LianGuai Morning News | CZ’s tweet causes FTX to collapse, US CFTC sues Voyager Digital co-founder

Scandalous Headlines CZ's Tweet Causes FTX Crash, CFTC Takes Legal Action Against Voyager Digital Co-Founder

Headline

▌Former CEO of Alameda: Zhao Changpeng’s tweet “caused” the collapse of FTX

Caroline Ellison, former CEO of Alameda Research, testified that a tweet by Binance CEO Zhao Changpeng (CZ) caused the collapse of the crypto exchange FTX. In a tweet on November 6, 2022, CZ announced that Binance would liquidate its holdings of FTX tokens (FTT). Many reports suggest that the liquidation of the tokens led to retail investors following Binance in withdrawing funds from FTX, causing a bank run on the platform and leading to its bankruptcy filing on November 11.

Ellison stated that while CZ’s tweet “caused” the collapse of FTX, the main reason was that Alameda borrowed $10 billion from the exchange that it couldn’t repay.

▌US CFTC sues co-founder of Voyager Digital for alleged large-scale commodity pool fraud

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The US Commodity Futures Trading Commission (CFTC) announced a lawsuit filed in the Southern District of New York against Stephen Ehrlich, a resident of Tennessee, who was the co-founder and former CEO of now-defunct entity Voyager Digital. The complaint accuses Ehrlich of fraudulent and failure-to-register conduct in the operation of the Voyager digital asset platform and the unregistered Voyager commodity pool. Ehrlich and Voyager falsely touted the Voyager platform as a “safe haven” to earn high returns, enticing customers to purchase and store digital asset commodities.

In the lawsuit against Ehrlich, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations.

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Market Update

As of press time, according to coinmarketcap data:

BTC recent trading price is $26,741.6, with a daily percentage change of +0.25 %;

ETH recent trading price is $1,537.2, with a daily percentage change of -0.29 %;

BNB recent trading price is $205.03, with a daily percentage change of -0.26 %;

XRP recent trading price is $0.4827, with a daily percentage change of +1.03 %;

DOGE recent trading price is $0.0578, with a daily percentage change of –0.07 %;

ADA recent trading price is $0.2458, with a daily percentage change of +0.48 %;

SOL recent trading price is $21.30, with a daily percentage change of +0.15 %.

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Policies

▌Coinbase raises alarm over IRS’ crypto tax proposal

Coinbase, the largest cryptocurrency exchange in the US, sent a letter to the Internal Revenue Service (IRS), stating that its recent crypto tax proposal would jeopardize the industry and the privacy of Americans.

The Internal Revenue Service (IRS) in the United States recently proposed a rule that formally defines cryptocurrency brokers and guides them and their clients on proper taxation. However, Coinbase commented in a letter that the proposed rule represents an “unprecedented, unrestricted, and unlimited tracking of Americans’ daily lives.”

The cryptocurrency exchange outlined six overall concerns related to its opposition: lack of equivalence with financial services, repetitive and burdensome reporting, invasion of privacy, violation of technological neutrality, unrealistic compliance timelines, and missing the opportunity to leverage blockchain to ensure taxpayer compliance.

The IRS will continue to accept comments until October 30th and hold a public hearing on November 7th. Coinbase stated their intention to provide more detailed observations and technical comments in another letter.

▌The U.S. Department of Justice accuses former CEO of Systematic Alpha Management of participating in a “cherry-picking” plan for cryptocurrency futures contracts

The U.S. Department of Justice announced that Peter Kambolin, the owner and CEO of Systematic Alpha Management LLC (SAM), is criminally charged for participating in a “cherry-picking” plan involving cryptocurrency futures contracts, which is the first of its kind in such cases.

It is alleged that Peter Kambolin fraudulently allocated profits and losses from futures trades, sacrificing client interests for unfair accounting treatment, aiming to benefit himself. This plan generated at least $1,451,559 in total trading profits for SAM and Kambolin’s proprietary accounts. Peter Kambolin has admitted to conspiring to commit commodity fraud and could face up to five years in prison.

▌The U.S. Federal Trade Commission reaches a settlement with Voyager, permanently banning it from handling consumer assets

The U.S. Federal Trade Commission (FTC) announced that it has reached a settlement with bankrupt cryptocurrency company Voyager Digital, permanently banning it from handling consumer assets. The commission has also filed a lawsuit against its former CEO, Stephen Ehrlich, accusing him of lying about whether customer accounts were insured by the Federal Deposit Insurance Corporation. Even though the company is on the brink of bankruptcy, Ehrlich has not agreed to settle with the FTC, so his case will be heard in federal court.

LianGuai previously reported that the U.S. Commodity Futures Trading Commission (CFTC) has accused Stephen Ehrlich of implementing a large-scale commodity pool fraud scheme in a parallel action.

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Blockchain Applications

▌Waiting time for new validators deployed on the Ethereum network reduced to 5 hours

On-chain data shows that the previously congested new validator queue on the Ethereum blockchain has almost been completely cleared, with only 598 validators currently waiting to enter the network, which is lower than the peak of over 96,000 in early June. This means that as of today, the expected wait time to add new validators to the Ethereum network has been reduced to less than five hours, a significant decrease compared to the peak of a 45-day waiting period in early June.

Institutional cryptocurrency exchange FalconX research director David Lawant said that since the Ethereum merge and the Shapella upgrade, ETH staking has been “exceptionally strong,” but the initial enthusiasm is starting to wane, and an empty activation queue means that the growth of staked ETH is slowing down.

▌Developer Merchants: BitVM’s goal is to expand the scale of Bitcoin, not to imitate Ethereum

Bitcoin developer Super Testnet reiterated that the goal of BitVM is to expand Bitcoin, not to launch decentralized finance applications similar to Ethereum on the network. BitVM’s white paper was released on October 10 by Robin Linus, the project lead of ZeroSync, with technical support from anonymous developer Super Testnet, implementing the first proof of concept for BitVM and committed to expanding its functionality. After the release, some industry experts believed that BitVM would bring DeFi to Bitcoin, just like the Ethereum Virtual Machine (EVM) did for Ethereum.

Super Testnet stated that building a decentralized exchange on Bitcoin would be a “step backward.” BitVM focuses on scalability rather than implementing smart contracts and numerous altcoins, and the true killer application is expanding Bitcoin. Additionally, BitVM can fix a flaw in the Lightning Network.

▌Gitcoin Founder: Current focus is on building public funding and anti-Sybil infrastructure

Gitcoin founder Kevin Owocki stated in an interview that he hopes Gitcoin will become a critical platform that all other projects in the ecosystem rely on to resist Sybil attacks and achieve public goods funding. Therefore, the current focus is on building public funding and anti-Sybil infrastructure.

The platform claims that since its establishment in 2019, it has funded 3,000 different projects and donated over $50 million to fund public goods, with the total market value of funded projects reaching $28.2 billion.

▌Web3 fan community platform Gaudiy Fanlink integrates Arbitrum One

Web3 startup Gaudiy Inc. announced that its Web3 fan community platform Gaudiy Fanlink will start using the Ethereum Layer 2 scaling solution Arbitrum One. By using Arbitrum One, Gaudiy will begin developing globally standardized Web3 services. Each community will be handled on the public chain, aiming to expand global influence, connect the company with fans, and enhance user experience.

▌DeFi protocol Wagmi Protocol launches on Kava blockchain

DeFi protocol Wagmi Protocol announced its launch on the Kava blockchain, allowing users to stake WAGMI tokens and convert them into sWAGMI to earn fees. Holders of sWAGMI are eligible to share in the fee distribution of the Wagmi Protocol, which charges a 20% fee and then allocates it to sWagmi holders.

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Cryptocurrencies

▌Former Alameda CEO: No internal controls and segregation system between FTX and Alameda

Former Alameda CEO Caroline Ellison testified in court today that there was no real “internal controls and segregation system” between FTX and Alameda regarding their business mix. From 2019 until November 2022, she considered resigning from Alameda multiple times.

▌21.co: Tokenized asset market cap could reach $10 trillion by the 2030s

A recent report by 21.co shows that the market cap of tokenized assets will reach $3.5 trillion in a bear market scenario and $10 trillion in a bull market scenario by 2030. The market value is derived from estimates of the overall potential market penetration of various asset categories, including non-financial corporate debt, real estate funds, private equity, securities collateral, trade finance, and public debt securities. Furthermore, the report also states that blockchain will become the backend infrastructure for each asset category by 2030.

▌Terraform Labs motions, claiming potential connection between Citadel Securities and UST decoupling

Terraform Labs has filed a motion in court claiming that Citadel may have a potential connection to the decoupling of UST. The motion states, “Terraform notes public evidence suggesting that the head of Citadel entity, Ken Griffin, intended to short UST during or before the decoupling period in May 2022,” requesting Citadel Securities to provide certain data under a third-party subpoena, arguing that it is “crucial” for its defense in the lawsuit filed by the SEC against the company and its former CEO, Do Kwon.

▌Report: Tether, Bitcoin, and Ethereum account for 83% of Brazil’s cryptocurrency demand

A report by Chainalysis shows that Tether, Bitcoin, and Ethereum account for 83% of Brazil’s cryptocurrency demand from June 2022 to July 2023. Tether represents around 52% of the country’s investor trading demand during that period, Bitcoin accounts for 25%, Ethereum accounts for 6%, while other altcoins total slightly above 17%. Chainalysis classifies Brazil as a “unique market in Latin America.”

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Key Economic Trends

▌China Securities evaluates September U.S. CPI: Inflation slowdown is not a given

China Securities research report states that the unexpected inflation in the U.S. in September brings an important revelation, that inflation slowdown is not a given but rather contingent on continued monetary tightening. There has been a popular view that the U.S. inflation is temporary and the Fed doesn’t need to maintain higher interest rates for longer. We believe this perspective overlooks a fact, which is that the slowdown in inflation is a result of the Fed’s persistent rate hikes and firm anti-inflation stance. If the Fed hadn’t pursued rate hikes, inflation might not have receded. In the foreseeable future, U.S. bond yields will continue to stay high. (Jin10 mobile app)

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LianGuai Encyclopedia

▌Long Positions and Short Positions

Long and short positions represent opposite strategies that investors and traders use to speculate on the price movements of assets. In cryptocurrency trading, a long position is initiated by buying an asset, hoping that its price will rise, while a short position is initiated by selling an asset (usually borrowed), hoping that its price will fall.

Disclaimer: LianGuai, as a blockchain information platform, publishes articles for informational purposes only and does not constitute actual investment advice. Please adopt the correct investment principles and be sure to increase risk awareness.

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