SEC - Page 39

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Binance and Former CEO Challenge SEC’s Attempt to Include Guilty Plea in Ongoing Legal Battle

Binance Holdings and its former CEO, Changpeng Zhao, have responded to a recent development in their legal battle with the United States Securities and Exchange Commission (SEC).

The SEC sought to include Binance’s admission of guilt to the Department of Justice (DOJ) in its ongoing legal proceedings.

In a filing submitted on December 12th to the U.S. District Court for the District of Columbia, Binance firmly contested the SEC’s move, arguing that it was procedurally incorrect and should be disallowed.

The legal dispute between Binance and the SEC commenced on June 5, 2023, when the SEC levied accusations against the company, alleging 13 violations of securities laws.

Among these allegations were claims that Zhao and Binance had mishandled customer assets on Binance.US and engaged in the improper mixing or redirection of these assets.

In November, the DOJ reached a separate settlement with Binance and its former CEO, effectively resolving its investigation into the company.

The terms of the agreement required Binance to pay a substantial $4.3 billion in penalties while permitting the company to continue its operations while complying with U.S. regulatory standards.

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Although the SEC was not formally included in this settlement, the agency contended that the federal court overseeing its case against Binance should take into account the statements and acknowledgments made by Binance and Zhao during the November settlement.

The SEC’s argument was that these settlements demonstrated Binance’s awareness of its U.S. operations, its service to U.S. customers, and its reliance on U.S. infrastructure for transactions.

Binance, in response, contended that the SEC had failed to establish how the resolutions with the DOJ were relevant to the SEC’s allegations against Binance Holdings and Zhao.

In their court papers submitted on December 12, 2023, Binance argued that the SEC’s notice did not provide substantiation for the claims made in the original lawsuit from June 2023.

They stated that the SEC’s notice was essentially an impermissible attempt to introduce new factual information and arguments rather than citing new legal authority, which was reason enough to disregard it.

Furthermore, Binance asserted that presenting a judicial notice should not be seen as a substitute for amending a complaint.

According to the company, the SEC’s attempt to leverage settlements with other agencies indicated a lack of clarity regarding the appropriate regulatory jurisdiction within the SEC’s purview.

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Bitcoin Core Developer Denies Involvement in Listing Bitcoin Inscriptions as Cybersecurity Risk

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Bitcoin Core developer Luke Dashjr has refuted any involvement in the inclusion of Bitcoin inscriptions as a cybersecurity concern on the United States National Vulnerability Database’s (NVD) Common Vulnerabilities and Exposures (CVE) list.

This controversy arose when Dashjr, in a December 6th post on X (formerly Twitter), alleged that inscriptions, utilized by the Ordinals protocol and BRC-20 creators for embedding data in satoshis, were exploiting a Bitcoin Core vulnerability, thus “spamming the blockchain.”

Several days later, Bitcoin inscriptions surfaced on the U.S. vulnerability database as part of the CVE list on December 9th, describing it as a security flaw linked to the development of the Ordinals protocol in 2022.

Nonetheless, Dashjr, despite his vocal criticism of Bitcoin Ordinals, asserted that he played no role in adding inscriptions to the vulnerability database’s CVE list.

The CVE list is structured to allow any developer to report a vulnerability, subject to approval by the CVE Assignment Team for public awareness purposes.

As of December 11th, the NVD updated the listing, assigning inscriptions a base severity score of “5.3 Medium.”

This rating indicates that the exploitation of this vulnerability offers “very limited” access to a network or presents challenging hurdles for executing denial-of-service attacks, according to Atlassian, a software firm.

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Dashjr explained that the CVE list’s 5.3 score primarily resulted from the vulnerability’s minimal impact on the availability of the Bitcoin network.

Nevertheless, he contended that the score might underestimate its long-term consequences, suggesting that if the availability impact were classified as “High,” the CVSS base score would reach 7.5.

The debate surrounding Bitcoin inscriptions continues to unfold on social media platforms.

While some Bitcoin enthusiasts argue that inscriptions are overloading the network, Ordinals proponents, including Udi Wertheimer, co-founder of Taproot Wizards, maintain that Ordinals are essential for the future adoption and revenue growth of the Bitcoin network.

The Bitcoin network has experienced increased congestion in recent months due to heightened interest in Ordinals’ nonfungible token inscriptions and BRC-20 token minting.

Data from mempool.space indicates over 275,000 unconfirmed transactions, with average medium-priority transaction costs surging from approximately $1.50 to around $14.

Patching the so-called inscriptions bug could potentially limit future Ordinals inscriptions on the network.

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Security Concerns Mount as HTX Crypto Exchange Suffers $30 Million Exploit

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After a devastating exploit on November 22nd, crypto investors have been rapidly withdrawing their assets from the cryptocurrency exchange formerly known as Huobi, now rebranded as HTX.

This breach resulted in the exchange suspending its services and incurring losses amounting to $30 million.

In the aftermath, between November 25th, when HTX resumed its services, and December 10th, a staggering $258 million in net outflows were recorded, as per data sourced from DefiLlama.

DefiLlama’s data further reveals that HTX’s reserves are comprised of 32.3% Bitcoin and 31.8% Tron (TRX), which is the native currency of the Tron network, established by Justin Sun in 2017.

Despite the turmoil, HTX, as of the time of this report, remains the 16th largest cryptocurrency exchange in terms of daily trading volume, boasting a total trading volume of $1.6 billion over the last 24 hours, according to CoinMarketCap.

In a bid to reassure affected HTX users, Sun, the founder of Tron, pledged full compensation for losses incurred from the hot wallet breach and assured the public that an investigation was already in progress.

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Sadly, this incident was not an isolated event for HTX and related entities under the Sun umbrella. Over the past two months, they have been plagued by a total of four hacks.

The initial breach occurred shortly after the exchange’s rebranding to HTX on September 24, 2023, with an unknown assailant making off with nearly $8 million in cryptocurrency.

The most significant of these breaches was the $100 million exploit that targeted the Poloniex exchange on November 10th, attributed to a compromise of private keys.

Another substantial breach hit HTX’s HECO Chain bridge on November 22nd, where hackers compromised the bridge and funneled at least $86.6 million to suspicious addresses.

November 2023 was a bleak month for the cryptocurrency world, witnessing a surge in theft as malicious actors pilfered a total of $363 million in ill-gotten digital assets.

Cointelegraph reached out to HTX for a statement, but at the time of reporting, no response had been received.

These ongoing security breaches have cast a shadow of doubt over the safety and trustworthiness of the HTX exchange and related platforms, prompting investors to move their assets elsewhere.

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Blockchain Security Firm Discovers $50 Million HAXcoin Movement Linked to KyberSwap Exploiter

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Cyvers, a prominent blockchain security firm, recently uncovered a suspicious movement of $50 million in HAXcoin (HXA), the native utility token of the Herencia Artifex nonfungible token (NFT) project.

This significant transfer of funds was linked to an entity known as the KyberSwap exploiter, raising concerns in the cryptocurrency community.

The KyberSwap exploiter obtained these tokens by exploiting the “transfer from function” within the Ethereum network.

The “transfer from” function is commonly utilized by decentralized application users, allowing one party to transfer tokens from the balance of another party to a third-party address.

However, misuse or vulnerabilities in the implementation of such functions can lead to security vulnerabilities.

Cyvers, in its report, suggests that the security breach may be associated with a potential flaw in the Multicall function, a component of the thirdweb libraries integrated into the HXA token’s smart contract.

Cyvers encourages interested parties to actively participate in the investigation to comprehensively understand the extent and repercussions of this exploit.

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The Cyvers team has also revealed that the funds acquired by the KyberSwap exploiter have been dispersed among various externally owned accounts, which are now recognized as the top HXA tokenholders. This distribution adds complexity to tracking and recovering the stolen assets.

Meanwhile, cryptocurrency exchange MEXC has taken a precautionary measure by temporarily suspending HXA token withdrawals and deposits.

However, this halt is not directly linked to security concerns arising from the hack but rather stems from unusual on-chain activities related to HXA, as reported by the exchange.

In an unexpected development, the official website of HAXcoin, hxacoin.io, is currently inaccessible, leaving investors and stakeholders without access to official information and updates.

This further complicates the situation and raises suspicions regarding the project’s integrity and transparency.

This incident follows a recent hack that saw hackers siphon off approximately $46 million in cryptocurrency assets from the decentralized KyberSwap exchange.

The cumulative impact of such security breaches highlights the need for enhanced security measures within the cryptocurrency ecosystem, urging industry participants to remain vigilant and proactive in safeguarding digital assets and user interests.

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VanEck Files Fifth Amended Application for ‘HODL’ Bitcoin ETF with SEC

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On December 8th, asset management firm VanEck made headlines by filing its fifth amended application for a spot Bitcoin exchange-traded fund (ETF).

This move was submitted to the United States Securities and Exchange Commission (SEC) as an update to the VanEck Bitcoin Trust, signaling the company’s continued pursuit of launching a Bitcoin ETF.

A spot Bitcoin ETF is a financial product that enables investors to acquire shares in a fund directly tied to the price of Bitcoin.

One intriguing aspect of VanEck’s application is its choice of ticker symbol for the ETF: “HODL.” This term, derived from a misspelling of “hold” or an acronym for “hold on for dear life,” is widely recognized among cryptocurrency enthusiasts.

It represents a strategy of holding onto Bitcoin without selling, regardless of market fluctuations.

While this ticker symbol may resonate with crypto-savvy individuals, some have suggested that it might be less familiar or clear to older generations, often humorously referred to as “boomers.”

Nate Geraci, the president of advisory firm The ETF Store, opined that those well-versed in the crypto space would appreciate the ticker symbol.

However, he humorously noted that it might leave “boomers” scratching their heads.

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Despite this potential generation gap, the choice of “HODL” could serve to emphasize the long-term holding strategy often associated with Bitcoin.

Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, highlighted that VanEck’s unconventional ticker symbol stands out in contrast to the more traditional choices made by companies like BlackRock and Fidelity when naming their financial products.

He characterized VanEck’s choice as a unique and creative approach.

VanEck even joined the playful banter, posting a comment on December 8th that humorously stated, “My #Bitcoin ETF will bring all the baby boomers to the yard, *if approved.”

VanEck is not alone in its pursuit of a spot Bitcoin ETF. Several other companies, including BlackRock, Fidelity, Valkyrie, and Franklin Templeton, are also vying for approval from the SEC to launch their own Bitcoin ETFs.

While the SEC has not yet expressed its support for these filings, it has engaged in discussions with the applicant firms to address technical aspects of their fund proposals.

VanEck remains optimistic about the prospect of SEC approval for its Bitcoin ETF, with expectations set for January.

If approved, the company estimates substantial inflows of approximately $2.4 billion in the first quarter of implementation.

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SEC Engages with Fidelity to Discuss Spot Bitcoin ETF, Paving the Way for Regulatory Clarity

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The U.S. Securities and Exchange Commission (SEC) recently engaged in discussions with Fidelity Investments to gain further insights into its spot Bitcoin exchange-traded fund (ETF) application.

A recent filing, dated December 7, revealed that the meeting included two representatives from Cboe BZX Exchange, six SEC personnel, and nine representatives from Fidelity. The focal point of this meeting was the Wise Origin Bitcoin Trust.

Specifically, the discussion revolved around Cboe BZX’s proposed rule change aimed at listing and trading shares of the Wise Origin Bitcoin Trust under Cboe BZX Rule 14.11(e)(4). In addition to verbal discussions, Fidelity presented a comprehensive PowerPoint presentation during the meeting, shedding light on the operational framework of their Bitcoin ETF.

A key highlight from the meeting was the emphasis on the efficiency of arbitrage and hedging through physical creations and redemptions.

Fidelity underscored the importance of permitting physical creation and redemption, asserting that it is critical to enhance trading efficiency and secondary market pricing for all participants.

Fidelity had initially submitted its spot Bitcoin ETF application to the SEC on June 19, closely following similar submissions by BlackRock and several other asset managers.

READ MORE: VanEck Predicts Bitcoin to Reach New All-Time High in Late 2024

However, it’s noteworthy that the SEC had previously rejected Fidelity’s application for a spot Bitcoin ETF in 2022.

This recent engagement with Fidelity follows a pattern of the SEC meeting with various spot Bitcoin ETF applicants to explore the nuances of their applications.

According to reports, these meetings have delved into “key technical details” associated with U.S. exchanges listing shares of a spot Bitcoin ETF.

In addition to Fidelity, the SEC has also held separate meetings with representatives from BlackRock and Grayscale, adding to the growing interest and scrutiny surrounding the approval of spot Bitcoin ETFs in the United States.

While the exact timeline for the approval of a spot Bitcoin ETF in the U.S. remains uncertain, industry participants and analysts have shared differing views.

Hashdex, one of the 13 asset managers in the running, anticipates the first U.S. spot Bitcoin ETF to materialize by the second quarter of 2024.

However, the consensus appears to be shifting towards a matter of “when” rather than “if,” with industry experts increasingly optimistic about the eventual approval of these ETFs.

Bloomberg ETF analysts Eric Balchunas and James Seyffart are particularly confident that January 10 could witness the simultaneous approval of all spot Bitcoin ETFs, aligning with the SEC’s deadline to either approve or deny ARK Invest’s application.

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Babylon Chain Secures $18 Million Series A Funding to Revolutionize Bitcoin Staking

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Babylon Chain, a groundbreaking protocol focused on Bitcoin staking, has secured $18 million in Series A funding, with Polychain Capital and Hack VC spearheading the investment round.

This development, as revealed in an announcement on December 7th, is set to propel Babylon’s Bitcoin Staking protocol forward, effectively connecting the decentralized finance (DeFi) landscape with the Bitcoin blockchain.

The central aim of Babylon Chain’s Bitcoin Staking protocol is to facilitate proof-of-stake (PoS) networks in staking BTC, thereby injecting liquidity and enhanced security into emerging blockchain ecosystems.

In the context of blockchain, PoS chains hinge on participants who validate transactions.

Validators, in order to create new blocks, are required to stake the native coin of the chain.

The overall security and reliability of a PoS chain are heavily contingent on the volume of coins staked.

However, Bitcoin deploys an alternative mechanism, known as proof-of-work (PoW), in which miners solve intricate mathematical problems to validate transactions.

Babylon’s vision is to bridge these two worlds seamlessly.

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The startup unveiled its Bitcoin staking minimum viable product back in October, asserting its ability to alleviate inflationary pressure on PoS chains, which could harness Bitcoin for capital infusion via staking while simultaneously fortifying the security of emerging chains.

One of Babylon’s major challenges, as outlined in its lite paper, revolves around the need to “slash all safety violations remotely without necessitating a smart contract on the Bitcoin chain.”

To tackle this, the protocol relies on accountable assertions, finality gadgets, Bitcoin emulation, and timestamps.

Importantly, Babylon emphasizes the modularity of its construction, highlighting its compatibility with all PoS consensus protocols.

Crucially, no soft or hard fork of Bitcoin is needed to implement the Bitcoin staking protocol.

The introduction of staking in the Bitcoin network may pave the way for an influx of developers looking to create innovative solutions.

This is a significant challenge facing the original blockchain. As the pioneer and most prominent cryptocurrency, Bitcoin boasts a market capitalization of $847.8 billion.

Notably, a Glassnode report revealed that a staggering 66% of its circulating supply has remained dormant for a minimum of one year.

Alex Pack, the managing partner at Hack VC, underlines the transformative potential of Babylon’s technology, stating that it “not only unlocks the largest blockchain asset, but can also make Bitcoin-backed security services (such as data availability service) possible for the broader blockchain ecosystem.”

In addition to Polychain Capital and Hack VC, several other prominent investors have participated in this funding round, including Framework Ventures, Polygon Ventures, Castle Island Ventures, OKX Ventures, Finality Capital, Breyer Capital, Symbolic Capital, and IOSG Ventures.

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Thirdweb Identifies Critical Security Vulnerability in Web3 Smart Contracts

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Smart contract development firm Thirdweb recently identified a critical security vulnerability that has the potential to impact a wide range of smart contracts within the Web3 ecosystem.

On December 4th, Thirdweb disclosed this vulnerability, which was found in a commonly used open-source library.

The vulnerability could affect specific pre-built smart contracts, including some developed by Thirdweb itself.

Fortunately, the firm’s investigation revealed that this security flaw has not been exploited yet, providing a limited window of opportunity for Web3 entities to address the issue before any potential security breach occurs.

Thirdweb emphasized the significance of this vulnerability, stating that it could lead to substantial damage if left unaddressed.

The affected pre-built contracts encompass various types, such as DropERC20, ERC721, ERC1155 (across all versions), and AirdropERC20.

Thirdweb promptly alerted users who had deployed its contracts before November 22nd to take independent mitigation steps or utilize tools provided by the company.

Additionally, Thirdweb encouraged developers to assist users in revoking approvals on all affected contracts using the revoke.cash platform.

This measure aims to protect users who choose not to address the contract vulnerability. A developer known as “0xngmi” from DefiLlama supported this approach.

READ MORE: Crypto Hacker Executes $2 Million Heist through Address Poisoning Attacks

Thirdweb has taken proactive steps to address the issue. They have contacted the maintainers of the open-source library responsible for the vulnerability and reached out to other potentially affected teams.

To bolster security, the company has decided to increase its investment in security measures and double bug bounty payouts from $25,000 to $50,000.

They also plan to implement a more stringent auditing process and are offering grants to cover contract mitigations.

In their commitment to resolving the issue and ensuring the security of the Web3 ecosystem, Thirdweb stated, “We understand that this will cause disruption, and we are treating the mitigation of the issue with the utmost seriousness.

We will be offering a retroactive gas grant to cover fees for contract mitigations.”

For security reasons, Thirdweb has not disclosed the full details of the vulnerability. Further inquiries by Cointelegraph were directed to a blog post for additional updates.

It’s worth noting that Thirdweb recently secured $24 million in a Series A funding round, with notable investors including Haun Ventures, Coinbase, Shopify, and Polygon.

The company, known for providing multichain smart contract deployment tools for gaming, minting, marketplaces, and wallets, boasts a user base of over 70,000 developers who utilize its services on a monthly basis within the Web3 space.

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BlackRock Secures $100,000 Seed Investment for Bitcoin ETF as Approval Nears

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In October 2023, BlackRock, the world’s largest asset manager, received a noteworthy infusion of $100,000 in seed funding for its Bitcoin (BTC) exchange-traded fund (ETF), as reported in their recent filing with the United States Securities and Exchange Commission (SEC).

The SEC disclosure shed light on the specifics of this investment, revealing that an undisclosed investor had committed to purchasing 4,000 shares at a price of $25.00 per share, totaling $100,000, on October 27, 2023.

This investor also assumed the role of a “statutory underwriter” concerning the Seed Creation Baskets.

Additionally, BlackRock disclosed its strategy for managing sponsor’s fees, indicating that it intends to acquire Bitcoin or cash through short-term trade credit from a trade credit lender.

This approach allows BlackRock to collect its fees via loans, mitigating the need to sell BTC from the ETF assets. Consequently, this method minimizes any significant impact on the BTC price.

READ MORE: Space Force Member Calls for Bitcoin’s Role in National Cybersecurity

Trade credit settlements are scheduled to transpire on the subsequent business day following the execution date and incur a financing fee.

This fee is calculated at 11%, plus the federal funds target rate divided by 365. For instance, if the federal funds target rate was 5.50% on November 20, 2023, the hypothetical financing fee on borrowed funds would amount to (11% + 5.5%) divided by 365.

Eric Balchunas, an ETF analyst, described these revelations as an intriguing development within the financial sector.

BlackRock emerged as an early pioneer among institutional giants by filing for a spot Bitcoin ETF back in July. Notably, their application is among the 13 awaiting a verdict from the SEC.

Although the SEC has previously rejected applications for spot BTC ETFs, market experts speculate that the agency is likely to grant approval for the first spot BTC ETF in the United States by early 2024, reflecting the growing acceptance and integration of cryptocurrencies into traditional finance.

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Phoenix Group Makes Historic Debut as First Crypto Mining Firm on Abu Dhabi Securities Exchange

Phoenix Group, a prominent cryptocurrency mining firm, has achieved a historic milestone by making its debut on the Abu Dhabi Securities Exchange (ADX), marking it as one of the Middle East’s pioneering publicly listed companies in the crypto industry.

This momentous event unfolded on December 5th, with Phoenix Group’s stock initially trading at 2.25 dirhams ($0.6) as per data from the ADX exchange.

Remarkably, this price skyrocketed by an astonishing 50% from the IPO price of 1.50 dirhams ($0.41), as outlined in the Phoenix IPO prospectus.

This momentous public listing follows closely on the heels of Phoenix Group’s immensely successful IPO closure on November 18th, where it garnered a staggering 33 times oversubscription.

During this process, the company managed to sell a substantial 907,323,529 shares, amassing a remarkable sum of around 1.3 billion dirhams ($371 million).

It is worth noting that the retail investors’ portion of the IPO witnessed a jaw-dropping oversubscription of 180 times, while professional investors oversubscribed the offering 22 times.

The primary purpose behind this IPO was to secure funds that would propel Phoenix Group’s future growth and deliver lucrative returns to its investors.

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CEO Bijan Alizadeh delineated the company’s ambitions, which revolve around four core pillars: spearheading innovation in Bitcoin mining, venturing into renewable energy projects, enhancing advanced manufacturing capabilities, and executing strategic acquisitions.

Phoenix Group, founded in 2015 by Alizadeh and Munaf Ali, has emerged as a significant player in the Middle East’s blockchain landscape, actively collaborating with regional authorities.

A significant milestone in this journey was the August 2023 agreement, where Phoenix signed a pact to construct a $300 million cryptocurrency mining farm in Oman, with the presence of Omani Minister of Transport Saeed Al Maawali and the chairman of the Abu Dhabi Stock Exchange, Hisham Malak.

One of Phoenix’s standout attributes is its unwavering commitment to sustainability in cryptocurrency mining, with a strong emphasis on utilizing renewable energy sources.

As of September 2023, approximately 95% of the company’s power is sourced from renewables, predominantly hydropower.

Further underscoring Phoenix Group’s significance, in October 2023, the Abu Dhabi conglomerate International Holding Company acquired a substantial 10% stake in the firm through its subsidiary, International Tech Group.

This strategic move highlights the growing interest and confidence in the cryptocurrency mining sector within the Middle East region and beyond.

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