SBF Trial Starts
Before Trial
The most sought after legal battle among the crypto community, the trial of Sam Bankman Fried (SBF), the ignominious former CEO of crypto exchange FTX, began this week. SBF faces seven charges of fraud and conspiracy. Before the hearing, SBF’s band of lawyers contested the prosecutors’ decision to call on FTX’s customers and investors to testify. They also tried to block a Ukrainian customer from testifying.
Formalities
The trial process began on Tuesday with a 12-member jury selection. Meanwhile, the US prosecutors reiterated that the absence of a crypto framework would not hamper the SBF case and that existing laws are sufficient to charge SBF. In their opening statement, prosecutors argued that SBF built his wealth and power on lies, while SBF’s lawyers stated he had “acted in good faith.”
Fiat@
The crucial argument on the second day was around the “fiat@” entry in the FTX accounts. Before FTX had its bank account, customers would wire money to Alameda Research’s account. The funds remained in Alameda’s account, while in FTX’s books, an entry was made called “fiat@.” Over time, the balance in fiat@ was -$8 billion. The prosecutors claimed that this entry reflected the $8 billion debt owed by Alameda to FTX. But the defendant team cleverly reframed it as a $8 billion loaned by FTX to Alameda, which SBF made in “good faith” as Alameda was well collateralized at that moment.
Alameda Backdoor
FTX employees had discovered a backdoor for Alameda Research months before the crypto exchange collapsed. It allowed Alameda to have a negative balance of up to $65 billion using customer funds. The employees alerted their division boss and Nishad Singh. But, the issue was never resolved, and the leader of the team that raised the concern was fired.
Coinbase and Ripple in Singapore
Crypto exchange Coinbase has secured the Major Payment Institution (MPI) license from MAS, Singapore’s financial authority. Coinbase can now offer enhanced crypto services to individuals and businesses in Singapore. Ripple has also obtained the MPI license, which will allow it to offer regulated digital assets services in Singapore.
Grayscale ETHE to Spot ETF
Grayscale Investments, in partnership with NYSE Arca, has filed for approval from the SEC to convert the Grayscale Ethereum Trust (ETHE) to a spot Ethereum ETF. Grayscale claims the move would give investors a regulated and transparent access to crypto. ETHE has close to $5 billion AUM.
Ether Future ETFs Hit the Market
Scores of ETFs based on ether futures went live this week, nearly two years after the first bitcoin futures ETF. ProShares unveiled the ProShares Ether Strategy ETF. VanEck launched VanEck Ethereum Strategy ETF. Meanwhile, Bitwise set the Bitwise Ethereum Strategy ETF and the Bitwise Bitcoin and Ether Equal Weight Strategy ETF in motion.
Tokenized Money Market Fund
UBS Asset Management has launched a live pilot of a tokenized money market fund on the Ethereum blockchain. It will test various fund activities on the chain using its tokenization service, UBS Tokenize. The initiative is part of Project Guardian, led by the Monetary Authority of Singapore.
THORSwap in Maintenance Mode
THORSwap, a THORChain based decentralized exchange, is temporarily going into maintenance mode. The idea is to curtail a rise in potentially illicit funds moving through the platform. This move comes after a transfer of 22,500 ETH ($38 million) by the “FTX hacker” and consultation with legal experts, advisors, and law enforcement. THORSwap will remain in maintenance mode until a permanent and robust solution is determined.
Layoffs
Chia Network laid off 26 of its 70 employees, cutting down over a third of its workforce, due to the delayed IPO and loss of banking partner, Credit Suisse. Meanwhile, crypto analytics firm Chainalysis is letting go of about 150 employees, making up 15% of its staff. The firm plans to focus on the public sector and depart from the commercial market.
Celsius Revival
Celsius’ successor, tentatively named “NewCo,” plans to launch with up to $450 million in crypto and aims to be listed on Nasdaq. If its restart plans are approved, Celsius would potentially become the first crypto platform to revive itself after bankruptcy. It also intends to start repaying customers whose funds were frozen during Celsius’ collapse by the end of the year. NewCo will be managed by investment consortium Fahrenheit, which plans to invest up to $50 million as an equity stake.
BoK CBDC Trial
The Bank of Korea (BoK) will begin a wholesale CBDC test in partnership with the BIS and other institutions. The trial will assess the feasibility of a future monetary system built upon wholesale CBDCs. The pilot will test the use of a wholesale CBDC as a settlement asset for commercial bank tokenized deposits.
Stars Arena Hack
Avalanche based social token platform Stars Arena was exploited for $2.9 million. The hack was the result of a reentrancy issue, which allowed attackers to sell tickets for much more than they were worth. Users can still withdraw tokens from their wallets but will not receive any value if they sell tickets.
Cryptoverse
Prosecutors of the SBF-FTX case have filed for forfeiture of two multi million dollar jets connected to SBF. A Bombardier Global 5000 BD-700-1A11 worth $15.9 million and an Embraer Legacy EMB-135BJ bought for $12.5 million were listed in the filing.
Gary Wang, co-founder of Alameda Research and FTX, testified that SBF directed him to give Alameda Research preferential treatment but hide the fact from the public.
ZeroSync has implemented the first client system based on Stark proofs for the Bitcoin header chain. It enables users to validate the state of the network without downloading the blockchain or trusting a third party.
Chainlink launched “Data Streams,” a new product that reduces network latency, now in early access on Arbitrum.
A family office backed crypto investment firm, Deus X Capital, launched this week with Tim Grant as CEO and $1 billion of assets.
DeFi lending project Yield Protocol will shut down by the end of this year due to regulatory challenges and a lack of demand. Its 2023 series will mature on Dec 29, after which it will end all the lending and borrowing on the platform.
Friend.tech was again targeted by a wave of SIM swap exploits, which resulted in four users losing $385,000 in ether.
Synergists
Ledger has entered an exclusive partnership with Sotheby’s. Together, they will provide limited edition branded Ledger Nano X wallets to Sotheby’s top digital art or NFT collectors.
Japanese banking giant Nomura’s crypto unit Laser Digital has expanded to a new office in Tokyo, Japan. Nomura’s Hideaki Kudo will head this new office.
Policy
Singapore’s financial regulator, MAS, has granted in-principle approval for a Major Payment Institution license to crypto market maker GSR’s Singapore unit, GSR Markets.
Hyperledger Foundation has added seven members to its council. They include Deloitte, Japan’s JSCC, and India’s NPCI.
Funds and Investments
Crypto focused VC firm CMCC Global raised $100 million from more than 30 investors, including Winklevoss Capital and Animoca Brands founder Yat Siu. This new Titan Fund will support startups in Asia’s blockchain sector.
The Sui Foundation, responsible for the Sui blockchain, announced a $51.3 million fund that will be deployed to support the Sui DeFi ecosystem and its DeepBook platform. The foundation will claim 117 million SUI tokens worth $51.3 million from external market makers.
Web3 restaurant loyalty and rewards app Blackbird raised $24 million in a Series A round led by A16z.Crypto startup Ostium Labs, building a protocol for digital commodity perpetual swaps, raised $3.5 million from investors, including SIG and LocalGlobe.
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