- The stalemate in the U.S. debt ceiling talks continued to weigh heavily on asset prices over the past week, with no end to the debate in sight.
- Binance has been accused of commingling customer and company funds in its bank accounts held at Silvergate Bank between 2020 and 2021.
- The IRS plans to deploy cyber attachés across four continents to combat cryptocurrency-related cybercrime.
ISSUE #45
26 May 2023
Market Overview
Cryptocurrencies and the broader financial markets continued to face downward pressure over the past week as the debt ceiling talks in the U.S. remain at a stalemate, putting the country at risk of defaulting on its obligations.
The rapidly approaching deadline of June 1 – as laid out by Secretary of the Treasury Janet Yellen – has investors worldwide feeling anxious, leading many to dump assets such as stocks, gold, and cryptocurrency in favor of the U.S. dollar, which has been steadily climbing higher since early May.
A spike in fees across various networks, including Bitcoin, Ethereum, Litecoin and Dogecoin, has also led to some disenchantment for crypto proponents who see their holdings dwindle every time they make a transaction. The emergence of BRC-20 contracts on Bitcoin has resulted in the creation of similar protocols on Litecoin (LRC-20) and Dogecoin (DRC-20), which has directly contributed to the rising cost of transacting on those networks. For Ethereum, meme coin chasers continue to drive up gas costs as they hunt for outsized gains amid a sea of red.
Bitcoin price oscillated between a high of $27,510 and a low of $25,890 this week, with price action that could best be described as choppy with a negative trend. Little has changed from the macro perspective as BTC remains within the trading range it's been stuck in since the middle of March. With financial markets being largely driven by outside forces currently, i.e. the debt ceiling, analysts remain mixed on which way prices will head in the near term, resulting in many opting to sit on the sidelines until more welcoming market conditions emerge.
At the time of writing, the total cryptocurrency market cap stands at $1.11 trillion, a decrease of 1.15% over the past week. The DeFi market cap currently stands at $48.2 billion with a 24-hour trading volume of $1.84 billion, which is 6.15% of the total crypto market volume.
Crypto News
Crypto CSI - The U.S. Internal Revenue Service announced that its Criminal Investigation Unit (IRS-CI) will be rolling out a new cybercrime pilot program in June that will deploy “cyber attachés” across four continents to combat cybercrime, with a focus on tax and financial crimes that use cryptocurrency, decentralized finance (DeFi), peer-to-peer payments and mixing services. The IRS said the four individuals tapped to serve as cyber attachés have significant expertise in investigating cybercrime and will work with IRS-CI's law enforcement counterparts in Europe, Australia, Asia and South America. The attachés will be stationed in Sydney, Australia; Bogota, Colombia; Frankfurt, Germany; and Singapore on a 120-day deployment from June to September.
Hong Kong Rising - The Hong Kong Securities and Futures Commission (SFC) announced that it will begin accepting applications on June 1 for crypto trading platforms looking to serve retail investors. The agency recently closed a public comment period on its proposed policy recommendations for virtual asset trading platforms and said the public has thus far been open to the proposed requirements. The new guidelines for virtual asset trading platform operators spell out the requirements for the safe custody of assets, segregation of client assets, avoidance of conflicts of interest, and cybersecurity standards and requirements expected of licensed trading platforms.
e-Securities - The China Securities Regulatory Commission (CSRC) has officially approved the use of the digital yuan in the securities market, meaning that eligible Chinese investors can utilize the e-CNY to buy into public funds and other “financial products” directly from their smartphones any time, day or night, bringing a new use case to the CBDC that is intended to boost its adoption. No date has been given for the rollout of the new functionality, but when it is released, investors will also be able to access a “payment as settlement” feature, which allows redemption and withdrawal to be made one day in advance. As part of its announcement, the CSRC touted the functionality of the e-CNY, saying it has loadable smart contracts, is traceable, and cannot be illegally forged and copied.
And in the World of Cryptocurrency Exchanges…
Questionable Commingling - According to a report for Reuters, Binance is alleged to have commingled customer and company funds in their U.S. bank accounts at Silvergate Bank from 2020 to 2021 in violation of U.S. law, with one source claiming that the sums “ran into billions of dollars and commingling happened almost daily.” The sources claim that the exchange’s Cayman Islands holding firm, Binance Holdings, maintained one Silvergate account for dollar-denominated company revenue, while U.S. dollars from customers went into another Silvergate account of Seychelles-based Key Vision Development which was “controlled by Binance CEO Changpeng Zhao.” Binance has since denied the allegations, with Binance chief of communication Patrick Hillmann referring to the report as “1000 words of conspiracy theories.”
Missed Note - The Digital Currency Group (DCG) has reportedly missed a $630 million repayment that was due to the Gemini cryptocurrency exchange last week, leading the exchange to consider the option of forbearance against the DCG in an effort to help accommodate the process. Under forbearance, lenders grant borrowers a temporary reduction or pause in payments to help them get their financial matters in order. According to Gemini, forbearance will be considered in the case "based in part on whether the parties believe DCG will engage in good faith negotiations on a consensual deal." In the event that a deal is unable to be reached, Gemini plans to work with Genesis to "suggest terms for an amended plan of reorganization that could be advanced without DCG's consensual participation."
Education Campaign - Coinbase is redoubling its efforts to educate the U.S. public on the benefits of blockchain technology with the launch of “Crypto: Moving America Forward,” a national campaign intended to explain the role of cryptocurrencies as an underlying technology that will update the global financial system. The campaign will kick off with a series of four ads featuring Coinbase CEO Brian Armstrong that will air during popular Sunday programming and the NBA Finals, with a new chapter premiering each weekend. The titles for the upcoming ads are The History of Money Initiative, Stand With Crypto Day, Real People Using Crypto for Real Needs, and The State of Crypto Summit. Overseas adoption of blockchain in countries like China will also be a focus of the campaign.
Related News
Solana integrates AI with ChatGPT plugin
Binance denies fund mismanagement allegations, calls it ‘conspiracy theory’
Crypto Security Firm Unciphered Claims Ability to Physically Hack Trezor T Wallet
Multichain pledges to compensate users after 'force majeure' incident
Terra Founder Do Kwon Back in Jail in Montenegro, Bail Revoked
Japan to Tighten Crypto Anti-Money Laundering Rules Next Month