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WuBlockchain Weekly: Binance Initiates Workforce Reduction, CNHC Team Unreachable, BKEX Suspends Withdrawals and Top10 News
1. The White House and Republicans Reach a Tentative Agreement on Debt Ceiling Principle link
On May 28th, according to CNN, the White House and House Republicans have reached a tentative agreement on raising the debt ceiling in the United States. Both sides will review the agreement text overnight to ensure it aligns with the tentative agreement. According to NBC News, House Speaker McCarthy stated in a press conference that the agreement text is expected to be released on Sunday, and a vote on the debt ceiling agreement will take place on Wednesday. The agreement includes historic spending cuts and important reform measures aimed at helping people escape poverty, enter the workforce, and limit excessive government intervention. There are no new taxes or new government programs involved.
Some analysts express concerns about the potential agreement to raise the US government’s $31.4 trillion debt limit and its potential impact on the cryptocurrency market. They believe it could bring pain to the market in the following ways: 1) Once the debt limit is raised, the Treasury Department will replenish its cash reserves by issuing government bonds, which could absorb liquidity in the system and exert upward pressure on bond yields. Bitcoin is considered to move inversely to bond yields. 2) While the potential agreement may eliminate major economic uncertainties, assets like Bitcoin, which have no direct connection to the real economy and heavily rely on fiat liquidity, may actually face challenges. Additionally, issuing more US government bonds will increase public spending, which is beneficial to the economy and further delays interest rate cuts.
2. The White House’s Plan to Impose High Taxes on Bitcoin Mining Has Been Abandoned link
On May 30th, according to Fortune, with the United States President Biden and senior Republican members reaching a larger agreement to prevent a US debt default, the White House’s plan to impose high taxes on the cryptocurrency mining industry seems to have fallen through, much to the relief of Bitcoin miners. The tax plan, initially proposed by the White House in early May, called for a 10% tax on the electricity used for Bitcoin and other cryptocurrency mining starting in 2024, increasing to 30% by 2026. Republican Congressman Warren Davidson from Ohio stated on Sunday that the mining tax would not take effect.
3. Offshore RMB Stablecoin CNHC Issuance Team Goes Missing, Possibly Detained for Alleged Involvement in a Case link
On May 31st, according to PANEWS, the issuing entity of the CNHC stablecoin, which is pegged to offshore Chinese yuan at a 1:1 ratio, named CNHC Group (now renamed Trust Reserve), went missing since the afternoon of May 29th. Multiple sources revealed that the team has been taken away and detained by the police, and some employees’ families have received notifications. When PANews visited the company’s office located in a building in Pudong, Shanghai, it was found empty, with a seal on the door stating “Judicial Seizure, Do Not Destroy,” dated May 29, 2023. Insiders informed PANews that the company’s stablecoin business had not been widely promoted, but they had a separate cross-border payment business, which might be related to the investigation. Trust Reserve’s products include the offshore Chinese yuan stablecoin CNHC and the Hong Kong dollar stablecoin HKDC. In March, CNHC announced the completion of a $10 million Series A+ funding round led by KuCoin Ventures, with other investors including Circle and IDG Capital.
According to Deepchain, the team behind the offshore Chinese yuan stablecoin CNHC was taken away by the Baoshan Police in Shanghai, but not due to cryptocurrency-related business. The team has been involved in cross-border payment services, converting overseas US dollars into offshore Chinese yuan and then converting them into onshore Chinese yuan, with a total transaction volume of $15 billion. This incident may be related to judicial issues concerning the source of customer funds for their services.
4. USDT Total Circulating Market Cap Surpasses $83.2 Billion, Reaching an All-Time High link
On June 1st, Tether, the issuer of USDT, announced that the total circulating market capitalization of USDT has exceeded $83.2 billion, surpassing the previous record set in May 2022 and reaching a new all-time high.
According to CoinGecko, the statistics of stablecoin market share changes over the past year show that USDT has increased from 46.88% to 66.07%, USDC has decreased from 34.96% to 22.91%, BUSD has decreased from 11.66% to 4.13%, DAI has decreased from 4.14% to 3.66%, and TUSD has increased from 0.82% to 1.62%. The decline in USDC market share is mainly attributed to the fallout from the Silicon Valley Bank collapse incident. The decrease in BUSD market share is primarily due to the New York Department of Financial Services’ requirement for its issuer, Paxos, to halt the issuance of BUSD.
5. Binance’s Weekly Summary
a. Binance Initiates Workforce Reduction link
On May 31st, Wu Shuo exclusively learned from multiple sources, confirmed by insiders, that Binance has initiated layoffs, although the exact percentage is yet to be determined. Binance currently has approximately 8,000 employees, and the compensation plan will be formulated based on different circumstances in various locations. Market rumors suggest that the layoff rate in June is about 20%, but as of the time of writing, Binance has not responded to this matter. However, Wu Shuo has also learned that a few departments are still continuing their recruitment efforts. This round of layoffs may be related to the overall downturn in the market and the previous rapid expansion of Binance’s workforce.
Binance spokesperson’s response: We regularly review how we can best allocate talent to the appropriate teams. Sometimes, this inevitably results in the dismissal of underperforming or culturally mismatched employees. However, this is not a layoff but rather a reassessment of whether we have the right talent and expertise in key positions. Therefore, we will continue to seek to fill hundreds of vacant positions. We will examine certain product and business departments to ensure that our resources are appropriately allocated to reflect the evolving needs of users and regulatory agencies. Providing services to our users remains our top priority, and new user registrations remain strong.
b. Binance Prohibits Trading of Privacy Tokens for French Users to Comply with Local Regulatory Requirements link
On May 31st, according to Ninja News, Binance announced that starting from June 26th, they will prohibit users from trading privacy-focused tokens in France, Italy, Spain, and Poland to comply with local regulatory requirements. The banned tokens include DCR, DASH, ZEC, ZEN, PIVX, NAV, SCRT, XVG, FIRO, BEAM, XMR, and MOB. This decision comes in response to the revised anti-money laundering regulations by the European Union, which require banks and cryptocurrency providers to restrict transactions involving privacy tokens such as Zcash, Monero, and Dash. Similar regulations have also been implemented in Dubai and Japan.
c. CZ States Delisting and Removal of AUD Trading Pairs Due to Banking Partners Ceasing Cooperation link
On May 27th, CZ, the CEO of Binance, tweeted that the decision to shut down Binance’s operations in Australia and delist AUD trading pairs was made due to the closure of fiat channels. This means that banking partners have ceased their cooperation, making it impossible to deposit or withdraw Australian dollars, resulting in a lack of liquidity for the AUD trading pairs. Prior to this, Westpac, one of the four major banks in Australia, prohibited its customers from trading with Binance. Binance subsequently announced that it would remove and delist the relevant AUD trading pairs on June 1st, Beijing time.
d. Binance Plans to Launch Local Platform in Japan in the Summer of 2023 link
On May 27th, Binance announced that its current services would cease to be available for residents of Japan starting from November 30, 2023. As of May 26th, Japanese users will no longer be able to open new derivative accounts on the global platform. The migration link for Japanese users who have completed the Know Your Customer (KYC) verification will be open from August 1st to November 30th, 2023. Binance plans to launch a local platform in Japan in the summer of 2023. Initially, only a limited number of tokens will be available for spot trading on Binance Japan, and derivative services will not be provided. The exact list of tokens that will be available on the Japanese platform is yet to be confirmed.
e. Binance Explores Allowing Some Institutional Clients to Store Trading Collateral in Banks link
On May 30th, according to Bloomberg, Binance is reportedly discussing a proposal that would allow institutional clients to store their trading collateral in banks rather than on cryptocurrency platforms. This move aims to reduce counterparty risks. FlowBank, based in Switzerland, and Bank Frick, based in Liechtenstein, have been mentioned as potential intermediaries for this service. Following the collapse of FTX, Binance began offering a custody solution called Ceffu, which enables institutional clients to store their assets in segregated cold wallets. A company document from 2022 indicates that the company operating Ceffu is fully owned by Binance CEO CZ.
f. Binance Users in Australia No Longer Able to Deposit and Withdraw Australian Dollars via Bank Transfers link
On June 1st, Binance Australia announced that users in Australia will no longer be able to deposit or withdraw Australian dollars (AUD) through bank transfers. Binance has ceased all AUD trading pairs starting from June 1st, and users are advised to convert their AUD balances to USDT. Users can still buy and sell cryptocurrencies using credit cards or debit cards, and the Binance P2P marketplace will continue to operate as usual.
6. BKEX Exchange Suspends Withdrawals in Cooperation with Police Investigation link
On May 29th, BKEX Exchange announced that some user funds on the platform were involved in money laundering activities. BKEX is currently cooperating with the authorities for evidence collection and has temporarily suspended withdrawals to facilitate the investigation.
BKEX was founded by Ji Jiaming and was established in June 2018. The exchange received strategic investments from institutions such as Huang Tianwei, Nod Capital, Leede Capital, FBG, BICA, AlphaCoin Fund, Qiantan Capital, BlockArk, and Thomas Capital.
7. FTX’s Weekly Summary
a. FTX Creditors: US IRS Submits Substantial Claims, Asserts Substantive Claims Against Multiple Debtors link
On May 28th, according to a tweet by @FTX_Committee, the US Internal Revenue Service (IRS) submitted a significant number of claims on April 27th to 28th, asserting substantial claims against various debtors. The debtors and the committee are assessing the nature, validity, priority, and amount of these claims. Previously, the IRS filed claims against FTX and its affiliated entities amounting to nearly $44 billion. The largest claims include $20.4 billion and $7.9 billion against Alameda Research LLC.
b. Temasek Chairman Issues Statement on Internal Review of FTX Investment and Trading link
On May 29th, the Chairman of Temasek Holdings, a Singaporean sovereign wealth fund, issued a statement regarding an internal review of the FTX investment. The statement alleges that FTX engaged in fraudulent behavior by intentionally withholding information from investors, including Temasek. While the investment team found no wrongdoing in the process of making investment recommendations, both the investment team and senior management responsible for investment decisions bear collective responsibility and have had their compensation reduced as a result. Temasek previously announced a write-down of its $275 million investment in FTX to zero. Temasek also led a $200 million Series B funding round for another cryptocurrency company, Amber, which was previously on the brink of bankruptcy.
c. US Prosecutor: Criminal Charges Against Former FTX CEO Sam Bankman-Fried Should Not Be Dismissed link
On May 30th, U.S. prosecutors stated that criminal charges against former CEO of FTX, Sam Bankman-Fried (SBF), should not be dismissed. SBF’s lawyers attempted to dismiss the charges based on technical or procedural issues, but the prosecution argued that the charges were valid, including extradition issues, foreign corrupt practices, and campaign finance violations. SBF allegedly provided $40 million to unnamed Chinese officials in an attempt to persuade them to unfreeze accounts. SBF argued that the charges of commodity fraud were invalid as they involved extraterritorial enforcement, but U.S. prosecutors asserted that the charges should stand because FTX’s cryptocurrency trading had an impact within the United States. SBF is set to face trial in October in New York.
8. Multichain’s Weekly Summary
a. Stargate Releases Proposal to Disable Fantom Pool and Cross-Chain Paths link
On May 27th, due to concerns about the stability of the primary USDC asset, anyUSDC, on Multichain and Fantom, the LayerZero cross-chain bridge protocol Stargate issued a proposal to disable the Fantom Pool and cross-chain paths. The proposal includes setting the release of STG in the Fantom Pool to 0, disconnecting the Fantom Pool from other liquidity pools, removing and unlocking anyUSDC POL via Multichain, depositing POL into the Ethereum USDC Pool, and whitelisting existing LPs. In the proportion of votes cast, 93.98% were in favor, and the proposal voting ended on May 30th, with the proposal being approved.
b. Multichain Unable to Reach CEO, Suspends Cross-Chain Services for Affected Chains link
On June 1st, Multichain tweeted that the Multichain protocol has encountered multiple issues in the past two days due to unforeseen circumstances. The team has made every effort to maintain the protocol’s operation, but they are currently unable to contact CEO Zhaojun and obtain the necessary server access to perform maintenance. This afternoon, there were issues with the scanning node network of Router5, affecting the normal cross-chain services of certain chains. Moreover, this problem exceeds the team’s current authority and capability. To protect the interests of users, they have decided to temporarily suspend the corresponding cross-chain services on the affected chains on the UI. Last week, the same issue occurred on Router2. They appreciate the understanding of the users and request their partners to refrain from directly calling the Multichain protocol smart contracts for cross-chain operations on the affected chains. The affected chains are: Kekchain, PublicMint, Dyno Chain, Red Light Chain, Dexit, Ekta, HPB, ONUS, Omax, Findora, and Planq.
c. Fantom Foundation Affirms Multichain Bridge on Fantom as Fully Operational and Secure link
On June 1st, the Fantom Foundation published a statement stating that the Multichain bridge on Fantom is fully operational and secure, and there have been no changes. Fantom was not listed as one of the affected chains in the Multichain tweet. However, the foundation will continue to research the issuance of native tokens and maintain communication with multiple cross-chain providers.
9. Nansen, Data Analytics Product, Announces 30% Workforce Reduction link
On May 31st, it was reported that data analytics product Nansen has announced a 30% reduction in workforce. In 2021, Nansen announced raising $75 million in funding with leading investors a16z and Tiger.
Founder of MaskNetwork, Suji, suggested reducing costs and selling annual NFT passes for access. This strategy could generate additional revenue during bear markets, and it was also recommended to integrate decentralized digital identities (DID).
10. Gate Addresses Community Rumors, Affirms Normal Operations link
On June 1st, Gate issued an announcement addressing community rumors and stated that their operations are running smoothly with no issues related to operations or withdrawals. Earlier, there were rumors in the community about Gate employees being involved in a project that led to an investigation.
According to Defillama data, Gate has experienced a net outflow of $150 million in the past 24 hours, accounting for approximately 13% of their net reserve assets of $1.26 billion (excluding the platform token GT issued by Gate).
BNB Chain NFT marketplace Tabi has completed a $10 million angel round of investment, with participation from Animoca Brands, Binance Labs, Draper Dragon, Hashkey Capital, and others link
Zero-knowledge identity oracle provider zkMe has successfully raised $2 million in seed funding from well-known venture capital firms including Circle Venture, Spartan Group, CMS Holdings, Fenbushi Capital, and NGC Ventures link
Web3 startup Transak has raised a Series A funding round led by CE Innovation Capital, totaling $20 million link
Blockchain gaming team Illuvium has raised an additional $10 million from Framework Ventures to accelerate its development work link
Cryptocurrency wallet company Magic has announced a $52 million funding round led by PayPal Ventures, with a valuation just under $500 million link
Cryptocurrency infrastructure company Anoma Foundation raised $25 million in its third funding round, led by CMCC Global link
Binance Labs announced co-leading a $6.6 million seed round of funding for Fusionist in May 2022, alongside Web2 gaming giant FunPlus link
Private market firm StepStone Group’s venture capital division, StepStone VC, raised a total of $96.54 million for two blockchain-focused private equity funds link
Learn more, check out crypto-fundraising.info.