BlackRock meets with SEC over ETF, Binance’s new era begins and SBF loses release bid: Hodler’s Digest, Nov. 19-25
Top Stories This Week
US officials announce $4.3B settlement with Binance, plea deal with CZ
Binance and its co-founder, Changpeng “CZ” Zhao, have reached a settlement over criminal and civil cases with the United States Department of Justice. CZ will plead guilty to one felony charge as part of the negotiated agreement. Attorney General Merrick Garland announced the settlement, claiming Binance’s policies allowed criminals involved in illicit activities to move “stolen funds” through the exchange. As part of the settlement, CZ announced on X (formerly Twitter) that he had stepped down as CEO and that Binance’s global head of regional markets, Richard Teng, will assume the position. He added he was “proud to point out” that U.S. officials didn’t allege that Binance misappropriated funds or manipulated markets. CZ was released on bail and is battling government efforts to bar his return to the United Arab Emirates to be with his family. His sentencing is scheduled for February.
BlackRock met with SEC officials to discuss spot Bitcoin ETF
Representatives from BlackRock and Nasdaq met with the U.S. Securities and Exchange Commission (SEC) to discuss the proposed rule allowing the listing of a spot Bitcoin exchange-traded fund (ETF). BlackRock provided a presentation detailing how the firm could use an in-kind or in-cash redemption model for its iShares Bitcoin Trust. Many reports have suggested the SEC could be nearing a decision on a spot BTC ETF for listing on U.S. markets. SEC officials also met with Grayscale representatives this week to discuss the listing of a Bitcoin ETF. BlackRock is one of many firms with spot crypto ETF applications in the SEC pipeline awaiting a response, including Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck and Bitwise.
Bitcoin user pays $3.1M transaction fee for 139 BTC transfer
A Bitcoin user paid $3.1 million in fees for transferring 139.42 BTC. The transaction fee is the eighth-highest in Bitcoin’s 14-year history. A wallet address tried transferring 139.42 BTC only to pay more than half the actual value of the transaction fee. The destination address received only 55.77 BTC. The mining pool Antpool captured the absurdly high mining fee on block 818087. This is the largest Bitcoin transaction fee ever paid in dollar terms, knocking off Paxos’s September transfer of $500,000.
SEC sues Kraken alleging it’s an unregistered exchange, mixes user funds
The U.S. Securities and Exchange Commission has sued Kraken, alleging it commingled customer funds and failed to register with the regulator as a securities exchange, broker, dealer and clearing agency. Additionally, the SEC alleged Kraken’s business practices and “deficient” internal controls saw the exchange commingle up to $33 billion worth of customer assets with its own. The SEC said this resulted in a “significant risk of loss” for its clients. In a follow-up blog post, Kraken said the SEC’s commingling accusations were “no more than Kraken spending fees it has already earned,” and the regulator doesn’t allege any user funds are missing.
Appeals court rejects Sam Bankman-Fried’s bid for release
Sam Bankman-Fried will stay jailed after failing to convince a United States appellate court that he should be freed while his legal team appeals his conviction. Government prosecutors accused Bankman-Fried of leaking Caroline Ellison’s journals to The New York Times in July, which caused his bail to be revoked by a New York District Court. Bankman-Fried was found guilty of seven fraud and money laundering-related charges on Nov. 2. The former FTX CEO will remain behind bars while he awaits his sentencing on March 28 next year.
Winners and Losers
At the end of the week, Bitcoin (BTC) is at $37,710, Ether (ETH) is at $2,079, and XRP is at $0.62. The total market cap is at $1.43 trillion, according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Blur (BLUR) at 99.25%, FTX Token (FTT) at 39.05% and KuCoin Token (KCS) at 24.82%.
The top three altcoin losers of the week are Celestia (TIA) at -19.89%, ORDI (ORDI) at -17.63% and THORChain (RUNE) at -15.53%.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
Read also
Most Memorable Quotations
“The U.S. has a financial regime that basically has been weaponized.”
Charles Hoskinson, founder of Cardano
“I made mistakes, and I must take responsibility.”
Changpeng “CZ” Zhao, former CEO of Binance
“We, the employees of OpenAI, have developed the best models and pushed the field to new frontiers, [but] the process through which you terminated Sam Altman […] has jeopardized all of this work and undermined our mission and company.”
“Get your crypto company out of the U.S. warzone.”
Jesse Powell, co-founder of Kraken
“The regulatory uncertainty that permeates the U.S. market is having an impact on the rest of the world.”
Oliver Linch, CEO of Bittrex Global
“I’m looking forward to returning to OpenAI and building on our strong partnership with Microsoft.”
Sam Altman, CEO of OpenAI
Prediction of the week
‘Enjoy sub-$40K Bitcoin’ — PlanB stresses $100K average BTC price from 2024
Bitcoin buyers should enjoy the chance to add to their stack below $40,000, according to PlanB, pseudonymous creator of the stock-to-flow family of BTC price models. He believes Bitcoin will rise much higher than its recent 18-month highs.
Bitcoin bear market bottoms are characterized by the spot price dipping below the realized price, while bull markets begin once the spot crosses the two-year and five-month realized price levels. BTC/USD is now once again above all three realized price iterations.
“Enjoy sub-$40k bitcoin … while it lasts,” PlanB commented on an accompanying chart.
Asked whether the market should expect lower levels from here, PlanB would not be drawn, saying that he simply expected an average BTC price of at least $100,000 between 2024 and 2028 — Bitcoin’s next halving cycle.
FUD of the Week
HTX to restore services ‘within 24 hours’ after $30M hack
Crypto exchange HTX, formerly known as Huobi Global, resumed deposits and withdrawals within 24 hours after suffering a $30 million exploit on Nov. 22. The exploit was reported to be $13.6 million around the time of the incident, but has since increased in value. HTX’s hot wallets were compromised alongside a coordinated $86.6 million attack against the HTX Eco (HECO) Chain bridge, consisting of HTX, Tron and BitTorrent. The company has promised to fully compensate users for any losses incurred as a consequence of the hack.
CZ an ‘unacceptable risk of flight,’ should stay in US: DOJ
United States prosecutors are trying to stop former Binance boss Changpeng “CZ” Zhao from leaving the country, expressing concern about his potential flight risk. The government requested a review and overturn of a judge’s decision that would allow Zhao to return to his home in the United Arab Emirates (UAE) on a $175 million bond under the condition that he returns to the U.S. two weeks before his February 2024 sentencing. In a proposed order, prosecutors wrote that Zhao “presents an unacceptable risk of flight,” arguing that his ties and favored status in the UAE, along with the country’s lack of an extradition treaty with the U.S., are reasons to block him from leaving the country.
KyberSwap hacker offers $4.6M bounty for return of $46M loot
The decentralized exchange KyberSwap has offered a 10% bounty reward to the hacker who stole $46 million on Nov. 22 and left a note of negotiation. The exchange wants 90% of the loot returned. The hacker made away with roughly $20 million in Wrapped Ether, $7 million in wrapped Lido-staked Ether and $4 million in Arbitrum tokens. The hacker then siphoned the loot across multiple chains, including Arbitrum, Optimism, Ethereum, Polygon and Base.
Read also
Top Magazine Pieces of the Week
This is your brain on crypto: Substance abuse grows among crypto traders
According to some addiction experts, the high-stress atmosphere of cryptocurrency trading can provide a perfect environment for substance abuse.
Michael Saylor’s a fan, but Frisby says bull run needs a new guru: X Hall of Flame
Bitcoin enthusiast Dominic Frisby has a wild journey, from penning one of the first-ever Bitcoin books to plastering “Bitcoin fixes this” on the Bank of England.
6 Questions for Alex O’Donnell about financial journalism and the future of DeFi
Alex O’Donnell spoke to Cointelegraph Magazine about his career as a financial journalist — and how it led to his involvement in crypto and Umami DAO.
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Haliey Welch, better known as the “Hawk tuah girl,” says the Federal Bureau of Investigation briefly probed her after her “memecoin disaster” — the failed launch of a token in her image that she promoted.
Welch said in a May 21 episode of her “Talk Tuah” podcast that the FBI showed up at her grandmother’s house looking to speak to her over the Hawk Tuah (HAWK) crypto token, which many crypto commentators have called an exit scam.
“After the coin launch, the feds came to granny’s house and knocked on her door, and she called me, having a heart attack, saying: ‘The FBI is here after you, what have you done?’”
Welch said she handed over her phone to the FBI and met with agents who “interrogated me, asking me questions and everything else related to crypto.”
“They cleared me, I was good to go,” Welch said.
Welch went viral for her response about an oral sex technique in a vox pop interview posted to YouTube in June.
The HAWK memecoin, based on her viral catchphrase, launched in early December and almost immediately lost 90% of its value and blockchain analytics firm Bubblemaps’ alleged insider wallets and snipers bought up and dumped massive quantities of the token at launch.
Welch said on her podcast that the Securities and Exchange Commission also asked for her phone, and she sent it off “for two or three days” before she was cleared.
Welch’s lawyer James Sallah told TMZ in March that the SEC “closed the investigation without making any findings against, or seeking any monetary sanctions from, Haliey.”
“I trusted the wrong people”
Welch admitted knowing very little about crypto before the HAWK memecoin and said she “trusted the wrong people” for the launch.
She claimed a company, which she said she couldn’t name for legal reasons, was in full control of her X account, which posted videos of her promoting the memecoin.
Welch said she was sent lines to record on video, which were then posted on her X account by someone she trusted but could also not legally name.
She added that on the day of HAWK’s launch, she “kind of knew something was up” and was pulled into a room where a team of people told her to talk on a livestream with YouTuber Stephen Findeisen, better known as Coffeezilla.
“Coffeezilla got on there and they’re like ‘Mute it, mute it,’” Welch said. “Nobody warned me about this guy at all, like nobody at all, they didn’t tell me he was like a crypto wizard, that’s exactly what he is — he ate me the fuck up.”
Related: Justin Sun to attend Trump’s dinner with memecoin backers
Welch said she was only paid a marketing fee and “did not make a dime from the coin itself,” which she said had been totally spent on legal and public relations fees.
Despite being cleared of any legal wrongdoing, Welch took some accountability, admitting that she let many of her fans down who invested in the coin:
“It makes me feel really bad that they trusted me, and I led them to something that I did not have enough knowledge about. I did not have enough knowledge about crypto to be getting involved with it. And I knew that, but I got talked into it, and I trusted the wrong people.”
A group of HAWK buyers sued the alleged creators of the token in December, claiming Alex Schultz, the token’s backing Tuah the Moon Foundation, the token launchpad overHere Limited, and its founder Clinton So promoted and sold HAWK as an unregistered security.
Welch wasn’t named as a defendant.
Magazine: ‘Normie degens’ go all in on sports fan crypto tokens for the rewards
Has Labour got the right strategy to tackle Reform UK?
Nigel Farage’s party cost the Tories dozens, maybe 100-plus seats at the general election. Now it looks like the party is hitting Labour too. But has Sir Keir Starmer got the right answers?
Last year, Labour won a landslide because the Tory vote collapsed, in part because Reform UK took chunks of their supporters in constituencies across the UK.
And here is the situation on 1 May this year – the national equivalent vote share at the council elections put Reform well ahead in first place. Success – this time at the expense of Labour too.
How big a threat is this to MPs? As a very crude experiment, Sky News has looked at what would happen if this result was replicated evenly across parliamentary constituencies.
Within the areas where there were county council elections are 77 complete Westminster seats with sitting Labour MPs.
This includes places like Wycombe, where Treasury minister Emma Reynolds holds. Or Lincoln, won by Foreign Office minister Hamish Falconer.
Now if – for fun – we mapped the country council results from 1 May evenly across these general election constituencies, almost all those Labour seats are gone. All lost, apart from five. That’s 72 out of 77 Labour MPs losing their seats and mostly to Reform UK.
What if we took that swing an applied across the whole country, places where there weren’t local elections?
Angela Rayner in Greater Manchester and Jess Phillips in Birmingham would lose their seats.
Yes this is a crude measure – it assumes a uniform swing can be drawn from the 1 May polls – and local and national elections are very different.
But importantly, YouGov’s latest national opinion polls paint a similar picture to the council elections. Meanwhile, 89 out of 98 constituencies where Reform came second place have Labour in first. Labour MPs are feeling the heat from Farage.
The Reform threat is real. Sir Keir Starmer knows it – and this year has started chasing Reform votes. Slashing aid spending. Abandoning green promises. Hard talk about immigration and living on an “Island of Strangers”.
Sensible given the clear and evident Reform UK threat? Actually – maybe not. Look at the data in detail:
This block here is all the people who voted Labour in last year’s general election. Now thanks to YouGov polling, we know what people in this block would do with their vote now.
It shows Labour has lost more than half of last year’s voters. Just 46% still say they’d still vote for Sir Keir’s party. But – despite the PM’s strategy – they’re not actually going to Reform in large numbers.
Just 6% of Labour’s voters at last year’s general election – six out of every 100 – said they would vote Reform now. That’s all. So where have they gone?
Well, they’ve been lost much more to liberal and left-wing parties – 12% to the Lib Dems, 9% to the Greens.
So just pause there. That means the number of Labour voters who have switched to the Lib Dems and Greens, arguably on the left of the political spectrum, is three times the number going to Reform to the right.
Just 2% go to the Tories.
And much more seriously for Labour, 22% aren’t going to vote, don’t know or won’t say.
The bottom line is people who voted Reform have never backed Labour in large numbers.
This shows how Reform supporters last year voted in each election since 2005. You can see – Reform voters are former UKIP voters. They’re Boris Johnson’s Tories.
Let’s put it another way. While 11% of Labour voters may one day be open to voting Reform, 70% are at risk of going to the Lib Dems or Greens – seven times the threat from Reform.
And typically, these voters don’t like the hard line, Reform-leaning policies of Sir Keir Starmer recently.
The local elections show there is a threat to Labour from Reform. But our data suggests Keir Starmer trying to be Nigel Farage lite isn’t the answer.
Is Labour’s strategy really working?
The US Securities and Exchange Commission has charged crypto platform Unicoin and three of its executives, alleging they made false and misleading statements about its crypto assets that raised $100 million from investors.
The SEC said on May 20 that it charged Unicoin CEO Alex Konanykhin, board member Silvina Moschini, and former investment chief Alex Dominguez with misleading investors about certificates that conveyed rights to receive Unicoin tokens and stock.
Mark Cave, associate director in the SEC’s Division of Enforcement, claimed the trio “exploited thousands of investors with fictitious promises that its tokens, when issued, would be backed by real-world assets including an international portfolio of valuable real estate holdings.”
Related: SEC crypto task force to release first report ‘in the next few months’
“The real estate assets were worth a mere fraction of what the company claimed, and the majority of the company’s sales of rights certificates were illusory,” Cave added.
The SEC’s complaint, filed in a Manhattan federal court, charged Unicoin and the three executives with various securities laws violations and asks for permanent injunctive relief, along with paying back the allegedly ill-gotten gains.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
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