Family matters... 👨👩👧
The SBF saga: Daddy Joe wasn’t just a cheerleader at FTX. A billion-dollar surge in Bitcoin's open interest. Base is the new star on the block, thanks to Friend.tech. Also, the global gossip round up.
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Today's drama involves the parents of FTX's former top dog.
Mr Joseph Bankman and Mrs Barbara Fried.
And as always, Sam Bankman-Fried.
The bankruptcy estate of FTX is going after Joseph Bankman and Barbara Fried, claiming they pocketed "millions of dollars in fraudulently transferred and misappropriated funds". The legal papers paint a picture of the two supposedly using their family ties to cash in big.
And when we say big, we mean BIG.
Daddy plays his part
Apparently, contrary to what SBF has said, his dad, Joseph, was not just an onlooker in FTX's game. Described as a "de facto officer" at FTX Group, he seemingly had a good deal of say in FTX's business. There's even chatter about him holding executive positions in the company.
Mama's ain't too far
Barbara Fried, also from the lofty halls of Stanford Law School, wasn't twiddling her thumbs either. According to the lawsuit, she had a big hand in directing FTX's political contributions. She's said to have repeatedly nudged FTX to send some big bucks to a political action committee, Mind the Gap (MTG), which she co-founded.
Also👇🏻
Joe Bankman was drawing a salary of $200,000 from FTX. However, a message in January 2022 unveiled his discontent, revealing an expectation of $1 million annual pay. But how do you handle such a dispute when your boss is also your son? You bring in mom, of course.
"Family Business" Claims: FTX was often referred to as a "family business". Even as the exchange was sinking, it's alleged that the "family" continued to rake in profits.
Flashy Lifestyle: A luxurious $19 million property in The Bahamas? Check. Super Bowl commercials with Larry David? Check. Exorbitant hotel bills? Check. These were some of the perks Bankman and Fried allegedly enjoyed while FTX was on shaky grounds.
Questionable Donations: The lawsuit brings up tens of millions in donations, especially to Stanford University. The intention? Allegedly to boost the duo's reputation at the expense of FTX.
The Accusation's Aftermath: The plaintiffs aren't just airing the family's dirty laundry. They're aiming to recover assets for FTX's creditors. They believe the parent duo either had knowledge of or turned a blind eye to the alleged shady dealings of their son.
In response, counsels for Bankman and Fried have called out the lawsuit, labelling it an attempt to "undermine the jury process". They've firmly stated that these claims are baseless.
SBF wants out
Now, Sam has been having a bit of a rough time since he was put behind bars in August. His legal team insists that it's tough for him to build a strong defense while he's cooped up in jail.
The 2nd US Circuit Court of Appeals took a step back from making a decision on Bankman-Fried's appeal to end his pre-trial detention.
The judges? They're keeping their cards close to their chest, saying they're taking arguments from both sides "under advisement."
Prosecutors have thrown a spanner in the works by claiming that if SBF is let out, he might pose a risk to the witnesses – and guess what? The judge is nodding in agreement.
If this appeal doesn't swing his way, it's a pretty solid bet that he'll be counting the days in his cell until his trial begins on October 3.
Returning the gifts
Stanford University has announced that it will be returning donations worth $5.5 million that were allegedly given by Joe Bankman. The donations were made through FTX, of course. The decision to return the donations comes after concerns were raised about the source of the funds and potential conflicts of interest.
Stanford University has stated that it is committed to maintaining the highest ethical standards and will thoroughly review all donations to ensure they align with the university's values.
TTD Blockquote🎙️
Steven Goldfeder, CEO, Offchain Labs
Blockchain scalability is a ‘solved problem’
Event: Real World Asset Summit in New York City.
Quotes:
"Scalability is very much a solved problem today. That’s not the problem that ecosystems are working on today. It’s about user interface and compliance."
"A lot of existing RWA users are not crypto users; there are a lot of people who are using these products, but they are not the same people who are using Uniswap."
He believes that the development of tools with better user interfaces and the ability to comply with regulations will be crucial for wider blockchain adoption.
Kristin Pauley, Assistant Director of the Crypto Assets and Cyber Unit, US
Global regulators look for US guidance on crypto
Event: Securities Enforcement Forum Central conference in Chicago.
Quotes:
"Many regulators look to the US for guidance and leadership…that’s definitely what we’ve seen in the crypto space as well."
"One challenge we often face is that these crypto firms…can claim overseas jurisdiction, even when offering products to US investors."
David Hirsch, Head of the Office handling crypto enforcement, US SEC.
"We’re going to continue to bring those charges."
Event: Securities Enforcement Forum Central in Chicago.
He warned that more charges will be brought against cryptocurrency exchanges and decentralised finance (DeFi) platforms.
Hirsch specifically mentioned Coinbase and Binance as examples of exchanges that have strayed from the law, but noted that there are others as well.
Quotes:
"We're going to continue to be active as to intermediaries. That can be brokers, dealers, exchanges, clearing agencies or any others who are active in this space, are within our jurisdiction and not meeting their obligations, either through registration or failure to provide adequate or complete disclosures.”
We're going to continue to conduct investigations, we're gonna be active in the space, and adding the label of DeFi is not going to be something that's going to deter us from continuing our work.”
Where’s ETF?🚨
Grayscale Investments has submitted a new application for an Ethereum futures ETF👇🏻
TTD Numbers 🔢
$1 billion
On September 18, the crypto community witnessed a sudden surge of $1 billion in Bitcoin's open interest on derivatives exchanges. With Bitcoin’s price climbing to $27,430, a 3.4% spike, many wondered if market whales were placing bets ahead of the anticipated unsealing of Binance’s court documents.
The surge in open interest coincided with the unsealing of court filings related to Binance. The US SEC, which had accused Binance of non-cooperation on matters related to unregistered securities operations, had its request granted to unseal the relevant documents.
Surprisingly, after the release, the documents did not contain any groundbreaking revelations that could have influenced Bitcoin's price.
Despite the initial spike, by the end of the day, Bitcoin's open interest dropped back to $11.3 billion and its price settled at $26,770. The sharp decline suggested that the players behind the surge might have been disappointed by the court proceedings or the price movements were not as expected. A significant 80% of the initial open interest surge was liquidated within 24 hours.
While the price movement alongside the rise in open interest might indicate bullish sentiment, attributing it solely to the Binance court case might be simplistic. No one expected the unsealed documents to particularly favour Binance. Moreover, the stability of the Bitcoin futures contract funding rate during this period indicates no major imbalance between long and short positions.
TTD Base 🧿
Base, a blockchain project fostered by Coinbase, has made headlines by surpassing Solana in total value locked (TVL), largely owing to Friend.tech's booming activity and the influx of new DeFi applications.
Key Metrics:
Ranking: Base is now the ninth-largest blockchain in terms of TVL.
Value Locked: DeFi protocols on Base have secured deposits of $370.50 million, while Solana stands at $310.25 million.
Network Activity: Among Ethereum's layer-2 protocols, Base ranks third after Arbitrum and Optimism in value bridged. Furthermore, it boasts a transaction per second rate (TPS) of 15.15, surpassing Ethereum and other layer-2 networks which have 11 TPS or lower.
Driving forces behind Base's growth
Friend.tech Influence: This Web3 social media platform has played a pivotal role in Base's recent ascent. Friend.tech, which provides a unique twist to social media by tokenising user accounts, has witnessed a surge in deposits and activity, making it the most active application on Base.
Key Purchases: There's been a spike in the purchase and sale of Friend.tech Keys, with a record 539,810 transactions on September 13 alone.
Deposits: Over $130 million has been deposited since September 9, raising the total from a tad over $100 million to a staggering $230 million now.
DeFi Influx: The launch of the Aerodrome DEX saw Base's DeFi deposits crossing the $300 million mark for the first time. Well-known Ethereum DeFi protocols like Compound Finance, Uniswap, and Stargate have also expanded to Base, further driving up deposits.
TTD Global 🌎
Global regulatory roundup: keeping tabs on cryptocurrency.
The UK 🇬🇧
The UK is moving closer to passing a bill that will make it easier for law enforcement to seize and freeze illegal cryptocurrency. The Economic Crime and Corporate Transparency Bill, which has already gone through the House of Lords, aims to expand authorities' powers to tackle crimes involving cryptocurrencies, such as money laundering and drug trafficking. The bill, introduced in September 2020, is now in its final stages of approval. Once passed, it will provide law enforcement with the necessary tools to combat illicit activities in the crypto space.
Philippines 🇵🇭
The Philippines is seeking assistance from the US Securities and Exchange Commission to combat the increasing issue of cryptocurrency scams. Last year, a trafficking ring involved in cryptocurrency scams was busted by the police, highlighting the urgency and magnitude of the problem. The collaboration between the Philippines regulators and US law enforcement aims to address this growing crisis and protect investors from fraudulent activities in the crypto space.
Germany 🇩🇪
A senior executive at Germany's financial watchdog, BaFin, has predicted that there will be more crashes in the cryptocurrency market and has called for stricter regulations. Raimund Roeseler, the head of BaFin's banking supervision department, expressed concerns about the volatility and lack of transparency in the crypto market. He highlighted the risks associated with initial coin offerings (ICOs) and warned investors to be cautious. Roeseler emphasised the need for regulatory measures to protect investors and prevent money laundering. Germany has been working on implementing regulations for the crypto industry, including a new law that requires crypto exchanges to obtain a license.
The US 🇺🇸
According to BlackRock, the largest asset manager in the world, the US Federal Reserve is expected to maintain elevated interest rates until 2024. This prediction comes as the central bank aims to support the economic recovery and manage inflation.
BlackRock's Chief Investment Officer for Global Fixed Income suggests that the Fed will continue to prioritise full employment and tolerate higher inflation for a longer period. The prolonged low-rate environment is expected to impact various sectors, including housing and financial markets, as investors seek higher-yielding assets. However, the Fed's decision will depend on the progress of the economic recovery and inflation levels.
TTD Surfer 🏄
OpenAI, the artificial intelligence research lab, is recruiting a cybersecurity "Red Team" to enhance the security of its AI models.
Elon Musk is considering making Twitter a pay-to-play platform in order to combat the issue of "armies of bots" spreading misinformation.
A lawyer involved in the OneCoin money laundering scandal has lost his appeal, despite claims of witness perjury.
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