum community has a responsibility to hold developers accountable in their decision-making process about the development of the Ethereum protocol. Instead of slowing the decision-making process, members of the Ethereum community should be driving this process by making their voices heard about the most pressing issues on Ethereum. Rather than oppose this upgrade due to its urgency, the community should be pushing for its inclusion, because the issue at stake is real, serious, and urgent.

To learn more about the issue of validator set size growth on Ethereum and long-term solutions already being considered by developers to address this issue, read the full Galaxy Research report here. Legal Disclosure: This document, and the information contained herein, has been provided to you by Galaxy Digital Holdings LP and its affiliates (“Galaxy Digital”) solely for informational purposes.

Edited by Ben Schiller.

Bitcoin’s Slips Below $27K, But What Might Government Shutdown Mean for Prices

While Bitcoin (BTC) remains on track to end its six-year streak of September losses, a modest pullback ahead of what could be an imminent federal government shutdown could put this month’s advance in jeopardy.

The largest crypto by market capitalization changed hands at $26,800 during Friday afternoon hours, posting a 3.2% return this month so far. However, BTC has declined 1.6% from the $27,400 it touched for a short time on Thursday.

Extending this weak price action into the weekend could put BTC’s provisional positive monthly return in jeopardy as the crypto began September at just about $26,000.

Ether (ETH) traded mostly flat at around $1,660, as market participants anticipate futures-based exchange-traded funds (ETF) to go live early next week.

Ripple’s XRP, Solana’s SOL and the Tron network’s native token TRON posted 3%-5% gains, outperforming the broader digital asset market. The CoinDesk Market Index (CMI) was down 0.5%.

What does the government shutdown mean for crypto

“The oppressive macro uncertainty is still a major headwind,” Noelle Acheson, macro analyst and author of Crypto Is Macro Now newsletter, noted Friday. “Bond markets around the world are flashing signs of distress, as yields have reached multi-year records in the US, UK, Germany and Japan to name just a few markets.”

She added that the looming U.S. government shutdown adds to the uncertainty and noted that the U.S. consumer spending growth in Q2 was revised lower, an indication that consumers might not be that resilient to tightening financial conditions.

“As scary as this may sound, during the 21 government shutdowns [in the past] the S&P 500 rose 55% of the time, generating an average return of 0.3%,” advisory firm Asgard Markets wrote in a Friday market report.

Returns of the S&P 500 during past U.S. government shutdowns (Asgard Markets)

Digital asset investment firm NYDIG said that the government shutdown could delay regulatory decisions, as the U.S. Securities and Exchange Commission (SEC) staff will be radically reduced.

“A spot bitcoin ETF will have to wait until after SEC employees come back from a potential furlough,” Greg Cipolaro, NYDIG’s head of research, wrote in the report.

What’s next for bitcoin’s (BTC) price?

Still, crypto markets held up well recently compared to the sell-off in stocks. Despite the difficult macro picture, Asgard has a more constructive outlook for risk assets in Q4.

“BTC and ETH are now trying to break upwards outside of their range established in the last month and a half,” Asgard said. “We are looking for a short-term move somewhere between $28,500 and a swipe of $30,000, for as long as BTC does not retrace below 26,000.”

Historically, October has usually been a bullish month for bitcoin, Markus Thielen, Matrixport’s Head of Research said in a recent appearance on CoinDesk TV.

He pointed out that “over the last 10 years, eight of those times in October, the market was actually up with an average of 22%,” adding that as soon as interest rates become dovish bitcoin is “going to break out quite aggressively.”

Thielen also argued that bitcoin miners, particularly Marathon Digital, are entering this next quarter with far more efficient operations.

At the same time, the halving is still on everyone’s minds: Marathon Digital, according to Thielen, estimated their mining costs would increase from $24,000 to $29,000 per bitcoin.

“Nevertheless, we need to really rally above 30,000,” he concluded.

Edited by Stephen Alpher.

Valkyrie Backs Off Ether Futures Purchases Until SEC ETF Approval Officially Effective

Valkyrie Friday morning said it will not purchase ether (ETH) futures until the U.S. Securities and Exchange Commission’s (SEC) approval of adding that vehicle to its Bitcoin Strategy ETF (BTF) is effective.

In an SEC Form 497 filing, the asset manager also said it would unwind any ether futures purchases it had already made.

The quick backtrack comes after the firm yesterday told CoinDesk (and others) it had begun adding ether futures exposure to the BTF after gaining SEC approval.

Bloomberg ETF analyst Eric Balchunas tweeted that the unwinding of ether futures purchases from Valkyrie is an example of the SEC not wanting to be a “kingmaker via their policies and will do whatever they can to prevent someone from launching on their own like BITO [ProShares Bitcoin Strategy ETF] in 2021.”

Notwithstanding Valkyrie’s actions, it does appear that a number of ether futures ETFs will begin trading in the U.S. on Monday, with ProShares, Bitwise and VanEck among those confirming as much in SEC filings on Friday morning.

Valkyrie did not immediately respond to CoinDesk’s request for comment.

Correction (15:50 UTC, Sept. 29): Removes incorrect reference to assets under management at Valkyrie.

Edited by Stephen Alpher.

Where Liquid Staking Meets Tokenization

Liquid staking has the potential to be the building blocks that incorporate established financial norms into crypto that mainstream audiences actually trust. This is because staking resembles traditional financial (TradFi) instruments they’re already familiar with, like bonds, in terms of yield opportunities and risk profile.

Liquid staking will be a catalyst to the broader mainstream adoption and market stability, which remain key objectives for the crypto ecosystem.

Danny Chong is a co-founder of Tranchess.

The power of familiarity

To understand the significance of liquid staking as a familiar comfort blanket for non-crypto-natives, it’s important to understand how it works. Liquid staking refers to the process of locking up cryptocurrency assets to support blockchain network operation while offering a level of stability and familiarity similar to conventional financial instruments. It can be seen as a more advanced form of traditional staking where users can use their locked funds for other on-chain activities while still earning rewards from their original deposits.

In the financial landscape, both liquid staking tokens and government bonds in traditional finance bear the similarity in that they serve as investment vehicles that offer a form of yield or interest over time. In the case of liquid staking tokens, users earn staking rewards, while government bonds offer periodic interest payments. Furthermore, both liquid staking tokens and certain types of government bonds can be readily traded in secondary markets, providing liquidity to investors.

Cryptocurrency investments carry high-risk profiles, which have deterred many investors from entering the space. Liquid staking mirrors government bonds in the sense that both of these instruments are often considered lower risk compared to other investment options in their respective markets. This is particularly important as it makes liquid staking a compelling alternative for risk-averse investors seeking more stability. Therefore, the ability of liquid staking to offer a risk profile that is familiar to a low-risk traditional investment instrument is a noteworthy advantage.

By merging the benefits of staking with the familiarity of traditional finance, liquid staking appeals to mainstream investors and a broader audience, reducing barriers to entry and encouraging wider adoption.

Unlocking the potential of liquid staking

Liquid staking isn’t just about staking assets and earning rewards. It represents an opportunity in the cryptocurrency landscape to unlock the potential of enhancing the overall financial ecosystem.

Yield from liquid staking has the potential to form the base of structured products in the coming future due to its stable reward system. Compared to the price volatility of underlying cryptocurrencies, liquid staking rewards are relatively stable and predictable, making them a reliable source of cash flow to create structured products. For example, a financial institution may develop a yield-enhanced product that offers investors a higher yield by combining staking rewards with other income-generating strategies.

Likewise, financial derivatives can also be structured based on the expected yield from staking. These derivatives may allow investors to speculate on future staking rewards or to use the expected yield to purchase yield-enhancing structured products. While tokenization is an integral aspect of liquid staking, it isn’t the sole focus of its innovation.

With liquid staking, “staking deposits” become a digital token that users can trade or sell. This means users have more control over how they use staked assets, like selling them if they need liquidity or swapping them for other digital assets. This flexibility and predictability make it easier to manage assets and make investments.

With improved transparency, reduced counterparty risk and decentralized control, liquid staking unlocks new possibilities for yield generation and empowers financial users.

The path towards mainstream trust and adoption

Liquid staking’s promise lies in its ability to mimic the financial instruments that mainstream audiences are comfortable with, fostering wider adoption and reducing barriers to entry. This will introduce an influx of new participants that will fuel further expansion and diversification within the crypto market

Opposing Centralization in Ethereum Staking

The market has agreed that staking is a really good deal — more so than core developers ever anticipated. There’s not just demand to build on Ethereum, but a wildly unanticipated demand to participate in Ethereum’s consensus, aka staking.

Stakers put down collateral in the form of ETH to validate the network and receive rewards in the form of ETH. Yield is dependent on the size of the validator set, which, in theory, creates a market equilibrium — if yield is too low, people unstake. If the validator set is too small, yield increases and new stakers are incentivized to enter the set.

This article is part of CoinDesk’s “Staking Week.” Justin Kalland is the vice president of innovation at Horizen Labs Ventures.

In the purest form of staking, affectionately called “home staking,”you run a small, unobtrusive, energy-efficient PC with Ethereum software and you control your assets. But there are two cohorts who want to stake but don’t want to “home stake.” The first set is people who don’t have the motivation, time or tech savvy to learn how to set up the necessary PC. The second set is people who don’t want to lock up their ETH for a ~3%-6% yield – they’re interested in more risk and more reward.

These two cohorts have given rise to a part of the ecosystem that is both a boon and a bane. They allow their stake to be managed by a third party who gives them receipt tokens, which means that this third party doesn’t have anything “at stake” but still retains some influence over the network. It provides a service and takes a cut of the rewards.

On the one hand, third parties democratize access to staking. The barrier to stake is quite high in terms of initial investment and tech knowledge, and “staking-as-a-service” providers make on-boarding easy. They are are a net positive for the chain.

On the other hand, third parties, or in other words middlemen, the types of market participants that crypto is meant to eliminate, come with problems.

Ethereum’s Shanghai hardfork in April enabled people who had been staking for years to finally withdraw. It was a massive derisking event for those interested in staking. Since then, the queue to get into staking has been several weeks to months long. The metaphorical bouncer has not had a moment’s rest.

Everybody is piling into staking and few are leaving, putting network stability and centralization risks at the forefront of the minds working in core development.

The boom in staking coupled with centralization issues of third-party providers has created somewhat of a villain narrative in the staking ecosystem. And one third-party staking provider has eclipsed all others: Lido. Lido is a semi-decentralized, non-custodial staking protocol that anybody can use to stake their ETH that is governed by a decentralized autonomous organization (DAO).

There are two sides to the debate — Lido is a successful business with attractive UX [user experience] and solid business development. It’s acting as an economically rational actor by seeking to control a large portion of all staked ETH and is stress-testing the limits of Ethereum’s protocol design. Plus, it’s not just one entity, it’s 38 operators.

The other side would say that Lido is detrimental to the decentralization of the chain, because it refuses to artificially cap its staking dominance and that its rapid monopolistic growth is uncooperative with researchers while they figure out a “coded in” way to deal with the design flaw that has allowed a single entity to grow to manage one-third of all staked ETH. Further, those 38 operators are still managed by one entity: the Lido DAO, where decisions are usually made by just two wallets.

Lido is exploiting a flaw that threatens the core value proposition of Ethereum: its decentralization and inability to bend to any special interests.

In any case, the move here is to give Ethereum researchers more time to discuss, brainstorm and adapt the system to account for these economically rational actors. Core development and research are accomplished in uncharted territory with hundreds of the best minds in tech who now grapple with this centralization risk and how to mitigate or even actively account for it.

There are already ideas being discussed and the community is working hard to inform individuals and institutions of risks that might not be apparent when they choose their staking provider. I, for one, expect that the caliber of solution we’ll see will match that which we’ve come to know from Ethereum core development.

Bankrupt Crypto Hedge Fund 3AC’s Su Zhu Apprehended in Singapore, Liquidator Says

Su Zhu, co-founder of hedge fund Three Arrows Capital, was apprehended at Changi airport in Singapore on Friday, according to the company’s liquidator Teneo.

The hedge fund collapsed in 2022, and interconnections within the industry meant the impact of its collapse quickly brought on a new crypto winter.

Zhu, alongside co-founder Kyle Davies, was the subject of a committal order sentencing him to four months’ imprisonment due to failure to comply with a court order.

Davies’ whereabouts remain unknown, the statement added.

Earlier in September, the Monetary Authority of Singapore banned Zhu and Davies from owning or running any registered capital markets firm for nine years.

In May, the pair were also reprimanded by Dubai’s crypto regulator for operating their new venture, a bankruptcy exchange called OPNX, as an unregulated exchange. Davies has also declined to respond to subpoenas relating to 3AC’s collapse issued by a New York court.

The native token of the duo’s new project fell by 21% as its market cap shrank to $40 million.

Oliver Knight contributed to the reporting of the story

UPDATE (Sept. 29, 14:40 UTC): Updates to add more context and price action of OX token.

Edited by Aoyon Ashraf.

First Mover Americas: Circle Argues Stablecoins Aren’t Securities in Response to SEC’s Binance Lawsuit

This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

Latest Prices

Top Stories

Stablecoin issuer Circle has intervened in the Securities and Exchange Commission’s case against major crypto exchange Binance, arguing that financial trading laws shouldn’t spread to stablecoins whose value is tied to other assets. In June, regulators charged Binance with multiple legal violations for facilitating trades in cryptocurrencies, such as Solana’s SOL, Cardano’s ADA and the Binance stablecoin BUSD, which the SEC alleged constituted unregistered securities. That’s become one of the most major cases in crypto right now, as the world’s biggest crypto exchange – alongside rivals like Coinbase – seek to argue that crypto isn’t caught by existing heavy-handed U.S. financial laws.

Asset manager Valkyrie started buying ether (ETH) futures contracts, after getting approval to convert its existing bitcoin futures exchange traded fund (ETF) to a two-for-one investment vehicle. “Today, the Valkyrie Bitcoin Strategy ETF (Nasdaq: $BTF) began adding exposure to Ether futures contracts, making it the first U.S. ETF to provide exposure to Ether and Bitcoin futures contracts under one wrapper,” a spokesperson told CoinDesk in an email statement. Valkyrie was first to get approval for ETH futures ETF among other firms, as it “supplemented its prospectus and updated risk disclosures related to Ether futures,” said the spokesperson.

Cryptocurrency exchange Coinbase (COIN) announced this week that it had received regulatory approval in Bermuda to list perpetual futures to users outside of the United States. The move comes as no surprise, after Coinbase acquired a license in Bermuda to operate a spot exchange back in April following a gung-ho approach from U.S. regulators, with the ultimate intention of rolling out a perpetual futures platform. Perpetual futures are a type of cash-settled derivatives contract that allow traders to “long” or “short” an underlying asset with leverage. Instead of the contract expiring every month or quarter, perpetual swap traders pay a funding rate that represents the difference between the mark and index price of the underlying asset, this ensures that pricing stays efficient.

Chart of the Day

  • The chart shows that addresses holding at least 0.1% of bitcoin’s supply have recorded strong net inflows throughout Q3.
  • When bitcoin dropped to $25,000 large holders saw inflows of $600 million within a day.
  • Since then bitcoin has seen three other spikes of $400 million + in net inflows to large holders, showing strong interest quietly building up, according to IntoTheBlock. “These have happened while centralized exchanges have seen outflows, suggesting it is organic buyers receiving these funds and not just CEX addresses,” said IntoTheBlock.
  • Source: IntoTheBlock.

– Lyllah Ledesma

Trending Posts

Edited by Parikshit Mishra.

Circle Rolls Out Open-Source Protocol to Help Build Tokenized Credit Markets

Stablecoin issuer Circle Internet Financial on Friday rolled out a smart contract codebase called Perimeter Protocol that aims to serve as an open-source foundation to build tokenized credit markets.

The company said in a blog post that Perimeter can support a variety of credit use cases, including invoice factoring, payroll advances, instant settlement for merchants and credit trading for institutional investors. Its white paper is publicly available and developers can freely copy the codebase and build products on top of it.

The protocol also marks the first release of Circle Research, the company’s new division dedicated to open-source development.

The release came as bringing traditional financial instruments such as credit to blockchain-based applications – often referred to as tokenization of real-world assets (RWA) – is gaining steam. Tokenization could disrupt the existing financial plumbing by creating a more efficient and transparent system, a Bank of America (BAC) report said. Bernstein forecasted that tokenized assets could grow to a 5 trillion market in the next five years.

Stablecoins are a key piece of plumbing for blockchain-based lending markets to settle transactions. Facilitating tokenization efforts and the development of decentralized finance (DeFi) credit platforms could help Circle grow the utility of its $26 billion USDC and euro-pegged token EURC.

“We’ve seen the great utility stablecoins and USDC have brought to developers, corporations, end-users and more across an array of use cases, including for global lending markets within DeFi,” the company said in a blog post. “However, for new entrants to participate in these markets, the ability to securely unlock credit on-chain through safe standards and underwriting, represents a significant barrier to entry.”

Institutional DeFi platform OpenTrade’s yield-generating tokenized U.S. Treasury pool was the first offering to be developed using Perimeter.

Edited by Stephen Alpher.

Subscribe to our newsletter to be updated with our exclusive deals and major announcements.

© 2023 Moonboyz Crypto. All rights reserved
Bitcoin (BTC) $ 27,034.24
Ethereum (ETH) $ 1,673.64
BNB (BNB) $ 215.02
XRP (XRP) $ 0.51629
Cardano (ADA) $ 0.255588
Solana (SOL) $ 21.29
Polkadot (DOT) $ 4.11
Polygon (MATIC) $ 0.536209
Fantom (FTM) $ 0.20346
Dogecoin (DOGE) $ 0.062072
Shiba Inu (SHIB) $ 0.000007
Avalanche (AVAX) $ 9.28
TRON (TRX) $ 0.088197
Cronos (CRO) $ 0.050847
Litecoin (LTC) $ 66.02
VeChain (VET) $ 0.017384
SafeMoon (SFM) $ 0.00012
Baby Doge Coin (BABYDOGE) $ 0.00000000107429