Close

Crypto.news weekly recap: sustained regulatory efforts amid increased adoption, more trouble for Sam Bankman-Fried

cryptonews
coinxhigh
Crypto.news weekly recap: sustained regulatory efforts amid increased adoption, more trouble for Sam Bankman-Fried

The last week in crypto was mixed, seeing progress and obstacles. Increasing global regulatory efforts and general adoption pointed to steady support. Meanwhile, increased hacks and scams reminded the industry of the need for better security measures. Alongside these developments, the crypto community closely monitored updates in the ongoing FTX case, where ex-boss, Sam Bankman-Fried, faced new challenges.

Don’t forget to subscribe to our newsletter and get a ton of amazing content right in your inbox!

The need for greater oversight 

Following high-profile implosions that hit the crypto sector last year, there’s an urgent demand for clear global regulations. Financial regulators have acknowledged this, and the rise in crypto-related money laundering and illicit funding makes matters worse for the sector.

Last week, a report from blockchain analytics company, Chainalysis showed that many are opting to use crypto mixers to hide trails of their ill-gotten funds. The study revealed that mixers processed around $7.8b in 2022, with 24% of that amount being from unlawful activities, a significant increase from the 10% recorded in 2021. 

This highlights growth in illicit activity despite stricter regulations. The report also shows a drop in legitimate mixer use, likely due to heightened regulatory oversight.

Binance CEO Changpeng “C.Z.” Zhao voiced support for proper regulation in the crypto industry in a series of tweets on Jan. 23. He supported the International Monetary Fund’s position on crypto regulation and the significance of globally uniform, risk-based rules for user protection. 

Changpeng Zhao stated that outright bans are ineffective and regulators must adapt to the crypto landscape’s rapidly changing nature. He emphasized the importance of proper licensing, registration, and authorization for digital asset service providers. The CEO also wants clear standards for licensing and approval of digital assets and companies trading in them.

U.S. authorities call for increased scrutiny 

On Jan.27, the Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson called for regulators to be empowered to inspect the finances of firms targeting investment in crypto market participants following the FTX debacle. She also proposed steps to mitigate the risks of further implosions in the industry.

Amid growing scrutiny, Senator Elizabeth Warren thinks the crypto industry fears strict regulation from the United States Securities and Exchange Commission (SEC). This fear, she says, would benefit crypto. In a YouTube livestream last week, she urged the SEC to combat crypto fraud more vigorously and said the industry is “afraid of a strong SEC.” 

Warren believes the SEC, led by Gary Gensler, is the ideal agency to address crypto fraud among several financial regulators such as the CFTC. Warren also called on environmental agencies to take action against crypto miners that harm the environment and increase energy costs.

The Biden administration disclosed that it wants Congress to implement increased regulatory oversight of the cryptocurrency industry. In a statement, four senior White House officials stressed the need to protect financial stability and hold bad actors accountable. They are proposing that regulators’ powers be expanded to stop the misuse of client assets, improve transparency and disclosure requirements for crypto companies, and implement stronger penalties for violators. In the statement, the four also discouraged permitting mainstream financial institutions like pension funds to have crypto exposure, further cautioning against intertwining crypto and traditional financial system.

While the White House anticipates Congress’ ramped-up efforts, its Office of Science and Technology Policy (OSTP) is seeking input from organizations and individuals on the National Digital Assets Research and Development Agenda, as revealed on Jan. 26. The goal is to create a comprehensive framework for the responsible growth of digital assets, as directed by the president. 

Feedback should be submitted in a maximum of 10 pages and is due by Mar. 23. The received responses will aid the government in effectively managing the development of digital assets and related technologies.

Meanwhile, NYDFS stepped up its efforts last week, releasing regulations for customer protection in the event of market failure. The New York regulator issued guidance for crypto market participants on safeguarding customers for insolvent firms, emphasizing the importance of fair customer interests and proper custody and disclosure practices. The guidance is for entities licensed under New York banking law that hold virtual currency assets.

NYDFS Superintendent Adrienne A. Harris emphasized the need for a comprehensive and safe regulatory framework for customer protection and trust preservation. It underscored the need to separate and segregate customer crypto assets, disclose product and service terms, and conduct due diligence for sub-custodian arrangements with third parties.

Europe is enacting stricter regulatory measures

The head of the Central Bank of Ireland, Gabriel Makhlouf, called for a ban on crypto-related advertisements on Jan. 26. Gabriel said crypto investments that lack backing to conventional assets are similar to gambling and susceptible to scams and high-risk opportunities. 

He expressed concern over the impact of such ads on young people. Subsequently, he places crypto in the same category as Ponzi schemes, stressing the need to protect impressionable individuals from exposure to such advertisements.

Makhlouf’s remarks came up two days after the E.U. put into effect strict regulations for banks dealing in digital assets, mandating a 1:1 reserve requirement of fiat currency for their crypto holdings to limit the amount of un-regulated crypto held by banks and keep stability in the financial sector. 

These rules may extend to tokenized securities and foreign banks serving E.U. clients must either establish local branches or convert existing ones into highly capitalized subsidiaries.

While noticeably clearer than the United States’, the United Kingdom’s regulatory requirements have been a problem for most crypto-focused entities. On Jan. 26, the U.K.’s Financial Conduct Authority (FCA) disclosed that 85% of crypto entities that applied for licensing could not satisfy its minimum requirements. 

Global interest continues to see an uptick 

Global interest in crypto and blockchain has further triggered increased regulatory efforts from governments and institutions.

report by Bank of America (BoA) analysts showed that 114 central banks, including the U.S. Federal Reserve, have a growing interest in Central Bank Digital Currencies (CBDCs). They note that CBDCs have the potential to serve over 1.4b unbanked individuals globally, including 6.5% in the U.S. 

Analysts also suggest that stablecoins and CBDCs can coexist, with stablecoins used for smart contract purposes and CBDCs more widely accepted due to their interoperability. 

The Saudi Central Bank (SAMA) is actively researching and testing CBDCs for their potential benefits and risks, as reports suggested. Their immediate focus is domestic wholesale CBDC use cases in partnership with local banks and fintech companies. 

SAMA is considering policy, legal, and regulatory considerations to support Saudi Vision 2030. It will consult with international bodies, government entities, and the public as they continue their CBDC testing and development.

The U.K. finance department, H.M. Treasury, posted a job opening for the head of a central bank digital currency (CBDC) project. On being hired, the individual will lead the Treasury’s efforts in creating a digital version of the Pound and will be given a two-year contract and a salary range of £61,260-£66,500. 

The listing highlights that as the use of physical money decreases, digital forms of currency are becoming more prevalent, presenting an opportunity for U.K. businesses. This development came up shortly after Bank of England’s governor Andrew Bailey downplayed the necessity of a digital pound two weeks back.

The utility of blockchain technology 

At the recent Davos conference, Brynly Llyr, the head of blockchain and digital assets at the World Economic Forum (WEF), stated that despite a decrease in interest from financial institutions, startups are still planning on investing in blockchain technology this year. Recent events advised her position. Discussions at the conference have shifted to blockchain’s real-world applications instead of its technical aspects.

KPMG reported last Friday that 33% of fintech companies in the country adopted blockchain technology, making it the 5th most in-demand tech in 2022. Despite China’s ban on crypto activities, including bitcoin mining, blockchain is still gaining popularity.

IOTA, a blockchain platform, was chosen last week to participate in the next phase of the European Blockchain Pre-Commercial Procurement (PCP). This initiative aims to assess and advance blockchain technology for the European Blockchain Services Infrastructure (EBSI). 

The internet-of-things-focused protocol will be working towards enhancing existing blockchain solutions and creating new ones that align with the goals of the EBSI, which include enabling cross-border mobility, reducing waste, ensuring compliance with European Union regulations, promoting technology growth, and delivering trustworthy digital services.

Interest in crypto payments

Growing global adoption rate has also triggered increased interest in crypto payments. On Jan. 27, Bin Faqeeh Real Estate Investment in Bahrain announced that it will now accept cryptocurrencies for property purchases through Binance Pay. This move allows clients to make payments using the digital asset of their choice via their Binance app.

Sen. Ted Cruz proposed a bill to allow the use of cryptocurrency in vending machines in the U.S. Capitol. The bill was introduced on Jan. 25 but needs approval from the House and Senate to become law. If passed, it will change the payment methods for vending and food service merchants in the Capitol.

Another proposed bill in the state of New York seeks to provide clarity on the legality of state agencies accepting cryptocurrency as payment. It would permit agencies to enter into contracts with individuals or organizations to receive payment in cryptocurrency for various fees, such as taxes and fines. These agreements are legally binding.

Updates on FTX and Sam Bankman-Fried 

The cryptocurrency scene continued to follow updates on the ongoing issue with Sam Bankman-Fried and FTX, as the latter’s bankruptcy proceedings progressed.

A 115-page document in the U.S. Bankruptcy Court in Delaware revealed the list of FTX creditors, including tech behemoths Amazon, Apple, Microsoft, Twitter, and government agencies like the IRS. The crypto companies affected include Binance, Bittrex, and Coinbase. Celebrities like Gisele Bundchen and Tom Brady were also listed.

Shortly after, Goldman Sachs came up to refute claims of being a creditor of FTX, as indicated by the court document. Although the document lists thousands of creditors, Goldman Sachs confirmed it’s not one of them. A representative stated that the creditor matrix only highlights previous dealings with FTX, not a creditor relationship.

While others sought to distance themselves, crypto lender BlockFi’s documents indicated a greater entanglement with FTX. Leaked BlockFi financials displayed a $1.2b exposure to FTX, greater than previously estimated. The confidential documents were inadvertently released, revealing $415.9m exposure to FTX and $831.3m to Alameda Research. BlockFi swiftly removed the reports as they were intended for internal use only.

More trouble for Sam Bankman-Fried 

Last week, Sam Bankman-Fried’s woes appeared to have worsened. New York prosecutors sought to revise his bail conditions over allegations of trying to tamper with witnesses via Signal and email.

Evidence shows he reached out to current and former FTX employees, employed apps with self-destruct features, and may have attempted to sway witnesses as one key witness holds incriminating info. The ex-CEO may face examination from FTX’s U.S. General Counsel.

Modulo Capital, a lesser-known crypto hedge fund, was said to have received $400m from Sam Bankman-Fried. Modulo was founded in March 2022 and had close connections to the former FTX boss, with offices near his Bahamas home and its co-founder having a rumored romantic history with Sam.

Modulo Capital had no public presence or trading record and started crypto trading shortly before FTX’s collapse in November 2022. According to The New York Times, the company is currently inactive.

As scrutiny picked up, FTX lawyers aimed to inquire about Sam Bankman-Fried’s family’s financial gains from FTX. They revealed intent to examine Bankman-Fried’s parents and brother about the origin and procurement of their wealth and request to administer an oath. The case is pending before U.S. Bankruptcy Judge John Dorsey.

Binance CEO Changpeng Zhao also leveled allegations against Sam Bankman-Fried, claiming that FTX is behind most of the FUD directed at Binance. During a Q&A on Twitter, he claimed that FTX gave a cryptocurrency news outlet $43m to produce fuel FUD about Binance. Despite this, Zhao stated that Binance is unfazed by it.

As things continue to unfold, reports suggested that Sam Bankman-Fried might be struggling financially after U.S. federal authorities seized nearly $700m linked to him, mostly from his Robinhood stocks. He is reported to have put his Washington, DC townhouse for sale at $3.28m, although he owns other assets. 

A resurgence of hacks and scams

Azuki, an anime-themed NFT project, was targeted by a cyber-attack in which hackers infiltrated its official Twitter account in the early hours of Jan. 28, with over $750,000 in investors’ funds stolen. The attackers posted a deceptive link in a phishing scam that led users to a counterfeit land minting site. 

Robinhood’s Twitter was hacked on Wednesday and used to promote RHB, a scam token. The tweets were deleted after getting over 10,000 views. Public awareness prevented significant purchases, as only around $1,000 worth of RHB was bought. 

On Jan. 23, Whalechart’s Twitter account, with over 223,000 followers, was compromised and used to promote a fake Uniswap giveaway through a malicious link impersonating Uniswap’s site. Users who followed the link were tricked into connecting their crypto wallets for a fake $500 UNI reward. Whalechart regained control of the account and revealed that the exploit occurred due to a scheduled tweet feature on TweetDeck.

On the same day of the Whalechart compromise, the Twitter account of GOLTV, a Latin American soccer channel, was hacked to promote a bogus XRP giveaway. The hackers pretended to be Ripple’s Brad Garlinghouse and made false XRP predictions leading to a malicious page claiming, “Biggest pump is coming.”

Reddit also witnessed its share of scams, as users sounded the alarm on the the sub-reddit channel, “CryptoCurrency” ” regarding a Shiba Inu (SHIB) airdrop scam on Jan. 26. The scam promised Shiba Inu coins. However, it was a ploy to empty users’ wallets. The link prompts a wallet connection, enabling quick theft of funds. Scammers targeted users with random tags to disseminate the link. Reddit removed the post after multiple reports.

Last week, Kevin Rose, CEO of NFT firm Proof, revealed his Ethereum wallet had been hacked and 40 valuable NFTs, worth millions, were taken. The stolen NFTs included 25 Chromie Squiggles and 1 Autoglyph. Rose warned his 1.6 million Twitter followers not to buy any Chromie Squiggles and stated the minimum worth of the stolen NFTs is $1m, with some potentially worth more.

Follow Us on Google News

Source – Crypto.news

 

 

Trending Searches

crypto news | cryptocurrency news | crypto news today | cryptocurrency news today | Latest cryptocurrencies | crypto market news | Latest crypto news | cryptocurrency latest news | crypto update 

cryptonews

Your #1 source for #crypto & #blockchain news.

scroll to top