03 Feb 2023

The Friday Focus: Issue 71

Crypto lender Celsius draws comparison to a Ponzi scheme, mining companies are trying to sort out their issues, the UK is finally revealing plans to regulate crypto, and the White House is telling Congress to step up on crypto regulation.
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Top storiesThe crypto lender Celsius has been making headlines this week. An independent examiner is saying that Celsius used new customer funds to pay for withdrawals and failed to report $800 million in losses while the CFO flagged “possibly illegal” behavior. In addition, Celsius is now letting certain customers withdraw 94% of their funds. In other lending news, BlockFi got judge approval to pay out bonuses, and the New York Department of Financial Services is investigating whether crypto lender Gemini broke the law with its insurance statements.While the Coinbase share is soaring this week, other crypto exchanges are reminding us of the state of the industry. Bittrex is laying off more than 80 people this week, and Kraken has decided to shut down its office in Abu Dhabi. Binance’s ongoing dispute with India’s largest exchange is escalating, with WazirX claiming that Binance lied about its ownership.FTX-linked Alameda Research is suing Voyager Digital for over $445 million, but Voyager quickly denied the claim. The ex-FTX CEO Sam Bankman-Fried is now restricted from contacting FTX employees after attempts to influence witnesses lately.The bitcoin mining industry is trying to sort out its issues. Core Scientific reached a $70 million replacement loan deal with B. Riley, and a deal with NYDIG to extinguish $38 million in debt. The miner Greenidge also announced deals with both B. Riley and NYDIG, cutting $61 million in debts. We’ve also seen two raises from miners lately, with Pow.e announcing a $9.2 million Series A, and TeraWulv raising $32 million. To round off a good week for miners, Cipher Mining reportedly doubled its hash rate capacity in January.Policymakers worldwide are, as usual, focusing on the crypto market. The UK government introduced a new crypto regulatory framework this week, with stricter rules for investing and trading. The EU is easing the regulatory burden for smart contracts in a new draft legislation, and Kazakshatan plans to tighten its crypto policy. Hong Kong has laid out a timetable for stablecoin regulations, and in Australia, we can expect a crypto rule framework in 2023.In the US, the White House handed Congress a crypto legislation wish list alongside an exhortation for the legislature to ''step up its efforts”. The FED unanimously rejected an application from the crypto bank Custodia, and the Justice Department is reportedly probing Silvergate’s relationship with FTX.In other crypto news, Premier League inks deal with digital trading card platform SorareBinance and MasterCard launch bitcoin rewards card in Brazil, Opsrey Funds is suing its competitor Grayscale over bitcoin trust advertising, and the TradFi legend/dinosaur Charlie Munger has again called for a US ban on crypto.That’s all - have a great weekend!
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