Market Update: 14th February 2023

Week in Review

Front and centre in the world of cryptocurrency this week was the SEC’s decision to charge Kraken for the offer and sale of unregistered securities, with the exchange settling at a cost of US$30m. The regulator’s call has cast doubt over the viability of staking cryptocurrency via centralized exchanges and companies domiciled in the US. The move is the latest in what is being perceived as a broader de-banking campaign by US regulators against the industry.

Meanwhile, the feud between Barry Silbert and the Winklevoss twins appears to have reached a ceasefire as DCG’s Genesis reached an agreement with Gemini which would see a path to a “substantial recovery of assets” for Gemini Earn users according to Cameron Winklevoss.

Finally, as Paypal puts its stablecoin project on ice while its partner, Paxos, is probed by the NYDFS, AAVE’s new stablecoin, GHO, launched this week on the Ethereum Testnet.

Industry Stories

• Crypto exchange Kraken will discontinue its staking services for U.S. residents as part of a settlement with the SEC, according to a press release from the regulator on Feb. 9; Crypto Slate report.
• PayPay Holdings Inc. is pausing work on its stablecoin as regulators increase scrutiny of cryptocurrencies and a key partner in the project faces a probe by the New York State Department of Financial Services.
• China’s Ministry of Science and Technology has approved the construction of its National Blockchain Technology Innovation Centre.
• Bankrupt crypto broker Genesis has filed details on how it will pay back its creditors.
• A Friday filing shows that Digital Currency Group (DCG) plans to turn its Genesis Global Trading equity over to Genesis Global Holdco to eventually sell both companies and pay back clients.
• LocalBitcoins, one of the earliest and most popular peer-to-peer Bitcoin exchanges, today announced that it is shuttering its business after more than ten years of operation.
• Open-sourced decentralized finance liquidity protocol Aave is deploying its native stablecoin GHO on Ethereum’s Goerli testnet. Aave’s native token (AAVE) spiked by about 10% on the news, before retreating 5%, to change hands around $86 as of Thursday at 11:30 am ET.
• Web3 infrastructure firm Jump Crypto has discovered a vulnerability in the BNB Beacon Chain, which would allow the mint of an unlimited amount of arbitrary tokens. The issue was privately disclosed to the BNB team, enabling a patch to be developed and deployed within 24 hours.
• The CEO and co-founder of cryptocurrency exchange Coinbase, Brian Armstrong, believes that banning retail crypto staking in the United States would be a “terrible” move by the country’s regulators. 
• A major Brazilian bank is offering a new and convenient option for taxpayers to settle their dues using cryptocurrencies.
• Threat of Uniswap Replication Triggers Rare Clash With A16Z. The VC disagrees with community plan for bridging; reports The Defiant.

MHC Digital Group News

• Bede Schubert, CFA, Head of Venture, is an official mentor in Outlier Ventures‘ inaugural Zero Knowledge Base Camp accelerator.
  
  Bede stated, “MHC Digital Group and I are excited to be playing an active role in developing the future market leaders in zero-knowledge applications and believe these cutting-edge cryptographic techniques will have broad commercial implications across industries.” Outlier Ventures (OV) is the pre-eminent global #web3 accelerator program, investing in ~200 Web3 start-ups annually.
  
  OV recently announced their first global Zero Knowledge accelerator program that will invest and support the best Zero Knowledge founders, teaming up with top market players Aleo, Aztec, StarkWare, Immutable, Nethermind, Polygon and zkSync.