Today's Headlines:
US SEC Files Lawsuit Against $1.7 Billion Crypto Ponzi Scheme HyperFund
Magic Eden Officially Launches Multi-Chain Self-Custody Wallet
Financial Times: Binance Allows Some Large-Scale Traders to Store Assets in Independent Banks
Coinbase to Charge Fees for Converting USDC to USD Exceeding $75 Million
dYdX Foundation Applies for $30 Million Operating Budget from DAO for Three Years
US Bitcoin Spot ETFs See Net Inflows of $255 Million on the 12th Trading Day
Regulatory News
According to Cryptopolitan, the Securities and Futures Commission (SFC) of Hong Kong has mandated licensed virtual asset exchanges to provide at least 50% insurance for client assets to ensure the safety of investors' funds. This move aims to strengthen the virtual asset market and protect users from potential security vulnerabilities or bankruptcy risks. Licensed exchanges such as OSL Exchange and HashKey Exchange have taken measures to provide insurance coverage exceeding the requirements, enhancing investors' confidence in the crypto market.
According to The Block, the US Securities and Exchange Commission (SEC) has announced that it has filed a lawsuit against the $1.7 billion HyperFund scam on charges of fraud and unregistered securities issuance. From June 2020 to early 2022, Xue Lee and Brenda Chunga (also known as Sam Lee and Bitcoin Beautee) raised over $1.7 billion from global investors. Lee and Chunga promoted HyperFund as a profitable opportunity for cryptocurrency mining investments, but in reality, it was a Ponzi scheme without genuine sources of income. In 2022, the project collapsed, resulting in significant losses for investors. The SEC's press release stated, "This case once again illustrates how misconduct in the cryptocurrency field has fostered some schemes in which promoters exploit promises of easy money without providing the detailed investor protection disclosure required by federal securities laws."
The SEC has filed a lawsuit in the federal district court of Maryland, accusing Lee and Chunga of violating federal securities laws related to anti-fraud and registration provisions. The US Attorney's Office for the District of Maryland has also brought criminal charges against Lee and Chunga. Chunga has admitted to conspiring to commit securities fraud and wire fraud, agreed to a settlement on the charges, and will pay restitution and civil penalties, the specific amount of which will be determined by the court.
According to the official website of the US Department of Justice (DOJ), Indian citizen Banmeet Singh recently pleaded guilty in a US federal court in a case involving the largest single cryptocurrency and cash seizure in the history of the US Drug Enforcement Administration (DEA); the defendant seized a cryptocurrency account ultimately valued at $150 million.
Singh's charges include conspiring to distribute drugs on the dark web, transporting hundreds of kilograms and tens of thousands of controlled substances across the United States, and establishing a drug enterprise worth millions of dollars. According to court documents, Singh created supplier marketing websites on dark web markets such as Silk Road 1, Silk Road 2, Alpha Bay, and Hansa to sell various controlled substances. Customers used the supplier websites and paid with cryptocurrency to order controlled substances from Singh. Subsequently, Singh personally shipped or arranged for the shipment of controlled substances from Europe to the United States through the US mail or other shipping services. From at least mid-2012 to July 2017, Singh controlled at least 8 distribution centers within the United States. Singh was arrested in London in April 2019, and the government extradited him to the United States in 2023.
Nicole M. Argentieri, Acting Assistant Attorney General of the Criminal Division, stated, "Today's plea agreement, including the seizure of approximately $150 million in cryptocurrency, demonstrates that the Department of Justice will hold accountable criminals who violate US laws, regardless of how they conceal their activities."
NFT & Metaverse
According to Decrypt, the Solana-based play-to-earn blockchain game project MixMob will launch its governance token MXM on February 1 and will be listed on crypto exchanges such as Bybit. The project will distribute 63 million MXM tokens through airdrops, including to buyers of MixBot NFTs and players of the game's test version. MixMob recently held a public sale of MixBot NFTs, selling 9,000 NFTs in 12 minutes, generating over $2.25 million in revenue. Simon Vieira, CEO of MixMob, stated that the project will also provide exclusive benefits to holders of Solana Saga smartphones, including airdrops, with the Saga benefits expected to be launched later this quarter. Earlier reports indicated that MixMob completed a $7 million seed round of financing in 2022, led by Defiance Capital.
According to The Block, the NFT marketplace Magic Eden has officially launched a multi-chain self-custody wallet, supporting the Solana, Bitcoin, Polygon, and Ethereum blockchains. The platform previously released a beta version of the wallet in November 2023. The wallet, developed in partnership with Exodus, supports instant cross-chain swaps, NFT portfolio management, and direct NFT trading from the wallet. To incentivize early users, Magic Eden has announced that it will offer limited-time wallet minting for NFT projects such as Claynosaurz, Degenerate Ape Academy, and BoDoggos in February, as well as airdrops and other benefits.
Project Updates
Financial Times: Binance Allows Some Large-Scale Traders to Store Assets in Independent Banks
According to the Financial Times, Binance has succumbed to pressure from clients who wish to entrust their assets to independent custodians, highlighting increasing concerns among traders about the security of the world's largest cryptocurrency exchange since it was fined by US authorities last year. Three sources revealed that Binance has started allowing some large-scale traders to store assets in independent banks, including Switzerland's Sygnum Bank and Flow Bank. Previously, Binance clients could only hold assets on the exchange or through the custodian Ceffu, which describes itself on its website as the "sole institutional custody partner of Binance Exchange." US regulators last year described Ceffu as a "mysterious Binance-related entity."
The head of a cryptocurrency trading firm stated, "I'd rather have my money in a Swiss bank than on Binance. In theory, it's safer to have money in a custodian regulated by supervisory authorities." Binance stated that it "began exploring and developing banking tripartite solutions approximately two years ago, well before counterparty risk became prominent, referring to arrangements between Binance, its clients, and bank custodians. It declined to comment on the names of the banks and added, "Counterparty risk is an industry issue, not unique to Binance."
Two sources indicated that the setup allows clients to deposit funds with a custodian of US Treasury securities, from which traders can earn approximately 4% interest due to the higher interest rate environment. Binance stated, "This arrangement directly addresses counterparty risk, the most pressing concern for institutional investors today," and added that it "initiated and successfully executed a risk management solution that addresses this concern for all institutional investors in the industry, enabling them to better manage risk and further expand their operations." Binance is "actively engaging with numerous interested banking partners and institutional investors." Cefu stated that its company structure is independent of Binance and its custody business is "built using independent accounts and wallet systems separate from any partner exchange (including Binance)."
Google Allows Crypto Trusts to Advertise in the US
According to Bitcoin Magazine, Google has updated its advertising policy to allow cryptocurrency trust products to advertise in the US. Advertisements for Bitcoin spot ETFs from BlackRock, VanEck, and Franklin Templeton have already appeared on Google search pages.
JP Morgan Lowers Fees for its Bitcoin Spot ETF from 0.39% to 0.25%
According to CoinDesk, JP Morgan (Invesco) and Galaxy Asset Management announced on Monday that they have lowered the fees for their Bitcoin spot ETF from 0.39% to 0.25%. This move aligns the trading fees for Invesco Galaxy Bitcoin ETF (BTCO) with those of most other issuers. Only Ark and 21Shares, Bitwise, and Franklin Templeton have lower fees than their peers. The statement mentioned that JP Morgan will continue to waive fees for the first six months until its assets reach $5 billion.
21Shares Launches Dune Dashboard, Publicizes ARKB Bitcoin Holdings Information to Investors
21Shares announced the launch of a new Dune dashboard aimed at providing investors, users, and others with access to information about the Bitcoin holdings of the ARK 21Shares Bitcoin spot ETF (ARKB). 21Shares stated that the dashboard is designed to increase transparency. The non-disclosure of wallet addresses is due to concerns about dust attacks, transaction tracking, and even geopolitical risks. With many new Bitcoin ETFs being launched in the US, striking a balance between transparency and security is more important than ever.
Coinbase to Charge Fees for Converting USDC to USD Exceeding $75 Million
According to The Block, Coinbase has announced that institutional clients will be required to pay conversion fees when the net amount of USDC converted to USD within 30 days exceeds $75 million. Transactions between $75 million and $150 million will incur a 0.1% fee; transactions between $150 million and $500 million will incur a 0.15% fee; and transactions exceeding $500 million will incur a 0.2% fee. Coinbase added that institutional clients holding over $500 million in assets on the platform or averaging $100 million USD/USDC per calendar month will be exempt from conversion fees. Additionally, members of the Coinbase exchange liquidity program who qualify for Tier 1 or Tier 2 will also be exempt from USDC conversion fees if they meet the eligibility criteria.
dYdX Chain Upgrades to Version 3.0, Will Support Liquidity Staking
According to The Block, the Cosmos-based dYdX Chain has upgraded to version 3.0 today. This upgrade introduces interchain accounts and supports the integration of liquidity staking protocols into dYdX Chain for liquidity staking on the network. This allows users to continue staking and securing dYdX Chain while converting staked DYDX into liquid assets that can be traded or used in DeFi applications. Additionally, the Cosmos ecosystem protocol Stride plans to open liquidity staking for dYdX today, and two other liquidity staking providers, Persistence and Quicksilver, also plan to offer this service in the near future.
According to Protos, Andreessen Horowitz (a16z) general partner Chris Dixon defended his investment theory and the company's investments on The New York Times podcast, claiming that the companies in which they invest do not sell tokens to the public and are not allowed to do so.
However, upon reviewing a16z's portfolio, the media expressed doubt about Dixon's statement. The media mentioned that DFINITY's ICP tokens have been distributed to those who "donated" to the DFINITY Foundation; the failed algorithmic stablecoin protocol Fei sold FEI tokens and TRIBE governance in its genesis event; and the developer behind Axie Infinity, Sky Mavis, sold AXS tokens on Binance Launchpad.
According to reports, Dixon apparently does not consider NFTs as tokens, as several companies invested in by a16z have sold NFTs to retailers, including VeeFriends, a company used by Gary Vee to sell NFTs. Yuga Labs has also sold NFTs to the public, and it is currently unclear what Dixon's claim of never allowing a16z portfolio projects to sell tokens to the public means.
OKX Web3 Wallet to Integrate ARC-20, SRC-20, Runes, and DRC-20 Inscription Token Standards
According to official sources, the OKX Web3 Wallet will be the first to integrate four new inscription token standards: Atomicals (ARC-20), Stamps (SRC-20), Runes, and Doginals (DRC-20) for Dogecoin, making it the first and most advanced one-stop inscription ecosystem platform in the Web3 industry.
It is reported that the OKX Web3 Wallet will integrate the Bitcoin token standard SRC-20 on February 5, allowing users to view and transfer these inscriptions, and will integrate ARC-20, DRC-20, and Runes by the end of February. At the same time, the OKX NFT marketplace will integrate the DRC-20, ARC-20, and Runes standards by the end of February, providing millions of users with zero-cost trading of DRC-20, ARC-20, and Runes inscriptions.
Frame: Mainnet Launch Postponed, Airdrop Query Reopened
The Ethereum L2 network Frame announced on the X platform that it has listened to community feedback and understands that not everyone can access the airdrop query page correctly. The airdrop query has been reopened, and the mainnet launch will be postponed to give users more time to claim the airdrop. The mainnet and airdrop query deadline will be announced soon.
Starknet to Collaborate with Celestia to Establish High-Throughput Layer 3 Network
The official Ethereum Layer 2 scaling solution Starknet announced on the X platform that it will collaborate with the modular blockchain network Celestia to achieve a high-throughput Layer 3 network. Using Celestia as a modular DA on Starknet to establish a high-throughput application chain is a game-changing combination. This collaboration will involve porting Celestia Blobstream to Cairo for use on Starknet.
According to Bloomberg, Bitcoin is set to achieve its fifth consecutive month of gains, marking the longest continuous rise in Bitcoin since the rebound driven by loose monetary policies during the COVID-19 pandemic. The price of Bitcoin rose by approximately 2% in January, driven by the launch of the first Bitcoin spot ETF in the US and a shift in people's outlook on monetary policy. According to Bloomberg's compiled data, a fifth consecutive month of gains would be the longest since the six-month rise from October 2020 to March 2021, when Bitcoin reached a historical high of nearly $69,000 in November 2021.
Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors LLC, wrote in a report on Monday that the slowdown in outflows from Grayscale GBTC "has had a significant positive impact on market sentiment." Data shows that the 10 Bitcoin spot ETFs have attracted a total of $817 million in net funds so far. Investors are also awaiting the Federal Reserve's interest rate decision this week, with their expectations for a rate cut in March roughly unchanged. This significant change in outlook could affect Bitcoin and the broader crypto market, as they are sensitive to changes in market sentiment and liquidity views.
dYdX Foundation Requests $30 Million Operating Budget from DAO for Three Years
According to Coindesk, the dYdX Foundation is seeking $30 million in funding from the DAO to be used over the next three years. This funding represents 4% of the DAO's current treasury. The dYdX Foundation provides legal, development, marketing, and technical support for crypto trading projects, including perpetual futures trading platforms and professional blockchains in the Cosmos and Ethereum ecosystems. According to its promotion, the foundation's goal is to develop dYdX into an "exchange layer of the internet."
When the foundation first shared this request last Friday, it received widespread approval from dYdX stakeholders. The vote will continue until February 2. Nearly half of the requested budget will be used for payroll, with 18% allocated to marketing and growth, 14% for various legal expenses, and 5.5% for contractor projects. The foundation will "diversify" some of the acquired funds into "fiat and stablecoins" and invest in expanding its staking business. The $30 million will include 10.5 million DYDX tokens and extend the foundation's operating period to over 18 months.
De.Fi to Launch DEFI Token Season 1 Airdrop Plan in February
Web3 SocialFi and antivirus super app De.Fi announced on the X platform that the DEFI token Season 1 airdrop plan will take place in February. The claiming process for Season 1 will begin in the first half of February, with the specific date to be announced soon, and the snapshot has not been taken yet. Last October, De.Fi announced that it had received investment from OKX Ventures.
Bounce Brand: Bitcoin Staking Chain BounceBit Now Live
Decentralized auction platform Bounce Brand announced on the X platform that the Bitcoin staking chain BounceBit is now live, supported by Binance Custody (Ceffu), Mainnet Digital, Breyer Capital, and OKX Ventures. Users can now stake WBTC, BTCB, AUCTION, MUBI, DAII, and earn points.
Funding News
Digital Asset Startup Mesh Receives $6.5 Million Investment from PayPal
According to Fortune magazine, PayPal's venture capital arm has invested $5 million in the digital asset startup Mesh. It is worth noting that this investment was made through PayPal's PYUSD stablecoin launched last August. In addition to the investment in the form of the PYUSD stablecoin, PayPal Ventures also added an additional $1.5 million in cash.
Mesh is a company founded by cybersecurity veterans, focusing on secure communication and cryptocurrency-based financial transactions. Mesh is described as the Plaid of the cryptocurrency world, aiming to simplify the transfer of funds between exchanges, wallets, and cryptocurrency-supporting financial applications. Mesh currently has annual revenue of over $1 million, is not yet profitable, but according to the founders, achieving profitability is feasible.
According to The Block, Gevulot has completed a $6 million seed funding round, led by Variant. Gevulot plans to use this funding to launch a Layer 1 blockchain utilizing zero-knowledge proofs (ZK proofs). This technology will enable developers to delegate computational tasks on advanced hardware networks, creating new opportunities for scalable applications. Gevulot is set to launch a developer network (devnet) and is collaborating with multiple validation companies.
Web3 Social Game Forgotten Playland Raises $7 Million, with Participation from Spartan Group
According to the official blog, Web3 social game Forgotten Playland has announced the completion of a $7 million funding round, with participation from Merit Circle, Spartan Group, C² Ventures, and Paper Ventures.
Forgotten Playland aims to redefine social gathering games and is set to release in the first quarter of 2024, featuring a series of mini-games. Bump-A-Ball and Jungle Rumble have been confirmed, with more games in development.
Key Data
Bitcoin Spot ETF 12th Trading Day: Total Trading Volume $15.6 Billion, GBTC Leads
According to data compiled by Bloomberg analyst James Seyffart, the total trading volume for the 12th trading day of US Bitcoin spot ETFs was $15.643 billion. Among them, GBTC had a trading volume of $570 million, leading the pack. IBIT from BlackRock and FBTC from Fidelity closely followed. Meanwhile, the total trading volume for Bitcoin spot ETFs over the 12 trading days was $259.384 billion.
Net Inflow of Funds into All US Bitcoin Spot ETFs Reaches $255 Million on the 12th Trading Day
BitMEX Research stated on the X platform that the net inflow of funds into all US Bitcoin spot ETFs reached $255 million on the 12th trading day.
According to the shared data, on the 12th trading day, Grayscale's GBTC saw a net outflow of approximately $191.7 million, while BlackRock's IBIT had a net inflow of $198.4 million, Fidelity's FBTC had a net inflow of $208.2 million, Bitwise's BITBC had a net inflow of $20 million, Ark 21Shares' ARKB had a net inflow of $17.2 million, ProShares' BTCO had a net inflow of $3 million, WisdomTree's BTCW had a net inflow of $500,000, and Franklin's EZBC, Valkyrie's BRRR, and VanEck's HODL were not included in the statistics due to minimal fund changes.
Bitwise CEO: Bitcoin ETF "BITB" AUM Surpasses $600 Million
Bitwise CEO Hunter Horsley stated on the X platform, "Today, the assets under management (AUM) of Bitwise Bitcoin ETF (BITB) have surpassed $600 million, experiencing 12 trading days since its listing. Investors have a choice of products from many well-known companies. Thank you to the many investors who have entrusted Bitwise to manage their investments, and thank you to the ecosystem driving the development of this asset class."
Grayscale Deposits 6,534 Bitcoins Worth Approximately $274.9 Million into Coinbase Prime
According to Lookonchain monitoring, Grayscale deposited 6,534 Bitcoins (BTC) worth approximately $274.9 million into Coinbase Prime 30 minutes ago. Since the ETF approval, Grayscale has deposited a total of 119,663 Bitcoins into Coinbase Prime, with a total value of approximately $4.91 billion. Currently, Grayscale holds a total of 495,290 Bitcoins, valued at approximately $20.76 billion.
According to Spot On Chain monitoring, the Arbitrum Foundation multi-signature address 0xd6c deposited 15 million ARB (approximately $27.5 million) into Coinbase at an average price of $1.83 6 hours ago. Shortly after, six new wallets withdrew a total of 14.9 million ARB from CEX, suspected to be over-the-counter transactions.
DWF Labs Deposits 500,000 API3 Tokens Worth $1.63 Million into Binance 8 Hours Ago
According to on-chain analyst @ai_9684xtpa, DWF Labs deposited 500,000 API3 tokens into Binance 8 hours ago, worth $1.63 million. DWF Labs previously received 1 million API3 tokens from the API3 Primary Treasury Agent address two weeks ago (01.15) at a transfer price of $1.68, currently realizing a profit of $1.44 million. The oracle project API3 announced the launch of the ZK-Rollup platform OEV Network, leading to a 35.4% increase in the past seven days.
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