A recent report by blockchain research firm Chainalysis suggests that the United States government’s regulatory oversight over the stablecoin market may be slipping away.
In their latest North America cryptocurrency report released on October 23, Chainalysis highlights a growing trend of stablecoin activity taking place outside the purview of U.S. regulatory authorities.
According to Chainalysis’ findings, there has been a significant shift in stablecoin inflows away from U.S.-licensed entities towards non-U.S.-licensed ones since the spring of 2023.
Specifically, as of June 2023, approximately 55% of stablecoin inflows into the top 50 cryptocurrency services were directed to non-U.S.-licensed exchanges.
This shift in stablecoin activity raises concerns about the diminishing ability of the U.S. government to effectively regulate the stablecoin market.
Concurrently, it means that U.S. consumers may be missing out on opportunities to engage with regulated stablecoins that offer greater protection and oversight.
Chainalysis notes that while U.S. entities played a pivotal role in legitimizing and nurturing the stablecoin market, an increasing number of cryptocurrency users are now conducting stablecoin-related activities through trading platforms and issuers headquartered abroad.
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This shift comes as U.S. lawmakers grapple with the complexities of regulating stablecoins.
Congress is still considering various bills, such as the Clarity for Payment Stablecoins Act and the Responsible Financial Innovation Act, without clear and finalized regulatory frameworks in place.
Despite the decline in licensed stablecoin activity within the United States, North America has become the largest cryptocurrency market.
Between July 2022 and June 2023, the region attracted an estimated $1.2 trillion in cryptocurrency transactions, representing 24.4% of the global transaction volume during this period.
This surge in North American cryptocurrency activity has surpassed the transaction volumes of Central, Northern, and Western Europe, which collectively received approximately $1 trillion.
In conclusion, the Chainalysis report highlights the shifting landscape of the stablecoin market, with regulatory oversight in the United States facing challenges as activity increasingly moves abroad.
It underscores the need for clear and effective regulations to ensure both consumer protection and the continued growth of the cryptocurrency industry in the United States.
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Worldcoin, the cryptocurrency project known for its innovative use of eye-scanning technology, is making significant changes to its payment system for Orb Operators.
These operators, responsible for scanning people’s irises in exchange for Worldcoin (WLD) tokens, will no longer be compensated in USD Coin (USDC) starting next month, according to an announcement made on October 22.
This shift will impact most regions where the project operates.
Worldcoin views this transition as a crucial phase in its development, following its official launch on July 24.
A pilot program initiated by the Worldcoin Foundation on October 10 already began granting selected operators payment in WLD tokens, and it aims to complete this transition process by November 2023.
Notably, Worldcoin tokens are currently unavailable to individuals and companies residing in the United States and certain other restricted territories.
Data from Worldcoin’s official Dune Analytics dashboard reveals that the supply of WLD tokens has increased from approximately 100 million at launch to around 134 million at the time of this announcement.
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Out of the 134 million WLD tokens issued, 100 million were allocated as loans to market makers, while the remaining 34 million were distributed to Orb operators and new users through free user grants.
Five market-making entities received the initial 100 million WLD loans, originally set to expire on October 24, 2023.
However, Worldcoin has decided to extend the loan expiration date to December 15, reducing the amount to 75 million WLD.
The announcement states that market makers will either return or purchase the remaining 25 million WLD tokens as part of the agreement.
Worldcoin’s native WLD token experienced a rollercoaster ride in its price since its launch.
After reaching an all-time high of $2.65 on July 27, it witnessed a 63% drop, hitting as low as $0.97 on September 13.
As of now, the token is trading at $1.64, marking a slight recovery in recent weeks, as per TradingView data.
These developments mark a significant evolution in Worldcoin’s strategy as it continues to develop its cryptocurrency ecosystem.
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FTX users have fallen victim to a withdrawal scam that has raised concerns within the community.
Sunil, a prominent advocate for FTX creditors, sounded the alarm on Twitter, cautioning FTX account holders to be wary of a phishing scam and advising them against clicking on suspicious links.
This incident sheds light on the ever-evolving tactics employed by online scammers to exploit unsuspecting victims.
Reports from FTX users have revealed that they received deceptive emails supposedly originating from FTX Trading, West Realm Shires Services, and FTX EU.
These fraudulent emails falsely promise FTX creditors an exclusive opportunity for immediate asset withdrawals, circumventing waiting periods and legal proceedings. One such email read:
“We are excited to offer the valued priority clients of FTX Trading Ltd., West Realm Shires Services Inc., and FTX EU Ltd., a special opportunity starting today, Oct. 20, 2023.
As a priority client, you can now undergo the withdrawal process for your assets on the FTX platform and deposit them directly into your wallet, eliminating any waiting period and court outcomes.”
These deceptive emails specifically target users who are eager to withdraw their assets amidst the ongoing legal disputes involving Sam Bankman-Fried, the former CEO of the exchange.
]This timing plays into the hands of scammers looking to capitalize on the uncertainty and impatience of FTX users involved in these disputes.
Notably, this scam emerged shortly after FTX creditors achieved a significant milestone by announcing the resolution of customer property disputes.
Pending approval from a bankruptcy court, the revised plan holds the promise of substantial relief for FTX’s global customer base.
According to the proposed plan, customers would be entitled to receive over 90% of the distributable value, potentially offering a much-needed reprieve for those affected by the exchange’s troubles.
In conclusion, FTX users are currently facing a withdrawal scam that preys on their eagerness to access their assets amidst ongoing legal complications.
It is essential for FTX account holders to exercise caution, avoid clicking on suspicious links, and verify the authenticity of any communication they receive from the exchange to protect themselves from falling victim to these malicious schemes.
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In a recent court testimony on October 19, former FTX CEO Sam Bankman-Fried was alleged to have instructed his former general counsel, Can Sun, to find a legal explanation for the glaring $8 billion discrepancy in Alameda Research’s financial records.
Sun, who had flown from Japan as part of a non-prosecution agreement with the United States Department of Justice, disclosed this startling information during the ongoing trial.
Sun revealed that he became aware of the substantial financial hole between the two companies on November 7, when he received a spreadsheet detailing the debt.
He expressed his astonishment to the jurors, saying, “I was shocked.” The spreadsheet was initially intended for asset manager Apollo Capital, as FTX was seeking new funding during the tumultuous financial period of early November.
When Apollo Capital inquired about the $8 billion discrepancy, Bankman-Fried reportedly urged Sun to “come up with a legal justification.”
During his testimony, Sun admitted that he had explored various legal options, such as dormancy fees and collateral liquidations during the market downturn.
However, the missing funds were too substantial to be easily explained away. Moreover, FTX’s terms of service explicitly stated that users’ funds were not the property of FTX Trading.
This further complicated efforts to justify the discrepancy.
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Sun claimed that Bankman-Fried appeared unfazed by the situation, while former engineering director Nishad Singh seemed deeply troubled by it.
On the same day, Sun learned from Singh about Alameda’s $65 billion line of credit with FTX. Following this revelation, Sun resigned from his position at the exchange, more than a year after joining.
During his tenure at FTX, Sun had relied on Bankman-Fried’s assurances that user funds were segregated, and he had produced legal documents for FTX while responding to inquiries from regulators.
Sun emphasized that he would never have approved such discrepancies.
The trial of Sam Bankman-Fried has been marked by a series of testimonies from witnesses, including Can Sun. Prosecutors are expected to conclude their case on October 26 after hearing from two more witnesses. It remains uncertain whether Bankman-Fried’s defense will present its case.
Bankman-Fried is facing seven counts of fraud and conspiracy to commit fraud in connection with FTX customers and investors.
If found guilty, he could potentially face a maximum sentence of 115 years in prison. The trial continues to unfold, and the legal community is closely following the developments.
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Binance, the prominent cryptocurrency exchange, has recently revealed its new partners to facilitate euro-related transactions, marking a significant development in the aftermath of losing its previous fiat collaborator, PaySafe, in September.
In an announcement on October 19th, Binance disclosed that it had inked agreements with fresh fiat partners to manage euro-based payments, deposits, and withdrawals.
This strategic maneuver comes in the wake of challenging regulatory and financial hurdles within the European Union, prompting Binance to seek alternative banking partnerships after parting ways with PaySafe the previous month.
While the exchange did not divulge the identities of these new partners, it indicated that users have already started transitioning to the services offered by these regulated and authorized fiat collaborators.
These newly secured fiat partners will offer an array of services, including euro deposits and withdrawals facilitated through Open Banking and SEPA/SEPA Instant.
Additionally, users will have the ability to purchase and trade cryptocurrencies through the Single Euro Payments Area (SEPA), bank cards, and fiat balances, as well as engage in trading euro spot pairs.
In late September, Binance had urged its European user base to convert their euros into Tether (USDT) by the end of October.
However, this recent announcement may signal a shift in this strategy.
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Despite the positive news, some users continue to experience difficulties depositing euros, while inquiries about fiat partners for the British pound in the United Kingdom persist.
It should be noted that PaySafe had ceased support for transactions involving British pounds in May due to concerns raised by U.K. financial regulators.
Furthermore, on October 16th, Binance took the decision to suspend access to its exchange for new users residing in the United Kingdom.
This move followed the termination of a third-party partnership responsible for authorizing communications on the platform, a response to new local regulations imposed by the Financial Conduct Authority (FCA).
As of now, Binance has not yet established fiat partnerships for its U.K. exchange, leaving British users unable to deposit pounds.
In an attempt to gather more information, Cointelegraph reached out to Binance, but a detailed response was not immediately forthcoming.
These recent developments underscore the cryptocurrency industry’s ongoing challenges in navigating regulatory landscapes and establishing secure financial partnerships.
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In her opening address at the International Monetary Fund’s seminar on financial inclusion in Marrakesh, Morocco, Kristalina Georgieva, the Managing Director of the IMF, underscored the pivotal role of digitalization in advancing financial inclusion.
She emphasized that digitalization represents “the most important way” to expand access to financial services, asserting that it facilitates the flow of aid to individuals, spurs investment, and propels economic growth.
To illustrate this point, Georgieva referenced the successful implementation of digital cash transfers in Togo during the height of the COVID-19 pandemic.
While advocating for comprehensive national strategies to promote financial inclusion, Georgieva also cautioned against overlooking the potential risks associated with digitalization.
She highlighted the link between digitalization and financial stability risks, urging a balanced approach in harnessing the benefits of technology while safeguarding against potential pitfalls.
In recent times, the IMF has actively engaged in the examination of necessary regulations for cryptocurrencies.
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On September 29th, the IMF introduced a crypto-risk assessment matrix (C-RAM) designed to assist countries in identifying indicators and triggers of potential risks within the cryptocurrency sector.
Notably, the IMF collaborated with the Bank for International Settlements (BIS) to develop a Synthesis paper, which garnered unanimous approval in the “G20 Finance Ministers and Central Bank Governors Communique” in October.
The paper advocates for a comprehensive regulatory framework for cryptocurrencies rather than an outright ban.
Its high-level recommendations emphasize the importance of international cooperation and information sharing among regulatory bodies, the need for robust governance and risk management frameworks for cryptocurrency companies, and ensuring that relevant data is made available to regulatory authorities by these companies.
In conclusion, Kristalina Georgieva’s address at the IMF’s seminar in Marrakesh highlighted the critical role of digitalization in expanding financial inclusion.
While emphasizing the potential benefits, she also stressed the importance of addressing associated risks.
The IMF’s proactive stance on cryptocurrency regulation, as evidenced by the C-RAM and the Synthesis paper, underscores the organization’s commitment to fostering a balanced and secure environment for emerging financial technologies.
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FTX and FTX.US, both embroiled in bankruptcy, have taken a significant step toward resolving their customer asset disputes.
A proposed settlement has been reached between FTX creditors and debtors, potentially returning over 90% of assets to customers by the second quarter of 2024.
On October 17, FTX debtors announced a “major milestone” in their Chapter 11 case following extensive discussions with various parties, including the unsecured creditors’ committee, non-U.S. customers, and class action plaintiffs, all related to customer property disputes.
While an information-only notice of the proposed settlement was filed with a Delaware-based U.S. bankruptcy court on October 16, the official filing for court approval is expected by December 16.
Central to the amended plan is the “shortfall claim,” which estimates that customers of FTX.com and FTX.US will collectively receive approximately 90% of the available assets.
This claim is valued at around $8.9 billion for FTX.com and $166 million for FTX.US.
Pending approval, these funds are anticipated to be distributed by the end of the second quarter of 2024.
FTX CEO and Chief Restructuring Officer John J. Ray III expressed satisfaction with the settlement terms, stating that it has transformed what could have been a near-total loss for customers, especially given the challenging financial circumstances.
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The plan divides assets into three pools, specifically designated for FTX.com customers, U.S. customers, and a general pool of other assets.
However, only the first two groups are included in the shortfall claim, suggesting that customers of both exchanges will not receive full payments, with FTX.com customers likely to bear a higher percentage of losses.
A noteworthy aspect of the proposed plan addresses customers who withdrew over $250,000 from the exchange within nine days of bankruptcy.
These customers may face a 15% reduction in their claims. However, claims under $250,000 will remain unaffected.
FTX debtors clarified that eligible customers with preference settlement amounts below $250,000 during the nine-day period would receive the settlement without any claim reduction.
Additionally, as part of the amended plan, FTX may exclude insiders, affiliates, and customers with knowledge of the misuse of customer deposits and corporate funds from the settlement.
Notably, former FTX CEO Sam Bankman-Fried is currently facing a fraud trial linked to FTX’s bankruptcy last November.
The outcome of this trial could also impact the ongoing bankruptcy proceedings.
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FTX co-founder, Sam Bankman-Fried, has reached out to a United States judge in a plea for long-release Adderall, citing difficulties in maintaining concentration during his ongoing criminal trial.
Bankman-Fried’s legal team submitted a letter to New York District Judge Lewis Kaplan on October 15th, requesting permission for him to take a “12-hour extended-release 20mg dose of Adderall” before he’s transported to the trial on October 16th.
In their letter, the lawyers emphasized that the absence of the prescribed stimulant during trial hours has severely impacted Bankman-Fried’s ability to focus at his usual level.
As the crucial moments of his defense strategy and the decision of whether he will testify loom closer, there are growing concerns that the FTX founder won’t be able to actively participate in presenting his defense without his medication.
The letter revealed that despite the absence of medication, Bankman-Fried has been making diligent efforts to remain focused during the trial.
However, even if he is granted the requested medication, there remains uncertainty about whether the extended-release dose will be effective.
To address this situation, Bankman-Fried’s legal team proposed two potential solutions to Judge Kaplan.
Firstly, they requested that the trial be paused for one day on Tuesday, October 17th, if Bankman-Fried cannot receive the long-release dose or if it proves ineffective.
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This would allow time to find an alternative solution for the remainder of the trial. Alternatively, they asked for permission to provide Bankman-Fried with his prescription of Adderall at the District Court during the trial.
The lawyers noted that they had attempted to resolve this issue with the Bureau of Prisons but had received no response to their five attempts to contact them between October 5th and October 12th.
Judge Kaplan had previously approved a motion to allow Bankman-Fried access to Adderall and anti-depressant medication while in prison on August 14th.
This decision was based on his history of major depressive disorder and attention deficit hyperactivity disorder (ADHD) and his psychiatric care since early 2019.
However, in an August 22nd hearing, Bankman-Fried’s legal team had complained about his lack of access to Adderall, stating that he had not received the medication for 11 days.
As Bankman-Fried’s criminal trial enters its third week, various witnesses, including former associates and his ex-girlfriend, have provided testimonies. Bankman-Fried has pleaded not guilty, maintaining his innocence throughout the trial.
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Latin America, according to a recent report by blockchain analytics firm Chainalysis, exhibits a strong preference for centralized exchanges (CEXs) over decentralized exchanges (DEXs) when it comes to cryptocurrency trading.
Despite having the seventh-largest crypto economy globally, Latin America lags behind regions like the Middle East and North America (MENA), Eastern Asia, and Eastern Europe.
The report, published on October 11, reveals that the crypto community in Latin America has a distinct leaning towards CEXs.
Chainalysis notes, “Latin America shows the highest preference for centralized exchanges of any region we study, and tilts slightly away from institutional activity compared to other regions.”
In some countries within the region, this preference for CEXs is even more pronounced when compared to the global average.
Worldwide, 48.1% of crypto users prefer CEXs, 44% opt for DEXs, and 5.9% engage in other decentralized finance (DeFi) activities.
However, in Venezuela, an astonishing 92.5% of users prefer CEXs, while only 5.6% favor DEXs.
The report attributes Venezuela’s strong adoption of crypto to its unique circumstances, particularly a “complex humanitarian emergency.”
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During the COVID-19 pandemic in 2020, cryptocurrency played a crucial role in providing direct assistance to healthcare professionals in the country.
Traditional payment methods were impractical due to the government’s reluctance to accept international aid for political reasons.
Colombia also exhibits a significant preference for CEXs, with 74% of users favoring them over DEXs, which account for just 21.1% of preferences.
Meanwhile, Argentina leads in terms of cryptocurrency transaction volume in Latin America, with an estimated $85.4 billion received in a 12-month period ending on July 1.
However, the country has faced regulatory challenges, with its central bank banning payment providers from offering crypto transactions to reduce exposure to digital assets.
This move aimed to subject fintech companies to the same regulations as traditional financial institutions.
Despite these challenges, three Latin American countries secured positions in the top 20 ranks on Chainalysis’ Global Crypto Adoption Index.
Brazil holds the ninth position, followed by Argentina at 15th and Mexico at 16th.
The top position globally was claimed by India, with Nigeria and Vietnam ranking second and third, respectively.
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On October 14, 2023, Ethereum wallet MetaMask experienced a temporary removal from Apple’s App Store, sparking concerns within the cryptocurrency community about the possibility of a permanent expulsion from the marketplace.
MetaMask, a popular wallet known for its integration with various Web3 decentralized applications (DApps), boasts a user base of over 30 million individuals worldwide.
Reports emerged on that day, indicating that the MetaMask app had vanished from the App Store, leaving Apple users unable to download it directly from the MetaMask website.
However, MetaMask promptly reassured its users that the situation did not stem from any security breaches or malicious activity.
A MetaMask spokesperson stated, “We’re aware that MetaMask isn’t currently available for download on the App Store.
This issue is unrelated to any malicious activity. Our dedicated team is working diligently to resolve it as quickly as possible.
Importantly, this is not a security concern, and there is no compromise or action required on users’ part.
Additionally, it’s not related to the app’s functionality.”
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The likely cause behind MetaMask’s removal was Apple’s stringent service policies, which prohibit apps from running “unrelated background processes,” including cryptocurrency mining.
MetaMask expressed confidence that this removal was temporary and expected the app to return to the App Store shortly.
They also urged users to report any fake MetaMask apps that might have appeared during the removal.
This incident marked the second time that MetaMask faced challenges from major tech marketplaces.
In December 2019, the company encountered suspension from Google Play’s app store, with allegations of violating the platform’s financial services guidelines. Google cited its policy against cryptocurrency mining on mobile devices and rejected MetaMask’s appeal to reverse the ban.
Apple’s guidelines, which necessitate app developers to share 30% of transaction revenues with the platform, pose another obstacle for crypto firms.
This requirement has been a point of contention for companies, particularly those that wish to provide iOS users with the capability to purchase nonfungible tokens (NFTs) and engage in cryptocurrency-related activities.
In conclusion, while MetaMask’s temporary removal from the App Store raised concerns, the company remains committed to resolving the issue and returning to the platform.
The incident highlights the ongoing challenges faced by cryptocurrency-related apps in complying with the policies of major tech giants.
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