The ongoing legal battle between Binance and the United States Securities and Exchange Commission (SEC) continues to escalate as court documents reveal disputes over evidence production and witness depositions.
The latest joint status report filed on January 25 sheds light on the contentious nature of this regulatory case.
The SEC asserts that there are crucial aspects of discovery related to BAM Trading Services, the parent company of Binance.US, that are still outstanding.
This dispute has arisen due to the SEC’s extensive requests for evidence, particularly concerning the custody and liquidity of assets held by Binance.US.
The regulator is keen to uncover any potential backdoor access that Binance.US might have had to control customer assets, akin to FTX.
In response, BAM Trading Services contends that they have fully adhered to the document production requirements set forth in the consent order and expedited recovery request.
They urge the court to acknowledge their compliance and to consider expedited discovery as complete for BAM.
They express the belief that the SEC’s Temporary Restraining Order (TRO) and its approach to expedited discovery have caused undue harm and burden over the past seven months.
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The consent order, which outlines the scope of the SEC’s investigation, is another bone of contention. BAM argues that the SEC’s inquiry should be limited to confirming the safety and proper accounting of customer assets.
They accuse the SEC of overstepping by broadly investigating BAM’s custody policies, procedures, and practices, both past and present.
Furthermore, the document highlights ongoing disagreements about witness examinations. Specific requests for depositions of “BAM’s former CEO and CFO,” presumably Brian Shroder and Jasmine Lee, are mentioned.
BAM argues against additional depositions of current or former BAM personnel, citing the numerous depositions that have already taken place during expedited discovery.
Additionally, discussions regarding the examination of Binance co-founder Changpeng Zhao are underway. However, disputes persist regarding the scope, timing, location, and number of depositions related to Zhao.
Zhao’s resignation as CEO of Binance in November 2023 as part of a $4.3-billion settlement with U.S. regulators adds complexity to the case.
His sentencing is scheduled for February 23, 2024, while the next status report on the case is due by February 15.
Currently, Zhao is free on a $175-million bond in the United States and faces a potential prison sentence of up to 18 months. The legal clash between Binance and the SEC appears far from reaching a resolution.
The approval of spot Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) on January 10 has raised concerns about potential misconceptions regarding cryptocurrency regulations.
Rostin Behnam, the chair of the Commodity Futures Trading Commission (CFTC), highlighted these worries in a keynote speech on January 26.
Behnam emphasized the risk of investors, both retail and institutional, misinterpreting the recent SEC decision as comprehensive regulatory oversight for Bitcoin and other cryptocurrencies.
Although spot Bitcoin ETFs can now provide exposure to the cryptocurrency, they are supervised by SEC-regulated stock exchanges.
However, Behnam pointed out that there is still a lack of regulatory oversight for the broader cash market of digital assets, which includes cryptocurrency exchanges.
He stated, “There remains nothing firmly in place to address the opaque and inconsistent practices in the cash markets for digital assets.”
This absence of regulatory clarity in the cash market has implications for the transparency of Bitcoin ETFs, as asset management firms acquire the underlying assets from this market.
Behnam expressed concerns about trade settlement, conflicts of interest, data reporting, cybersecurity, customer protections, transparency, and overall market integrity.
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Behnam also criticized the concept of Bitcoin ETFs, describing them as speculative and volatile assets wrapped in a thin layer of indirect regulation and presented as new investment products.
The issue of cryptocurrency regulation has been a prominent topic within the U.S. government, driven by the demands of the crypto industry.
In September 2023, CFTC Commissioner Caroline Pham proposed a limited pilot program to address crypto regulation, warning that the U.S. might need to catch up with crypto-friendly jurisdictions if regulatory clarity is not established.
She suggested that this program could resemble regulatory sandboxes previously implemented at the state level.
Many anticipate that there may be increased regulatory clarity following the U.S. presidential election in November.
A survey conducted on January 2 by the Crypto Council for Innovation revealed that a candidate’s stance on digital assets was considered important by most individuals in the crypto industry when deciding their vote, indicating the growing significance of cryptocurrency regulation in the political landscape.
In 2023, Polygon, a Layer-2 scaling network built to enhance Ethereum’s capabilities, came tantalizingly close to matching Ethereum’s user base, according to blockchain analytics firm Flipside.
Polygon proudly accumulated 15.24 million users during the year, falling short by just 160,000 users compared to Ethereum’s 15.4 million.
Flipside’s criteria for an acquired user was someone who conducted at least two transactions on a specific blockchain, with at least one transaction occurring in 2023.
Notably, Polygon led the race during the initial half of 2023 but relinquished its lead to Ethereum in the latter half.
Flipside shed light on Polygon’s remarkable start, amassing a whopping 2.8 million acquired users in January alone, accounting for more than 40% of the network’s total users in 2023.
Despite experiencing a steady decline in monthly user acquisition throughout the year, Polygon still performed favorably when compared to other networks.
Bitcoin secured the third position with 10.65 million acquired users, while Solana and Arbitrum occupied the fourth and fifth spots, respectively.
In total, the eight monitored blockchains recorded a sum of 62 million acquired users, encompassing platforms like Optimism, Avalanche, and Base.
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Flipside observed that user acquisition reached its zenith in May, after which it gradually receded.
Notably, the surge in acquired users began in March, coinciding with the collapse of Silicon Valley Bank.
This event potentially eroded confidence in centralized entities and prompted a shift towards decentralized custody alternatives, as suggested by Flipside.
The report also highlighted Base’s journey in 2023. Although it exhibited a strong start following its launch in August, its user volume tapered off in the closing months of the year.
Flipside attributed this decline to renewed enthusiasm for more established chains toward the end of the year, as these networks offered more robust and diverse app ecosystems.
Nevertheless, Flipside expressed optimism about Base’s future growth, speculating that the next bull run could be beneficial, especially given Coinbase’s efforts to act as a gateway for new crypto users.
In conclusion, Polygon’s remarkable performance in 2023, almost rivaling Ethereum in terms of user acquisition, underscores the growing interest in Layer-2 scaling solutions and the broader cryptocurrency ecosystem.
Investor Chris Burniske has made a bold prediction regarding the future of Bitcoin, foreseeing months of struggle ahead for the cryptocurrency as it attempts to recover its lost ground and challenge previous highs.
In a recent post on X (formerly Twitter), Burniske, who currently serves as a partner at the crypto venture capital firm Placeholder, suggested that the price of BTC could potentially drop to a minimum of $30,000.
Burniske’s outlook aligns with a growing number of crypto industry figures who are also anticipating further declines in Bitcoin’s price.
However, Burniske’s floor target is notably lower than some of his peers, indicating a more bearish stance.
He emphasized that Bitcoin may experience a period of decline, possibly testing levels in the mid-to-high $20,000s before any significant recovery toward previous all-time highs.
He cautioned investors about the potential volatility in the path ahead, including possible fakeouts, and suggested that this extended downturn could take months to play out.
Burniske’s forecast extends beyond the upcoming block subsidy halving in April, indicating that the recovery may be a longer-term endeavor.
While Bitcoin is expected to face challenges, Burniske also anticipates a more challenging situation for altcoins, warning investors to exercise patience during this period of uncertainty.
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He stressed that other cryptocurrencies may experience greater percentage declines compared to Bitcoin.
Despite his bearish outlook, Burniske made it clear that he was not inclined to change his long BTC position, expressing confidence in Bitcoin’s long-term potential.
This perspective on Bitcoin’s future aligns with the broader sentiment in the crypto industry, where several factors are influencing predictions of continued weakness in BTC’s price.
These factors include macroeconomic influences tied to U.S. financial policies and global liquidity trends, which have a significant impact on crypto markets.
Other industry figures, such as Arthur Hayes and notorious trader Il Capo of Crypto, have also made bearish predictions about Bitcoin’s price, with some suggesting the possibility of a dip to $30,000 or even $12,000.
However, some analysts, like Il Capo of Crypto, see a temporary reprieve for Bitcoin bulls and anticipate a potential rebound if key levels are reclaimed.
As of the time of writing, BTC/USD was trading near $40,000, but the future remains uncertain, with investors closely monitoring developments in the crypto market.
The Algorand Foundation made a public announcement on X (formerly known as Twitter), revealing that their CEO, Staci Warden, had fallen victim to a security breach on her X account.
In response to this incident, they urged their community members to exercise caution by refraining from clicking on any suspicious links or engaging with direct messages.
The breach came to light on January 26, when a post from Warden’s X account surfaced, containing offensive language and racial slurs while also disparaging the Algorand community.
These derogatory remarks strongly suggested that an unauthorized party had taken control of her account, Stealth Tax News reported.
Furthermore, the perpetrator of the breach encouraged the community to divest from Algorand and instead invest in Ether.
Following this provocative post, the hacker continued to share satirical content, fabricating a story wherein they claimed that Justin Sun, the founder of Tron, would elevate Algorand to unprecedented heights.
According to the hacker, all that was needed was to grant Sun “total control” over Algorand and allow him to mint any token back to True USD (TUSD).
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This fabricated narrative was presented with tongue-in-cheek humor, insinuating that they had readily accepted this proposal, which would supposedly peg Algorand to the US dollar, ushering in a new era of digital commerce.
The hacker also humorously suggested that Sun’s projects would precipitate the next “major financial collapse in crypto.”
Aside from these fabricated tales, the hacker made various changes to Warden’s X account.
They shared music, modified her profile bio, and alleged that the CEO had siphoned off six figures from the Algorand community while falsely gaslighting them into believing it was a hacking incident.
The hacker even went so far as to change Warden’s bio to claim that she had left the Algorand Foundation and had taken up a new career as a “semi-professional pole dancer.”
Surprisingly, some members of the Algorand community seemed amused by the hacker’s antics.
Some even responded to the post about Justin Sun by suggesting that Algorand should hire the hacker or allow them to maintain control of the account.
Meanwhile, others seized the opportunity to criticize Warden, with one crypto enthusiast suggesting that the hacker would make a “better CEO” for the Algorand Foundation.
Another individual humorously proposed that Warden should consider applying for an internship at the United States Securities and Exchange Commission, given their own recent security breach on X.
According to analysts at Cantor Fitzgerald, eleven of the largest publicly traded Bitcoin miners may face profitability challenges if the price of Bitcoin (BTC) does not experience a significant increase following the upcoming halving event.
CleanSpark’s executive chairman and co-founder, Matthew Shultz, shared this research on January 25th, highlighting concerns for miners like Marathon Digital, Riot Platforms, and Core Scientific, as their mining operations may no longer cover their costs.
While Bitcoin miner revenues are closely tied to BTC’s price, Luxor’s executive emphasized that miners often employ strategies to mitigate potential losses from price volatility.
Nevertheless, Cantor Fitzgerald’s assessment suggests that, at the current BTC price, UK-based Argo Blockchain and Florida-based Hut 8 could be the most vulnerable post-halving, with an “all in” cost-per-coin rate of $62,276 and $60,360, respectively.
Hut 8 reported in its January 5th update that it held 9,195 BTC, worth $377 million at current prices.
Cantor analysts only expected Singapore-based Bitdeer and US mining firm CleanSpark to maintain profitability following the halving, assuming an average BTC price of $40,000 and no drastic changes in hash rate.
The “all in per coin” metric takes into account all costs incurred in producing a single Bitcoin, including electricity and hosting fees.
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The Bitcoin halving, scheduled for April, involves cutting mining rewards in half, potentially impacting miners with high operational costs.
If BTC’s price does not cover these costs, their situation could worsen.
However, many market experts believe that the halving could drive a long-term increase in BTC’s price, which would alleviate this concern.
Dan Rosen, associate director of derivatives at Bitcoin miner Luxor, explained that miners often employ various strategies to hedge against BTC price fluctuations, such as purchasing derivatives products like hash rate futures contracts and BTC-related options.
Cointelegraph attempted to contact several Bitcoin miners mentioned in the report for comment, but no immediate responses were received.
The fate of these miners will depend on BTC’s post-halving price performance and their ability to manage operational costs in an evolving market.
The United States government’s decision to sell approximately $118 million worth of seized Silk Road Bitcoin has sparked discussions within the cryptocurrency market.
The announcement of this planned sale came through a forfeiture notice on January 10, which gained attention on social media on January 24.
This move follows the sentencing of Silk Road Xanax dealer Ryan Farace and his father Joseph Farace for money laundering conspiracy on January 8.
While some members of the crypto community expressed concerns that this auction might result in a significant Bitcoin “dump,” many market experts disagree.
Steven Lubka, the managing director at the Bitcoin exchange Swan Bitcoin, downplayed the impact of the sale, describing it as “peanuts” compared to the recent outflows from the Grayscale Bitcoin Trust (GBTC).
The GBTC has sold a substantial 106,575 BTC worth $4.2 billion since converting to a spot Bitcoin exchange-traded fund on January 11, with an additional 10,871 BTC outflow on January 24.
Furthermore, the planned sale by the U.S. government represents only 1.5% of its total holdings of approximately 194,188 BTC, equivalent to $7.7 billion, acquired from three separate seizures in criminal cases.
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This figure still accounts for less than 1% of Bitcoin’s overall circulating supply.
The three sources of Bitcoin held by the U.S. government include 94,643 BTC seized in January 2022 from the 2016 Bitfinex hack, 69,369 BTC seized in November 2020 from the Silk Road, and 51,326 BTC seized from Silk Road hacker James Zhong.
Approximately 41,000 BTC is expected to be gradually offloaded through four sales scheduled throughout 2023.
Notably, the U.S. government has a history of auctioning off seized Bitcoin assets.
In 2014, venture capitalist Tim Draper purchased nearly 30,000 BTC through such an auction.
More recently, the government has opted to sell seized cryptocurrencies on exchanges instead of holding auctions, with the last known sale involving 9,118 BTC in March 2023.
Overall, the upcoming sale of seized Silk Road Bitcoin by the U.S. government is expected to have a limited impact on the cryptocurrency market, given its relatively small scale compared to recent market activities and the government’s total holdings.
Former Binance CEO Changpeng Zhao, who is facing money laundering charges, attempted to use his multibillion-dollar stake in Binance.US as collateral to secure temporary travel permission back to the United Arab Emirates (UAE).
This information comes from a recently unsealed court filing dated January 24, which revealed a previously sealed letter from Zhao’s lawyers to Judge Richard Jones, dated December 22.
In the letter, it was disclosed that Changpeng Zhao had sought permission to travel to the UAE for up to four weeks in early January to visit a friend or family member undergoing surgery and recuperating in a hospital.
The value of his equity in Binance.US, estimated at $4.5 billion based on a funding round from two years ago, was offered as collateral.
However, federal prosecutors did not approve this request, and Judge Richard Jones subsequently denied it during a closed-door hearing on December 29.
Changpeng Zhao had previously been prohibited from traveling to the UAE as part of his bond conditions. Judge Jones argued that his substantial wealth and overseas assets made him a flight risk if he returned to the UAE.
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As a result, Zhao is required to remain in the United States until his sentencing on February 23.
His current whereabouts within the country are unknown, and his activity on X, a social media platform, has been minimal since December 6, 2023.
Changpeng Zhao’s legal troubles began when he resigned as CEO of Binance in November 2022, as part of a $4.3 billion settlement with U.S. regulators.
In his admission, he acknowledged running an unlicensed money-transmitting business and violating the Bank Secrecy Act.
Now, Zhao faces a potential prison sentence of up to 18 months and has agreed not to appeal any sentence within that range.
Some details in the recently unsealed letter remain redacted, including the identity of the person undergoing surgery, the nature of the surgery, and other sensitive and personal information.
Blackberry, the renowned tech giant once dominating the mobile phone industry, has sounded the alarm regarding a financially motivated attacker with their research and intelligence division.
This malevolent entity is setting its sights on numerous high-net-worth Mexican cryptocurrency exchanges and banks.
In a detailed report, Blackberry unveiled the attack strategy, which revolves around an attempt to pilfer sensitive user information from banks and cryptocurrency trading platforms.
The weapon of choice for the attacker is an open-source remote access tool known as AllaKore RAT.
This threat operates by infiltrating company-owned computers and databases, often camouflaging itself with official naming conventions and links, thereby slipping under the radar of unsuspecting employees.
The report goes on to highlight the insidious nature of the AllaKore RAT payload, which has been substantially modified to enable the perpetrators to transmit stolen banking credentials and unique authentication data to a command-and-control (C2) server.
This stolen information is then exploited for financial fraud.
Notably, the attackers appear to have a predilection for large companies with gross revenues exceeding $100 million, which typically report directly to the Mexican Social Security Institute (IMSS), according to Blackberry’s findings.
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The majority of these attacks can be traced back to Mexican Starlink IP addresses. Additionally, the use of Spanish-language instructions within the modified RAT payload led Blackberry to conclude that the threat actors are likely based in Latin America.
The latest versions of the AllaKore RAT exhibit a more intricate installation process. They are delivered to their targets within a Microsoft software installer file, with execution contingent on confirming the victim’s location as Mexico.
However, the threat is not confined solely to major banks and crypto trading services.
Large Mexican corporations from various sectors, including retail, agriculture, public administration, manufacturing, transportation, commercial services, and capital goods, are also in the crosshairs of this malicious campaign.
Meanwhile, the cybersecurity landscape continues to witness a surge in basic phishing attacks, with an alarming success rate in stealing funds.
Just recently, on January 20th, the contact details of nearly 66,000 users of the hardware wallet manufacturer Trezor were exposed in a security breach.
Trezor, while reassuring its users that their funds remained secure, cautioned against sharing sensitive information unless properly verified, as attackers had begun sending direct email requests for sensitive recovery seed data to at least 41 users.
With numerous data breaches plaguing the cryptocurrency ecosystem, investors are urged to exercise extreme caution and verify the authenticity of requests for sensitive information.
Trezor, a renowned hardware wallet provider, has confirmed that a recent surge in malicious emails sent to its users over the past 24 hours was a result of unauthorized use of its third-party email provider.
On January 24th, Trezor detected an unauthorized email impersonating the company, originating from a third-party email service they employ.
The fraudulent email, appearing to be from “noreply@trezor.io,” directed users to upgrade their “network” or risk losing their funds.
It included a malicious link leading to a webpage where users were prompted to enter their seed phrase.
While there is no official confirmation of users losing funds to this phishing attempt, there have been no reports indicating any Trezor users falling victim to the scam.
Trezor took swift action to deactivate the malicious link and assured users that their funds remain secure as long as they refrain from entering their recovery seed.
For those who did enter their recovery seed, Trezor strongly recommends transferring their assets to a new wallet immediately.
Trezor’s investigation has revealed that an unauthorized individual gained access to their database of email addresses for newsletter subscribers and used a third-party email service to distribute the malicious emails.
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As long as users have not disclosed their 12 or 24-word recovery seed through any online form, their assets remain safe.
Interestingly, a few days before this incident, MailerLite, an email marketing software firm, reported a cybersecurity breach on January 23rd, resulting in a series of phishing emails using branded domains, including those associated with Cointelegraph, WalletConnect, and Token Terminal.
These attacks collectively led to losses exceeding $3.3 million through phishing attacks. It remains unclear whether Trezor utilizes the same email domain provider as those affected.
Some suspect that this attack may be linked to a recent security breach involving Trezor’s support portal, where the contact information of nearly 66,000 users was exposed on January 17th.
Trezor promptly took measures to restrict unauthorized access and began notifying affected users.
Digital asset lawyer Joe Carlasare revealed his personal encounter with the phishing email, describing it as a “sophisticated scam.”
This incident is not the first time Trezor has faced phishing threats, as they previously cautioned users in February 2023 about a similar attack aimed at stealing investor funds by tricking them into entering their recovery phrase on a fake Trezor website.
Additionally, in May, cybersecurity firm Kaspersky reported a fake hardware wallet impersonating Trezor that attempted to steal funds by replacing the microcontroller, allowing the attackers to gain control of users’ private keys.