• Last weekend, USD coin (USDC) fell to as low 87 cents due to news of Circle Internet Financial’s exposure to Silicon Valley Bank.
• This caused a wave of USDC sales across decentralized-finance platforms and a surge in the withdrawal of tether (USDT) from Binance.
• Two high-frequency trading firms capitalized on USDC’s plight, with one wallet making $16.5 million in profit in a day by trading tether for USD coin and DAI.
USDC Plummets After News of Circle Internet Financial’s Exposure
Last weekend, the U.S dollar-pegged stablecoin USD coin (USDC) fell to as low as 87 cents on news that Circle Internet Financial, its issuer, had exposure to Silicon Valley Bank, which collapsed last Friday. This sparked a wave of USDC sales across decentralized-finance platforms and an increase in the withdrawal of tether (USDT) from crypto exchange Binance.
High-Frequency Trading Firms Take Advantage Of Price Drop
Two high-frequency trading firms were quick to capitalize on USDC’s plunge and take advantage of the arbitrage opportunity it presented when it traded below 90 cents – one wallet receiving $215 million worth of tether from Binance before executing 59 transactions that involved swapping USDT for USDC and the DAI stablecoin and making a profit of around $16.5 million according to CryptoQuant research.
Risk Involved With Trading Stablecoins
Despite this lucrative opportunity presented by USDC’s depeg, traders faced significant risk due to lack of available information surrounding the situation. Mike van Rossum, founder of trading firm Folkvang commented “Given what recently happened to FTX and other big crypto players, you can see why many wanted to be careful when taking positions” .
What Does The Future Hold?
It remains unclear how long this period volatility will last for but it is likely that high frequency traders are already looking ahead at potential arbitrage opportunities between different exchanges or even different currencies depending on market sentiment over the coming days/weeks/months .
The events that unfolded last weekend have highlighted both the risks associated with trading volatile assets like cryptocurrencies but also the huge rewards available if traders are able identify profitable trades quickly enough before markets move against them .
• MakerDAO’s decentralized stablecoin, DAI, depegged to an all-time low of 88 cents on Saturday.
• The sudden collapse of tech-focused Silicon Valley Bank is being blamed for the drop in DAI pricing.
• Other algorithmic stablecoins like Curve 3pool and Tron’s USDD have also been knocked off their pegs.
Stablecoin Rout Plagues Crypto Markets
The crypto markets were hit with a sudden shock recently when tech-focused Silicon Valley Bank suddenly collapsed. Since then, many stablecoins have been affected by this incident and are now trading at all-time lows. The most prominent amongst these stablecoins is MakerDAO’s decentralized token DAI, which has dropped to an all-time low of 88 cents as a result of the market conditions.
USDC Exposure and Silvergate Liquidation
Traders are speculating that Circle, who issues USDC, has worse exposure to SVB than the $3.3 billion out of the total $40 billion backing USDC they previously disclosed. On top of this, Silvergate had gone into voluntary liquidation days prior to this event – further adding fuel to the fire regarding USDC exposure.
$563 Million in DAI Burned in 24 Hours
On-chain data from Dune shows that $563 million worth of DAI was burned in the last 24 hours alone due to traders fleeing from USDC and other related assets. This has caused the total market cap for DAI to fall down to a total of $4.9 billion as a result of this selloff.
Tron’s USDD Also Hit
Not only has DAI been affected by this incident – Tron’s USDD has also seen its peg broken after it dropped down 93 cents during Asian afternoon hours on Saturday. Tether remains pegged at 1 dollar however – despite the market chaos occurring around it with other algorithmic tokens such as Curve 3pool also seeing their liquidity pool take a hit due to traders fleeing USDC as well..
Crypto markets remain volatile following this incident – with many algorithmic tokens still feeling its effects even days later after it occurred. It will be interesting to see whether or not these tokens can recover following this period or if they will continue dropping further in value over time
• Regulators are making it difficult for enterprises to understand and implement multiple blockchain networks.
• It costs a lot of money to stay up-to-date with different blockchains, as they continuously evolve and change.
• There is also a lack of liquidity when transferring tokens between different chains.
The High Cost of Understanding Multiple Chain Environments
Regulators are bringing the multichain era to a close by making it difficult for enterprises to understand and implement multiple blockchain networks. EY (Ernst & Young) estimates that it costs around $500,000 to add a new chain to their Blockchain Analyzer platform and 10%-20% of that amount each year just to ensure they stay up-to-date with changes in the network. Ethereum has two to four hard forks a year which can make staying on top of updates challenging.
Lack Of Liquidity Between Chains
Liquidity is also an issue when transferring tokens between different chains. Polling Automated Market Makers (AMM) reveals how quickly liquidity declines when users move away from the Ethereum blockchain. Even though setting up network nodes isn’t too complicated, understanding how payments and transfers work within these networks requires further investment in time and resources from enterprises.
Transactions And Cryptography
When adding a new network, firms must look into the transaction processing model (how transactions are initiated, recorded, processed & reported), the cryptography that underpins those transactions and any associated risks with different steps in the process. If businesses want to audit their activity then control points need to be identified so verification can take place.
EY’s Approach To Adding A New Chain
At EY, teams take an in depth look at all aspects of adding a new chain including transaction processing models, cryptography underpinning those transactions as well as risk identification across each step in the process so audits can be performed successfully if needed.
Conclusion: The Multichain Era Is Coming To An End
The cost associated with understanding multiple chain environments means enterprises are likely going become reluctant when it comes to exploring new chains or updating existing ones which will unfortunately bring an end to this multichain era we’re currently experiencing
• The U.S. Securities and Exchange Commission (SEC) recently sued Terraform Labs and Do Kwon, alleging that terraUSD is a security, alongside various other tokens and products.
• This lawsuit comes after the SEC previously denied crypto bank Custodia’s bid for Federal Supervision, which could potentially lead to the SEC classifying stablecoins as securities.
• The lawsuit against Terraform Labs has important implications for the cryptocurrency industry and how regulators view digital assets going forward.
The SEC’s Stablecoin Hammer, Courtesy of Terraform Labs and Do Kwon
Background on the Regulatory Landscape
The Federal Reserve Board recently announced it had again rejected crypto bank Custodia’s bid for Fed supervision, after previously denying the application last month. This could potentially lead to the SEC classifying stablecoins as securities.
The Lawsuit Against Terraform Labs
The U.S. Securities and Exchange Commission (SEC) sued Terraform Labs and Do Kwon last week, alleging the terraUSD stablecoin was a security, alongside various other tokens and products.
Implications of the Lawsuit
The lawsuit has important implications for the cryptocurrency industry and how regulators view digital assets going forward.
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• The US Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs, the company behind the failed TerraUSD stablecoin, and its co-founder Do Kwon.
• The SEC alleges that Terraform and Kwon misled investors on a number of issues, including who was using TerraUSD for payments, and called both the yield-bearing Anchor Protocol and the LUNA token “crypto asset securities”.
• The SEC is charging Terraform and Kwon with fraud, selling unregistered securities, selling unregistered security-based swaps, and other related claims.
SEC Sues Terraform Labs & Do Kwon
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs, the company behind the failed TerraUSD stablecoin, and its co-founder Do Kwon. The SEC alleges that Terraform and Kwon misled investors on a number of issues, including who was using TerraUSD for payments.
Allegations of Misleading Investors
The SEC claims that both the yield-bearing Anchor Protocol as well as the LUNA token have been labeled as “crypto asset securities” by them. Furthermore, they allege that Terraform & Kwon made misleading statements about how UST’s peg to the dollar was restored after it fell nearly 10 cents in May 2021. As compensation for helping to restore UST’s peg back to $1 USD level at that time, they received LUNA tokens from Terraform.
Charges Brought Against Them
The SEC is charging both entities with fraud; selling unregistered securities; selling unregistered security-based swaps; as well as several other related charges. This marks yet another example of how companies operating within crypto space need to be extra careful when it comes to making public statements or taking certain actions which could be viewed as being misleading or fraudulent by regulators.
Consequences of Collapse
The collapse ofTerraUSD last year led to a wave of bankruptcies in crypto industry due to many users relying heavily on this stablecoin—many of whom were not prepared for such an event happening so suddenly without any warning signs beforehand.
It remains uncertain what will happen next in this case but one thing is clear—investors should be wary when dealing with projects claiming to offer investors any kind of return or profit opportunities with their crypto assets/tokens/coins—as those could very easily fall under the jurisdiction of regulatory bodies like the SEC if found out to violate certain rules/regulations set forth by them.
• Kraken’s settlement with the US SEC led to a market decline, causing $220 million in liquidations on crypto futures trading.
• 90% of liquidated positions originated from traders betting on higher prices.
• Liquidation data serves as a signal of leverage being washed out, providing insight into price volatility.
Crypto Market Decline Spurs $220M in Liquidations
The crypto market recently experienced a significant decline due to Kraken’s settlement with the U.S. Securities and Exchange Commission (SEC). This caused roughly $220 million in liquidations on crypto futures trading, with over 90% of those positions originating from long traders who were betting on even higher prices.
What is Liquidation?
Liquidations occur when an exchange forcefully closes a trader’s leveraged position owing to either a partial or total loss of the trader’s initial margin. This occurs when the trader does not have sufficient funds to keep the trade open and meet the margin requirements for their leveraged position.
How Does Liquidation Affect Price Volatility?
Data regarding liquidations can be beneficial for traders as it serves as an indication of leverage being effectively removed from popular futures products — thereby providing useful insight into short-term price volatility. For example, within the last 24 hours Bitcoin and Ether cumulatively saw over $100 million in liquidations while Dogecoin, Solana, XRP and Aptos each had about $4 million in liquidations apiece.
Biggest Losers: Long Traders
Long trades — or bets on higher prices — took 90% of all liquidated positions during this period and thus bear much of the brunt during these market declines. Binance was hit hardest among counterparties with over $95 million in losses while OKX took second place with around $47 million lost in liquidations.
Kraken Settles With SEC Over Crypto Staking Platform
Kraken agreed to immediately end its crypto staking-as-a-service platform for U.S customers and pay a fine of $30 million to settle Securities and Exchange Commission (SEC) charges that it had been offering unregistered securities through its platform prior to this settlement agreement
• Avraham Eisenberg is a crypto trader and alleged manipulator of Mango Markets who has been accused of draining $116 million from the exchange.
• He is currently in jail and working to negotiate bail, which he waived at his first hearing in U.S. District Court in New York on Thursday.
• Eisenberg is being sued by Mango Labs for $47 million due to the incident, and is charged with three criminal offenses including commodities fraud, commodities manipulation, and wire fraud
Avraham Eisenberg’s Alleged Exploitation of Mango Markets
Avraham Eisenberg has publicly admitted to draining $116 million from the crypto exchange Mango Markets. The 27-year-old crypto trader and alleged manipulator revealed himself to be part of the group that exploited the Solana-based decentralized finance (DeFi) lending protocol for this amount. After pulling off the heist – which Eisenberg described on Twitter as both legal and a “highly profitable trading strategy” – he returned $67 million to preempt any potential civil lawsuit against him by Mango Markets’ decentralized autonomous organization (DAO).
Legal Proceedings Against Avraham Eisenberg
Despite his attempt at reparations, Eisenberg is still being sued by Mango Labs for the remaining $47 million. Additionally, he has been indicted on three criminal offenses including commodities fraud, commodities manipulation, and wire fraud. On Thursday, Jan 2nd 2023, Eisenberg waived bail at his first hearing in U.S. District Court in New York and will stay in jail until at least Feb 14th 2023 while attempting to negotiate bail terms with McMillan LLP Partner Benjamin Bathgate discussing the latest legal developments related to this case..
Eisenberg’s Arrest & Detention
Eisenberg was arrested in Puerto Rico on Dec 26th 2020 and remained there until Wednesday when he was transferred into federal custody for arraignment proceedings before Judge Paul Grewal of U.S District Court Northern District Of California San Francisco Division . He was then sent back into federal detention pending further hearings on his status as an international fugitive from justice who had fled from Israel prior to his arrest..
Impact Of Avraham Eisenberg’s Actions
The actions of Avraham Einsenberg have had a major impact on cryptocurrency exchanges around the world as they consider how best to protect customer funds while also allowing robust trading activity without exposing themselves to such risks again . This case also highlights how regulators are beginning to take a much more active role in enforcing laws related to crypto markets , something investors should keep an eye out for going forward .
The case against Avraham Eisenberg provides insight into how serious allegations of exploitation within cryptocurrency exchanges can lead not only financial losses but also potentially long prison sentences depending upon what can be proven during court proceedings . It remains unclear if or when a settlement may be reached between all parties involved , though it appears that negotiations are ongoing between Mr . Einsenberg’s legal team , prosecutors , and representatives from Mango Labs regarding possible solutions that could bring some closure to this situation .
• Brevan Howard, a traditional finance giant, has hired Dragonfly Capital veteran Kevin Hu as its Digital Portfolio Manager.
• Hu will be based in Brevan Howard’s Abu Dhabi office, and will report to BH Digital CEO Gautam Sharma.
• The firm is raising at least $1 billion for a record-breaking crypto hedge fund, and has made it through the market volatility with only a 5% loss.
Brevan Howard, a traditional finance giant with $25 billion in assets under management, has added to its digital assets arm with the hire of a new portfolio manager, Kevin Hu. Hu, a veteran of Dragonfly Capital, will be based in Brevan Howard’s Abu Dhabi office and will report to BH Digital CEO Gautam Sharma.
Hu joined Dragonfly Capital in 2019, serving as General Partner and Head of Liquid Strategy. Prior to that, he spent three years as an associate at BlackRock’s Alternative Investment Group. He brings a wealth of experience in cryptocurrency and blockchain-related investments to Brevan Howard.
The firm is also looking to capitalize on the recent boom in digital assets, notably cryptocurrency and blockchain. Last summer, Brevan Howard announced it was raising at least $1 billion for a record-breaking crypto hedge fund. This strategy has since come to fruition, as evidenced by filings with the U.S. Securities and Exchange Commission (SEC).
Despite the market volatility of late, Brevan Howard’s crypto hedge fund has seen only a 5% loss. This success has been attributed to the firm’s diverse approach to digital asset investing, which includes a combination of algorithmic and quantitative strategies.
With the addition of Hu, Brevan Howard continues to show its commitment to the digital asset space. The firm’s Digital Assets team is now well-equipped to navigate the ever-changing landscape of cryptocurrency and blockchain investment, and is likely to continue to be a leader in the world of institutional investment.
• The U.S. Department of Justice (DOJ) was criticized for over-hyping the seizure of a little-known exchange.
• The announcement caused the prices of Bitcoin and Ether to drop by about 5%.
• This article details the DOJ’s announcement, the events leading up to it, and the reactions from the crypto community.
The U.S. Department of Justice (DOJ) caused a stir in the crypto community Wednesday when they announced they had shut down a little-known crypto exchange. The announcement came after a series of events that had rocked the crypto world, including the collapse of major crypto exchange FTX and the destabilization of crypto conglomerate Digital Currency Group.
The DOJ’s announcement caused the prices of Bitcoin and Ether to drop by about 5%. It was unclear what the DOJ had planned, and many speculated that they were investigating one of the major exchanges, such as Binance. However, when the DOJ eventually revealed the details of their announcement, it was revealed that they had seized a little-known crypto exchange.
The DOJ’s announcement was met with criticism from the crypto community, with many accusing them of overhyping the seizure of the small exchange. Many felt the DOJ had made a show of the announcement, and that their actions had caused unnecessary panic in the markets.
The DOJ has yet to comment on the criticism, but the incident has highlighted the need for greater oversight and regulation in the crypto space. With the crypto market continuing to grow, it is important for regulators to take the initiative in understanding the industry and its complexities.
The crypto markets have since recovered, but the incident has raised important questions about the role of regulators in the crypto space. It is clear that regulators must take steps to ensure the integrity of the markets, while also ensuring that their actions do not unduly harm the industry. As the industry continues to mature, it will be important for regulators to work with the crypto community in order to ensure the safety and stability of the markets.
• EU’s financial services official Mairead McGuinness has said that new European Union crypto rules are pointless unless the rest of the world follows suit.
• The turmoil in the crypto market has given extra ammunition to those pushing for a global rulebook.
• McGuinness warned future crypto innovations need to be focused on people, and that a global approach is necessary to prevent more problems.
At the World Economic Forum on Thursday, it was made clear that the European Union’s leading financial-services official is making it known that new EU crypto rules are pointless unless the rest of the world follows suit. Mairead McGuinness, the European Commissioner, made this known in her talks with CoinDesk on the sidelines of the meeting in Davos.
McGuinness pointed out that the turmoil in the crypto market has added fuel to those seeking stricter crypto rules, and that the European Union can set an example by being the first major jurisdiction in the world to regulate the sector with its Markets in Crypto Assets regulation (MiCA). However, she also pointed out that this would be pointless unless other countries follow suit, as the technology is borderless.
McGuinness continued to say that a global approach is necessary to prevent more problems, and that future crypto innovations need to be focused on people. She stated that the technology should be accessible to everyone and that the rules should be fair and consistent across borders.
Furthermore, McGuinness warned that if the European Union does not take a global approach to regulations, it will open up a world of problems and potentially stifle innovation. To prevent this, she believes that it is important to have a global set of regulations that all countries follow, so that there is a level playing field for all.
It is clear that McGuinness is pushing for a global approach to crypto regulations, and that the European Union is leading the way in this regard. However, it is also clear that she is adamant that other countries must follow suit in order for the regulations to be effective and for the technology to reach its full potential.