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Top Stories This Week

Silicon Valley Bank shut down by California regulator, holding over $5 billion for prominent crypto VCs

Silicon Valley Bank (SVB) was shut down by California’s financial watchdog on March 10 after announcing a significant sale of assets and stocks aimed at raising additional capital. The California watchdog appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver to protect insured deposits. However, the FDIC only insures up to $250,000 per depositor, per institution and per ownership category. The bank held over $5 billion in funds from major venture capital firms. Silicon Valley Bank is one of the top 20 largest banks in the United States, providing banking services to crypto-friendly venture companies, such as Sequoia Capital and Andreessen Horowitz.

USDC depegs as Circle confirms $3.3B stuck with Silicon Valley Bank

USD Coin (USDC) issuer Circle confirmed that $3.3 billion of its $40 billion USDC reserves remain at Silicon Valley Bank, triggering a sell-off that resulted in the stablecoin falling below $1. The stablecoin ecosystem felt an immediate impact as USDC depegged from the U.S. dollar, with major stablecoin depegging from the U.S. dollar as a consequence, including DAI, USDD and FRAX. The USDC price was slowly re-pegging on late Saturday after turbulent trading hours. Circle plans to cover missing liquidity in SVB with corporate funds.

Our weekly roundup of news from East Asia curates the industry’s most important developments.

South Korea invests another $51M in metaverse tech

South Korea’s plans for metaverse domination are gathering pace. A March 8 document prepared by the Ministry of Science and Information and Communication Technology (ICT), the National IT Industry Promotion Agency, and the Korea Radio Promotion Association, says the three entities will invest a total of 27.7 billion Korean won ($21 million) in metaverse projects across 13 sectors such as healthcare, tourism, and education. One example use case is about telemedicine in the metaverse:

“Establish a virtual counseling space and provide mental health recovery and promotion services through expert psychological counseling, healing contents, and community activities.”

The same day, South Korea’s Ministry of Science and ICT also announced the creation of a 40 billion Korean won ($30 million) metaverse fund to be operated by local investment management companies. It cited the need to incubate domestic metaverse-related companies to become big enough to compete with global companies through the expansion of business areas and scale.

Mt. Gox’s final deadline for claims

On March 9, trustees of bankrupt Japanese cryptocurrency exchange Mt. Gox announced that creditors have until April 6 to complete registration to receive repayment. The biggest Bitcoin exchange in the world at one time, Mt. Gox filed for bankruptcy in 2014 after discovering that 850,000 of the exchange’s Bitcoin had been stolen via discreet hacks and siphoning over a number of years. The exchange has since recovered around 200,000 BTC. The funds have been held in trust for the creditors, with 162,106 BTC ($3.49 billion) sitting in wallet addresses tracked by Token Unlock.

Clara Bullrich must have cloned herself or possibly invoked dark forces that shouldn’t be meddled with. Somehow, she’s managed to cram about four careers into one life.

Her main gig is leading her own financial entity, AlTi, managing a whopping investment fund, which grew to $54 billion under management following a recent merger. That’s a big enough job in itself.

A member of Women in Blockchain, she also runs a women-only DAO, Komorebi, that concentrates on funding female and non-gender-specific projects.

“I’ve seen in crypto that there’s very few women, and I really want to push that as much as I can,” she says. “For me, it’s always important to have skin in the game.”

And if that wasn’t enough, she’s also the founder of a gaming guild, Ola Guild Games (OlaGG), that hopes to upskill the quarter of a billion mobile gamers in Latin America so they can boost their incomes using play-to-earn blockchain games. 

Artist: Terrell Jones, Michigan
Date minted first NFT: March 28, 2021
Which blockchains? Ethereum, Tezos

Influenced by classic gangster films, Terrell Jones has a distinctive style that captures imagination and nostalgia. He is about to auction a second piece at Sotheby’s and has a patented “soft-shell taco method” to garner the attention of notable collectors. 

Who is he?

From childhood aspirations of being a cartoonist to now being one of the hottest new NFT artists capturing the attention of elite collectors and Sotheby’s, Terrell Jones is well into his launch trajectory.

Born in Ann Arbour, Michigan, Jones has a visually distinct style. But it is his ability to tell stories through his art such as the collections “Evil in Color” and “Good and Evil” that sets him apart. Just in the last two months, Jones has had some of his highest-ever sales, and there is growing interest in his work.

“A big thing for me has always been to try to connect my stories and images with a deeper part of everyone. With the way things are moving now and with so many artists, people are probably seeing more art within a day than you probably would have seen within a year. It’s been a big shift,” Jones says. 

In this inaugural edition of Cointelegraph’s monthly Web3 gaming column, we highlight some of the top stories and events in the blockchain gaming space over the past few weeks, as well as upcoming releases.

Fortnite player sells Dookey Dash prize

It has been a little over a month since NFT behemoth Yuga Labs, the company behind Bored Ape Yacht Club (BAYC) and other top NFT collections, rolled out the skill-based game and NFT mint, Dookey Dash. 

Sent on a quest by a dog called Gary, players have to navigate through the sewers, dodging obstacles and collecting power-ups in pursuit of a golden key.

For three weeks, holders of Sewer Pass NFTs competed for the top spot on the leaderboard and different prizes. Though BAYC and sister collection Mutant Ape Yacht Club holders could claim a free pass, buying one wasn’t cheap. The floor price currently stands at 2.4 Ether (ETH) ($3,888)

That’s a lot to play Temple Run in a toilet.

Top Stories This Week

Silvergate stock plunges after delayed filing raises doubts over future

Silvergate made headlines this week after postponing the filing of its annual 10-K financial report, raising fears of an upcoming bankruptcy filing. The collapse of the cryptocurrency bank could prove costly for the rest of the industry. Within 24 hours after the announcement, Coinbase, Circle, Bitstamp, Galaxy Digital and Paxos confirmed that they will scale back their individual partnerships with Silvergate in some capacity. MicroStrategy and Tether joined a number of firms publicly denying any meaningful exposure to the bank. On March 2, Silvergate’s stock plummeted by over 50% on the NYSE.

FTX presentation shows ‘massive shortfall’ in firm’s assets

Bankrupt cryptocurrency exchange FTX has revealed a “massive shortfall” in its digital asset and fiat currency holdings, with billions worth of customer funds missing from both the exchange and its United States-based arm, FTX US. In total, FTX recorded an $8.6 billion deficit across all wallets and accounts while FTX US recorded a deficit of $116 million. Among the week’s headlines, former FTX engineering director Nishad Singh pleaded guilty to charges of wire fraud along with wire and commodities fraud conspiracy. Singh’s plea follows a number of Sam Bankman-Fried’s close associates reportedly agreeing to cooperate with U.S. prosecutors in recent months.

Our weekly roundup of news from East Asia curates the industry’s most important developments.

OKX airdrop after token trading fiasco

On Mar. 1, cryptocurrency exchange OKX  announced  that it would airdrop 3,014,381 Tether (USDT) to users who suffered losses as a result of the Celestial (CELT) token trading incident. On Feb. 26, Celestial revealed the development of a novel blockchain game, followed by extensive social media campaigns promoting the project’s alleged backing by OKX. Shortly afterward, the price of CELT pumped nearly 100% in two days before plummeting over 60%, after OKX clarified it had no affiliation with the project other than a $100,000 investment from OKX Ventures in Nov. 2021. 

“On Feb. 27, many influencers on social media promoted the [CELT] project by claiming that it was the “Son of OKX,” such actions were not authorized by the OKX exchange.”

After an investigation, OKX concluded that there was evidence of “malicious market manipulation” associated with the incident. The exchange explained shortly afterward that it froze 714,381 USDT held in five accounts suspected of market manipulation, and clawed back 1.3 million USDT from Celestial developers.

Combined with 1 million USDT of its own money, OKX will airdrop a total of 3 million USDT to users who purchased CELT between Feb. 25, 12:00 pm Hong Kong time (HKT), and Feb. 28, 12:00 pm HKT and suffered losses. The airdrop will be delivered to affected users within the next 48 hours. 

For years, Bitcoiners have repeated the mantra “be your own bank.” But in truth, storing any type of crypto in a wallet has been a lot closer to stuffing cash under your mattress than to a complex financial institution like a bank.

Admittedly, it’s an improvement in that crypto can be transferred across the globe in minutes and it’s secured with cryptography — but it’s also a lot less user-friendly than a bank and doesn’t offer anywhere near as many features. 

Your crypto could be stolen in a $5 wrench attack. You could lose the seed phrase and your funds forever. And that’s if you were technically minded enough to even figure out the complicated process of setting up a wallet in the first place.

That’s all set to change with the surprise announcement at WalletCon in Denver this week of “smart accounts,” also known as “account abstraction,” on Ethereum — and every other chain compatible with the Ethereum Virtual Machine (the EVM is the software responsible for executing Ethereum-based smart contracts).

Chains that can now take advantage of smart accounts include Polygon, Optimism, Arbitrum, BNB Smart Chain, Avalanche and Gnosis Chain.

Stablecoins are entering a period of great uncertainty following the U.S. Securities and Exchange Commission labeling BUSD an “unregistered security” and ordering Paxos to stop minting new tokens.

Do these moves signal a wider war by U.S. regulators on stablecoins? Could the SEC declare all stablecoins securities, or is BUSD a special case?

Independent crypto reporter Amy Castor, who has been covering cryptocurrencies since 2016, believes the BUSD crackdown is aimed squarely at the world’s largest crypto exchange, Binance: 

“Going after Paxos-issued BUSD is part of a much broader crackdown on crypto. They are going after the jugular, and they plan to cut off the blood supply.”

She continues, “They want to kill BUSD because BUSD is critical to Binance, which is the largest offshore crypto casino. Binance auto-converts every U.S. dollar and stablecoin to BUSD (the pegged version). Now they’ll have to find something else to auto-convert to… probably Tether. So, maybe the authorities will target Tether next, something that has been a long time coming.”

Top Stories This Week

Unsealed superseding indictment against Sam Bankman-Fried includes 12 criminal charges

Former FTX CEO Sam Bankman-Fried (SBF) was charged on four new criminal counts by a federal judge presiding over his case. According to a superseding indictment, there are now 12 criminal charges against Bankman-Fried, including eight conspiracy charges related to fraud as well as four charges of wire fraud and securities fraud. In an attempt to possibly modify his bail terms, Bankman-Fried’s attorneys will hire a security expert to assist the federal judge overseeing his fraud case. The technical expert will help the judge navigate issues regarding encrypted messages, privacy-focused messaging apps and VPNs.

Ethereum Shapella upgrade gets new date, making way for un-staking ETH

Ethereum core developer Tim Beiko announced the blockchain’s Shapella upgrade is scheduled for Feb. 28. The Shapella network upgrade will activate on the Sepolia network at epoch 56832. Major changes to the consensus layer include full and partial withdrawals for validators and independent state and block historical accumulators, replacing the original singular historical roots. After the Sepolia fork, the next step would be the release of the Shanghai upgrade on the Ethereum Goerli test network, planned for March.

Our weekly roundup of news from East Asia curates the industry’s most important developments.

Hong Kong moves bullish

On Feb. 20, the Securities and Futures Commission (SFC) of Hong Kong launched a consultation on its proposed regulatory requirements for digital asset trading platforms.
The SFC requires the licensing of all cryptocurrency exchanges operating in Hong Kong, or soliciting services from Hong Kong investors, by June 2023.

In addition, the SFC said it will seek feedback on whether licensed platform operators should be allowed to provide services to retail investors and what measures should be implemented to ensure suitability and token inclusion when establishing business relationships with customers.

Currently, retail trading of cryptocurrencies is banned in Hong Kong. The announcement that the special administrative region of China was dipping its toes back into crypto immediately set off bullish reactions from everyday users and executives alike. Brian Armstrong, CEO of cryptocurrency exchange Coinbase,wrote:

“America risks losing its status as a financial hub long term, with no clear regs on crypto, and a hostile environment from regulators. Congress should act soon to pass clear legislation. Crypto is open to everyone in the world and others are leading. The EU, the UK, and now HK.”

Artist name: Grant Riven Yun 
Location: Milwaukee 
Date minted first NFT: Feb. 3, 2021
Which blockchains? Ethereum, Counterparty (Bitcoin)

Who is he?

Grant Yun has always been an artist at heart with an early aspiration to have his work featured at a major auction house. A curious and motivated individual, Yun is studying medicine while juggling his work as an artist and performing as a breakdancer who has competed all over the United States. 

Since discovering NFTs a little over two years ago, the Wisconsin resident has propelled his art and personal brand into the stratosphere much quicker than he’d imagined. With a minimalist style that elicits nostalgic vibes among collectors and his witty personality on Twitter, Yun is slicing out a significant percentage of mindshare amongst digital art fans. 

“Before NFTs, I told myself I would become an artist who sells at a large auction house one day because, at the time, that was my only metric through which I knew what it meant to be a successful artist. I had no experience being an artist overall, so that was the only metric I had to measure.” 

He reached the metric in October 2022:

Chris Georgen, founder of the social impact-focused blockchain company Topl, believes that many consumers are unaware of the consequences of their buying habits.

“Forced labor, deforestation, the destruction of endangered habitats… As responsible citizens of the world, we wouldn’t knowingly support, condone or participate in anything like this,” he tells Magazine. 

“Unfortunately, too often, what we buy can lead to this (and sometimes worse). Whether we know it or not, the things we buy profoundly impact the lives of others and the health of our planet.”

Blockchain may not be able to solve these problems directly, but it can play a significant role in supply chain transparency and rewarding ethical behavior.

Mesbah Sabur, founder of Circularise — a blockchain company tackling traceability solutions for a more circular economy — stresses the importance of consumers making greener choices:

Our weekly roundup of news from East Asia curates the industry’s most important developments.

China blockchain SIM card

Conflux Network says it is working with the second-largest telecommunications provider in China to develop a blockchain SIM card that will serve as a secure place to store digital private keys and nonfungible tokens.

Conflux announced its partnership with China Telecom on Feb. 15, saying the BSIM has moved past the research and development phase. The card will have up to “10-20 times storage space” compared to regular SIM cards, thereby ensuring optimized access to decentralized applications and digital communities. 

The first pilot program for the BSIM card is expected to launch in Hong Kong later this year. Conflux is a layer-1 blockchain operating on a hybrid proof-of-work and proof-of-stake consensus and claims it’s the “only regulatory-compliant public blockchain in China.” Its parent entity, the Shanghai Tree-Graph Blockchain Research Institute, has received approval from the Shanghai Municipal People’s Government to operate as a blockchain entity. 

Korean crypto scandals

Korean crypto exchanges and blockchain entities endured a tough week after a series of misconduct allegations shook the industry. On Feb. 13, investigations carried out by local news outlet IT Chosun alleged that Gopax, a top five crypto exchange in South Korea, charged anywhere between tens of thousands to hundreds of millions in Korean Won (KRW) for token listing fees.

Top Stories This Week

Paxos ‘categorically disagrees’ with the SEC that BUSD is a security

The United States Securities and Exchange Commission (SEC) has defined the stablecoin Binance USD (BUSD) as a security in a Wells Notice sent to its issuer, Paxos Trust Company. The SEC alleges the organization failed to register BUSD under federal securities laws. The firm, however, “categorically disagrees” with the authority’s view, and it’s prepared to “vigorously litigate” the matter in the U.S. courts. Also this week, Paxos was given directions from the New York Department of Financial Services to halt the issuance of new BUSD tokens. The department allegedly received a complaint last year from Circle — another stablecoin issuer — claiming that Binance’s reserves were insufficient to back BUSD.

SEC sues Do Kwon and Terraform Labs for fraud

The U.S. SEC has also filed a lawsuit against Terraform Labs and its founder Do Kwon for allegedly “orchestrating a multi-billion dollar crypto asset securities fraud.” The regulator said Kwon and Terraform offered and sold an “inter-connected suite of crypto asset securities, many in unregistered transactions.” It pointed to the firm’s now-collapsed algorithmic stablecoin, TerraClassicUSD (USTC) and its connected cryptocurrency Terra Classic (LUNC). The complaint seeks charges for violations of registration and anti-fraud provisions of securities laws.

Name: Simon Dixon
Anonymous: No
Twitter Followers: 109.1K
Known for: Co-founder of Bank To The Future and the dude who wrote the first-ever published book on Bitcoin.

Who is this guy anyway?

Simon Dixon is a true Bitcoin O.G. He is the author of the first-ever published book on Bitcoin in the world Bank to the Future, which was released in February 2012, and has splashed over $1 billion in cash investing in “over 100” different crypto companies, including Kraken, Ripple Labs and — err — Celsius.

Dixon stumbled upon Bitcoin when he was “deep in debt” after his ambitious attempt to start a traditional bank didn’t go to plan. “I failed at that task,” he admits.

Instead of throwing in the towel, Dixon eventually founded BnkToTheFuture, an online investment platform that crowdsources private equity funding, giving smaller-scale investors who can satisfy regulatory requirements in their own countries access to early-stage but risky tech VC-style opportunities, with Celsius, Kraken, Bitfinex and Securitize among them.

In recent times, he has “accidentally become the Chapter 11 guy” as he seems to have psychic powers in predicting what crypto firm is going to go into Chapter 11 next.

On Oct. 25, 2022 — about two weeks before the collapse of the world’s third-largest cryptocurrency exchange, FTX — prominent DeFi architect Andre Cronje published a foreboding article with a chilling warning on the state of centralized cryptocurrency exchanges:

“Remedies under the current regulatory regime are ineffective. Most investors sign away their rights to their crypto in voluminous terms and conditions of crypto-exchanges and many will (at best) rank as unsecured creditors should these exchange services be liquidated. Crypto exchange and crypto investment service providers are essentially operating as banks, but without the safeguards and regulation which banks are required to follow.”

What happened afterward is history. With the abrupt downfall of FTX, customers suddenly discovered that despite all previous guarantees, their assets had been locked as the defunct exchange filed for bankruptcy amid an $8 billion shortfall — the consequence of senior executives siphoning customer assets to trade in related hedge fund Alameda Research. Even though the new management claims they have recovered some customer assets, clients’ funds still remain frozen in bankruptcy proceedings, with no end in sight and heavy legal fees to follow. 

In the aftermath, the crypto community has raised serious concerns regarding the state of CEXs. Demands such as proof of assets and liabilities, segregation of customer funds, and voluntary registration as broker-dealers have echoed in the industry. That said, haven’t CEXs come this far by making an effort to legitimize their operations? Here’s why the issue is more complicated than meets the eye. 

Why not just get regulated?

Jack Graves, a teaching professor at Syracuse University, tells Magazine, “To my knowledge, there is nobody acting as an exchange of cryptocurrencies and digital assets in the U.S. that is registered with the SEC. Instead, they simply stated that they don’t trade securities. And that’s a critical difference.”

Top Stories This Week

Kraken reaches $30M settlement with SEC over staking as IRS seeks user information

Kraken has agreed to stop offering staking services or programs to United States clients after reaching an agreement with the U.S. Securities and Exchange Commission (SEC). Along with ceasing operations, the crypto exchange will pay $30 million in disgorgement, prejudgment interest and civil penalties. The SEC claims that Kraken failed to register the program as a securities offering. The move has sparked controversy within the SEC. Commissioner Hester Peirce has publicly rebuked her own agency over the shutdown, arguing that regulation by enforcement “is not an efficient or fair way of regulating” an emerging industry.

FTX CEO testifies on ‘pure hell’ post-bankruptcy days at exchange

John Ray, who took over as CEO of crypto exchange FTX, has described in a court hearing some of the chaotic experiences at the firm following the company declaring bankruptcy. According to Ray, there was “not a single list of anything” related to bank accounts, income, insurance or personnel, causing a “massive scramble for information.” As the bankruptcy proceedings continue, the names of two guarantors who signed off on part of Bankman-Fried’s $250 million bail bond will remain withheld for now, after a last-minute appeal. In another headline, a federal judge denied a joint agreement between Bankman-Fried’s legal team and prosecutors that would allow him to use certain messaging apps, including Facebook Messenger.

Will 2023 finally see an explosion of crypto gaming? The signs are mixed, with former play-to-earn darling Axie Infinity falling out of favor and hemorrhaging players, while mainstream gamers report that Web3 games still have playability issues.

The bright spot is that AAA games are finally starting to emerge in Web3, with projects like Illuvium garnering attention. And there’s a ton of runaway, considering that Web3 gaming raised $4.5 billion in 2022. For comparison, metaverse projects raised $1.9 billion.

The thesis is compelling for crypto gaming, but the way forward is unclear. Do tokenomics help immerse gamers in a game, or do they distract from the experience?

“I think the first big win will come from a game with tokenomics that don’t explode and implode in six months, and that also doesn’t feel like a ‘crypto’ game,” Geoff Renaud, co-founder and chief marketing officer of Web2-to-Web3 creative marketing agency Invisible North, tells Magazine.

“StepN showed a ton of promise for easy onboarding and user experience but was marred by bad economics. Once there’s a game model that feels frictionless — where you don’t even know you’re on the blockchain — and that has sustainable incentives for users, there will be a massive follow-on effect. Blockchain gaming needs to have one big win, and I have a feeling that’s more likely to be from a simple mobile game that looks like Candy Crush than a AAA title out of the gates.”

Our weekly roundup of news from East Asia curates the industry’s most important developments.

China airdrops 180 million digital yuan to celebrate Lunar New Year 

According to state-owned media Global Times, Chinese cities airdropped a total of 180 million digital yuan (e-CNY) worth $26.6 million to boost consumption during the Lunar New Year celebrations between Jan. 22 and Feb. 5. Nearly 200 digital yuan activities were launched during the festival, and commercial institutions also participated in these promotions, covering various sectors such as mobile communications, supermarkets, transportation and tourism.

Data from Meituan, a popular Chinese food delivery platform, showed that its 20 million digital yuan vouchers given out in partnership with the city of Hangzhou government were claimed in less than 10 seconds. China has prioritized the development of its central bank digital currency (CBDC) as part of its digital economy transformation, with numerous local party officials receiving key performance indicator targets regarding their efforts to promote the currency.

Asia-Pacific crypto exchanges donate to Turkey

In an act of international solidarity, cryptocurrency exchanges operating from several countries in the Asia-Pacific region were quick to react to a series of devastating earthquakes that struck Turkey and Syria on Feb. 6, with death tolls exceeding 12,000 at the time of publication. Singaporean exchange OKX said it would donate 1 million lira to the relief effort, while Binance stated it would airdrop $100 in BNB to Turkish users with addresses listed in the affected region. Cryptocurrency exchange MEXC Global also announced it would donate 1 million lira to help with earthquake relief. Meanwhile, Justin Sun, an adviser at crypto exchange Huobi Global, pledged 2 million lira for relief efforts. Donations are currently not available to Syrian residents due to sanctions. 

“While the [proof of address] method has its limitations and inaccuracies, it is the best method we have available for us to locate potentially impacted users. We estimate the total donations will be around $5 million USD (or 94,000,000 TRY),” Binance stated.