<![CDATA[The Street Crypto: Bitcoin and cryptocurrency news, advice, analysis and more]]>https://www.thestreet.com/cryptohttps://www.thestreet.com/crypto/site/images/apple-touch-icon.pngThe Street Crypto: Bitcoin and cryptocurrency news, advice, analysis and morehttps://www.thestreet.com/cryptoTempestFri, 02 Dec 2022 09:10:23 GMTFri, 02 Dec 2022 09:10:23 GMT<![CDATA[Crypto Exchange Kraken Settles with Treasury Department Over Iran Sanctions]]>https://www.thestreet.com/crypto/news/crypto-exchange-kraken-settles-with-treasury-department-over-iran-sanctionshttps://www.thestreet.com/crypto/news/crypto-exchange-kraken-settles-with-treasury-department-over-iran-sanctionsTue, 29 Nov 2022 01:26:27 GMTThe Delaware-based company failed to prevent more than 820 individuals in Iran from using Kraken for crypto transactions.

On Monday, the Treasury department announced that Kraken, one of America's largest crypto exchanges, has settled with the government and agreed to pay more than $360,000 for apparently violating America's sanctions laws related to Iran.

The Delaware-based company failed to prevent more than 820 individuals in Iran from conducting more than $1.6 million worth of crypto transactions on its platform between October 2015 to June 2019, according to the Office of Foreign Assets Control (OFAC).

OFAC, however, assessed that Kraken's conduct was "non-egregious and voluntarily self-disclosed," significantly reducing the settlement it paid.

Under the agreement, the company has also signed on to spend $100,000 on ameliorating its sanctions compliance system, including by instituting an automated internet protocol address blocking system that would prevent users in Iran from accessing Kraken for crypto transactions in the future.

"[Kraken] applied its geolocation controls only at the time of onboarding and not with respect to subsequent transactional activity, despite having reason to know based on available IP address information that transactions appear to have been conducted from Iran," OFAC said.

However, the agency lauded Kraken for remedial changes like integrating geolocation blocking into its platform to prohibit Iranians from using Kraken; improving sanctions monitoring through blockchain analytics; appointing a dedicated sanctions expert to staff; and also blocking accounts in Crimea, Donetsk and Luhansk in Ukraine.

In 2021, Kraken was also fined $1.25 million for not registering as a futures commission merchant with the Commodity Futures Trading Commission and offering margined retail commodities illegally.  

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<![CDATA[Crypto Investor Newsletter: Financial Contagion from FTX Is Spreading]]>https://www.thestreet.com/crypto/news/crypto-investor-newsletter-financial-contagion-from-ftx-is-spreadinghttps://www.thestreet.com/crypto/news/crypto-investor-newsletter-financial-contagion-from-ftx-is-spreadingMon, 28 Nov 2022 17:23:09 GMTPlus: Visa's NFT play at the 2022 FIFA World Cup.

Inside this week's issue:

  • Coin Chatter: Line's crypto exchange shuts down, the Bahamas defends its crypto regulations in the wake of the FTX collapse
  • Featured: Visa's NFT play at the 2022 FIFA World Cup

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<![CDATA[‘The World Is Watching’: How Visa Brought NFTs to the 2022 FIFA World Cup]]>https://www.thestreet.com/crypto/ethereum/the-world-is-watching-how-visa-brought-nfts-to-the-2022-fifa-world-cuphttps://www.thestreet.com/crypto/ethereum/the-world-is-watching-how-visa-brought-nfts-to-the-2022-fifa-world-cupMon, 28 Nov 2022 16:31:07 GMTIt partnered with Crypto.com to deliver user-generated digital collectibles at the sporting event.

The 2022 FIFA World Cup in Qatar is the first World Cup featuring non-fungible tokens (NFTs), with payments giant Visa partnering with Crypto.com to bring user-generated digital collectibles to the popular sporting event. From now until December 18, global soccer fans visiting the FIFA Fan Festival will be able to see Visa’s “Masters of Movement” experience, where they can jump on top of an LED soccer pitch and draw their own NFT designs with their feet. The resulting design will be emailed to them as a digital souvenir.

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<![CDATA[Line's U.S. Crypto Exchange Bitfront Shuts Down]]>https://www.thestreet.com/crypto/news/line-us-crypto-exchange-bitfront-shuts-down-plans-to-halt-all-withdrawalshttps://www.thestreet.com/crypto/news/line-us-crypto-exchange-bitfront-shuts-down-plans-to-halt-all-withdrawalsMon, 28 Nov 2022 14:18:31 GMTThe company will halt all withdrawals soon.

U.S. crypto exchange Bitfront, owned by Japan’s messaging service Line, is closing down in a move apparently unrelated to the recent FTX collapse, citing its desire to work on other blockchain projects. The company suspended all new registrations and credit card payments on Monday, after saying its closure was not tied to “certain exchanges that have been accused of misconduct.”


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“We have regretfully determined that we need to shut down Bitfront in order to continue growing the Line blockchain ecosystem and Link token economy,” the company said on Sunday.

Starting in December, Line will also suspend all trades, crypto and U.S. dollar deposits, and cancel all open orders. By March 31, 2023, the company will halt all withdrawals on its platforms.

The company says it will delete all personal user data stored by Bitfront 40 days after withdrawals are stopped on its platform on March 31, 2023, though for legal purposes it may retain some information

It is unclear how many U.S. customers will be impacted; the company was not permitted to operate in California, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, New Jersey, Pennsylvania, Utah, Wisconsin, and Wyoming.

Bitfront has been operating in the U.S. since 2020.

The genesis of Line's crypto exchange stems back to 2018, when the company unveiled a crypto exchange called Bitbox in Singapore, followed by Bitmax in 2019, and finally Bitfront in 2020 in the U.S. This coincided with the company releasing Link, its own digital currency.

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<![CDATA[Bahamas: Stop Saying We Lack Crypto Regulations After FTX]]>https://www.thestreet.com/crypto/news/bahamas-we-are-a-place-of-laws-stop-saying-we-lack-crypto-regulations-after-ftxhttps://www.thestreet.com/crypto/news/bahamas-we-are-a-place-of-laws-stop-saying-we-lack-crypto-regulations-after-ftxMon, 28 Nov 2022 06:03:51 GMTA government official pointed out that the Bahamas was "the first regulator in the world" to go after FTX.

After the FTX debacle, the island nation of the Bahamas has come under scrutiny for hosting now bankrupt and insolvent crypto exchange FTX, which is under investigation by U.S. regulators. Bahamian government officials are on the offensive, defending the country's commitment to legislation and rule of law around digital assets.


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"We have been shocked at the ignorance of those who assert that FTX came to the Bahamas because they did not want to submit to regulatory scrutiny," said Ryan Pinder, the country's attorney general and Minister of Legal Affairs on Sunday. "In fact, the world is full of countries in which there is no legislative or regulatory authority over the crypto and digital asset business, but the Bahamas is not one of these countries."

Cryptocurrency in the Bahamas is governed by 2020's Digital Assets and Registered Exchanges (DARE) Act, and the Financial and Corporate Service Providers Act, which compelled crypto entrepreneurs like Sam Bankman-Fried to leave Hong Kong for the Caribbean nation after China tightened restrictions on cryptocurrency.

FTX is also not the sole crypto exchange located on the island – crypto exchange OKX maintains an office in the Bahamas and touts legislative clarity as a chief reason for its presence there.

On Sunday, Pinder highlighted the fact that FTX's sister entity Alameda Research – which was largely owned by Sam Bankman-Fried before it filed for bankruptcy – does not maintain a legal presence in the Bahamas. This makes it difficult for government officials to go after the company. 

Pinder added that FTX's collapse owed as much to poor management by FTX founder Sam Bankman-Fried as to FTX's role as a crypto firm: "What happened can more readily be understood as a case of a very large business failure as a result of questionable internal management practices and corporate governance."

He also said that the Bahamas was "the first regulator in the world" to pursue action against FTX in the wake of revelations that the company had allegedly siphoned off billions of dollars of customer funds to shore up sister company Alameda Research. "The Securities Commission [in the Bahamas] was able to move so quickly because of the strength of the legislative framework, which was already in place in the Bahamas," Pinder said. "For safekeeping," the government froze FTX assets and transferred them to a crypto wallet.

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<![CDATA[Mark Cuban Says FTX's Sam Bankman-Fried Should 'Be Afraid of Jail']]>https://www.thestreet.com/crypto/ethereum/mark-cuban-says-ftxs-sam-bankman-fried-should-be-afraid-of-jailhttps://www.thestreet.com/crypto/ethereum/mark-cuban-says-ftxs-sam-bankman-fried-should-be-afraid-of-jailMon, 28 Nov 2022 00:53:05 GMTThe Dallas Mavericks' owner said he met with SBF and "thought he was smart."

Mark Cuban, the billionaire owner of the Dallas Mavericks, believes that crypto is not going anywhere, but suggested that disgraced FTX founder Sam Bankman-Fried might be heading to a correctional facility. 

“I don’t know all the details, but if I were him, I’d be afraid of going to jail for a long time,” Cuban told TMZ. "I talked to the guy and thought he was smart.. I had no idea he was going to take other people's money and put it to his personal use."


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Cuban has been an ardent proponent of crypto, in the past claiming popular memecoin Dogecoin was "real money" and the "strongest" medium of exchange. However, in recent months he has generated controversy for his role promoting now bankrupt crypto lender Voyager. 

"Cuban and [Voyager CEO Stephen Ehrlich]... went to great lengths to use their experience as investors to dupe millions of Americans into investing — in many cases, their life savings — into the deceptive Voyager platform and purchasing Voyager earn program accounts, which are unregistered securities," the class-action lawsuit says. "As a result, over 3.5 million Americans have now all but lost over $5 billion in cryptocurrency assets." 

Cuban, who is an Ethereum maximalist, doubled down on his belief that the FTX collapse will not be a death knell for the crypto industry. "Separate the signal from the noise," Cuban said. "There's been a lot of people making a lot of mistakes, but it doesn't change the underlying value."

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<![CDATA[Binance Begins Process of Revealing Proof of Reserves, but Liabilities Remain Undisclosed]]>https://www.thestreet.com/crypto/news/binance-begins-process-of-revealing-proof-of-reserves-but-liabilities-remain-undisclosedhttps://www.thestreet.com/crypto/news/binance-begins-process-of-revealing-proof-of-reserves-but-liabilities-remain-undisclosedSun, 27 Nov 2022 15:21:35 GMT"This is either ignorance or intentional misrepresentation," said Kraken CEO Jesse Powell.

In the aftermath of the FTX collapse, Binance, Crypto.com and other major crypto firms pledged to “publicly share proof of reserves,” indicating that they wanted to grow consumer trust in their platform by revealing a full audit of coins.


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Binance unveiled proof of reserves of the world's largest crypto exchange on November 25 for Bitcoin, and said an audit of other coins would be impending in the next few weeks.

The company provided a breakdown of Bitcoin assets held in reserve for their customers, showing a reserve ratio of 101% (the company says it is holding 582,485 Bitcoin in reserves and users' net balance is 575,742 Bitcoin). "We are showing evidence and proof that Binance has funds that cover all of our users assets 1:1, as well as some reserves,” Binance said.

The company says it is also planning to bring aboard third-party auditors to review their proof-of-reserves, who will provide details on the net balance, equity and debt of each crypto user.

Binance says it will also eventually implement "ZK-SNARKs," or zero-knowledge succinct non-interactive argument of knowledge proofs to demonstrate that customers have enough additional assets to provide collateral for funds, indicating that the total net balance of each user was not negative.

For now, Binance said users could check the accuracy of the figures through an independent method: “For those who want to go a step further and independently verify their funds, they can copy the source code into a Python application and cross reference it themselves.”

However, despite the disclosures, Kraken CEO Jesse Powell said that Binance has not yet offered a comprehensive proof-of-reserve audit, which ideally would map out total client liabilities, offer customers a way to check that each account was part of that total, and provide signatures showing that Binance maintains control over the specific crypto wallets cited in the total. Without disclosure of liabilities, Powell said a "statement of assets is pointless."

The FTX imbroglio has led many crypto firms to champion proof of reserves as a marketing ploy. Speaking at a conference in Indonesia earlier this month, Binance's CEO Changpeng "CZ" Zhao said the crypto industry needed to safeguard investor funds and buoy investor confidence by disclosing proof of reserves: “That is absolutely going to be where the focus is for the next little while, which is right,” he said. “We have learned from our mistakes.”

“This is a critical moment for the entire industry,” echoed Kris Marszalek, CEO of Crypto.com, who said that "there are [still] trustworthy crypto platforms" in the aftermath of the FTX debacle.“Transparency is more important than ever, and safety and security of users and funds remains the priority. It requires full and collective commitment."

After FTX's dramatic fall from grace, CEOs like Marszalek hope to signal that some crypto firms are still worth believing in: “It’s incumbent on us to send a strong message to the world that there are trustworthy crypto platforms," he said.

"Investors will be asking crypto companies more questions about their debt, their internal risk management controls, and their use of collateral pledged against loans,” William Quigley, co-founder of Tether, one of the world’s largest stablecoins, told TheStreet Crypto about the ramifications of FTX's collapse.

Earlier this month, Tether also released its quarterly attestations. The company said it was unrelated to the FTX collapse.

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<![CDATA[Crypto Lender Genesis Under Regulatory Probe in Multiple U.S. States]]>https://www.thestreet.com/crypto/news/crypto-lender-genesis-under-regulatory-probe-in-multiple-u-s-stateshttps://www.thestreet.com/crypto/news/crypto-lender-genesis-under-regulatory-probe-in-multiple-u-s-statesSun, 27 Nov 2022 12:54:36 GMTThe company is also facing a liquidity crisis.

Crypto trading firm Genesis, one of the world’s largest crypto lenders, is being scrutinized by regulators in the state of Alabama and other U.S. states while it is pursuing financing to the tune of at least $500 million to cover funding gaps.


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The company is the latest experiencing financial contagion from the FTX collapse. Genesis lost $175 million on FTX, and although it received a cash bailout of $140 million from parent company Digital Currency Group, customer runs on funds is making it difficult to stay afloat amid the liquidity crunch.

Genesis denies it is planning to file for bankruptcy, but its parent company Digital Currency Group said this past week that DCG owed Genesis $575 million.

"We have weathered previous crypto winters, and while this one may feel more severe, collectively we will come out of it stronger," Digital Currency Group CEO Barry Silbert said.

For regulators, the chief concern is how interlinked crypto firms are with another, potentially sparking more crypto firm collapses in the aftermath of FTX and Three Arrows Capital disasters. Regulators are also looking at the violation of securities laws. Described as ‘the Goldman Sachs of crypto,’ the firm had more than $115 billion in trades last year, along with more than $130 billion in loans, making its potential collapse worrisome for the broader industry.

On November 16, Genesis suspended withdrawals, citing “unprecedented market turmoil.” Although the company told customers it had “no plans to file for bankruptcy imminently,” the company’s financial imbroglio has prompted it to seek external help and advice in the aftermath of the announcement.

Its woes have been looming since the summer collapse of crypto hedge fund Three Arrows Capital, which saw it lose $1.2 billion. Although Digital Currency Group offered Genesis a bailout, Genesis was still feeling the financial impact, prompting Genesis CEO Michael Moro to resign and slash 20% of employees.

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<![CDATA[Blockchain.com CEO: Your Only Job in Crypto is to ‘Survive’]]>https://www.thestreet.com/crypto/news/blockchain-com-ceo-your-only-job-in-crypto-is-to-survivehttps://www.thestreet.com/crypto/news/blockchain-com-ceo-your-only-job-in-crypto-is-to-surviveMon, 21 Nov 2022 15:57:05 GMT‘We’re all playing the Hunger Games of crypto right now,’ he said.

After a tumultuous month in crypto that saw the dramatic collapse of one of the world's largest crypto exchanges, industry heavyweights amassed in Miami to discuss the path ahead.


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“Having a big exchange blow up, that’s literally happened every down market we’ve ever been through, and usually it’s the number one exchange that blows up,” said Blockchain.com CEO Peter Smith. “At the moment, your only job as a crypto CEO, running a larger company, is to make sure that you survive. It’s a survival of the fittest. We’re sort of all playing the Hunger Games of crypto right now.”

Blockchain.com was founded more than a decade ago in the United Kingdom, maintains a headquarters in Luxembourg, and established a US headquarters in Miami last year.

Smith trumpeted Miami's role as a crypto capital and its ability to magnetize new entrants in the space: “The passion for crypto is probably uniquely high here in Miami, and that’s a really cool thing to be a part of,” he said.

“It doesn’t matter if you’re a city selling an arena sponsorship or you’re a banking partner or you’re a VC investor, the net result of the FTX episode is going to be an increased focus on corporate governance, access controls and due diligence, and I think that’s going to be a net positive for the whole space,” Smith said.

“I don’t think that it’s going to impact Miami in a particular way that it doesn’t impact any other city or any place. The bar for diligence and the bar for making sure that crypto companies have good governance is going to come back in fashion.”

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<![CDATA[FTX and Alameda Research Collapse and File for Bankruptcy, SBF Resigns]]>https://www.thestreet.com/crypto/news/ftx-and-alameda-research-collapse-and-file-for-bankruptcy-sbf-resignshttps://www.thestreet.com/crypto/news/ftx-and-alameda-research-collapse-and-file-for-bankruptcy-sbf-resignsFri, 11 Nov 2022 16:01:21 GMTFTX faces almost $8.8 billion in liabilities.

On Friday, one of the world’s largest crypto exchanges, FTX, announced that it had filed for Chapter 11 bankruptcy along with its sister entity Alameda Research and approximately 130 other companies related to FTX.


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The company also announced that founder Sam Bankman-Fried was resigning from his position as CEO, with John J. Ray III succeeding him.

"It’s scary to think that FTX, which is one of the largest crypto exchanges in the world, was bitten by liquidity concerns," Dan Raju, CEO of brokerage platform Tradier told me.

FTX faces almost $8.8 billion in liabilities, and it was revealed that Bankman-Fried's Alameda Research relied on FTX's native token (FTT), Robinhood shares and client funds from FTX to prop up the trading firm.

"While it is easy to measure retail confidence in terms of coin prices, the current reality is much worse for investors given the recent insolvencies back in June," Raju added. 

"Events like this will shake retail investors to their core and give life to all those who have been demanding that the government regulate these firms better," Raju said.

The crypto industry is already facing spillover effects, with crypto lender BlockFi on Thursday halting all client withdrawals. Last year, BlockFi and FTX had agreed to let FTX US extend a $400 million credit facility to BlockFi, which would be acquired by FTX.

That deal now seems imperiled by the collapse of FTX on Friday.

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<![CDATA[Global Crypto Markets Lose Over $100 Billion After FTX Debacle]]>https://www.thestreet.com/crypto/news/global-crypto-markets-lose-over-100-billion-after-ftx-debaclehttps://www.thestreet.com/crypto/news/global-crypto-markets-lose-over-100-billion-after-ftx-debacleThu, 10 Nov 2022 22:20:59 GMT“In the near-term, crypto prices will fall, but the crypto markets are resilient."

This week, the global market for cryptocurrencies slid precipitously, losing more than $100 billion in a 24-hour period, after Binance announced it would not acquire FTX and the fate of the beleaguered crypto exchange hung in peril.


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Binance, the world's largest crypto exchange, announced that FTX had myriad problems ranging from "mishandled customer funds and alleged US agency investigations." The news plunged the total market cap for crypto below the $1 trillion mark, and also saw Bitcoin sliding under $16,000 on Wednesday — hitting a two-year low.

Ether, Dogecoin and XRP also faced a 14% price crash.

"The extreme volatility and vulnerability of the cryptocurrency market was illustrated this week by a sharp drop in Bitcoin price caused by the run on just one entity: FTX. These problems stem from the lack of assets backing Bitcoin and most other cryptocurrencies," said Alex Konanykhin, CEO of Unicoin.

"Bitcoin prices are currently reacting to multiple market factors, including the fallout of FTX’s collapse and the positive, risk-on sentiment from the CPI report," Jason Lau, COO at Okcoin, told TheStreet Crypto. "Going forward, I expect continued Bitcoin price volatility until the FTX incident is resolved, and I am seeing increased recognition of the value of Bitcoin as an uncorrelated asset that can be self-custodied, which will likely provide price support."

FTX’s liquidity crisis and insolvency also severely impacted non-crypto sectors and organizations as well. The Ontario Teachers Pension Plan in Canada had been part of FTX's $400 million Series C funding rounds in 2021, and was seen as a group negatively impacted by the fallout.

However, others in the crypto industry are buoyant there will be a recovery.

“In the near-term, crypto prices will fall, but the crypto markets are resilient,” William Quigley, co-founder of Tether, one of the world’s largest stablecoins, told me. “Within six months, most of the negative impact from the FTX collapse will dissipate.”

“Looking at the bigger picture, this mess may end up being a positive experience for the crypto industry," adds Ben Goertzel, CEO of SingularityNET, a blockchain and artificial intelligence project. "It’s not so terrible if crypto players with unsound business models get shaken out of the market, and regulators are nudged to put into place thoughtful rules enforcing greater transparency among large actors in the space."

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<![CDATA[White House After FTX Collapse: Crypto 'Risks Harming Everyday Americans']]>https://www.thestreet.com/crypto/news/white-house-after-ftx-collapse-crypto-risks-harming-everyday-americanshttps://www.thestreet.com/crypto/news/white-house-after-ftx-collapse-crypto-risks-harming-everyday-americansThu, 10 Nov 2022 21:56:10 GMTEdward Snowden referred to the government as “opportunistic serpents" in reply.

On Thursday, the White House waded into the FTX collapse controversy, with White House press secretary Karine Jean-Pierre saying, “Without proper oversight of cryptocurrencies, they risk harming everyday Americans.”

In the last 48 hours, one of the world's most prominent crypto exchanges, FTX, became mired in controversy after Binance dropped out of an acquisition bid of the company, declaring that FTX  had "mishandled customer funds and alleged US agency investigations." The total market cap for crypto fell below the $1 trillion mark, and also saw Bitcoin sliding under $16,000 on Wednesday — hitting a new two-year low.


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"The most recent news further underscores these concerns and highlights why prudent regulation of cryptocurrencies is indeed needed," Jean-Pierre said about FTX. She added that the government and regulatory agencies were continuing to monitor the situation.

This immediately ignited fury from crypto enthusiast and U.S. government whistleblower Edward Snowden, who testily called the White House “opportunistic serpents" who were capitalizing on the moment to push for greater government regulation.

In the aftermath, some regulators have sounded the alarm about crypto and indicated that they were looking to leverage the moment to implement sweeping reforms and gain control in reining in the industry.

"Never let a good crisis go to waste," U.S. Commodity Futures Trading Commission commisioner Kristin N. Johnson said on TV, commenting that "global markets are fragile" and clear regulation and legislation were needed to prevent greater financial losses.

In the crypto industry, many CEOs are echoing a sentiment of wanting to clean up their house, metaphorically speaking. “We need to raise our standards,” Kraken CEO Jesse Powell said on Twitter. “The damage here is huge. An exchange implosion of this magnitude is a gift to Bitcoin haters all over the world.”

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<![CDATA[FTX's Terms of Service Bar Company From Seizing User's Crypto, Lawyers Say]]>https://www.thestreet.com/crypto/news/ftxs-terms-of-service-bar-company-from-seizing-users-crypto-lawyers-sayhttps://www.thestreet.com/crypto/news/ftxs-terms-of-service-bar-company-from-seizing-users-crypto-lawyers-sayThu, 10 Nov 2022 21:06:26 GMTThe firm has allegedly taken billions of dollars in cryptocurrency from users.

According to its own terms of service, embattled crypto exchange FTX is not permitted to grab user funds, lawyers say.


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FTX has allegedly taken billions of dollars in cryptocurrency from users to shore up FTX’s sister trading entity Alameda Research, which is also owned by FTX CEO Sam Bankman-Fried.

But lawyers digging into FTX’s terms of service point out that this may amount to theft.

The FTX terms of service reads: crypto in FTX user accounts are not “the property of, or shall or may be loaned to, FTX Trading.” It adds that the crypto exchange “does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading,” 

The terms of service also guarantee that the user “control[s] the digital assets.” It also reassures users that they can withdraw their crypto "at any time, subject to outages or downtime."

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<![CDATA[Sam Bankman-Fried Shuts Down Alameda and Apologizes for String of Mistakes At FTX]]>https://www.thestreet.com/crypto/news/sam-bankman-fried-shuts-down-alameda-ftx-collapse-apologizeshttps://www.thestreet.com/crypto/news/sam-bankman-fried-shuts-down-alameda-ftx-collapse-apologizesThu, 10 Nov 2022 19:04:27 GMT"My #1 priority, by far, is doing right by users," the billionaire says.

The billionaire CEO of embattled crypto exchange FTX has taken to Twitter to issue a string of mea culpas and accept responsibility for the company's downfall, which he is still hoping to prevent through financing appeals to companies like Kraken. He also announced sister trading company Alameda Research would be shutting down.

On Thursday, FTX U.S. Derivatives assured customers that the company was leaving parent firm FTX and would “soon be entirely separate” from the crypto exchange. 

Among his chief failures triggering FTX's near-bankruptcy, Bankman-Fried says, was his lack of transparency and communication around the company's finances. This prompted him to pledge "radical transparency" in a future project, although it was not clear how the disgraced CEO would be in a position to helm such an endeavor in the future.

Earlier this week, FTX faced the possibility of an acquisition by the world's largest crypto exchange, Binance, that fell through after Binance's CEO said the company was more or less unsalvageable. This quickly sent crypto markets into a tailspin, wiping more than a $1 billion from the markets.

As Bankman-Fried to explain it, the crux of the problem at the firm was that the total market value of assets and collateral were "higher than client deposits."

"Of course, it's on me that we ended up there in the first place," Bankman-Fried said.

"A poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users' margin. I thought it was way lower," he explained.

Bankman-Fried also acknowledged that he was not a "good developer" and his explanations on social media should not be misconstrued.

Kraken CEO Jesse Powell, who is evaluating a potential cash infusion to the embattled exchange, said there were "red flags" in the company's books. Kraken, which has 9,000 of the company's native token on FTX, was not exposed to Alameda Research, the company confirmed this week. (FTT's, FTX's token, plummeted to a low of $2.05 this week.)

Among the red flags listed by Powell in a blistering Tweet were Bankman-Fried's "ego purchase" of the American Airlines Arena in Miami, Florida for an eye-watering sum, frequent trips to DC to "buy political favor" and generally "being overeager to please D.C.," along with his quest for unctuous media coverage. It did not help that he also acted as if he "knew everything after showing up to the battle eight years late," Powell pointed out.

Bankman-Fried said that he would ensure that if FTX is properly financed, all funds will return to the pockets of users. "Every penny of that, and of the existing collateral, will go straight to users, unless or until we've done right by them," he underlined on Twitter. "After that, investors – old and new – and employees who have fought for what's right for their career, and who weren't responsible for any of the fuck ups."

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<![CDATA[Here’s What FTX Users Can Do to Protect Themselves]]>https://www.thestreet.com/crypto/news/heres-what-ftx-users-can-do-to-protect-themselveshttps://www.thestreet.com/crypto/news/heres-what-ftx-users-can-do-to-protect-themselvesThu, 10 Nov 2022 16:30:22 GMTThe embattled crypto exchange has halted withdrawals of funds, drawing the ire of customers.

After Binance said it was no longer buying FTX this week, renewing fears over FTX’s insolvency and liquidity crisis, investors quickly – and in a panic – stormed FTX.com's website, worried about how to access, withdraw, and safeguard their funds on the Bahamas-headquartered crypto exchange.


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The FTX.com website has faced several outages as more than 1 million FTX.com users struggle to regain access to their account, download transaction records, and financially gird themselves for even greater losses.

“FTX is currently unable to process withdrawals,” the FTX.com website warned users. “We strongly advise against depositing. All onboarding of new clients has been suspended until further notice.”

Many users are attempting to export their FTX trade history in advance of a loss of access down the line, particularly for tax purposes. Regardless of whether FTX files for bankruptcy or suspends withdrawals during future court proceedings, the IRS requires users to report crypto transactions. Many investors rely on exchanges to aggregate this data for them and help them calculate what they owe. Now, FTX users risk not being able to report their capital gains, losses and income to the IRS.

FTX.com users will need to provide their tax office with a statement of their complete trading history in order to report their cryptocurrency earnings and capital gains accurately, and in compliance with income tax rules,” says Izzat-Begum Rajan, Head of Tax at Koinly, a crypto calculator platform that helps with taxes.

It's not just U.S. users who will be impacted; most jurisdictions in the world require reporting crypto transactions to tax authorities. 

“FTX.com users everywhere will need to have complete records of their FTX trading history at tax time, whether they are filing their tax returns in Canada, Australia, the UK or anywhere else where FTX.com is available,” Rajan added.

Here's what FTX users should do:

1. Login to your FTX account.

2. Look for the section on API keys in your profile, and click on "create read-only API key." Save the key in a safe place.

3. Download all statements indicating your crypto transactions, date of purchase, the amount of capital gains or losses you incurred or made.

If FTX faces legal action and users become creditors seeking compensation of their funds, having a paper trail indicating what you bought, when you bought it, and how much money you lost will prove helpful.

Over the past week, Reuters reported that approximately $6 billion has left FTX's crypto exchange. But even if you weren't able to withdraw funds, Matthew Liu, co-founder of Origin Protocol, says there are steps retail investors can take.

"They should take screenshots and download records that will be useful in proving their case if this goes to bankruptcy court," he says. "There will be a long line of creditors, and it's more likely than not that FTX will not be able to plug in the user funding hold. The latest figures suggest FTX is close to $10 billion in the negative, so I am skeptical that they can return 100% of user funds."

"Users that have the best documentation have the best chances of getting some of their money back," Liu said.

Even users without direct exposure have reason to worry, Liu added, pointing out that Alameda, FTX's sister trading firm, would likely be liquidating its balance sheet to cover FTX debt. "Alameda has large holdings in Solana, Serum, and Aptos," he said, indicating that those coins will face large sell pressure in the immediate aftermath.

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<![CDATA[Mark Zuckerberg's Metaverse Derailed by More than 11,000 Layoffs]]>https://www.thestreet.com/crypto/news/mark-zuckerbergs-metaverse-derailed-by-more-than-11000-layoffshttps://www.thestreet.com/crypto/news/mark-zuckerbergs-metaverse-derailed-by-more-than-11000-layoffsWed, 09 Nov 2022 14:58:40 GMTMeta has invested $36 billion in Reality Labs, but has yet to reap profits.

On Wednesday, Meta CEO Mark Zuckerberg announced that Facebook’s parent company plans to slash approximately 13% of its employees, laying off more than 11,000 people in one of the “most difficult” moves in Meta’s history.


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The layoffs extend to Reality Labs, the division of Meta dedicated to the metaverse and virtual reality, which employs over 10,000 people and produces Quest headsets and the Horizon Worlds platform. Meta has invested $36 billion in Reality Labs, but has yet to reap profits or energize customers to sign up to Zuckerberg's vision of the metaverse in large numbers.

The company’s net income dropped to $4.4 billion during the third quarter, a more than 50% loss compared to last year.

Zuckerberg linked Wednesday’s layoffs to higher spending and investments the company made during the pandemic, which fueled an optimism that online-oriented tech firms might enjoy “permanent acceleration” and growth that failed to materialize. “The macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” Zuckerberg said. “I got this wrong, and I take responsibility for that.”

Citing renewed need for "capital efficiency," Zuckerberg said the company would not make any new hires through the first quarter of 2023 and would reduce its real estate footprint, even shifting to “desk sharing” for frequently remote workers. “I believe we can achieve this while spending less,” he said.

“Fundamentally, we’re making all these changes for two reasons: our revenue outlook is lower than we expected at the beginning of this year, and we want to make sure we’re operating efficiently across both Family of Apps and Reality Labs,” Zuckerberg said, referring to Meta’s virtual reality and augment reality division.

During the third quarter of this year, Reality Labs lost more than $3.6 billion, but Zuckerberg reiterated the Meta has a “long-term vision for the metaverse.”

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<![CDATA['Crypto is Not Partisan, But the Approach Towards Regulating It Is']]>https://www.thestreet.com/crypto/news/eric-chen-injective-labs-crypto-not-partisan-approach-is-democrats-republicanshttps://www.thestreet.com/crypto/news/eric-chen-injective-labs-crypto-not-partisan-approach-is-democrats-republicansWed, 09 Nov 2022 13:34:30 GMTSome Democrats and Republicans differ in their legislative approach to crypto, one expert says.

Eric Chen is the CEO and co-founder of Injective Labs, who spoke to us about how industry players view the midterms, the blitz of spending by lobbying firms and PACs, and how Democrats and Republicans differ in the legislative actions they want to pursue around crypto.

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<![CDATA[Crypto Investor Newsletter: Politicians Have to Serve Crypto Voters – Or Risk Losing]]>https://www.thestreet.com/crypto/news/crypto-investor-newsletter-politicians-have-to-serve-crypto-voters-or-risk-losinghttps://www.thestreet.com/crypto/news/crypto-investor-newsletter-politicians-have-to-serve-crypto-voters-or-risk-losingWed, 09 Nov 2022 01:12:42 GMTIt's Election Day!

Welcome to this week's Crypto Investor!

It's Election Day! Here are some fun facts:

  • Approximately one in seven people who might vote hold crypto.
  • Across the country, one in two voters want government officials to take crypto seriously as a policy issue.
  • Increasingly, 4 in 5 voters say a political candidate’s stance on crypto might impact how they vote.

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<![CDATA[India to Launch Central Bank Digital Currency Trial]]>https://www.thestreet.com/crypto/news/india-to-launch-central-bank-digital-currency-trialhttps://www.thestreet.com/crypto/news/india-to-launch-central-bank-digital-currency-trialTue, 01 Nov 2022 02:47:12 GMTThe country has the highest crypto adoption rate in in the world after Vietnam.

Starting November 1, South Asia's largest economy is planning to begin its pilot program for a central bank digital currency. The Reserve Bank of India has shortlisted nine banks to participate in the pilot project, including the State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.

The project's initial focus will be on "settling secondary market transactions in government securities."

The government is hopeful the digital rupee program will making inter-bank transfers more efficient, reduce transaction costs and facilitate cross-border payments, particularly for remittances. 


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Earlier this year, the central bank recommend expanding the definition of "bank notes" to include cryptocurrencies under the Reserve Bank of India Act, 1934.

However, this past June, India's central bank published a report declaring that crypto was not currency and lacked any intrinsic value.

“Cryptocurrencies are not currencies, as they do not have an issuer, they are not an instrument of debt or a financial asset and they do not have any intrinsic value. At the same time, cryptocurrencies pose risks,” the Reserve Bank of India said.

India has the highest crypto adoption rate in in the world after Vietnam, boasting more than over 100 million citizens investing in crypto, according to an estimate from crypto firm TripleA. Chainalysis’ Global Crypto Adoption Index last year placed India first in the world for adoption of virtual currencies.

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<![CDATA[This Is the Most Crypto-Friendly State in the U.S.]]>https://www.thestreet.com/crypto/news/this-is-the-most-crypto-friendly-state-in-the-u-shttps://www.thestreet.com/crypto/news/this-is-the-most-crypto-friendly-state-in-the-u-sTue, 01 Nov 2022 02:27:24 GMTThis state has a high volume of crypto-related jobs along with favorable legislation around crypto.

The most crypto-friendly state in the nation is.. Nevada

According to a 2022 SmartAssets study, this is due to Nevada's pro-crypto regulations and high number of jobs for people working in the crypto and blockchain industries. The Nevada government also forbids local governments from taxing blockchain, and lets individuals electronically sign transactions on blockchain.


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Nevada is followed by Florida, California, New Jersey and Texas.

However, if you want to know which state performs the highest number of Google searches on crypto? The answer is California.

In addition to being home to Silicon Valley and plenty of pro-crypto businesses, California is among the best places in the country for crypto adoption and acceptancnce, with 1.86 businesses accepting crypto per 10,000 companies. The state also has more than 3,500 Bitcoin ATMs.

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<![CDATA[Almost Half of Gen Z Wants a Retirement Account in Crypto]]>https://www.thestreet.com/crypto/news/almost-half-of-gen-z-wants-a-retirement-account-in-cryptohttps://www.thestreet.com/crypto/news/almost-half-of-gen-z-wants-a-retirement-account-in-cryptoTue, 01 Nov 2022 02:10:47 GMTGen Z – those born between 1992 to 2012 – has the greatest desire to invest in 401(k) accounts through cryptocurrency.

A new Charles Schwab study surveying 1,000 people has discovered that millennials and Gen Z are the generations most likely to invest in cryptocurrency, with more than 30% of each group using cryptocurrency as a method for investing and saving for retirement.


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Gen Z is defined as the generation born between 1992 to 2012. Millennials fall between 1981 and 1996.

The report also revealed that 11% of Gen Z bought crypto via a marketplace, compared to 10% of millennials and only 5% of Gen X, or individuals born between 1965 and 1980.

Millennials and Gen Z were also the most geographically fluid segment of the population, with almost 40% of Gen Zers changing their employer in the last year, compared to 7% of Boomers and only 13% of Gen Xers.

Gen Z is the generation with the greatest desire to invest in 401(k) accounts through cryptocurrency, with almost half of all Gen Z respondents saying they hoped to do so, compared to 11% of Boomers and 31% of Gen Xers.

However, Gen Z and millennials joined Gen X and Boomers in facing several retirement obstacles, ranging from soaring inflation to stock market volatility and paying off student loans and helping aging parents.

The study isn’t bleak, however – slightly more than half of millennials and Gen Zers consider it “very likely” that they will achieve their retirement goals, with the average Gen Zer believing $1.4 million is the magic number for retirement, while millennials are slightly more conservative and believe the figure is closer to $1.8 million. Both groups, however, only expect retirement savings to last on average around two decades. 

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<![CDATA[Report: El Salvador Bank Refuses to Disclose Bitcoin-Related Data]]>https://www.thestreet.com/crypto/bitcoin/report-el-salvador-refuses-to-disclose-bitcoin-related-datahttps://www.thestreet.com/crypto/bitcoin/report-el-salvador-refuses-to-disclose-bitcoin-related-dataTue, 01 Nov 2022 01:13:21 GMTLast year, El Salvador became the first country in the world to declare Bitcoin legal tender.

Bandesal, the state-run development bank of El Salvador, has labeled the country's Bitcoin purchases "confidential" in a recent report, claiming that it cannot share information on how the Central American country has been using or spending its Bitcoin money. The bank manages the country's Bitcoin funds.

Last year, El Salvador became the first country in the world to declare Bitcoin legal tender.

However, a public watchdog group in El Salvador, the Anti-Corruption Legal Advisory Center (ALAC), has condemned the lack of transparency around Bitcoin accounting.

“The confidentiality limits the possibility for citizens to access and receive information on the operations carried out with public funds by Bandesal,” ALAC said in a tweet.

According to some reports, the country has lost $60 million in Bitcoin due to the crypto winter, and is facing a staggering debt-to-GDP ratio of nearly 90%, making it increasingly likely that El Salvador may plunge into a debt default. 

"Economically, I can say that nothing has changed,” El Salvador resident Edgardo Acevedo told CNBC about the country's economic turmoil.

El Salvador 's investments in Bitcoin are shrouded in secrecy, often only known to the public through President Nayib Bukele's Tweets and logged by websites like Nayib Tracker.

When El Salvador's experiment with Bitcoin was first unveiled last year, the government promised $30 in Bitcoin to every citizen through the Chivo wallet. However, in April, a report from the U.S. National Bureau of Economic Research (NBER) revealed that less than a quarter of users were still using the app, and only 9% of those citizens were using it for Bitcoin transactions.

Many businesses in the country still do not accept Bitcoin.

In fact, the vast majority of Chivo users are actually using it as a regular digital wallet. In a country where nearly 70% of the population is unbanked, it's clear why. Bukele promoted Bitcoin as a path to greater financial inclusion, and managed to achieve it – for U.S. dollar transactions more than Bitcoin ones.

“Just as most households using Chivo prefer to keep their money in cash rather than in Bitcoin, 88% of firms convert their Bitcoin into dollars,” NBER’s Laurent Belsie wrote in the report.

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<![CDATA[How Crypto Super PACs are Turbocharging the U.S. Midterms]]>https://www.thestreet.com/crypto/news/how-crypto-super-pacs-are-turbocharging-the-u-s-midterms-with-attack-adshttps://www.thestreet.com/crypto/news/how-crypto-super-pacs-are-turbocharging-the-u-s-midterms-with-attack-adsMon, 31 Oct 2022 20:41:13 GMTElections are coming – and one crypto super PAC hopes to play a major role.

The midterm elections are heating up, and crypto super PACs (political action committees) are playing a key role in some races around the country. In June, a new crypto super PAC called Crypto Freedom PAC registered and quickly began mobilizing more than $4 million for campaign ads and other ways to prop up pro-crypto candidates across America. While roughly half of its funding, or $2.2 million, has gone toward opposing Republican candidates, the super PAC has also been targeting Independent candidates in Utah.

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<![CDATA[Crypto Investor Newsletter: Brazil's Lula on Crypto + US Midterms and Crypto]]>https://www.thestreet.com/crypto/news/crypto-investor-newsletter-brazil-lula-on-crypto-us-midterms-and-cryptohttps://www.thestreet.com/crypto/news/crypto-investor-newsletter-brazil-lula-on-crypto-us-midterms-and-cryptoMon, 31 Oct 2022 20:33:26 GMTElections are coming – and one crypto super PAC hopes to play a major role.

Welcome to this week's Crypto Investor!

Brazil has a new president, but it remains to be seen how Lula's return to power will impact the country's growing crypto industry. According to Chainalysis, Brazil has one of the world's highest rates of crypto adoption (ranking seventh worldwide). This summer, a record-breaking 12,000-plus Brazilian companies bought crypto, indicating that the sector is making inroads in the world's 12th-largest economy. Earlier this month, the country’s largest digital bank, Nubank, even announced that it was unveiling its own cryptocurrency.

Leftist president Luiz Inácio Lula da Silva has gone on record saying the government should "monitor the impact of the crypto market on the health of the financial system." He believes Brazil's central bank should draw up regulations to prevent illegal use of crypto for money laundering and fraudulent trading. “Crypto assets have grown a lot in recent years and... deserve the attention of the authorities," he said.

In this newsletter, we have a round-up of the latest crypto news along with a look at the role of crypto super PACs in the upcoming midterm elections.

Fun fact: Today is also the 14th anniversary of the iconic Bitcoin white paper penned by Satoshi Nakamoto, a pseudonymous figure whose identity we still don't know. 

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<![CDATA[Up to 20% of Terror Attacks Funded by Crypto, UN Official Warns]]>https://www.thestreet.com/crypto/ethereum/up-to-20-of-terror-attacks-funded-by-crypto-un-official-warnshttps://www.thestreet.com/crypto/ethereum/up-to-20-of-terror-attacks-funded-by-crypto-un-official-warnsMon, 31 Oct 2022 18:13:12 GMTThe number has nearly quadrupled.

An official from the United Nations sounded the alarm this week when she declared that up to 20% of all terror attacks are now being financed by cryptocurrency, according to an interview with Bloomberg.


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"Blockchains, cryptocurrencies and crowdfunding sometimes pose a complex money trail for financial investigators to follow,” Svetlana Martynova, a senior legal officer at the United Nations Counter-Terrorism Committee Executive Directorate, told Bloomberg. “Some of these products can enable anonymous cross-border funds transfers."

The number used to stand at 5%, but is now creeping closer to 20%, Martynova points out, indicating the figure has nearly quadrupled. However, most militant groups are unsuccessful using crypto to fundraise for their terror campaigns, with  Al-Qaeda or Hamas’ military, the al-Qassam Brigades, being two prominent examples.  

Despite the growing popularity of crypto for terror financing, Martynova is not in favor of a ban on crypto and believes terrorists will continue to use cash to evade detection.

“Cash is always king,” she said. “It’s as anonymous as can be, it’s the most difficult to detect in reality.”

Last year, crypto research firm Chainalysis logged $14 billion in crypto crime.

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<![CDATA[Dogecoin Climbs 77% After Elon Musk's Twitter Takeover]]>https://www.thestreet.com/crypto/news/dogecoin-climbs-77-after-elon-musks-twitter-takeoverhttps://www.thestreet.com/crypto/news/dogecoin-climbs-77-after-elon-musks-twitter-takeoverSat, 29 Oct 2022 16:58:36 GMTThe popular memecoin has long been promoted by Musk.

Elon Musk's recent $44 billion takeover of social media platform Twitter has the crypto community buzzing and saw Dogecoin rallying 77% over the week.


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The popular memecoin has long been promoted by Twitter's new owner, even prompting a $258 billion lawsuit from Dogecoin investors who say Musk has been pedaling a Dogecoin "pyramid scheme."

Still, others believe that Musk's takeover will bring about greater integration of crypto on the platform.

"With Elon taking over Twitter, what we will likely see is broader adoption of a range of cryptocurrencies within the platform – it’s not just going to be a Bitcoin-dominated platform," Stefan Rust, CEO of Laguna Labs and former CEO of Bitcoin.com, told TheStreet Crypto.

The Twitter news also has crypto observers watching closely, after Binance, the world's largest crypto exchange, put $500 million of its money into the deal as an equity investment.

“We're excited to be able to help Elon realize a new vision for Twitter," Binance CEO Changpeng ‘CZ’ Zhao told Decrypt. "We aim to play a role in bringing social media and Web3 together in order to broaden the use and adoption of crypto and blockchain technology.”

Other investors who have pledged $2.5 billion or more in Twitter include Morgan Stanley, Bank of America, and Barclays, while Sequoia Capital, Qatar Investment Authority, and Fidelity Management & Research are committing equity investment.

Musk has gone on record saying his ownership of Twitter stems from a desire to protect the “future of civilization" and create a “common digital town square” hosting diverse viewpoints, in order to avoid “far right-wing and far left-wing echo chambers.”

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<![CDATA['Crooks Always Go Where the Money Is': A Conversation With Ric Edelman on The Truth About Crypto]]>https://www.thestreet.com/crypto/news/interview-ric-edelman-author-of-the-truth-about-cryptohttps://www.thestreet.com/crypto/news/interview-ric-edelman-author-of-the-truth-about-cryptoFri, 28 Oct 2022 10:00:00 GMT"Over the next several years, there will be a dramatic increase in the number of people engaged in crypto."

Ric Edelman has authored many personal finance books over the years, but none have captured the financial zeitgeist as much as The Truth About Crypto: A Practical, Easy-to-Understand Guide to Bitcoin, Blockchain, NFTs, and Other Digital Assets, which came out this spring. We had the chance to speak with Edelman about his new book below:


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Crypto Investor: Can you give us your perspective on the rise of crypto theft and hacks in the last year?

Courtesy of Ric Edelman.

Ric Edelman: First, there's nothing new about computer hacking. We have all gone digital, and not a day goes by that you don't hear of some company being hacked and consumers losing their personal data, social security numbers, or credit card numbers. Crypto is not immune. Crooks always go where the money is.

There are two ways you can protect yourself. One is by relying only on the most established, reputable organizations, which have a history of doing a good job protecting their data, and which demonstrate their ability to provide financial support should a hack occur. The second is if you are going to buy crypto directly: store your coins and tokens in a cold wallet. A cold wallet is a storage device that is disconnected from the internet. Since it's not connected, hackers can't access it. 

The other approach is to invest in companies that do the buying for you, which are investing in crypto funds rather than crypto directly. 

Crypto Investor: How do you see the US government's move to regulate and in some ways crack down on crypto? 

Edelman: The government isn't cracking down on crypto, they're cracking down on crooks and those who are violating federal securities rules. This is a welcome step.

The problem that always occurs in business is that innovation comes before regulation.

Think back to the Model T. When Henry Ford started rolling cars off the assembly line, you suddenly had lots of cars on the road – but there were no rules of the road yet. We didn't know what side of the road to drive on, or who got to go first at an intersection. What were the speed limits? There were no requirements for seatbelts or even lights or windshields on a vehicle. But after the government recognized that society was in danger, the regulations followed. At the time, nobody was suggesting that we ban the automobile – they were suggesting we make it safer. 

That's where we are with crypto. 

Crypto is quite young. The government has only begun to realize we need to increase consumer protection around crypto after it has begun to be widely used. There are lots of rules in place already for the governance, but many of the players in the crypto space are not adhering to those rules, and the government is cracking down on them in the spirit of consumer protection. This is welcome, healthy, and necessary, because without the rules, many of the nation's largest banks and brokerage firms, insurance companies, and credit card companies - they're all hesitant to engage, because they're afraid of getting in trouble with the regulators due to the lack of rules. Once the rules are in place, the major companies will all engage. It's like, I'm happy to drive my car, and I'll follow the speed limit. Just tell me what the speed limit is. Without a speed limit, I'm afraid to go on the highway, because I might get in trouble without knowing I'm doing it. So the rules of the road are coming.

There are dozens of bills in Congress right now. There is a lot of effort underway by the Treasury Department, the SEC, CFTC, the IRS, the Federal Reserve - they are all developing regulations to govern investor and consumer behavior. And this will be very, very healthy.

Courtesy of Simon & Schuster.

CI: What trends in the crypto industry excite you right now?

We are seeing further development of the technology, expansion of its application in commerce, and an increase in the number of companies that are engaging with the technology.

Most folks are paying attention to the price. And they're getting discouraged because the price of Bitcoin and other digital assets is still sharply below their all-time highs set last November. But if you set aside the price volatility for the moment, and you focus on the technological innovation and the development of this industry, it's very easy to get excited. Over the next several years, there will be a dramatic increase in the number of people engaged in this space. The number of companies that are providing products and services that make their businesses operate faster, safer, cheaper, with greater inclusion for more people on a worldwide basis will increase. And it's going to transform the global economy over the coming decade.

CI: We’ve also seen a lot of high-profile crypto failures in the past few months, such as the collapse of the Terra stablecoin and the bankruptcy of Celsius and Voyager. How do you look at these events?

This is all part of the shaking out of the bad players in the marketplace. Terra-Luna was a wacky experiment that never should have gotten as widely-used as it did. People were asking me during the collapse if I was surprised that Terra-Luna collapsed – I was surprised it took so long. The notion of creating an algorithm to provide stability in the price of a stablecoin is absurd on its face and was doomed to failure. 

For Celsius, lending money and offering 15% and 18% interest rates was unsustainable. The only people who engaged were those doing it out of greed and chasing these incredibly high yields. We had too many people making too many promises they couldn't possibly honor. And part of the collapse of crypto prices over the past couple of months has been the shaking out of this nonsense.

We're not done yet - there are going to be some more disruptive elements that have yet to occur - but we're much closer to elimination than before. It's very similar to the 2008 credit crisis, which resulted in a crash in real estate prices as well as the stock market, and created a massive economic crisis on a global scale. We had to shake ourselves of all the problems that led to that – it took several years. By the time we got to 2010, the economy was in much better shape and we enjoyed a 10-year bull market. We're going through this right now in crypto. It's unfortunate to experience it. It's devastating for those who suffer through it. But in the end, it leaves the crypto community in a much stronger condition for a new round of growth.

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<![CDATA[Google and Department of Justice Reach Agreement on Lost Crypto Exchange Data]]>https://www.thestreet.com/crypto/news/google-and-department-of-justice-reach-agreement-on-lost-crypto-exchange-datahttps://www.thestreet.com/crypto/news/google-and-department-of-justice-reach-agreement-on-lost-crypto-exchange-dataThu, 27 Oct 2022 06:28:23 GMTThe company will be improving its legal process compliance program.

On Wednesday, the U.S. Department of Justice announced that Google has committed to bolstering its legal process compliance program to speed up subpoena and search warrant requests, after the loss of data on a Russian crypto exchange that was shut down in 2017.


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In 2016, Google received a request from the Department of Justice (DoJ) to hand over data on BTC-e, a crypto exchange headquartered in Russia whose staff were later arrested for more than $4 billion of money laundering. Under the Stored Communications Act (SCA), Google was required to comply with the search warrant request. However, an appellate court declared that search warrants issued under the SCA did not apply to data stored outside America. Google thus only assisted the Department with data stored in the US and tried to "create new tools that would prevent the data from being repatriated," according to the DoJ.

In 2017 and 2018, a lawsuit moved forward about whether Google had to comply with requests for data stored overseas, a matter which was ultimately ruled on by Congress in 2018: "Congress clarified that the SCA does indeed reach data that U.S. providers choose to store overseas," the DoJ said. 

However, in a blow to the DoJ's case, the data they were seeking from the warrant was "lost" due to the time taken to determine if it could be sent to the government.

Now, hoping to prevent similar data loss fiascos from extended litigation and Google's policies on the geography of data retention, Google has agreed to ameliorate the company's legal process compliance program to speed up requests.

According to the Department's Assistant Attorney General Kenneth A. Polite, Jr., the goal is to "facilitate criminal investigations" and bring "offenders to justice."

“This agreement will help to ensure that, moving forward, Google will maintain the technical capability and resources necessary to comply with lawful warrants and orders, such as the one at issue in this case, that are critical to federal criminal investigations.”

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<![CDATA[Elizabeth Warren: Texas Is A ‘Deregulated Safe Harbor’ for Crypto Miners]]>https://www.thestreet.com/crypto/news/elizabeth-warren-texas-is-a-deregulated-safe-harbor-for-crypto-minershttps://www.thestreet.com/crypto/news/elizabeth-warren-texas-is-a-deregulated-safe-harbor-for-crypto-minersThu, 27 Oct 2022 06:10:59 GMTCrypto miners in the Lone Star state disagree.

DALLAS, TEXAS – U.S. lawmakers are seeking to scrutinize the environmental footprint of Texas’ Bitcoin mining operations, labeling the state a “deregulated safe harbor” offering “cheap power and laissez-faire regulation” in a letter to the Electric Reliability Council of Texas (ERCOT), the body responsible for overseeing the Lone Star state's electricity.


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The concerns rest on Bitcoin mining’s potential impact on the state's energy grid stability and the ongoing climate crisis. In the letter, Massachusetts senator Elizabeth Warren and other lawmakers expressed concern that Texas' state subsidies to miners were being paid by taxpayers. The senators are seeking a full accounting of energy usage and environmental costs.

Texas is home to approximately 30 Bitcoin mines, with dozens more eyeing the prospect of relocation. Almost all of the mining operations are sited in rural counties, far away from urban infrastructure like fast internet and plentiful mining manpower. Staunchly pro-crypto Governor Greg Abbott lured companies there with the pledge of lower energy bills and taxes, and abundant land – a promise that many miners say was fulfilled after China banned mining last year, sparking an exodus of miners to greener pastures in Texas.

But the state may still be unprepared for the potential risks. Last February, Texas' power grid failed, killing hundreds and engulfing millions of people in darkness for multiple days. Although ERCOT has repeatedly said no miner can connect to the grid if their potential energy use exceeds available supply, some watchdogs are sounding the alarm about an increased demand miners will put on an increasingly strained grid.

Crypto miners, however, say they voluntarily unplug from the grid during peak demand periods, ensuring that there is no stress. This was on display during weeks of 100-plus weather this summer, when miners successfully disconnected from the grid.

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<![CDATA[Facebook's Metaverse Reports Over $3.67 Billion In Quarterly Losses]]>https://www.thestreet.com/crypto/news/facebooks-metaverse-reports-over-3-67-billion-in-quarterly-losseshttps://www.thestreet.com/crypto/news/facebooks-metaverse-reports-over-3-67-billion-in-quarterly-lossesWed, 26 Oct 2022 23:59:29 GMT"We expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today.”

It's been a poor quarter for Facebook's parent company Meta, which reported more than $3.67 billion in losses this quarter at its metaverse division called Reality Labs, marking a substantial increase in losses from $2.8 billion just last quarter. The company also said it expects to lose even more money next year.


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“We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,” exiting Meta Chief Financial Officer Dave Wehner said.

The latest earnings report shows that Meta's bet on the metaverse has yet to pay off. In 2021, Meta lost $10 billion on the metaverse. 

Meta CEO Mark Zuckerberg said the company was buffeted by “near-term challenges on revenue.” 

Although Meta boasted revenue of $28 billion this quarter, the CEO said the figure was “still behind where I think we should be." He indicated that jobs would continue to be cut and teams will stay lean in preparation for the accelerating slowdown.

“In aggregate, we expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today.”

Meta is still planning to unveil Meta Quest 3, or the the next Quest headset, in 2023.

“This is a massive undertaking and it's often going to take a few versions of each product before they become mainstream,” Zuckerberg said. “But I think that our work here is going to be of historic importance and create the foundation for an entirely new way that we will interact with each other and blend technology into our lives.”

 

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<![CDATA[Lack of Crypto Regulations Hampers Search for Do Kwon, Co-Founder of Terraform Labs]]>https://www.thestreet.com/crypto/news/lack-of-crypto-regulations-hampers-search-for-do-kwon-co-founder-of-terraform-labshttps://www.thestreet.com/crypto/news/lack-of-crypto-regulations-hampers-search-for-do-kwon-co-founder-of-terraform-labsWed, 26 Oct 2022 14:24:15 GMTThe hunt is ongoing.

This month, South Korean prosecutors confirmed that the co-founder of Terraform Labs, Do Kwon, was in an undisclosed location after exiting Singapore and transiting in Dubai. The founder's whereabouts have been the subject of feverish scrutiny, particularly from investors seeking to recoup their losses amid growing financial tumult in crypto markets.

Kwon oversaw the dramatic collapse of the Terra-Luna algorithmic stablecoins this spring, wiping out $60 billion in investor holdings. Many have engaged in an online hunt to locate the fugitive, who maintains he is not hiding from authorities, including an Interpol Red Notice that was issued earlier this fall. 

Fighting rumors he was on the lam, Kwon has gone on record saying that he is simply protecting himself by not revealing where he is. Still, Kwon has posted humorous jabs at the red notice, saying that Interpol hadn't sent an official notice to his home - though no one knows where that quite is. 

Although Kwon's company was headquartered in Singapore, officials no longer believe the fugitive is in the jurisdiction and may have moved on to other geographies. 

Kwon recently appeared on the crypto podcast the Unchained, where he was evasive about his location and told journalist Laura Shin that he was not able to disclose his geography because of threats to his physical security.

On the podcast, the Terraform Labs co-founder also labeled his previous social media shitposting as "cringe."


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The lack of clear regulations around cryptocurrency has also presented another challenge, according to Bloomberg: prosecutors are facing difficulty navigating how to charge Terraform Labs and its employees for the crypto wipeout earlier this year. Recently, an unnamed employee faced the prospect of detention in South Korea for violating the South Korean Capital Markets Act, but the request to detain him was rejected due to a lack of clarity about whether the individual did, in fact, breach the act. Prosecutors are still working on the case and hoping to levy the charge, but it remains to be seen how it will shake out.

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<![CDATA[IRS to Target Crypto Investors Who Fail to Report Crypto Transactions]]>https://www.thestreet.com/crypto/news/irs-crypto-investors-fail-report-crypto-transactionshttps://www.thestreet.com/crypto/news/irs-crypto-investors-fail-report-crypto-transactionsWed, 26 Oct 2022 10:30:21 GMT"The IRS has strong reason to believe that many virtual currency transactions are not being properly reported."

Crypto investors have long feared the taxman and Uncle Sam's cudgel, and that's bound to get worse as the IRS authorizes the government to go after American citizens who engaged in crypto transactions they failed to report to the IRS.


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“Taxpayers are required to truthfully report their tax liabilities on their returns, and liabilities that arise from cryptocurrency transactions are not exempt," attorney Damian Williams said.

Earlier this year, the IRS was permitted to issue a "John Doe summons" to authorize New York-based M.Y. Safra Bank to hand over a list of customers who failed to disclose their crypto transactions – and probably didn't pay taxes on those transactions.

"Based on its recent experiences with cryptocurrencies, the IRS has strong reason to believe that many virtual currency transactions are not being properly reported on tax returns," the government said.

The IRS is targeting customers of a crypto broker called SFOX, which relied on M.Y. Safra Bank services during their transactions.

By law, U.S. citizens are mandated to report gains and losses from crypto holdings to the IRS each year, but the federal government said there are serious "deficiencies" in getting people to follow through. However, IRS Commissioner Charles P. Rettig pointed out that the government had several tools at its disposal to catch individuals who are failing to pay their taxes.

Crypto taxation, while novel, is increasingly rearing its head in jurisdictions around the world. According to crypto analysis firm Coincub, the top five worst locations for crypto taxes are Belgium, where 2017 rules levy a whopping 33% tax on crypto investments, followed by Iceland, Israel, the Philippines and Japan.

The U.S. is also noteworthy for its capital gains taxes on crypto, which can rise to 20% if the crypto is held for longer than a year. For crypto held less than a year, the rate of taxation roughly corresponds to an individual's income tax bracket, ranging from 10% to 37%.

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<![CDATA[Crypto Investor Newsletter: Rishi Sunak, Soccer Fan Tokens and NFTs]]>https://www.thestreet.com/crypto/news/crypto-investor-newsletter-rishi-sunak-soccer-fan-tokens-and-nftshttps://www.thestreet.com/crypto/news/crypto-investor-newsletter-rishi-sunak-soccer-fan-tokens-and-nftsTue, 25 Oct 2022 21:09:35 GMT

The United Kingdom has a new Prime Minister, and he is avowedly pro-crypto in his outlook.

Rishi Sunak, the former finance minister, hopes to transform Great Britain into a crypto hub, make stablecoins a popular payment method, and promote crypto innovation by creating a “financial infrastructure sandbox” for the blockchain and crypto sector. 

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<![CDATA[Crypto Investor Newsletter: Disney, Australia, and China's Digital Yuan]]>https://www.thestreet.com/crypto/news/crypto-investor-newsletter-disney-australia-and-chinas-digital-yuanhttps://www.thestreet.com/crypto/news/crypto-investor-newsletter-disney-australia-and-chinas-digital-yuanTue, 11 Oct 2022 20:04:15 GMTWe also interview David Rubenstein, author of 'How to Invest: Masters on the Craft.'

Welcome to the Crypto Investor.

Last month, Do Kwon, the disgraced co-founder of Terraform Labs, resurfaced in the news with claims he was not a fugitive on the run. Without revealing his present location (which is of great interest to law enforcement authorities), the poster boy for the perils of algorithmic stablecoins took to Twitter to casually announce that he was, unsurprisingly, a law-abiding citizen fully cooperating with authorities – just with an Interpol red notice targeting him worldwide and South Korea initiating a request to cancel his passport.

Earlier this year, Kwon oversaw the spectacular collapse of the TerraUSD stablecoin, which wiped out $60 billion from investors’ bank accounts. Since then, the developer has stunned Twitter audiences with his risible explanations of how he spends his time: “I go on walks and [to] malls,” Kwon claims. He’s also making light of the Interpol red notice, tweeting: “For something that has notice in the name, it sure gives no notice.”

The elusive founder might be able to joke on Twitter, but with South Korean prosecutors eager to use every tool at their disposal to bring about accountability and justice, Kwon is probably not going to be able to shake off legal action much longer.

In this newsletter, stay tuned for a round-up of this week’s crypto developments, including a look at what’s happening with central bank digital currencies (CBDCs) around the world and the metaverse. We also have an interview on crypto investing and how the war in Ukraine impacts crypto holdings with the Carlyle Group's co-founder David Rubenstein, the billionaire author of the new book How to Invest: Masters on the Craft

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<![CDATA[Crypto Investor Newsletter: Sam Bankman-Fried, Lebanon's Mountain Mining, and Celsius]]>https://www.thestreet.com/crypto/news/crypto-investor-crypto-investor-greener-mining-lebanons-mountain-mining-and-texas-and-vermont-block-celsiushttps://www.thestreet.com/crypto/news/crypto-investor-crypto-investor-greener-mining-lebanons-mountain-mining-and-texas-and-vermont-block-celsiusTue, 11 Oct 2022 19:44:54 GMTPlus, the ongoing legal troubles for Terra's Do Kwon.


Fun fact: More than 2,500 complaints related to crypto have been filed to the Consumer Financial Protection Bureau in the last two years, after a presidential order tasked the agency with enforcement duties "against unfair, deceptive or abusive practices” in the crypto industry. Many are wondering if this will prompt greater scrutiny – or regulation – of the volatile industry during periods of continued market turmoil.

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<![CDATA[Amid Ban on Blockchain Games, South Korean Gaming Industry Increasingly Looks Overseas]]>https://www.thestreet.com/crypto/news/amid-ban-on-blockchain-games-south-korean-gaming-industry-increasingly-looks-overseashttps://www.thestreet.com/crypto/news/amid-ban-on-blockchain-games-south-korean-gaming-industry-increasingly-looks-overseasTue, 11 Oct 2022 01:54:59 GMTThe government's refusal to repeal the ban has many developers searching for opportunities abroad.

South Korea’s gaming industry is increasingly going overseas, thanks to a ban on play-to-earn games and blockchain-based games.

Although Korea is among the globe’s top markets for gaming, ranking fourth worldwide for video games, the government is worried that rates for youth addiction to gambling are exploding in the country. Many in government fear this may be linked to the gaming industry.


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The Covid-19 pandemic saw an uptick in South Korean teenagers being treated for gambling addiction, the Korea Herald reported. Between 2017 and 2021, more than 7,000 Korean adolescents underwent treatment for addiction.

According to the Korea Creative Content Agency, more than 70% of Koreans are gamers.

This has prompted the government to prohibit the domestic gaming industry from releasing NFT games, play-to-earn games, or other games designed using decentralized blockchain technology, amid fears that the games might push teenagers deeper into a dependence on online game-playing.

Earlier this year, the election of pro-crypto President Yoon Suk-yeol looked as if it might reverse policy. On the campaign trail, Yoon initially pledged to repeal the country's ban on blockchain gaming, only to backtrack and exclude the demand from his campaign manifesto. 

Many believe the Yoon administration is unlikely to reverse course and reinstitute blockchain or play-to-earn gaming in the country.

Aware of this, South Korean game developers are eyeing a lucrative overseas market as a destination for their blockchain-based games, particularly after the meteoric success of blockbuster play-to-earn titles like Axie Infinity.

Since 2017, South Korean game developers have been working on their own blockchain and play-to-earn games – even ahead of the success of Axie Infinity by Vietnam-based game developer Sky Mavis. 

But a governmental ban on initial coin offerings in South Korea made it increasingly difficult to launch a domestic game built on blockchain technology.

More than a decade ago, South Korea also levied the so-called "Shutdown Law," which prohibited players under 16 from playing games online from midnight until sunrise. Earlier this year, the government repealed this law, but observers say antiquated views on gaming's ability to cause addiction remain.

Some say this traces back to the 2005 controversy surrounding the video game Sea Story, which quickly became linked with underground gangs and sparked a gambling fever throughout the country, leading to multiple suicides.

For now, game developers are not attempting to change governmental or societal attitudes around gaming. Instead, many are simply choosing to release games integrating play-to-earn models and blockchain technology overseas.

Among them is the South Korean gaming giant Netmarble, which has a new play-to-earn game titled Everybody’s Marble: Metaworld that focuses on buying and trading virtual land in the metaverse. Approximately 70% of the new games Netmarble pushed out this year were metaverse and blockchain-based, starting with the March release of A3: Still Alive.

“The blockchain-based games made by Netmarble will integrate the enjoyment of games, along with intangible assets through NFT, and I believe that the gaming industry will grow even bigger than it is now,” said Bang Jun-hyuk, founder of Netmarble about his company's expansion into blockchain and NFTs.

Similarly, the release of another Korean blockchain-based game, MIR4, led to a 620% surge in stock prices last year for game developer Wemade, transforming founder Park Kwan-ho into a billionaire. Four years ago, Park carved out a blockchain unit at his gaming company and unveiled the Wemix coin two years later.

The Legend of Mir game creator successfully hooked more than half a million gamers to his non-blockchain games before releasing play-to-earn blockchain games. Today, Park's company has a valuation of $3.9 billion. 

“It was wishful thinking at first to create a virtual world where people are allowed to make money while playing a game,” Park told Bloomberg last year. “That’s now possible with the development of blockchain technology, and the recent surge in share prices is reflective of our vision.”

Park also expressed hope that governments worldwide might offer clarity around blockchain-related regulations soon. "I am very interested in knowing ... how different countries will implement regulations on the blockchain sector,” Park said. “There’s so much to worry about and be prepared for because I learned over the years that even a small risk can take down a company.” 

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<![CDATA[South Korea's Aespa Collaborates with NFT Artist Blake Kathryn]]>https://www.thestreet.com/crypto/news/south-koreas-aespa-collaborates-with-nft-artist-on-digital-collectibleshttps://www.thestreet.com/crypto/news/south-koreas-aespa-collaborates-with-nft-artist-on-digital-collectiblesTue, 11 Oct 2022 00:55:08 GMTSome fans will win a free trip to Seoul to meet the group.

On Friday, Sotheby’s New York plans to unveil a new NFT collection featuring the Korean pop group Aespa, best known for hits like "Black Mamba" and "Savage." The all-female group is minting a non-fungible token collection with Los Angeles-based 3D artist Blake Kathryn, marking the world's first collaboration between a K-pop musical group and an NFT artist.

Starting Thursday, October 13, the three-part NFT collection will be auctioned on Sotheby’s Metaverse. Fans and collectors will be able to buy "my pass," an access key offering an NFT from 16 pieces of art prepared by the four members of Aespa, Karina, Giselle, Winter, and Ningning.


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According to Sotheby’s, the collection will feature the personality and signature identity of every Aespa member, fused together with the futurist surrealism of Blake Kathryn’s artwork. Each NFT will pay homage to the individual artists, celebrating their unique personalities and traits. 

In the second part of the auction, collectors will also be able to buy "Altars," limited edition digital artwork accompanied by personalized recordings from Aespa members, along with a signed autograph from Aespa and Kathryn.

For die-hard fans wanting greater intimacy with the artists, the third part of the collection – "Dreamspace" – offers the greatest rewards. It provides a rare NFT offering access to an exclusive video from Aespa and Kathryn, a digital meet-and-greet with Kathryn, on top of a real-life meet-and-greet with the South Korean quartet (along with a free flight to South Korea to a free Aespa concert).

Aespa NFTs. Courtesy of Blake Kathryn.

Since NFTs have exploded in 2021, celebrities across the world have hopped on the bandwagon. Last December, American rapper Snoop Dogg scooped up the most expensive NFT ever sold, paying $7 million for an NFT of the "Right Click and Save As guy." The rap mogul added it to his already large collection of CryptoPunks and Bored Apes NFTs, according to CoinGecko data pulled from transactions on the world's largest NFT marketplace, OpenSea.

Snoop Dogg joined the ranks of other celebrities like Madonna ($466,461 for a Bored Ape), Eminem ($453,776, also a Bored Ape), YouTuber Logan Paul ($624,669 for an NFT), and Tom Brady ($453,062, also a Bored Ape) in flexing their appreciation for art and technology through digital collectibles.

This January, "Baby" singer Justin Bieber bought the world's third most-expensive NFT, spending $1.3 million on a Bored Ape. The move, however, only earned him mockery from fans who assumed he had overpaid (by four times) for a Bored Ape that was only valued at $270,908 at the time.

Although sales of NFTs have dropped precipitously this year, resulting in $5 billion in losses, some South Korean megastars have still embraced the trend – even against strong fan backlash. In January, the pop group BTS said it was moving ahead with its NFT drop despite fan concerns over the environmental harm from crypto mining. Acolytes of the popular boy band pushed out social media hashtags decrying the move, such as #BoycottHybeNFT and #ARMYsAgainstNFT.

Despite the outcry, NFTs remain wildly popular in South Korea due to lower regulations on digital collectibles than crypto. President Yoon Suk-yeol even released his own NFT collection before this year's election and campaigned aggressively on a pro-crypto platform pledging to lower capital gains taxes on crypto profits and helping victims of crypto scams.

In February, Korea's Ministry of ICT, Science and Future Planning also invested nearly $190 million toward a national metaverse project that will center cities, education and media under a “Digital New Deal” to stimulate growth in the country's digital technologies.

This March, one South Korean university, Hoseo University, even issued more than 2,800 diplomas as NFTs.

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<![CDATA[Terra Founder Do Kwon's Passport Is Canceled by South Korea]]>https://www.thestreet.com/crypto/news/do-kwons-passport-terra-luna-stablecoin-canceled-by-south-koreahttps://www.thestreet.com/crypto/news/do-kwons-passport-terra-luna-stablecoin-canceled-by-south-koreaThu, 06 Oct 2022 12:50:31 GMTKwon still appears to be on the run.

Do Kwon's passport has been officially canceled by South Korean authorities. The Terra co-founder who oversaw the spectacular $40 billion collapse of the algorithmic stablecoin Terra earlier this year is still on the run from authorities, who posted a public notice on their website requesting the crypto fugitive return his passport.


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South Korean authorities also warned Kwon:“If you keep the passport, the validity of your passport will be invalidated" within 14 days.

Recently, Kwon was slapped with Interpol's red notice, which means that there is a worldwide notice to police departments around the globe to arrest the elusive crypto figure. 

On September 26, Kwon mockingly posted on Twitter that he had never received any notice from the international police agency and reiterated his position that he was not on the run. He made sarcastic jibes at Interpol's red notice, saying "For something that has notice in the name, it sure gives no notice."

The stablecoin Terra's collapse this year saw billions of dollars erased from investors' pockets.

On his social media, Kwon has objected to the claim he committed fraud, and also used Twitter this week to say that South Korea had not frozen $39.6 million in his accounts.

Meanwhile, this week news emerged South Korea also reportedly arrested a key aide to Kwon at Terraform Lab, Yoo Mo, who headed general business operations at the company. Mo was arrested for fraud, price manipulation of the Terra stablecoin, and violating the country's Capital Markets Act. This marks the first arrest related to Terra's collapse.

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<![CDATA[Myanmar's Democracy Activists Embrace Crypto]]>https://www.thestreet.com/crypto/news/myanmar-crypto-democracy-activists-dmmkhttps://www.thestreet.com/crypto/news/myanmar-crypto-democracy-activists-dmmkThu, 06 Oct 2022 10:00:00 GMTThe story of Myanmar's revolutionary cryptocurrency.

This summer, Myanmar’s government-in-exile, the National Unity Government (NUG), unveiled its own cryptocurrency called the Digital Myanmar Kyat (DMMK). The goal was simple: sidestep traditional banking systems controlled by the military junta, which has ruled Myanmar since last February 2021’s coup.

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<![CDATA['The Good, Bad and Ugly': Film Looks at CEO Brian Armstrong's Creation of Coinbase]]>https://www.thestreet.com/crypto/news/coinbase-ceo-brian-armstrong-film-coin-founders-story-amazonhttps://www.thestreet.com/crypto/news/coinbase-ceo-brian-armstrong-film-coin-founders-story-amazonWed, 05 Oct 2022 14:49:41 GMT"I believe it will help advance the cause of cryptocurrency."

This Friday, Amazon Prime will unveil a new documentary – Coin: A Founder’s Story – charting Coinbase’s ascent to America’s largest crypto exchange, as well as the backstory of how the company was built by CEO Brian Armstrong. Directed by Greg Kohs, the film offers an almost hagiographic look at the Coinbase founder, who evangelizes on the merits of crypto's decentralization and says the film will be a vehicle for advancing "the cause of cryptocurrency."


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Armstrong's impetus for commissioning the film was to "demystify crypto" and the process of founding a tech startup. The CEO hopes people will watch the film and start their own companies.

"The world tends to either vilify founders or put them on a pedestal," Armstrong said. "Neither is true. They're just regular people trying to make something that people want. And everyone working in crypto believes it can create a more fair, free, and global financial system."

Armstrong said the director was given free reign and "unprecedented access" inside the company's highs and lows over the past three years, showing how the company went public and listed on the stock market. The film, Armstrong said, will look at "the good, the bad, and the ugly."

Expect crypto star-studded appearances from Vitalik Buterin, founder of Ethereum, and crypto enthusiast Michael Saylor, along with others.

However, there is one issue that is being swept to the side by the film: Armstrong has  branded it as a documentary, even though Coinbase commissioned it, setting off clear conflict-of-interest and bias concerns.

The film will also stream on YouTube and iTunes.

This summer, Coinbase also released the first part of a widely-panned three-part interactive film featuring the Bored Ape Yacht Club called The Degen Triology. 

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<![CDATA[How the War in Ukraine Is Driving Crypto Investment]]>https://www.thestreet.com/crypto/news/how-the-war-in-ukraine-is-driving-crypto-investmenthttps://www.thestreet.com/crypto/news/how-the-war-in-ukraine-is-driving-crypto-investmentMon, 03 Oct 2022 21:05:36 GMT"Crypto is less easily confiscated," says David Rubenstein.

Crypto Investor, the newsletter from TheStreet Crypto, recently talked to David Rubenstein, the author of the new book How to Invest: Masters on the Craft, on crypto trends and why the war in Ukraine is helping drive crypto investment. Rubsteinstein is a billionaire investor and co-founder of one of the world’s largest private equity firms, the Carlyle Group. His book came out this month and imparts time-tested advice for how to invest long-term in crypto and other assets.

Rubenstein.


Although the book has an entire section devoted to investing in crypto, Rubenstein warns readers to exercise caution when placing a bet on who might win in the nascent industry, as the task might be a fool’s errand: “Trying to pick the ultimate winner, or winners, is an extremely difficult task,” Rubenstein says.

The businessman once saw crypto as a risky bet, and subscribed to a belief that it lacked any underlying value. But today, Rubenstein believes that even the current bear market and war in Ukraine cannot stop the growth of crypto as an emerging industry. “Today, I believe crypto is more likely to be around longer than I initially believed,” he tells Crypto Investor. Take a read:

You’ve mentioned the war in Ukraine as one reason to stay optimistic about crypto. Tell me why that is.
Rubenstein: My view is that many Russian oligarchs put their assets in very visible forms of wealth (homes, boats, art) which are easily confiscated by governments.. [But] crypto is less easily confiscated, as governments may not know what is owned or how to access it. Therefore, those who want to hedge their bets may put increasingly larger amounts of their net worth in crypto assets which, theoretically, cannot be as easily confiscated by governments.

We are currently in a period of economic turmoil for crypto. How do you diagnose the current moment, and what do you see as the next step for investors holding on to — or worrying about — their crypto assets?
Rubenstein: The biggest mistake investors make is selling when asset prices are down and buying when asset prices are up. Right now, prices for cryptocurrencies are down compared to their heights, and it’s likely many investors are shedding those assets. History shows investors are better off buying more when asset prices are lower, or not selling when they think a market is near a bottom. It is better to hold on and benefit from a rebound that may be inevitable.

What do you think is important for investors to understand about the promise — and threat — of regulation?
Rubenstein: Members of Congress are putting modest pressure on regulators right now. Supporters of the crypto industry are lobbying members of Congress to ease up on excessive regulation. Therefore, I do not expect a large number of new regulations, as there is not much pressure to regulate. Until there are large scandals, or massive multi-billion-dollar lawsuits brought by average investors, I do not believe Congress is likely to do anything that will upend the current regulatory apparatus.

This post originally appeared in the Crypto Investor newsletter.

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<![CDATA['A Revolutionary Payment Method': Spanish Telefónica Now Accepts Crypto]]>https://www.thestreet.com/crypto/news/a-revolutionary-payment-method-spanish-telef%C3%B3nica-now-accepts-cryptohttps://www.thestreet.com/crypto/news/a-revolutionary-payment-method-spanish-telef%C3%B3nica-now-accepts-cryptoSat, 01 Oct 2022 03:44:37 GMTThere's a minimum purchase price of $200 to $500.

The largest telecommunications company in Spain is now accepting payments in cryptocurrencies in its online store. Telefónica says that it has a partnership with the country's largest local crypto exchange Bit2Me for transactions, enabling it to offer a “revolutionary payment method."


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The new payment method will be offered through its marketplace Tu.com, where users can buy a range of products like phones and Xiaomi TV sets. 

In order to conduct a transaction using the payment method, customers are required to meet a minimum purchase price between $200 and $500.

The company will offer support for Bitcoin, Litecoin, Bitcoin cash, Ethereum, Ripple, Tether USD TRC20 token, USD coin, and TRON.

Additionally, to ease adoption and prevent users from experiencing any technical problems, the company automatically converts the crypto into euros for merchants.

Cryptocurrencies have been growing in popularity in Spain, with soccer team RCD Espanyol now also accepting cryptocurrency payments, and Spanish airline Vueling scheduling Bitcoin acceptance next year through a partnership with BitPay.

According to research company TripleA, around 1.1 million people in Spain have adopted crypto.

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<![CDATA[Robinhood Lawyer Heading Crypto Unit Joins Axie Infinity Team]]>https://www.thestreet.com/crypto/news/robinhood-axie-infinity-migrationhttps://www.thestreet.com/crypto/news/robinhood-axie-infinity-migrationSat, 01 Oct 2022 03:22:58 GMTHe will take over as Sky Mavis’s general counsel.

James Nguyen, the main lawyer heading up Robinhood's crypto unit, has joined Sky Mavis, the company behind the popular play-to-earn cryptocurrency game Axie Infinity.


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Robinhood has cut over 1,000 jobs during the crypto winter, joining other tech companies in announcing multiple rounds of layoffs as market volatility continues.

Sky Mavis announced on Twitter that Nguyen will focus on legal strategies related to Web3 and blockchain.

Nguyen is a former lawyer at Wells Fargo and Morrison & Foerster LLP. 

He will take over as Sky Mavis’s general counsel.

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<![CDATA[CFTC Goes After Digitex Crypto Exchange In Lawsuit]]>https://www.thestreet.com/crypto/news/cftc-goes-after-digitex-crypto-exchange-in-lawsuithttps://www.thestreet.com/crypto/news/cftc-goes-after-digitex-crypto-exchange-in-lawsuitSat, 01 Oct 2022 03:14:07 GMTThe company has "never been registered with the Commission in any capacity."

On Friday, the Commodities Futures Trading Commission went after crypto exchange Digitex and its founder Adam Todd in a lawsuit, claiming that it has “never been registered with the Commission in any capacity.”


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The move saw the price of DGTX slide by 12%, with the coin now trading at zero, after the CFTC alleged the company was operating illegally and accused the founder of price manipulation of Digitex's native token.

The CFTC has been aggressively cracking down on industry players through a “regulation by enforcement" method that has drawn ire from some who would prefer clear, transparent rules around crypto.

Recently, the CFTC also made a $250,000 settlement against the creators behind bZerox and bZx, better known as the Ooki Protocol, for illegally making available to customers transactions for leveraged and margined retail commodities in cryptocurrencies, and choosing not to implement anti-money laundering protocols like customer identification mechanisms. On top of this, the regulatory body also criticized the companies for conduct only permitted by registered futures commission merchants (FCM).

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<![CDATA[Paraguay Lawmakers Reject Presidential Veto on Bitcoin Mining]]>https://www.thestreet.com/crypto/bitcoin/paraguay-lawmakers-rejects-presidential-veto-on-bitcoin-mininghttps://www.thestreet.com/crypto/bitcoin/paraguay-lawmakers-rejects-presidential-veto-on-bitcoin-miningSat, 01 Oct 2022 03:02:31 GMTSenators hope increased taxation and formalization will allow the nascent industry to thrive.

On Wednesday, 33 senators in Paraguay's legislature rejected a presidential veto issued by President Mario Abdo Benitez, who opposes the country's first Bitcoin mining legislation on the grounds that it is energy-intensive and likely to jeopardize the South American country's economic future.


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The legislation establishing a regulatory framework for Bitcoin mining was approved this summer by Paraguay's legislature, but President Benitez objected to the high energy consumption and low employment benefits linked to Bitcoin mining and consequently vetoed the landmark bill.

Now, the bill may be the subject of debate between the presidency and legislature, as senators like Enrique Salyn Buzarquis argue it is “better to formalize” crypto in the Latin American country to reap the tax benefits, and congressman Daniel Rojas claims the emerging industry could yield “new forms of employment."

Lawmakers are hoping to capitalize on Paraguay's abundant, cheap electricity, which would allow the country to become a haven for Bitcoin mining. Foreign companies are already taking notice, like Canada's Bitcoin farming company Bitfarms already eyeing a move.

Given the disagreement, the bill will advance to Paraguay’s Chamber of Deputies where it will be debated before a decision is made.

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<![CDATA[Blockchain Company Sues Coinbase for Patent Infringement]]>https://www.thestreet.com/crypto/news/blockchain-company-sues-coinbase-for-patent-infringementhttps://www.thestreet.com/crypto/news/blockchain-company-sues-coinbase-for-patent-infringementSat, 01 Oct 2022 02:46:36 GMTVeritaseum said Coinbase was "uncooperative."

Coinbase, the largest crypto exchange in the U.S., is being sued for $350 million in damages by a blockchain company for allegedly using its crypto transfer technology for its blockchain infrastructure, according to Reuters.


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Reggie Middleton, the founder of blockchain company Veritaseum, is suing Coinbase along with his company to get damages from one of the largest crypto exchanges in the world.

 Middleton and Veritaseum are going after Coinbase for millions in order to protect a patent that Middleton filed last year with the U.S. Patent and Trademark Office. Now, it says that Coinbase has been using its work in its crypto transfer technology.

Veritaseum said that it had tried to settle outside of court but Coinbase was "uncooperative."

Notably, Veritaseum settled a case with the U.S. Securities and Exchange Commission in 2019 by paying over $9.4 million for a "fraudulent scheme" where the company sold tokens in 2017 and 2018. Regulators claim Veritaseum misled investors and manipulated the price of the token it was selling. Middleton and his company disputed the charges in court and claimed it was merely “an effort by Mr. Middleton to test out a new online cryptocurrency exchange.” The case concluded in a settlement, which included Middleton directly paying a $1 million penalty, without any concession of guilt or criminal wrongdoing by Veritaseum.

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<![CDATA[Did Someone Burn A Frida Kahlo Drawing to Mint 10,000 NFTs?]]>https://www.thestreet.com/crypto/news/frida-kahlo-nonfungible-tokens-mint-10000-nfts-mexicohttps://www.thestreet.com/crypto/news/frida-kahlo-nonfungible-tokens-mint-10000-nfts-mexicoSat, 01 Oct 2022 02:39:56 GMTPeople are outraged.

A Frida Kahlo drawing that might have been worth over $10 million was set ablaze to mint 10,000 non-fungible tokens or NFTs by a Mexican businessman in Miami this week. 

There’s a minor catch, though: No one knows for sure if the Kahlo drawing was real or fake, or even if the drawing was actually valued at $10 million or more.


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Perhaps it's nothing more than a publicity stunt by a man who said he was “going to change the lives of thousands of children.”

The drawing in question – named Fantasmones Siniestros, or Sinister Ghost – was sketched in Kahlo’s diary and burned by Mexican businessman Martin Mobarak, who incinerated the drawing to sell 10,000 NFTs of the drawing, valued at $4,000 apiece (3 ETH). This would effectively mean he converted a $10 million drawing into a $40 million collection of NFTs.

“The whole thing is creepy,” Latin American art dealer Mary-Anne Martin told VICE

Many are furious about the businessman’s decision to take a tangible piece of art and convert it into NFTs, with Mexico's major art institutions even saying the crime should be investigated.

In any case, perhaps as penance, Mobarak claims he will set aside some of the earnings for charity, particularly for survivors of domestic violence, autistic children, and even the Frida Kahlo museum.

“People may see it as I destroyed it. But I didn’t,” Mobarak told VICE. “This way I am bringing it to the world. I am letting everybody see it. I think it does more good for the world and makes a statement rather than just sitting in someone’s private collection.”

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<![CDATA[South Korean Police: Interpol Has Issued A Red Notice for Terra Co-Founder Do Kwon]]>https://www.thestreet.com/crypto/news/south-korean-police-interpol-has-issued-a-red-notice-for-terra-co-founder-do-kwonhttps://www.thestreet.com/crypto/news/south-korean-police-interpol-has-issued-a-red-notice-for-terra-co-founder-do-kwonMon, 26 Sep 2022 23:18:16 GMTThe 31-year-old has been in embroiled in a legal battle in South Korea after Terra's collapse this year saw billions wiped from investors' accounts.

On Monday, South Korean prosecutors announced that Terraform Labs co-founder Do Kwon, who is currently under investigation in South Korea for the $40 billion collapse of the algorithmic stablecoin Terra, is facing a red notice from Interpol.


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“A red notice is a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action,” Interpol says, pointing out that it’s typically reserved for fugitives from the law who are being pursued to serve a sentence or awaiting prosecution.

The 31-year-old has been in embroiled in a legal battle in South Korea after Terra's collapse this year saw billions wiped from investors. Now, Interpol and South Korean prosecutors are asking law enforcement agencies around the world to locate and arrest the elusive crypto figure.

In May, the sister coins Terra and Luna cratered, dropping the price to almost zero. Although the coin peaked at $116 a month before its collapse, the price is a paltry $0.0002 today. 

Recently, Singapore police announced that Kwon, who is a native of South Korea, was not in their territory, the headquarters for his embattled company. The whereabouts of the high-profile crypto founder remain murky, and South Korea has already put in a request to cancel Kwon’s passport, making it even harder for the Terra co-founder to travel. 

Kwon's Twitter activity has crawled to a halt and the co-founder has gone silent on social media. On September 17, Kwon flippantly dismissed rumors on social media that he was on the lam from authorities. He jocularly wrote, "I haven't gone running in a while, need to cut some calories."

This was a response to a Tweet where he doubled down on his claim that he was cooperating with law enforcement bodies instead of ignoring them: "I am not 'on the run'," Kwon said. "For any government agency that has shown interest to communicate, we are in full cooperation and we don't have anything to hide."

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<![CDATA[Nexo Targeted by Eight States in String of Lawsuits]]>https://www.thestreet.com/crypto/news/nexo-targeted-by-eight-states-in-string-of-lawsuitshttps://www.thestreet.com/crypto/news/nexo-targeted-by-eight-states-in-string-of-lawsuitsMon, 26 Sep 2022 21:59:30 GMTThe company is facing multiple cease-and-desist orders from California to New York.

On Monday, California and several other state regulatory bodies scrutinizing securities said they were going after Nexo Group, parent to crypto lender Nexo, for allegedly offering interest-earning accounts to customers through unregistered securities.

Eight states, which include California, Kentucky, New York, Maryland, Oklahoma, South Carolina, Washington and Vermont, are suing the company for this violation. New York even hopes to permanently prohibit Nexo – which has over 5 million users and handles more than $3.8 billion in digital assets – from selling any securities in the future.

Until Nexo complies with registration rules, the company cannot offer interest-bearing accounts to citizens of the aforementioned eight states. The company is currently battling several cease-and-desist orders across the states for failing to make the requisite disclosures to customers.

The accounts which violated the registration requirements are known as “earn interest products," which permitted users to earn yields as high as 36% on deposits.

“Cryptocurrency platforms are not exceptional; they must register to operate just like other investment platforms,” said New York Attorney General Letitia James. “Nexo violated the law and investors’ trust by falsely claiming that it is a licensed and registered platform. Nexo must stop its unlawful operations and take necessary action to protect its investors.”

The move comes in the wake of several high-profile collapses of businesses in the crypto industry, particularly Celsius, which also offered interest-bearing accounts.

Across Vermont and New York, thousands of Americans are potentially impacted by Nexo's businesses. The Vermont filing pointed out that “investors have no part in selecting, monitoring, or reviewing the revenue-generating activities that Respondents utilize to earn this interest.”

Nexo, however, said it has been cooperating with governmental regulators and underlines that it was not one of the companies requiring external help as a result of the collapse of the algorithmic stablecoin Terra earlier this year.

“We have been working with U.S. federal and state regulators and understand their urge, given the current market turmoil and bankruptcies of companies offering similar products, to fulfill their mandates of investor protection by examining past behavior of providers of earn interest products,” Nexo said. 

“As the recent months have clearly underlined, Nexo is a very different provider of earn interest products, as showcased by the fact that it did not engage in uncollateralized loans, had no exposure to Luna or Terra, did not have to be bailed out, or needed to resort to any withdrawal restrictions.”


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<![CDATA[Australia's Central Bank Digital Currency Pilot to Be Completed By Mid-2023]]>https://www.thestreet.com/crypto/news/australias-central-bank-digital-currency-pilot-to-be-completed-by-mid-2023https://www.thestreet.com/crypto/news/australias-central-bank-digital-currency-pilot-to-be-completed-by-mid-2023Mon, 26 Sep 2022 20:02:14 GMTThe aim is to "explore innovative use cases and business models" for CBDCs.

Australia is quickly accelerating its research into digital currencies, announcing on Monday that by mid-2023 it will be on schedule to unveil its first central bank digital currency (CBDC), known as an “eAUD.”


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In July, the country initiated a pilot of its first trial of a CBDC using a private version of Ethereum, working in close partnership with the Digital Finance Cooperative Research Center. The aim is to "explore innovative use cases and business models" for CBDCs, the country's white paper said.

Despite recent legislative fervor in the U.S. to create a digital dollar – mostly to displace rival China, which is already successfully trialing its own digital yuan – the enthusiasm to create one is more muted in Australia. CBDC enthusiasts have reasons to exercise caution in Australia; there is no indication yet the government of Australia will implement the CBDC it is researching and testing, or move the country away from fiat currency.

Earlier this month, Finder ranked Australia fourth among countries for global crypto adoption, though the country did not make the top 20 list in the 2022 Chainalysis crypto adoption index.

Finder said that almost a quarter of Australians have adopted crypto, numbering approximately 4.6 million and almost 60% of them being aged 18-34.

Overall, the majority of Australians holding crypto are young and tech-savvy, with 14% of Australians owning Bitcoin and 10% holding Ethereum.

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