In a recent development, an unknown entity has executed a significant Bitcoin transfer, worth over $160 million, from a wallet connected to the Luna Foundation Guard (LFG).
This organization is associated with Terraform Labs and its co-founder, Do Kwon.
On July 3, the unidentified party moved 5,292 Bitcoin (BTC), equivalent to approximately $30,719 per coin, from an LFG address to a wallet that does not appear to be linked to Terra.
At the time of this report, the total value of the transferred cryptocurrency amounted to roughly $161 million.
This transfer is part of a series of movements of crypto assets from LFG-controlled wallets, which have been occurring since the collapse of Terra in May 2022.
Analysis of blockchain data reveals that the reported LFG wallet held about 6,983 BTC in October 2022, with several transactions dispersing funds to different addresses over the past nine months.
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As of now, the wallet contains a balance of 0.152427 BTC, valued at approximately $4,649.
While South Korean news outlets have claimed that the sender’s wallet address is associated with LFG, this assertion has not been independently verified by Cointelegraph.
It is important to note that the Luna Foundation Guard was established to mitigate the volatility of LUNA tokens by supporting the project with TerraUSD.
Unfortunately, this approach ultimately proved unsuccessful.
The exact amount of digital assets moved by Kwon or other individuals associated with Terra during its collapse remains unclear.
In February, the United States Securities and Exchange Commission reported that Kwon and Terra were involved in laundering over $100 million worth of BTC.
Additionally, South Korean prosecutors identified more than $314 million in crypto assets connected to Kwon and his associates, some of which were subsequently frozen.
After evading authorities for several months following Terra’s collapse, Kwon was arrested in Montenegro in March for allegedly using counterfeit travel documents.
In June, he and former Terra chief financial officer Han Chong-joon were sentenced to four months in prison.
This recent Bitcoin transfer from an LFG-controlled wallet further adds to the complexity and ongoing investigations surrounding Terra and its affiliated entities.
The implications of these movements and the future of the individuals involved remain uncertain as legal proceedings continue.
According to Blockstream CEO Adam Back, the Bitcoin ecosystem has been hindered by the prevalence of initial coin offerings (ICOs) and the subsequent focus of venture capitalists (VCs) on non-Bitcoin investments.
In a conversation with Cointelegraph’s Joseph Hall at the Lugano Plan B Summer School in Switzerland, Back highlighted the disparity between the lack of VC investment in Bitcoin and its dominant position in the overall cryptocurrency market.
Back referred to a market research report by Trammell Venture Partners, which revealed that VC flows into the ICO frenzy surged after the launch of Ethereum and smart contracts.
However, this trend has declined in recent years as investors sought early liquidity by purchasing discounted tokens and selling them to retail investors before the products were even available.
Back argued that although ICOs generated profits for investors, they often failed to deliver usable products due to misaligned incentives.
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The Trammell Ventures report indicated that 97% of VC investments in recent years went into “crypto” rather than Bitcoin.
Back emphasized that ICOs, altcoins, and discounted tokens attracted significant investor attention, which was surprising considering the actual real-world utility and adoption of Bitcoin.
He noted that exchange volume primarily consisted of Bitcoin, while the majority of VC spending went to “crypto” ICOs, highlighting the misallocation of resources.
Back pointed out that the underfunding of the Bitcoin space by these types of investors hindered innovation and the creation of valuable products.
However, he also mentioned a positive trend: investment in Bitcoin-related startups, especially at the early stage, had doubled in the last year, indicating renewed interest.
In addition to the discussion on VC funding, it was revealed that Twitter co-founder Jack Dorsey donated $5 million to Brink, a nonprofit organization that supports Bitcoin developers.
Back’s company, Blockstream, and Lightning Labs were recognized as significant contributors to the ongoing development of the Bitcoin protocol, with each employing eight developers dedicated to maintaining the leading cryptocurrency.
Overall, the impact of ICOs on the Bitcoin ecosystem has been significant, with VCs showing a preference for non-Bitcoin investments.
However, recent trends suggest a shift in funding behavior, with renewed interest in Bitcoin-related startups and increased support for Bitcoin developers.
This development bodes well for the continued innovation and advancement of the Bitcoin ecosystem.
The co-founders of Three Arrows Capital (3AC), a crypto hedge fund that collapsed in 2022, have pledged to donate a portion of their earnings from their latest crypto venture to the creditors who suffered losses in the fund’s collapse.
Kyle Davies, one of the co-founders, made this announcement during a Twitter Space session on July 3.
Davies believes that donating the potential earnings from their new venture, Open Exchange (OPNX), would be a gesture of good karma towards the creditors of 3AC.
Davies described this proposed payback scheme as a “shadow recovery process” that operates independently of the official liquidation process currently being handled by Teneo, a global consulting firm.
He claims that this process is the first of its kind and would allow him and his partner to donate funds to 3AC’s creditors, but only if they were early supporters of OPNX.
Davies stated that there are already several creditors who have been fully compensated and emphasized that those who prefer not to engage with them are free to make that choice.
Davies further explained that their belief is that by doing good and providing an opportunity for creditors to recover their losses, they are creating positive karma.
He dismissed concerns about launching a new venture while their hedge fund is still undergoing liquidation, asserting that creditors stand to benefit from the new company.
However, the launch of OPNX has not been without controversy.
Davies and his partner have faced criticism from the crypto community for embarking on a new venture while seemingly evading responsibility for the collapse of their hedge fund.
Three Arrows Capital filed for Chapter 15 bankruptcy protection on July 1, 2022, and court documents revealed that the fund owes over $2.8 billion to more than 20 firms.
The whereabouts of Davies and his partner remain unknown, and liquidators have resorted to serving them subpoenas through Twitter due to difficulties in locating them.
A recent report by The New York Times suggests that Davies and his partner have been spending much of their time surfing in Bali.
Most recently, on June 27, liquidators announced their intent to recover $1.3 billion in lost funds from the co-founders of 3AC.
The unfolding situation continues to attract attention as stakeholders await further developments in the liquidation process and the outcome of the proposed donation scheme.
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Gemini’s Founder and CEO, Cameron Winklevoss, is once again threatening legal action against Digital Currency Group (DCG) and its CEO, Barry Silbert, over delays in resolving the issue of funds owed to Gemini by bankrupt lender Genesis.
In an open letter to Silbert on July 4, Winklevoss accused DCG of engaging in fraudulent behavior, creating a culture of lies and deceit that has negatively impacted Gemini’s 232,000 Earn users.
One of the key accusations in Winklevoss’ letter is that Silbert intentionally delayed the resolution by abusing the mediation process.
Winklevoss claims that through mediation, DCG has obtained an indefinite forbearance on the $630 million it owes Genesis, essentially for free.
Winklevoss expressed his dismay at Silbert’s attempt to portray himself as a victim in this situation, stating that it takes a special kind of person to owe billions of dollars and still consider themselves a victim.
Genesis, the lender behind Gemini’s Earn program, temporarily suspended withdrawals on November 16, 2022, citing unprecedented market turmoil.
Subsequently, Genesis filed for bankruptcy on January 19, 2023, leaving Gemini seeking to recover its portion of the outstanding debt.
However, Winklevoss claims that there have been multiple delays in resolving the matter, leading him to take a decisive stance. He warned Silbert that his games are over and demanded acceptance of Gemini’s best and final offer by 4 pm Eastern Time on July 6.
Failure to comply would result in a lawsuit on July 7.
Gemini’s offer to DCG includes a payment of $275 million by July 21, an additional $355 million before July 21, 2025, and a final payment of $835 million by July 21, 2028.
The total payment amounts to $1.47 billion. Winklevoss specifically requested that the payments be made in the form of Bitcoin (BTC), Ether (ETH), and the United States dollar.
The funds would be sourced from various entities, including Genesis Global Trading, potential payouts from FTX and Alameda Research’s bankruptcy estates, and tokens such as Avalanche (AVAX) and Near (NEAR) that may be claimed from the Three Arrows Capital’s bankruptcy estate.
Cointelegraph reached out to DCG for comment, but there was no immediate response.
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Polygon Labs has unveiled its proposed architecture for the upcoming “Polygon 2.0” project.
The team has outlined four distinct layers that will interconnect to establish a web of networks, all ultimately linked through Ethereum.
If approved by validators, Polygon 2.0 will introduce an aggregator that facilitates near-instant and atomic bridge transactions.
Initially announced on June 12, Polygon 2.0 aims to establish the value layer of the internet; however, specific details were scarce at that time.
Co-founder Mihailo Bjelic later suggested on June 20 that upgrading the current Polygon network to incorporate zero-knowledge proofs would be crucial for aligning the existing network with the vision of 2.0.
In a blog post on June 30, Polygon Labs provided a more comprehensive overview of Polygon 2.0. The project’s foundation will consist of the staking layer that already exists.
This layer comprises a validator manager contract on Ethereum, along with a chain manager contract for each individual Polygon chain. New Polygon chains will be able to form in the future by launching new chain manager contracts on Ethereum.
The staking layer will connect to an interoperability layer, which will incorporate bridges linking each Polygon chain to one another through Ethereum.
The security of this layer will be ensured through the use of zero-knowledge proofs for validating all transfers.
Additionally, the interoperability layer will incorporate an aggregator that combines individual zero-knowledge proofs from each bridge into a single proof before transmitting it to Ethereum. This mechanism will enable seamless bridge transactions and significantly reduce Ethereum gas consumption required for proof verification.
The third layer of Polygon 2.0 will be the existing execution layer, which relies on the Erigon Ethereum client.
The fourth layer, known as the proving layer, will standardize the zero-knowledge proof process across all Polygon chains.
The team has promised to provide further details about each layer in the future.
Polygon is not the only network aiming to expand into a multichain ecosystem.
zkSync Era has announced plans to create a network of “Hyperchains” and aims to launch them on a testnet by year-end.
Optimism, in collaboration with Coinbase’s Base network, is also working on creating a “Superchain” and has recently implemented the “Bedrock” upgrade to facilitate this transformation.
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The CEO of LayerZero, Bryan Pellegrino, expressed optimism about the future of the crypto industry, stating that the present situation is not as dire as it was in 2015.
Speaking at the Collision conference in Toronto, Pellegrino emphasized the significant growth of LayerZero’s cross-chain interoperability protocol.
He revealed that the protocol’s usage has surged from 10,000 messages per day six months ago to an impressive 650,000 messages per day currently.
While decentralized finance (DeFi) has historically accounted for around 70% of LayerZero’s overall volume, Pellegrino highlighted the increasing interest from the gaming and non-fungible token (NFT) sectors, which now constitute 80% of their inbound activity.
Pellegrino predicted that the next 36 months will witness substantial changes in LayerZero and the industry as a whole.
He noted the multitude of groundbreaking projects being developed and the involvement of important external entities.
Pellegrino emphasized the growing market share of LayerZero alongside its rising usage. He referred to LayerZero as the critical infrastructure that will underpin virtually everything reliant on blockchain technology.
In the emerging multichain environment, Pellegrino argued that even staunch advocates of specific blockchain ecosystems, such as Anatoly Yakovenko of Solana and Vitalik Buterin of Ethereum, recognize the need for interoperability and the coexistence of multiple chains.
In April, LayerZero completed a Series B funding round, securing $120 million in investments. Notable participants included Sequoia Capital, Andreessen Horowitz, BOND, Circle Ventures, Christie’s, OpenSea Ventures, and Samsung Next.
This funding round boosted LayerZero’s valuation to $3 billion. The company has ambitious plans for expansion, including venturing into the Asia-Pacific region.
Furthermore, Pellegrino highlighted a recent integration of LayerZero’s messaging protocol by zkLinkorg to facilitate omnichain trade settlement.
This integration demonstrates the composability of LayerZero, enabling omnichain applications (Oapps) to enhance their own application security by utilizing the protocol.
Overall, Pellegrino’s positive outlook, supported by the impressive growth of LayerZero’s protocol and the increasing involvement of key industry players, signals a promising future for the crypto industry.
As LayerZero continues to evolve and expand its market share, it solidifies its position as a crucial component of the blockchain ecosystem in an era of growing multichain adoption.
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The Australian Securities Exchange (ASX) is unlikely to directly list a cryptocurrency on its exchange but is open to the idea of listing tokenized real-world assets, such as gold.
The ASX’s Chief Information Officer and Group Executive of Technology and Data, Dan Chesterman, explained that listing a cryptocurrency poses challenges due to the existing listing rules.
However, he expressed the possibility of listing a tokenized product in the future.
As the 16th largest stock exchange globally by market capitalization, the ASX holds a significant position in the Australian equity market.
In the first quarter of 2023, the ASX accounted for approximately 82% of the total dollar turnover in local equity market products, according to data from the Australian Securities and Investment Commission.
Chesterman’s stance on blockchain aligns with sentiments expressed by banking executives, who see blockchain as a driver of efficiency.
Howard Silby, the Chief Innovation Officer at National Australia Bank (NAB), noted that large banks and institutions continue to experiment with blockchain, particularly in areas with high friction and high-value customer processes.
Similarly, Sophie Gilder, Managing Director of Blockchain and Digital Assets at Commonwealth Bank, emphasized the potential for tokenization and smart payments to enhance efficiency and reduce risks and costs.
Despite criticism over the suspension of its blockchain-based upgrade to the clearing and settlements system, which incurred significant costs, the ASX clarifies that the decision was not a rejection of blockchain technology.
Chesterman explained that the pause was a deliberate choice to prevent prolonged delays and maintain certainty for customers.
The ASX continues its collaboration with Digital Assets, an infrastructure company, for the development of its blockchain platform, Synfini.
In conclusion, the ASX is cautious about directly listing cryptocurrencies but remains open to the possibility of tokenizing real-world assets.
The exchange recognizes the potential of blockchain technology to drive efficiency in the financial sector.
The decision to pause the blockchain upgrade was made to avoid prolonged uncertainty for customers, and the ASX continues its partnership with Digital Assets for blockchain development.
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Solana’s Cardinal protocol is ceasing operations due to economic conditions, after raising $4.4 million approximately a year ago to enhance the utility of nonfungible tokens (NFTs).
The protocol recently announced on Twitter that users should make their withdrawals by August 26.
Cardinal Labs, an infrastructure provider, had focused on supporting NFT use cases on the Solana network by offering protocols and software development kits (SDKs) for various purposes, including staking, rentals, subscriptions, royalties, and trading.
As per the closing schedule, certain operations will be halted on July 19.
These include staking pool creations, token management, NFT rentals and rental extensions, social media handles, and new deposits.
Users are required to complete their withdrawals by August 26, when the two-month notice period ends.
The Cardinal team expressed their efforts to navigate the challenging macroeconomic environment since their inception 18 months ago.
They acknowledged that NFT-based products have gained traction but mentioned that they have remained confined within the crypto maximalist community.
In July 2022, Cardinal raised $4.4 million in a seed funding round co-led by Protagonist, a crypto venture firm, and Solana Ventures, along with participation from Animoca Brands, Delphi Digital, CMS Holdings, and Alameda Research, the sister company of the now-bankrupt crypto exchange FTX.
A spokesperson clarified that Alameda’s investment constituted a small portion of the funding round and did not contribute to the protocol’s financial difficulties.
Neo Ventures also provided $750,000 in pre-seed funding in 2021. In total, Cardinal secured $5.2 million in funding over 18 months, attracting over 65,000 staked NFTs on the protocol by July 2022.
Despite the challenging times, the NFT market is gradually maturing.
A recent report from DappRadar indicates that the NFT market had a promising start to the year, with Q1 2023 being the best quarter since Q2 2022.
Although trade volume decreased in March, overall performance remained strong due to intense competition among NFT marketplaces.
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According to the United States Federal Reserve, all 23 of the country’s largest banks have passed the “stress tests” and would be able to withstand a severe recession.
The report, released on June 28, highlighted some weaknesses among midsize and regional banks, although the stress tests only included the participation of the largest lenders.
In light of the banking crisis earlier this year, Federal Reserve policymakers have suggested that future stress tests could become more rigorous.
Michael Barr, the Fed’s vice chair for supervision, emphasized the importance of remaining humble in the face of potential risks and continuing efforts to ensure that banks are resilient to various economic scenarios, market shocks, and other stresses.
Since the 2008 financial crisis, which was caused by U.S. banks, bank stress tests have been conducted annually.
The purpose of these tests is to evaluate the potential losses the banking industry would incur in the event of skyrocketing unemployment and a significant contraction in economic activity.
In this year’s stress test, the Federal Reserve examined a severe global recession scenario that resulted in a 40% decline in commercial property prices and a 38% decline in home property prices.
In the worst-case scenario, unemployment would reach 10%, compared to the current rate of 3.7%. The tests revealed that the 23 largest banks would collectively experience losses amounting to $541 billion in this hypothetical scenario.
To receive a passing grade, a bank must maintain a stressed capital ratio of at least 4.5%, which serves as a crucial indicator of its financial strength, according to the Federal Reserve’s requirements.
Earlier this year, the American banking system was shaken by the collapse of several prominent institutions, including Silicon Valley Bank, Signature Bank, Silvergate Bank, and First Republic Bank.
Others, such as PacWest and Western Alliance, were also teetering on unstable ground.
To address the challenges faced by smaller banks, the Federal Reserve established the Bank Term Funding Program (BTFP) in March, actively providing bailout assistance.
Federal Reserve data indicates that over $100 billion has already been allocated to support struggling small and mid-sized banks.
Overall, the stress tests conducted by the Federal Reserve offer valuable insights into the resilience of the largest banks in the United States while underscoring the need for ongoing efforts to strengthen the banking sector and mitigate potential risks in the future.
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Cryptocurrency laws in the United States should adopt a “reserved” approach and avoid regulating the technology solely from a financial perspective, according to a commissioner at the U.S. Securities and Exchange Commission (SEC).
Commissioner Hester Peirce, often referred to as “Crypto Mom,” shared her views during her remote appearance at Australian Blockchain Week on June 29.
Peirce emphasized the need for regulatory frameworks to acknowledge that cryptocurrencies have applications beyond the financial realm.
While crypto is often associated with financial assets, Peirce highlighted its potential in facilitating decentralized interactions, such as in social media platforms.
She argued that any legal framework should be flexible enough to accommodate the evolving uses of crypto and blockchain technology, while still providing clarity that enables experimentation.
Taking a subtle jab at the SEC’s current approach, which has received criticism from various quarters, Peirce cautioned against delayed enforcement actions resulting from an inflexible regulatory framework. She suggested that regulations should strike a balance between being reserved and offering sufficient clarity, allowing individuals and businesses to explore new possibilities in the crypto space.
When asked about her advocacy for cryptocurrencies, Peirce expressed her belief that the SEC can improve its approach.
She emphasized the importance of being able to speak openly and questioned the purpose of her position if she is unable to do so.
Peirce viewed cryptocurrencies as an opportunity for the SEC to reevaluate its approach to innovation, asserting that the current regulatory stance is inadequate.
Referring to the recent collapse of FTX and subsequent allegations of misconduct, Peirce encouraged the crypto industry to embrace self-regulation.
She stressed the significance of addressing counterparty risks, conflicts of interest, and leverage.
While acknowledging that these steps should ideally be taken without government intervention, Peirce also recognized the potential role of government regulators in this process.
In summary, Commissioner Hester Peirce called for a reserved approach to cryptocurrency regulation in the United States.
She emphasized the need to recognize the broader applications of crypto beyond finance and cautioned against rigid regulatory frameworks. Peirce advocated for a regulatory environment that encourages innovation while still providing clarity.
Furthermore, she encouraged the crypto industry to undertake self-regulation and pay attention to risk factors, suggesting that government regulators could play a supportive role in this endeavor.
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