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Cryptocurrency, Blockchain, and Fintech News Headlines Update on 2023-05-09

A video has gone viral showing how anyone can create a crypto memecoin. In less than 27 seconds. Scary. This explains how the existing thousands of joke coins exist, and how we can realistically expect an influx of more. In many ways crypto hasn’t matured since the 2017-ish initial coin offering bubble. The world’s governments are going pro-CBDC (central bank digital currency), anti-crypto and anti-freedom, except Hong Kong, which is embracing positive regulation. The otherwise general CBDC threat isn’t helped by the IMF promoting its ideas on how to do CBDCs. Stablecoins are leaving exchanges, $22 billion worth, in the last 5 months. And fake AI is starting to meet crypto scams. TruthGPT Coin, a play on ChatGPT, claims to be able to predict future crypto prices using ‘Elon Musk AI’. Created by someone who dubs themself as the ‘shark of Wall Street’. Yes, really. Not investment advice, but do not invest.

India’s central bank wants to promote CBDC, ‘restrict’ crypto, reduce dollar dominance

India’s Central Bank is trying its best to promote its central bank digital currency the digital rupee initiative. It wants to promote this over allowing use of other cryptocurrency. The Reserve Bank of India’s Deputy Governor, T. Rabi Sankar is advocating for restricting digital currency usage to fiat money and supporting CBDCs, as well as diversifying away from major reserve currencies such as the dollar to reduce global financial risks. Sankar highlighted the potential threats to the financial system’s integrity from illicit payments using private virtual currencies. Despite the Supreme Court lifting a ban on banking services for crypto traders in 2020, the Reserve Bank of India has continued to push for regulation. This stance likely explains the bank’s swift progress on its digital rupee initiative.

Retail CBDCs bring unknown ‘consequences’ to financial system — IMF director

IMF Managing Director Kristalina Georgieva has urged countries to show caution regarding retail central bank digital currencies. Retail CBDCs are state-backed virtual currencies issued by central banks for use by consumers and businesses, which the IMF says have far more room for error. According to Georgieva, wholesale CBDCs, designed for financial institutions to carry reserve deposits with central banks, have less room for error. The IMF claims CBDCs could significantly transform the financial system, and it is working with around 50 countries on CBDC development. The fact that even the United States is now engaged in developing a CBDC indicates that the future of CBDCs is here, she claims. Scarily, with both the US and China developing their own CBDCs as well as almost 100 other countries, fair to say much of what we’ve known in the past as privacy is fast disappearing.

$22 billion of stablecoins has fled exchanges in 5 months

The balance of stablecoins on exchanges has reached a 2-year low, with over half the balance of stablecoins ($22.8 billion) flowing out in the last five months. This is attributed to several factors, including treasury yields above 5% offering viable alternatives for investors and issues with stablecoins, such as Binance’s BUSD being forced to shut down and USD Coin being affected by the SVB collapse. Tether, the largest stablecoin, and arguably the most controversial and most risky, according to many, has also experienced a 30% decrease in balance on exchanges since the FTX collapse, despite its market share being at its highest in two years. The outflows began in Q4 last year after the FTX collapse and intensified with regulatory scrutiny on Binance and issues surrounding BinanceUSD and USD Coin.

UK crypto ATMs the target of continued FCA crackdown

The UK’s Financial Conduct Authority is cracking down on unlicensed crypto ATMs. It has partnered with various regional organised crime units and the Nottinghamshire Police Force to shut down unregistered crypto ATMs. These ATMs, which convert fiat funds into crypto assets, are unregulated and provide no user protection. Inspections were carried out in Exeter, Nottingham, and Sheffield and follow on from inspections carried out in Leeds and East London. The ATMs have continued operating across the UK.

Registered UK Crypto Firms Can Approve Their Own Ads, Lawmakers Decide

UK lawmakers have voted to allow crypto companies to approve their own advertisements. The change will enable the few crypto companies registered under the UK’s anti-money laundering regime to approve their own ads until new crypto laws are implemented. This exemption is subject to opposition until it officially comes into force. The amendment allows the FCA to regulate crypto companies under the existing promotions law, helping protect consumers from misleading crypto promotions. The amendment is expected to take effect in approximately four months.

Voyager creditors could start seeing funds in the ‘next few weeks’

The Official Committee of Unsecured Creditors (UCC) of bankrupt crypto broker Voyager Digital’s platform have announced that creditors might regain access to funds stuck on the platform within the next few weeks. The update comes after Binance.US withdrew from its agreement to purchase $1.02 billion worth of Voyager’s assets, citing an uncertain regulatory climate in the US. Thankfully for its users, Voyager’s restructuring plan includes a self-liquidation option, allowing the firm to directly distribute cash and crypto to customers via its platform. The UCC is investigating potential claims against Binance.US for its decision to back out of the deal.

Coinbase remains ‘100% committed’ to US market: Armstrong

Coinbase CEO Brian Armstrong has said the exchange remains “100% committed to the U.S.” despite regulatory challenges. He added “I’m actually really optimistic on the U.S. getting this right.” He also (surprisingly) expressed confidence in Congress creating new legislation to provide a clear regulatory framework for crypto firms, saying, “When I go visit DC, there is strong bipartisan support for Congress to come in and create new legislation that would create a clear rule book in the U.S. and I think it’s really important for America to get this right.” He also however maintains concerns about the unpredictable enforcement actions of the SEC, particularly after Coinbase received a Wells Notice from the regulator in late March. He noted, “Despite our ongoing engagement with the commission, they have not been as clear about what their specific concerns are with Coinbase as we might like, and so I have to refrain from speculating too much.”

36% of the top 1,000 crypto projects went silent on blogging this year

Over a third of the top 1,000 crypto projects have not published any new articles on their websites in 2023, according to a research report by blockchain marketing agency Guerilla Buzz. The report found that 35.8% of these projects failed to update their websites with any new written content, and just under half (49.7%) posted more than two new articles during the year, ie still not much. Researchers believe that many crypto companies do not prioritise strong marketing foundations, focusing instead on generating hype for their token sales and opting for short-lived growth spurts rather than long-term organic growth. Generally companies post good news, and don’t post when there’s nothing to share. A lack of posts is also perhaps indicative of stagnation or market troubles affecting those companies.

FTX seeks to claw back $4B from Genesis in a battle of the bankrupt

Bankrupt crypto exchange FTX is seeking to recover around $4 billion from equally bankrupt crypto lender Genesis and a solvent British Virgin Islands-based entity, GGC International, as part of its efforts to regain value for its creditors. FTX’s lawyers have sought $1.8 billion in loans and a $273 million collateral pledge allegedly given to Genesis by FTX’s sister trading firm, Alameda Research. FTX is also seeking $1.6 billion in withdrawals allegedly made by Genesis and $213 million purportedly withdrawn by GGC International before FTX filed for Chapter 11 bankruptcy on November 11, 2022. The new management of the exchange accuses Genesis of being “instrumental to its fraudulent business model” and is pursuing the clawback under bankruptcy laws.

DOJ Investigates Binance for Russia Sanction Violations

Federal authorities are investigating if Binance violated U.S. sanctions against Russia by enabling Russians to circumvent sanctions, according to a Bloomberg report. According to the report, Binance has been in talks with the DOJ to resolve earlier complaints that it was used to bypass sanctions against Iran, according to unnamed sources. This new investigation is the latest in a series of probes against Binance and other large crypto companies during a period of heightened scrutiny in the sector. “Industry observers, along with market participants, are increasingly of the view that federal regulators will continue to come down heavily on larger crypto companies to set precedents for new regulation this year” wrote PYMNTS on the issue.

Mitsui readies $1.7 bn real estate for tokenisation as digital securities

Japan’s Mitsui Busan Digital Asset Management has been actively involved in the issuance of digital securities backed by Japanese real estate. After tokenising four funds in 2022, the company launched its consumer-targeted investment platform, Alterna, and has pre-registered 10,000 investors. It currently has ¥230 billion ($1.7 billion) in assets under management, with only a fraction of that value so far issued in tokens. Following the fourth token issuance, Mitsui has increased its real estate acquisition efforts, preparing funds for future digital securities issuances.

One can create a memecoin in less than 23 seconds, video goes viral. Scam concerns

A digital creator has shown in a now viral video how anyone can create and deploy a new cryptocurrency token in 27 seconds, or less. All that’s needed is a program called Contracts Wizard by OpenZeppelin which allows anyone to generate code for an ERC-20 token with a few clicks. It offers a choice of potential features for the token. After generating the code, Johnny Shankman, or @whitelights.eth on Twitter, used an application called Remix to compile the token’s smart contract and deploy it on the Ethereum testnet. His record was beaten a day later with a 22.45-second token-creation. Answers the question of how so many thousands of worthless memecoins exist….

‘WallStreetBets’ Themed Token drops 90% as moderator Dumps Treasury Holdings in alleged rug pull

Another day in crypto, another (alleged) rug pull. WSB token, linked to the popular WallStreetBets subreddit, has dropped 90% in the past 24 hours following a massive token sale by insiders, leading to token holders dumping their holdings en masse. WSB’s market capitalisation had jumped to over $50 million in just under three days before the dramatic decline. Internet sleuth Zachbtc tweeted, “Another day another meme coin rug this time involving ZJZ.eth from @wsbcoinofficial who suddenly dumped a large portion of the WSB team supply for $635k (334 ETH).”

The latest AI meets crypto scam: TruthGPT Coin disguising as ‘Elon Musk AI’

AI crypto scams are now hitting the market. The latest, TruthGPT- a take on newly viral GPT technology, which claims to use an AI not-very originally named Elon Musk AI to predict future crypto prices and find good investments. It uses fake avatars and fake celebrity endorsement using pictures of Elon Musk, Binance CEO CZ, and Vitalik Buterin to promote what regulators describe as an investment scam. Five US states have ordered TruthGPT Coin promoters to cease and desist from using the images of the celebrities, as well as demanding that the scheme, operated by Horatiu Caragaceanu, the self-dubbed ‘Shark of Wall Street’, and, cease all activity. The token allegedly involves offering unregistered or non-permitted securities to Texas residents. Caragaceanu has previously promised high returns from coin offerings that now have no value. The usual thing applies about running away screaming if something seems too good- or too fake- to be true.

Europol’s Operation SpecTor leads to massive dark web drug bust

Another month, another darknet shutdown. A darknet crackdown coordinated by Europol and the US Department of Justice has resulted in the seizure of over €50 million in cash and cryptocurrency, 850 kg of drugs (including amphetamines, cocaine, MDMA, and ecstasy pills), and 117 firearms. The arrested vendors were operating on the Monopoly Market, selling drugs in exchange for digital currencies. Active since 2019, Monopoly aimed to gain a larger share of the darknet market after the shutdown of Hydra in April 2022. Operation SpecTor saw German law enforcement seize the infrastructure site in 2021, gathering intelligence packages that have served as the basis for hundreds of national investigations, which doesn’t bode well for its users…

‘No other options’: Hong Kong moving forward with crypto licensing

Hong Kong remains enthusiastic about giving its citizens access to crypto trading, according to the chair of the FinTech Association of Hong Kong, Neil Tan, as other jurisdictions are “taking a step back.” HK will implement a licensing regime for crypto exchanges on June 1 and is “going to also include retail” said Tan. The licensing guidelines are anticipated to be released sometime in May. He expressed confidence in the market’s potential, saying, “If there’s access to [crypto] in a legal and regulated way, then I’m sure participants will come. It is a ‘build it and they will come’ because there are no other options. The options are dwindling, actually.” In February, HK’s securities regulator proposed allowing retail traders access to licensed crypto platforms in its licensing regime proposals for Virtual Asset Service Providers, noting that denying access could push traders to unregulated overseas platforms.

Alibaba Cloud, Avalanche partner to deploy metaverses on the blockchain

Alibaba Group subsidiary Alibaba Cloud has partnered with layer-1 blockchain Avalanche to provide Alibaba’s clients with a Metaverse launchpad called Cloudverse. This platform aims to help businesses customise, launch, and maintain metaverse spaces on Avalanche’s blockchain. MUA DAO, a third partner, will help implement the integration and customisation for metaverses. The partnership will allow enterprises without the time or resources to launch metaverse platforms to quickly and easily enter the space. According to Emin Gün Sirer, founder and CEO of Ava Labs, users can create a metaverse within minutes using open-source tools, with each metaverse space ready for business within a month after initial outreach.

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