Decentralized Diaries for the Week of 9/12/23


Is a storm coming for cryptospace?

That is possible.

With mass departures from Binance, increased centralization, and shadow moves by market makers.

That said, Apple bought rights to an upcoming book about SBF (for whatever reason?).

We should all watch out for the news to follow (a hacker stole $691 from Vitalik’s followers).

Plus, J.P. Morgan continued its blockchain experiments (reportedly).

And crypto miners have another battle looming on the horizon.

One is probably coming soon to Texas.

These are your decentralized diaries!

Bitcoin Remains in the Red at $25k, Altcoins Continue to Slide

Bitcoin continued to bleed and fell from a $26,409.30 high to a $25,045.25 low. Prices are currently at $25,064.36 (as of 9/11/23).

The altcoins are also in the same boat. Ethereum (ETH) is at $1,555.98, Polkadot (DOT) at $4.00, Solana (SOL) at $17.62, and Avalanche (AVAX) at $9.21.

Binance CEO Allayed Fears Following Mass Talent Departures

Changpeng “CZ” Zhao, CEO of the Binance crypto exchange, sought to calm frayed nerves on the “X ” platform following the departure of several executives.

Ten higher-ups left Binance in the last nine months.

Sam Bankman-Fried’s Lawyers Continued his Pre-Trial Release Push

Despite the consistent prosecutorial objection, Sam-Bankman Fried’s lawyers filed (again) for his bail.

The filing follows a judicial denial of the same.

A former executive, Ryan Salame, pled guilty to charges of campaign violation and illegal money transmitting.

Salame also agreed to forfeit $1.5 billion in assets.

The crypto markets may face upheaval this week with FTX’s upcoming  $3.4 billion liquidation.

FTX’s current management pursued clawback options. These include efforts to recover monies paid to celebrities for endorsements.

In related news, iPhone maker Apple reportedly paid $5 million for rights to “Going Infinite: The Rise and Fall of a New Tycoon”, an upcoming book about Fried by financial journalist and author Michael Lewis.

Vitalik Buterin’s “X” Account Got Hacked, Victims Lost Over $690k

Hackers accessed the “X” account of Ethereum co-founder Vitalik Buterin and executed a phishing scam offering free NFTs.

Victims reportedly lost $691,000.

In related news, Buterin co-authored a paper that espoused a “regulatory-friendly” alternative to the Treasury-blacklisted Tornado cash (“Privacy Pools”).

J.P. Morgan Continued its Blockchain Experiments

Per media reports, banking behemoth J.P. Morgan is exploring the launch of a blockchain-based token for payment settlements, among other activities.

The token differs from JPM Coin, which has internal uses and could facilitate settlements among J.P. Morgan’s clients.

Linus Financial Settled with the SEC

Following settlement reports, America’s top regulator said it would not pursue actions against a crypto firm, Linus Financial.

The Nashville-based firm stopped offering its crypto lending product to the public following similar moves by the SEC.

Crypto Market Making Profits Decline

Per media reports, market-making profits declined by 30%. Crypto exchange failures and regulatory issues as contributing factors.

Digital asset diversification and collateralization are some strategies market makers have deployed in response.

Digital Currency Group’s (DCG) Troubles Continued

Things continued to sour for the Barry Silbert-owned Digital Currency Group and its bankrupt subsidiary, Genesis.

Per media reports, Cameron Winklevoss, the co-founder of the Gemini cryptocurrency exchange, had a sitdown with federal agents, including the FBI.

Though details of the discussion remain scanty, Genesis Global Capital sued DCG over a “master loan agreement.”

Gemini is Genesis’s largest creditor.

Kaiko: Crypto Liquidity Remains with Top Centralized Exchanges

According to a recent report from Kaiko, a crypto data firm, the cryptospace may not be as decentralized as everyone thinks.

Per the report, the eight biggest crypto exchanges hold 89% of volumes with a 91% market depth.

Binance is at the top spot with a 30.7% market depth and 64.3% global trade volumes.

The report also identified a decline in altcoin liquidity concentrations and listed Coinbase, Kraken, and Bitstamp as players.

The CFTC Charged Several DeFi Protocols and a Commissioner Dissented

The Commodity Futures Trading Commission (CFTC) instituted enforcement actions against several DeFi projects.

The regulator ordered Opyn, Deridex, and ZeroEx (Ox) to pay $250,000, $100,00, and $200,000 in fines.

Commissioner Summer Mersinger indicated concern about the CFTC’s actions against the DeFi space. She advocated for engagement rather than enforcement.

Commissioner Caroline D. Pham also revealed a proposal that involves a “regulatory sandbox” for digital assets.

A Report Showed Increasing Institutional Crypto Optimism

According to a report by a financial analytics firm, Coalition Greenwich, in partnership with crypto data company Amberdata, institutional crypto optimism and adoption are rising.

Per the report, 48% of managers actively managed digital assets for clients, with 24% having a crypto strategy. 13% planned to create and deploy one within two years.

The survey included 60 companies across three jurisdictions.

A similar report from the World Federation of Exchanges identified that around 40% of exchanges had plans to offer digital asset-related services despite the risks involved.

Texas Grid Operator Paid Mining Firm $31.7 Million in Energy Credits to Lower Usage

According to Riot Platforms, a Texan Bitcoin mining company, the Electric Reliability Council of Texas (ERCOT) paid the firm $31.7 million in credits to get the firm to lower its usage during the August heat wave.

Heavy energy usage by miners has sparked public opposition to the industry. The State Senate passed Bill S.B. 1751 in April, which sought to limit the participation of mining firms in credit programs.