Investors who put their money into Logan Paul’s CryptoZoo nonfungible token (NFT) gaming project are still waiting for the promised refund of 1000 Ether (ETH), worth $1.93 million at current prices, according to reports.
In a YouTube video posted on June 30, a YouTuber known as Coffezilla, who first exposed the issues with the project in December 2022, claimed that Paul’s communication with the CryptoZoo community has been nonexistent in recent months.
Coffezilla stated, “It’s been six months, so here’s a follow-up.
“Logan Paul has not paid back his victims, he hasn’t talked about it since he first announced he was gonna pay them back.
“And what’s worst of all, he doesn’t seem to have a plan in place to refund anyone.” Coffezilla also revealed that he had been pressing Paul for a refund plan behind the scenes but received no concrete response.
CryptoZoo was launched in September 2021 as an NFT breeding game that offered opportunities to earn ZOO tokens and NFTs.
Paul himself described it as a “really fun game that makes you money.”
However, the project faced numerous issues such as lackluster NFT artwork, plummeting NFT and ZOO token prices, and a failure to deliver on the project’s roadmap.
These problems led to increasing dissatisfaction among investors by late 2022.
After Coffezilla’s exposé videos on CryptoZoo gained traction and sparked community backlash, Paul announced a plan to refund investors on January 14.
He also pledged to fulfill the project’s roadmap.
However, despite these promises, a class-action lawsuit was filed against CryptoZoo and Paul the following month.
In Coffezilla’s latest video, he shared screenshots of email exchanges with Paul’s lawyer, Jeffrey Neiman of the MNR Law Firm.
The emails suggested that no concrete plan had been established for the refund process. Neiman’s email stated, “We are working with Mr. Paul to evaluate the best way to achieve this goal.”
Coffezilla raised concerns about the lack of progress, emphasizing that blockchain developers could easily write the code for the refund process and that Paul has more than enough wealth to reimburse the investors.
He criticized the statement from Paul’s lawyer, calling it a stalling tactic or an admission of having no plan. Coffezilla questioned why, six months later, the team had not figured out a solution.
As of now, Paul has not responded to these allegations on YouTube or Twitter, leaving investors in CryptoZoo uncertain about the fate of their investments and the promised refund.
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Fidelity Investments, a prominent asset manager, has taken a step forward in its pursuit of a spot Bitcoin exchange-traded fund (ETF).
As disclosed in a filing by Cboe BZX Exchange with the United States Securities and Exchange Commission (SEC) on June 19, Fidelity has submitted an application for the ETF.
This move by Fidelity follows a series of similar applications made by other financial giants.
BlackRock, WisdomTree, Invesco, and Valkyrie had all submitted their respective spot Bitcoin ETF applications in the preceding days, with BlackRock initiating the trend on June 15.
According to Bloomberg, a total of seven spot Bitcoin ETF applications have been filed this year. Notably, Fidelity, WisdomTree, and Invesco are making a second attempt at securing approval for their spot BTC ETFs.
The applications submitted for the spot Bitcoin ETFs emphasize the significance of the regulated CME Bitcoin Futures market as it pertains to the spot Bitcoin market.
Fidelity’s application, much like others, argued extensively on this point and supported its claim with thorough research.
In its 193-page application, Fidelity stated, “The lack of a Spot Bitcoin ETP exposes U.S. investor assets to significant risk because investors that would otherwise seek crypto asset exposure through a Spot Bitcoin ETP are forced to find alternative exposure through generally riskier means.”
It also highlighted past instances, such as the cases of FTX, Celsius, BlockFi, and Voyager Digital, where investors had resorted to riskier alternatives due to the absence of a spot Bitcoin ETP.
Fidelity Digital Assets Services, a regulated custodian licensed by the New York Department of Financial Services, would be entrusted with the custody of the trust’s Bitcoin.
Furthermore, Cboe BZX Exchange announced its intent to establish a surveillance-sharing agreement with a United States-based cryptocurrency exchange.
It’s worth noting that the SEC is yet to approve any of the applications for a spot Bitcoin ETF. Fidelity’s filing, using the 19b-4 form, revealed that the firm is reviving its Wise Origin Bitcoin Trust product, which was initially submitted for approval in March 2021.
Unfortunately, the previous application was rejected despite two deliberation extensions.
With approximately $11 trillion in assets under administration, Fidelity Investments holds significant clout in the financial industry.
If approved, its spot Bitcoin ETF would provide investors with a regulated and more accessible avenue for exposure to Bitcoin, reducing the need for riskier alternatives.
However, the ultimate decision rests with the SEC, and the market awaits their verdict on these applications.
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Coinbase, the leading American cryptocurrency exchange, has taken a strong stance in its legal battle against the United States Securities and Exchange Commission (SEC) by filing a motion to dismiss the SEC’s complaint.
The motion, submitted to the U.S. District Court for the Southern District of New York on Thursday, June 29, raises concerns about the SEC’s interpretation of securities laws, suggesting that the agency is overstepping its legal authority.
In its bid to challenge the SEC’s lawsuit, Coinbase’s legal team argues in the motion that even if the allegations in the lawsuit are true, the plaintiff lacks a valid legal claim.
The filing asserts that the SEC’s actions not only violate Coinbase’s due process rights but also constitute an extraordinary abuse of process, demanding dismissal of the case.
Coinbase’s determination to defend its position against the SEC’s claims is evident in this motion.
The SEC’s lawsuit accuses Coinbase of facilitating unregistered trading of 12 digital tokens that the agency considers securities.
However, Coinbase has strongly contested this allegation, asserting that the SEC is applying securities laws to digital tokens in a manner that deviates significantly from existing legal frameworks.
Paul Grewal, Coinbase’s chief legal officer, expressed this sentiment in a tweet on June 29, stating that the SEC’s claims “go far beyond existing law” and should be dismissed accordingly.
The SEC’s definition of securities encompasses investment contracts, which have been interpreted by the Supreme Court through the Howey test to include transactions where individuals invest money in a common enterprise with the expectation of primarily profiting from the efforts of others.
The SEC’s lawsuit identifies 12 crypto tokens, such as Solana, as securities based on this definition.
Coinbase’s legal team also highlighted that in 2021, the SEC had declared the company’s registration statement effective, allowing Coinbase to sell its shares to investors during its public listing.
This approval came after a thorough review process involving extensive discussions between Coinbase and the SEC, spanning several months.
Consequently, Coinbase was authorized to trade over 240 tokens on its spot exchange, including six of the 12 tokens currently disputed by the SEC.
By filing this motion to dismiss, Coinbase continues to challenge the SEC’s lawsuit and its interpretation of securities laws.
The outcome of this legal battle will not only impact Coinbase’s operations but also shape the regulatory landscape for the broader cryptocurrency industry in the United States.
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The price of Bitcoin (BTC) remained within a narrow trading range between $30,000 and $31,000, showing no significant upward or downward movement, according to data from Cointelegraph Markets Pro and TradingView.
However, market participants started to anticipate a potential breakthrough above resistance levels.
Several traders and analysts expressed optimism about Bitcoin’s future performance.
A popular trader known as Jelle tweeted that Bitcoin’s current price action resembled its breakout in late 2020, suggesting a potential upward trend.
Another prominent analyst, Rekt Capital, pointed out positive signs on monthly timeframes, indicating that Bitcoin was positioning itself for a monthly close above a resistance level that had previously rejected its price.
Michaël van de Poppe, the founder and CEO of trading firm Eight, echoed the positive sentiment, stating that both Bitcoin and altcoins were showing promising movements, suggesting the possibility of another upward leg in the markets.
On the macroeconomic front, market participants were eagerly awaiting the release of major data, including comments on economic policy by Jerome Powell, the chair of the United States Federal Reserve.
The volatility catalyst for risk assets was expected to be the Personal Consumption Expenditures (PCE) figures, which served as Powell’s preferred inflation measurement tool.
Additionally, the options open interest expiry on June 30 attracted attention, as it amounted to a substantial $4.7 billion.
Traders speculated on the potential impact of this expiration on the crypto market, with some expecting spot buying from dealers to hedge their books if the options were rolled into more calls.
Tedtalksmacro, a financial commentator, suggested that there might be limited movement in the crypto market until the expiry of the options open interest.
Overall, while Bitcoin remained range-bound in the short term, market participants showed growing optimism about a potential breakout above resistance levels.
Traders and analysts highlighted similarities to past bullish trends, and the release of macroeconomic data, including PCE figures and the options expiry, was expected to bring potential volatility to the market.
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EDX, a recently launched cryptocurrency exchange, is reportedly preparing to switch its custody provider from Paxos Trust to Anchorage Digital.
The exchange, which received support from prominent traditional finance entities like Citadel Securities, Fidelity Digital Assets, and Charles Schwab, operates on a noncustodial business model aimed at eliminating conflicts of interest.
EDX currently facilitates trading in two cryptocurrencies, Bitcoin and Bitcoin Cash.
Notably, Bitcoin Cash has experienced significant growth since the exchange’s inception, with a 70.43% increase over the past week and a remarkable 101.36% surge in the last month.
Following the exchange’s announcement of its partnership with Paxos in October, the United States Securities and Exchange Commission proposed stricter custody regulations for crypto firms.
Paxos, holding a BitLicense from the New York Department of Financial Services, faced an investigation earlier this year for undisclosed reasons.
Additionally, Paxos obtained preliminary conditional approval for a U.S. bank charter from the United States Comptroller of the Currency (OCC) in 2021, but that approval reportedly lapsed by the end of March.
Anchorage Digital, on the other hand, became the first crypto firm to receive a national trust bank charter from the OCC in January 2021.
However, it faced regulatory issues a year later due to Anti-Money Laundering deficiencies and subsequently agreed to a consent order.
Shortly thereafter, Anchorage Digital formed a custody network with prominent crypto exchanges including Binance.US, CoinList, Blockchain.com, Strix Leviathan, and Wintermute.
EDX has plans to introduce EDX Clearing, a clearinghouse designed to settle trades executed on the EDX Markets platform, later this year.
While EDX declined to comment on the change of its custody provider, Anchorage Digital did not respond to requests for comments regarding the matter.
The decision to switch custody providers signifies EDX’s commitment to establishing a secure and compliant infrastructure for its users.
With the support of reputable financial heavyweights and the intention to introduce a clearinghouse, EDX aims to enhance its trading platform and ensure a seamless experience for cryptocurrency traders.
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FTX’s attempt to fill a $2 billion gap in its balance sheet has hit a snag as the sale of its $500 million stake in Anthropic, an artificial intelligence startup, has been temporarily halted.
According to Bloomberg’s sources on June 27, Parella Weinberg Partners, FTX’s advisory investment bank, decided to pause the sale despite the interest shown by multiple parties.
The sale of FTX’s stake in Anthropic would have been a significant step towards recovering funds for the bankrupt crypto exchange.
FTX’s restructuring chief, John Ray, stated in a report on June 26 that around $8.7 billion in user funds were misused, but they have managed to recover approximately $7 billion of that amount.
Before the sale was paused, several potential buyers had expressed interest in acquiring FTX’s stake in Anthropic. In early June, Semafor reported that FTX was actively promoting the AI firm to potential investors.
FTX had initially acquired $500 million worth of Anthropic stock prior to its bankruptcy in November, and with the current boom in the AI industry, the stake is expected to have significantly increased in value.
Anthropic itself has experienced substantial growth recently. In its most recent funding round, the company achieved a reported valuation of $4.6 billion and secured $450 million in investments.
Anthropic’s main product, an AI chatbot named “Claude,” has versatile applications in sales, customer service, and web searches.
The news of the sale pause comes shortly after Ray’s report revealed that FTX still had $2 billion to recover in assets.
The report highlighted the alleged misuse of customer funds, including thousands of dollars in grants for non-crypto-related projects, investments in venture capital firms.
A $243 million real estate portfolio in the Bahamas, and donations to non-profit organizations and a political action committee operated by Gabe Bankman-Fried, the younger brother of FTX co-founder Sam Bankman-Fried.
Cointelegraph reached out to Parella Weinberg Partners and Anthropic for comment but has not received an immediate response.
The delay in selling FTX’s stake in Anthropic adds another hurdle to the crypto exchange’s efforts to address its financial shortfall and rebuild its balance sheet.
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Bitcoin miners are experiencing a significant surge in revenue sent to exchanges, according to a tweet by Glassnode, an on-chain analytics platform.
The platform reported that miners had sent a record-breaking $128 million to exchanges in the past week, which amounts to a staggering 315% of their daily revenue.
While there have been previous spikes in miner revenue during the 2021 bull run, this recent surge surpasses them all by a considerable margin.
Typically, miners send their Bitcoin profits to exchanges to cover expenses and secure their profits. Given that Bitcoin reached its highest price of the year, touching $31,185 on June 24, this past week presented an opportune time for miners to cash out.
CryptoQuant co-founder and CEO Ki Young Ju echoed this sentiment, noting that the current price-to-earnings ratio was attractive for miners to sell.
However, despite the increased activity from miners, Bitcoin’s price remains relatively stable above the $30,000 threshold.
The $31,000 price level poses a significant resistance for Bitcoin, as it failed to break it both in mid-April and late June.
If bulls are unable to make progress and miners continue liquidating their holdings, the possibility of future losses looms.
Although Bitcoin’s price has surged by over 88% year-to-date, miners still face numerous challenges.
Profitability has dropped by more than 30% since July of the previous year and has plummeted over 80% since the peak of the 2021 bull market.
Moreover, record hash rates of 377 EH/s and peak difficulty levels further compound the obstacles faced by Bitcoin miners.
With rising hash rates, difficulty levels, and energy costs, mining profitability has been negatively impacted.
Consequently, miners may reluctantly need to sell their hard-earned Bitcoin to cover expenses, a situation that is far from ideal.
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Nevada’s Financial Institutions Division has taken further action against crypto custodian Prime Trust, following the filing of a cease and desist order, by petitioning for the appointment of a receiver.
In a recent filing on June 26, the regulator sought a temporary restraining order and the appointment of a receiver to Prime Trust Technologies, which includes its crypto custodian division.
The decision for receivership was agreed upon by Prime Trust due to the significant deficit between its assets and liabilities.
The petition emphasized the need for immediate action, citing the risk of “irreparable harm” to customers, the public, and the confidence in the cryptocurrency market.
The regulator expressed concerns over Prime Trust’s financial condition, stating that the custodian was unsafe and possibly insolvent.
The situation was expected to worsen as customers continued to withdraw from Prime Trust.
According to the filing, Prime Trust had engaged Fireblocks in 2019 to store all its crypto assets and underwent a change in management in 2020.
In January 2021, the custodian reintroduced legacy wallet forwarding addresses to customers due to limitations with Fireblocks.
Since December 2021, Prime Trust has been unable to access its users’ legacy wallets and had been purchasing crypto using customer funds.
The petition revealed that Prime Trust owed over $85 million in fiat currency to its clients but had only approximately $2.9 million available at the time of filing.
In terms of digital assets, the custodian’s liability amounted to over $69.5 million, with holdings of around $68.6 million.
The regulatory action came after Nevada’s financial watchdog issued a cease and desist order on June 21, citing Prime Trust’s deteriorating financial condition and its inability to fulfill customer withdrawals due to a shortfall of funds.
Following this development, BitGo, a wallet infrastructure provider and digital asset custodian, announced on June 22 that it would cancel its planned acquisition of Prime Trust.
The appointment of a receiver and the initiation of legal proceedings against Prime Trust highlight the seriousness of the situation.
The financial condition of the custodian has raised concerns among regulators and industry participants, who are keen to safeguard the interests of customers and maintain trust in the cryptocurrency market.
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Artificial intelligence (AI) has been widely discussed in relation to its potential integration with the cryptocurrency industry, particularly regarding how it can help combat scams.
However, experts are overlooking the fact that AI itself could have the opposite effect. Meta, for instance, recently warned that hackers were exploiting OpenAI’s ChatGPT to gain unauthorized access to users’ Facebook accounts.
In just March and April alone, Meta reported blocking over 1,000 malicious links disguised as ChatGPT extensions.
The platform even labeled ChatGPT as “the new crypto” in the eyes of scammers. Furthermore, a search for keywords like “ChatGPT” or “OpenAI” on DEXTools, an interactive crypto trading platform, reveals more than 700 token trading pairs mentioning these terms.
This indicates that scammers are leveraging the hype around AI tools to create tokens, despite OpenAI not officially entering the blockchain world.
Social media platforms have become popular avenues for promoting fraudulent cryptocurrencies online. Scammers exploit the extensive reach and influence of these platforms to quickly amass a significant following.
By utilizing AI-powered tools, they can further amplify their reach and create an apparently loyal fanbase consisting of thousands of people.
These fake accounts and interactions create an illusion of credibility and popularity for their scam projects.
Much of the cryptocurrency industry relies on social proof-of-work, assuming that popular projects with large followings are legitimate and trustworthy.
Investors and newcomers tend to trust projects with substantial and loyal online followings, assuming that others have done thorough research before investing.
However, AI poses a challenge to this assumption and undermines social proof-of-work.
Merely having thousands of likes and genuine-looking comments does not guarantee the legitimacy of a project. AI opens up various attack vectors, including “pig butchering” scams where AI instances spend days befriending vulnerable individuals, only to scam them later.
The advancement of AI technology has empowered scammers to automate and scale fraudulent activities, potentially targeting vulnerable individuals in the crypto space.
Scammers may deploy AI-driven chatbots or virtual assistants to engage with individuals, offer investment advice, promote fake tokens and initial coin offerings, or present high-yield investment opportunities.
These AI scams are particularly dangerous because they can flawlessly mimic human-like conversations. Furthermore, by leveraging social media platforms and AI-generated content, scammers orchestrate elaborate pump-and-dump schemes, artificially inflating token values before selling off their holdings for significant profits, leaving many investors at a loss.
Investors have long been cautioned about deepfake crypto scams, which utilize AI to create realistic online content by swapping faces in videos and photos or altering audio to make it seem as if influencers or well-known personalities are endorsing scam projects.
One notable deepfake that impacted the crypto industry was a video of former FTX CEO Sam Bankman-Fried directing users to a malicious website promising to double their crypto.
Earlier this year, in March 2023, an AI project called Harvest Keeper scammed users out of approximately $1 million. Around the same time, projects emerged on Twitter claiming to be “CryptoGPT.”
However, on a positive note, AI also has the potential to automate mundane aspects of crypto development, serving as a valuable tool for blockchain experts.
AI technology simplifies essential project requirements such as setting up Solidity environments or generating base code.
This will significantly lower the entry barrier, shifting the focus of the crypto industry from development skills to the genuine utility of ideas.
In some cases, AI can democratize processes traditionally accessible only to a select group, such as well-trained senior developers.
With advanced development tools and launchpads available to everyone in the crypto space, possibilities become limitless.
However, as AI makes it easier for scammers to operate, users must exercise caution and due diligence before investing in a project. It is essential to watch out.
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