Danubefuture

• FTX sought a U.S. bankruptcy court’s help amid a battle over ownership of about $450 million worth of stock in Robinhood Markets (HOOD).
• At issue are about 56 million shares of the brokerage owned by Emergent Fidelity Technologies Ltd., a corporate entity organized in Antigua and Barbuda and 90% controlled by former FTX CEO Sam Bankman-Fried.
• FTX has asked the judge overseeing the bankruptcy case to freeze the stock while it tries to figure out how to repay all its creditors.

FTX, a crypto exchange, recently sought the help of a U.S. bankruptcy court in order to resolve a dispute involving a large amount of stock in Robinhood Markets (HOOD). According to a filing, the stock is worth around $450 million and is owned by Emergent Fidelity Technologies Ltd., a corporate entity organized in Antigua and Barbuda and 90% controlled by former FTX CEO Sam Bankman-Fried.

The dispute centers around the ownership of the 56 million shares of the brokerage. Three parties have been vying for control of the stock: BlockFi (a lender that FTX had helped prop up earlier this year), Yonathan Ben Shimon (an FTX creditor appointed as a receiver in Antigua and granted permission to sell the shares under supervision of a court there) and Bankman-Fried himself (who has legal bills).

FTX’s bankruptcy estate has asked ED&F Man Capital Markets, the brokerage where the shares are parked, to freeze the stock until the bankruptcy court can resolve the issues in a fair manner. The exchange has determined that Emergent only nominally owns the shares and that they truly belong to FTX.

The judge presiding over the bankruptcy case will now decide whether to freeze the shares of stock in order to ensure that FTX is able to pay off all of its creditors. It is hoped that the court will be able to resolve the situation in a way that is fair to all parties involved.

• According to blockchain intelligence firm Crystal Blockchain, cryptocurrency payments to ransomware hackers only totaled $16 million in 2021, compared to nearly $74 million in 2021.
• Analysis of on-chain activity shows that crypto services with a high money laundering risk score are seeing a drop in popularity, and crypto exchanges and services have been further tightening anti-money laundering policies, effectively scaring away criminal actors.
• Cross-chain bridges remain popular for illicit transactions, with the Bitcoin-to-Ethereum bridge service Ren being popular among hackers.

Cryptocurrency payments to ransomware hackers have surprisingly only totaled $16 million in 2021, according to blockchain intelligence firm Crystal Blockchain, compared to nearly $74 million in 2021. This comes as ransomware attacks have increased since 2021, particularly with the notorious Conti ransomware gang known for terrorizing U.S. hospitals during the COVID-19 pandemic.

In order to gain further insight into this trend, Crystal Blockchain conducted analysis of on-chain activity. The results showed that crypto services with a high money laundering risk score were seeing a drop in popularity, likely due to increased regulation, registration and client expectations. At the same time, crypto exchanges and services have been further tightening anti-money laundering policies, effectively scaring away criminal actors. The volume of funds sent to low-risk exchanges from scams fell by 24% in 2022 compared to 2021, which is a positive sign.

Offline wallets, allowing users to directly control their funds, are becoming increasingly popular among crypto users in general. Cross-chain bridges, however, remain popular for illicit transactions. The Bitcoin-to-Ethereum bridge service Ren, for example, received almost a half of all crypto from sanctioned entities, and is popular among hackers. This can be seen by the FTX thief, who almost drained the entire of the protocol’s liquidity crossing chains.

Nick Smart, Crystal’s director of blockchain intelligence, said that it may be too early to conclude that ransomware attacks are in permanent decline. However, the data shows that increased regulation, registration and client expectations, combined with strengthened anti-money laundering policies, are having a positive effect. It is encouraging to see that crypto users are becoming more aware of the risks associated with money laundering, and are increasingly choosing to control their funds via offline wallets.

• Former FTX CEO Sam Bankman-Fried appeared in U.S. federal court in New York on Thursday on charges of fraud, money laundering, and campaign-finance violations.
• The judge set bail at $250 million and Bankman-Fried was released after agreeing to a list of conditions including not making financial transactions for more than $1,000 and going through substance-abuse and mental-health treatment.
• Two other co-founders of FTX, Caroline Ellison and Gary Wang, have admitted guilt in securities violations and are now cooperating with prosecutors in the case against Bankman-Fried.

On Thursday, Sam Bankman-Fried, the former CEO of FTX, appeared in U.S. federal court in New York on charges of fraud, money laundering, and campaign-finance violations. After listening to the prosecution and defense, the judge set bail at $250 million and Bankman-Fried was released after agreeing to a list of conditions including not making financial transactions for more than $1,000 and going through substance-abuse and mental-health treatment. His release was secured by equity in his parents‘ Palo Alto, California, home.

These charges come after Bankman-Fried was extradited from the Bahamas court on Wednesday. He had been brought to the U.S. overnight by the Federal Bureau of Investigation. This case in the U.S. District Court for the Southern District of New York centers on accusations of fraud, money laundering and campaign-finance violations.

Two other co-founders of FTX, Caroline Ellison and Gary Wang, have admitted guilt in securities violations and are now cooperating with prosecutors in the case against Bankman-Fried. Ellison, who was the former CEO of FTX’s sister company Alameda Research, and Wang have admitted that the senior management was aware of lawbreaking in the movement of customer funds between the two firms.

The cooperation of Ellison and Wang is likely to be key in the case against Bankman-Fried. Data analysis by Delphi Digital shows that bitcoin tends to lead major stock market bottoms by at least six weeks. In response to this positive economic data, investors in traditional equities should expect to see a negative reaction, and investors in digital assets should keep in mind that both bitcoin and ether maintain strong correlations with the S&P 500 and Nasdaq.

Ultimately, the economy is still doing too well for the Federal Reserve to see positive signs in fighting inflation. Until the U.S economy starts performing poorly, asset prices are likely to suffer. Bankman-Fried’s case will continue to be closely monitored and will likely have an effect on the overall crypto markets.

• The report “Developers of Bitcoin” found that there are only 40 to 60 active developers of the cryptocurrency.
• Bitcoin’s success is due to its passionate but small group of developers scattered around the globe.
• Compared to traditional payment firms such as Visa and Mastercard, Bitcoin is run by a “ultra lean” group of volunteers and part-timers.

The world of finance is dominated by giants like Visa, Mastercard, and PayPal, all of which employ tens of thousands of employees. But Bitcoin, the world’s most dominant cryptocurrency, is an anomaly. It is powered by a tight ship of just a few dozen active developers, whose efforts have propelled it to the top.

A recent report, titled “Developers of Bitcoin”, published by New York Digital Investment Group (NYDIG), sheds light on how Bitcoin has steadily grown from an obscure technological breakthrough to worldwide domination. The report also examines the software developers who made it all happen, and how they have maintained the cryptocurrency over the last 14 years.

The report highlights the fact that Bitcoin has been running with no major hiccups for almost 14 years, under the care of a passionate but small group of individuals scattered across the globe. It also explores the development cycle of Bitcoin—from its inception as an idea circulated on a mailing group to its current status as a pervasive technology—and the people who continue to update the protocol.

The report reveals that the people behind Bitcoin’s success are made up of 84% of its GitHub commits from different countries. It also notes that the lead developer/maintainer role has been replaced with a more egalitarian model that elects a group of maintainers instead. This year, Gloria Zhao became the first female Bitcoin maintainer in the community’s history.

The report also states that Bitcoin’s core protocol averages 40 to 60 monthly active developers, with 1,140 developers having contributed to the project since its inception. Meanwhile, the number of developers working on related applications is estimated to range from 600 to 1,000, with a total of over 13,000 contributors.

When compared to competing networks, Bitcoin always seems to come out smaller, but much more efficient. For example, Ethereum has over 4,000 monthly active developers in its broader ecosystem, yet its current market capitalization is less than half of Bitcoin’s.

The report’s co-author, Greg Cipolaro, believes that the people who are contributing to Bitcoin are driven by a purpose, rather than money. He said that those who are working for ideological reasons tend to stay longer and make more contributions than those who are just in it for the money.

At the end of the day, Bitcoin’s success is due to the hard work of its small but dedicated team of developers. Their commitment to innovation and progress is what has made Bitcoin the world’s most dominant cryptocurrency.

• Bullish, a crypto exchange, has called off its planned deal to go public.
• The deal would have seen Bullish merge with special purpose acquisition company (SPAC) Far Peak Acquisition (FPAC).
• Investors in Bullish include Peter Thiel and hedge fund giants Alan Howard and Louis Bacon.

Crypto exchange Bullish recently announced that it has called off its planned deal to go public. The deal would have seen Bullish merge with special purpose acquisition company (SPAC) Far Peak Acquisition (FPAC). However, the most recent amendment to the two firms‘ original July 2021 merger agreement allowed for the right to terminate the deal if it couldn’t be completed by the end of 2022.

Bullish Chairman and CEO Brendan Blumer explained that their quest to become a public company has taken longer than expected, and that they respect the SEC’s ongoing work to lay new digital asset frameworks and clarify industry-specific disclosure and accounting complexities.

Bullish is backed by notable investors, such as Peter Thiel and hedge fund giants Alan Howard and Louis Bacon. The Bullish platform handled $857 million in average daily volume in June of this year, according to its most recent investor update.

The news of Bullish’s termination of its merger agreement is the latest in a long line of canceled mergers in the formerly red-hot SPAC arena. Earlier this month stablecoin issuer Circle terminated its merger agreement with Concord Acquisition.

It is still unknown whether or not Bullish will pursue other avenues of going public in the future. However, it is clear that the company and its investors are dedicated to finding a way to make Bullish a publicly traded company. Until then, the crypto exchange will continue to expand its services and keep up with the ever-evolving digital asset industry.

• 2021 was the “Year of the Cryptocurrency,” but 2022 saw its collapse.
• 2023 will see the natural selection of the crypto ecosystem, regulation across the world, the metaverse and NFTs coming back from the dead, and institutional investments in the digital economy skyrocketing.
• In the US, no meaningful regulatory movements will occur due to legislative dysfunction.

2021 was a wild year for the crypto market, with massive gains and losses for investors across the world. It was dubbed the “Year of the Cryptocurrency,” but as we welcomed in 2022, the market saw a dramatic collapse. Now, 2023 is just around the corner and it is time to look ahead to the coming year in the digital economy.

The natural selection of the crypto ecosystem will be a powerful force in 2023. The companies that have been well-managed and have had the right intentions will survive and become stronger, while the ones that have had fraud, incompetence, or lack of experience will fade away or be restructured. This reshaping of the industry’s reputation and the way it does business will be driven by institutional investors requiring more controls, risk management, transparency, and reality checks.

Regulations on the crypto market will be taking shape across the world in 2023. The European Union will vote on and implement the Markets in Crypto-Assets Regulation (MiCAR/MiCA), which lays out a framework to regulate both the issuance of cryptocurrencies and assets, as well as transactions (i.e., trading, investment and payments). Meanwhile, Asian regulators are each taking on crypto guardrails differently. In Hong Kong, the goal for 2023 is to increase retail access to crypto, while Singapore has signaled that it will tighten regulations after big losses this year for investors. South Korea, still dealing with the aftermath of the collapse of Terra, will focus solely on enforcement, and India is using tax policy to drive behavior.

The metaverse and non-fungible tokens (NFTs) have seen their share of glitz and glamor, but 2023 will mark the beginning of how we perceive “metaverse experiences.” New use cases in enterprise, healthcare, education and more will bring the practical utility of the metaverse to our collective attention, even in our daily lives. Advances in identity technology, along with AR/VR devices, will come into focus as well in 2023. As for NFTs, the market will go through a rebirth of sorts in 2023, moving away from its current state and closer to being a digital proof of provenance and authenticity of an object, with its value deriving only from what it represents. NFTs will also have a more pervasive and permanent role in digitizing operations in industries such as supply chain and logistics, healthcare, real estate, and retail.

2023 may be the “Year of the CBDC” around the world, as central banks create alliances with commercial banks and technology providers to strengthen their position to test, launch, and execute their unique CBDC strategies. Already, China’s digital yuan is far beyond the rest, and many countries are making headway, with 2023 goals of rollout a possibility. Turkey announced it would launch its CBDC next year, while the ECB intends to start work to develop a rulebook in early 2023 on rolling out a digital euro.

Institutional investors will make big moves with their big money in 2023. Depending on the world economic sentiment, we may see an uplift in crypto prices as well as investments in the digital asset market. More traditional, blue chip funds will tokenize, making them more accessible to a broader sphere of investors. Additionally, more and more large cap market players will move into the tokenization space, and we’ll see a significant uptick in mergers and acquisitions activity as a result.

2023 promises to be an interesting year in the crypto market, with natural selection of the crypto ecosystem, regulation across the world, the metaverse and NFTs coming back from the dead, and institutional investments in the digital economy skyrocketing. While the US will likely not see any meaningful regulatory movements due to legislative dysfunction, the rest of the world will move forward in their respective strategies for the crypto market.

• Craig Wright, an Australian computer scientist, has been trying to prove he is the pseudonymous creator of Bitcoin, Satoshi Nakamoto.
• Wright has filed various lawsuits and attempted to present evidence to back up his claim, but so far he has not been successful.
• On Wednesday, Wright seemed to suggest he was putting the court crusade to rest and will now focus on his family and seeing his ideas come to fruition.

Craig Wright, an Australian computer scientist, has been trying to prove he is the pseudonymous creator of Bitcoin, Satoshi Nakamoto, for the past six years. It all began in 2016, when he wrote a blog post claiming he was Bitcoin’s inventor, though the evidence he provided was questionable. Ever since, Wright has been fighting a multi-year effort, trying to convince courts that he is Satoshi Nakamoto. He has filed various lawsuits containing accusations ranging from libel to copyright infringement.

Most recently, a judge has unequivocally stated that „[i]t is important to be clear that Dr. Wright has not established that he is Satoshi“ in the final judgment in a defamation case between Wright and podcast personality Peter McCormack. This latest blow seemed to be the straw that broke the camel’s back, as Wright took to Twitter to announce his change of heart.

„I have been too angry for too long, as I cared for external validation. That ends,“ he tweeted. „The only validation I seek now is from my family. The rest is no longer important.“ Wright then went on to say that he no longer cares what other people think, and that his vision is his goal. He vowed to never stop working to achieve it.

Although Wright may be ratcheting down his court crusade, he does not seem to be backing away from his claim to be Satoshi anytime soon. Creator of Bitcoin is still proudly displayed on his Twitter profile and website. Whether he will ever be able to back up his claim with concrete proof remains to be seen.

• Justin Sun, the founder of Tron, has his majority of Bitcoin stored in U.S.-based Valkyrie Investments.
• Sun is one of the biggest shareholders of Valkyrie and has provided major investments to the company.
• Valkyrie has partnered with Tron, creating a TRX trust and a BitTorrent trust, and promoted Tron using its own marketing materials.

Justin Sun, the founder of Tron, one of the largest and most influential projects in the cryptocurrency space, has been revealed to have a major stake in Valkyrie Investments – a U.S.-based crypto asset manager. Sun’s bitcoin (BTC) holdings with the firm amount to over $580 million, which is over 90% of the money stored in Valkyrie’s largest division, Valkyrie Digital Assets LLC.

This information comes from a private financial document that CoinDesk has reviewed, which shows that Sun has one of the largest stakes in the firm. Sun has also stated that he is one of the largest shareholders in Valkyrie. This relationship between Sun and Valkyrie has been beneficial to Sun’s empire in many ways, with Valkyrie building investment products for “Justin tokens” such as Tron’s TRX and BitTorrent’s BTT, which many other crypto asset managers have avoided.

In addition to this, Valkyrie has also promoted Tron using the blockchain network’s own marketing materials, and even allowed the Tron logo to be featured when Valkyrie rang the bell at Nasdaq in September. Valkyrie’s Chief Investment Officer, Steve McClurg, refused to discuss the source of Valkyrie’s client funds, citing confidentiality. Sun did not respond to CoinDesk’s request for comment.

Valkyrie’s assets under management (AUM) have been bolstered by Sun’s investments, with Sun’s tokens anchoring the firm’s largest trust at $37 million. There has also been a $700 million partnership with crypto protocol NEM/Symbol in January, though the deal fell apart months later. In October 2021, Sun stated he was the largest investor in Valkyrie’s bitcoin futures exchange-traded fund (ETF).

John Key, the former head of Valkyrie’s SMA product, stated that Sun’s SMA was an institutional-type product that differed from the retail offerings. Having one whale in an SMA doesn’t necessarily pose a threat to clients with money in other products, but it could become problematic for the asset manager’s fee revenue – and its ability to pay staff – if that client ever decided to leave.

Sun has clearly been a vocal backer of Valkyrie, joining the firm’s mid-2021 equity round and calling Valkyrie a “strategic partner” when Tron launched its Tron Trust three months later. Sun also stated that Valkyrie was the Tron ecosystem’s access route to U.S. investors, and the firm was planning to list its Tron trust on over-the-counter markets and create a Tron ETF. However, neither of these have come to pass yet.

Valkyrie has also toyed with creating trusts for BitTorrent tokens, though this hasn’t come to fruition yet. Valkyrie CEO and founder Leah Wald has also taken a board position at crypto exchange Huobi, which Sun reportedly acquired, and Sun is a board member of the exchange.

The relationship between Sun and Valkyrie is yet another example of centralization in the crypto industry, which is rife with whales carrying outsize clout, in spite of its decentralized ideals. Whilst Sun’s investments in Valkyrie have been beneficial to the firm, it raises questions about the asset manager’s reliance on a single client for growth.

• Aave, a popular DeFi protocol, will implement a “proof of reserve” system to protect bridged assets on Avalanche, a decentralized finance twist on centralized exchanges.
• The DAO behind Aave approved Chainlink’s Proof of Reserve smart contract by a vote of over 99% in favor.
• The “proof of reserve” system will provide an extra layer of security to Aave’s Avalanche implementation, and can also help mitigate attacks on bridged assets on the network.

Decentralized lending protocol Aave is taking a big step towards shoring up customer confidence in the wake of FTX by implementing a “proof of reserve” system to protect bridged assets on Avalanche, a decentralized finance (DeFi) twist on the centralized exchanges.

The decentralized autonomous organization (DAO) behind Aave, the popular DeFi protocol on Ethereum, recently approved blockchain oracle Chainlink’s Proof of Reserve smart contract by a vote of over 99% in favor. The system will specifically cover Aave versions (v)2 and v3 on the Avalanche blockchain.

Bridged assets are DeFi’s way of moving value between blockchains that don’t normally communicate with each other. The asset gets locked in a smart contract on its home chain; then, a clone is issued on the target network. Aave v3 on Avalanche has bridged versions of DAI, USDT and USDC, among other tokens.

But this setup creates many security vulnerabilities, and hackers have repeatedly exploited token bridges. This year, Web3 game Axie Infinity’s Ronin network and cross-chain protocol Nomad faced exploits totaling over $800 million due to breaches on their token-bridges.

In order to address these security issues, Aave is turning to Bored Ghost Developing, the Web3 studio behind the proposal, to implement their “proof of reserve” system. The “proof of reserve” system will provide an extra layer of security to Aave’s Avalanche implementation, and can also help mitigate attacks on bridged assets on the network.

According to Ernesto Boado, the former chief technology officer at Aave and co-founder at Bored Ghost Developing, the focus of the system is more on “automatically detecting and acting whenever any symptom of security issues on a bridge appears.”

The system will use ChainLink PoR’s aggregator smart contract to protect tokens on the original network (Ethereum) as well as their bridged versions on the target network (Avalanche). Max Melcher, go-to-market lead of proof of reserve at Chainlink Labs, says that proof of reserves allow decentralized technologies to accurately report on reserve values, rather than trusting a single party to do so.

Proof of reserves have been in the news post-collapse of FTX because the industry is demanding more transparency from centralized exchanges (CEX). Earlier this month, popular exchange Crypto.com’s reserve ratios show that investors‘ assets are safely backed. Last week, Binance’s auditor Mazars cut ties with the exchange, raising questions about the exchange’s reserves, or lack thereof.

By implementing Aave’s “proof of reserve” system, the popular DeFi protocol is taking a major step towards providing customers with the assurance that their assets are safe and secure on the Avalanche network. This system will not only provide an extra layer of security to Aave’s Avalanche implementation, but it can also help mitigate attacks on bridged assets on the network. With this new system in place, Aave is now better equipped to protect their customers and their assets from hackers and malicious actors.

• Former FTX CEO Sam Bankman-Fried appeared in U.S. federal court in New York on Thursday on charges of fraud, money laundering and campaign-finance violations.
• The judge set bail at $250 million, secured by equity in his parents‘ Palo Alto home, and a list of requirements for Bankman-Fried to remain free while he faces charges.
• Caroline Ellison, the former CEO of FTX’s sister company Alameda Research, and Gary Wang, the other co-founder of FTX, pleaded guilty to federal charges and also admitted guilt in securities violations.

Sam Bankman-Fried, the former CEO of FTX, a Bahamas-based crypto exchange, appeared in U.S. federal court in New York on Thursday to face felony charges including fraud, money laundering and campaign-finance violations. The case in the U.S. District Court for the Southern District of New York centers on accusations of fraud, money laundering and campaign-finance violations. Bankman-Fried was brought to the U.S. overnight by the Federal Bureau of Investigation after his extradition from the Bahamas was cleared on Wednesday.

The judge set bail at $250 million, secured by equity in his parents‘ Palo Alto, California, home, and a list of requirements were included for Bankman-Fried to remain free while he faces charges. These included not being allowed to make financial transactions for more than $1,000, not opening new lines of credit, not leaving the house except to exercise, and going through substance-abuse and mental-health treatment. Bankman-Fried agreed to the conditions of release, and was then instructed to answer aloud, to which he said, „Yes, I do.“

Prosecutors have been closing in on the disgraced crypto frontman in recent weeks, inking plea deals inside the FTX inner circle. Caroline Ellison, the former CEO of FTX’s sister company Alameda Research, and Gary Wang, the other co-founder of FTX, both pleaded guilty to federal charges and also admitted guilt in securities violations, according to statements from U.S. prosecutors and regulators late Wednesday.

The cooperation of Ellison and Wang – who admitted playing active roles in the company’s fraud – is likely to be key in the case against Bankman-Fried. They’ve both admitted that the senior management was aware of lawbreaking in the movement of customer funds between the two firms. Ellison’s recently unsealed plea agreement says that as long as she’s helping the SDNY’s investigation, as well as any other law enforcement agency involved in the case, she won’t face further criminal prosecution apart from potential tax violations. Her bail was set at $250,000, and she has to forfeit her travel documents.

Ellison and Wang also settled enforcement actions with the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). In the SEC case, it listed FTT, the exchange’s native token, as a security – another shot across the bow in the industry’s standoff with the securities regulator.

Judge Gabriel Gorenstein argued that the monitoring device „would go very far to provide assurance“ that Bankman-Fried would stay put and that his fame would make it difficult for him to flee into hiding. Also, because his crimes were financial, the federal magistrate judge said it’s unlikely he’s a threat to anybody, made especially certain by his inability to move money or start a business now.

Bankman-Fried has already given up his passport, and he’ll be fitted with a tracking device. His parents have to secure the bail with their home-equity arrangement by Jan. 12. SEC Chair Gary Gensler said in a Wednesday night statement, „Caroline Ellison and Sam Bankman-Fried schemed to manipulate the price of FTT, an exchange crypto security token that was integral to FTX, to prop up the value of their house of cards. Until crypto platforms comply with time-tested securities laws, risks to investors will persist.“