WuBlockchain Weekly: Federal Reserve Announces Pause in Interest Rate Hikes, Judge Rejects Freezing Binance Assets and Top10 News

Jun 16, 2023

1. US Macro Economic Information

a. Federal Reserve Announces Pause in Interest Rate Hikes link

On June 15th, the Federal Reserve announced a pause in interest rate hikes for the month of June, marking the first time they have stopped raising rates after 10 consecutive increases since March 2022. The Federal Reserve’s FOMC statement indicated that keeping rates unchanged would allow for further assessment of incoming data. If the economy and inflation do not cool off further, they are inclined to consider raising rates next month. According to WSJ, it is anticipated that there will be two more rate hikes later this year.

b. US May Unadjusted CPI Records 4% YoY, Reaching Lowest Level Since March 2021 link

In May, the year-on-year unadjusted Consumer Price Index (CPI) in the United States was 4%, slightly lower than the expected 4.1% and down from the previous value of 4.9%. The year-on-year unadjusted core CPI, which excludes volatile food and energy prices, was 5.3%, in line with expectations and slightly lower than the previous value of 5.5%. The May CPI data showed a significant decrease compared to the previous month, marking the 11th consecutive decline and reaching a new low since March 2021.

2. China’s Central Bank Cuts Benchmark Interest Rate by 10 Basis Points to 2.65% link

On June 15th, according to Wall Street Journal, the People’s Bank of China (PBOC) lowered the Medium-term Lending Facility (MLF) rate by 10 basis points to 2.65%. This marks the tenth consecutive month of rate cuts for MLF, with the previous cut occurring in August last year when the MLF rate was reduced by 10 basis points. Prior to this, on June 13th, the PBOC had already lowered the bid rate for open market operations (OMO) repurchase agreements by 10 basis points to 1.9%. Additionally, the PBOC reduced the overnight rate for the standing lending facility by 10 basis points to 2.75% and the 7-day rate by 10 basis points to 2.9%.

3. Binance’s Weekly Summary

a. Binance Hearing: Judge Denies Asset Freeze, SEC to Reach Agreement for Discussion on Securities Definition link link link

On June 14th, in the early morning Beijing time, a federal judge overseeing the Binance and Binance US cases rejected the temporary restraining order that sought to freeze the assets of the U.S. trading platforms. Judge Amy Berman Jackson of the District Court for the District of Columbia stated that there was “simply no need” for the restraining order. The judge also ordered Binance US to provide a list of its business expenses to the court and instructed both parties to continue negotiations.

b. Binance.US Conducts Round of Layoffs, Approximately 50 Employees Dismissed link

On June 16th, according to Reuters, Binance.US has undergone a round of layoffs, with approximately 50 employees being dismissed, including staff from the legal, compliance, and risk departments. This comes after the self-regulatory agency accused Binance.US of violating securities laws and attempting to freeze its assets. The spokesperson for Binance.US did not respond to emails and calls seeking comments.

c. Binance Considering Appointing Vice President Li Zhongxun as Chief Representative of GoPax link

On June 13th, according to Korean media Decenter, Binance is considering appointing its Vice President, Lee Jung-hoon (transliteration), as the Chief Representative of GoPax to complete the acquisition. Earlier this year in February, GoPax appointed Binance’s President of the Asia-Pacific region, Hong Feng, as its new chairman, strengthening Binance’s control. Concerns about the success of this acquisition have been heightened by the recent lawsuit filed by the SEC against Binance.

d. Binance Applies to Withdraw Cryptocurrency Service Provider Registration Application Submitted in Cyprus link

On June 14th, Binance’s subsidiary in Cyprus, Binance Cyprus Limited, is undergoing a review of its deregistration application. Binance obtained registration as a Cryptocurrency Asset Service Provider (CASP) in Cyprus in October of last year, allowing it to provide spot trading, custody, pledging, and card services in Cyprus.

e. Binance Announces Listing of Maverick Protocol (MAV) as the 34th Project on Launchpool link

On June 13th, Binance announced the launch of the 34th project, Maverick Protocol (MAV), on Launchpool. Users will have the opportunity to participate in mining MAV tokens by staking BNB and TUSD in separate pools for a duration of 25 days. The mining activity is scheduled to begin on June 14th, 2023, at 08:00 (UTC +8). It is worth noting that the official announcement removed the information regarding the previous day’s $9 million funding led by Founders Fund, with participation from Pantera Capital, Binance Labs, Coinbase Ventures, and Apollo Crypto.

f. Binance Announces Withdrawal from Dutch Market link

On June 16th, Binance announced its withdrawal from the Dutch market and stated that it would no longer accept new users residing in the Netherlands, effective immediately. Starting from July 17th, existing Dutch resident users will only be able to withdraw their assets from Binance and will not be able to engage in trading or deposits. Binance will continue its efforts to fully comply with the new regulations on crypto assets set by the European Union, known as MiCAR. The Dutch Central Bank (DNB) previously imposed an administrative fine of 3,325,000 euros on Binance in April 2022 for providing crypto services in the Netherlands without the required registration with the DNB as mandated by law.

g. Binance Under Investigation by French Prosecutors for Alleged Illegal Provision of Digital Asset Services and Money Laundering Activities link

On June 16th, the Paris Prosecutor’s Office confirmed that Binance is under investigation by local authorities for allegedly providing “illegal” digital asset services and engaging in “serious money laundering activities”. The French prosecutors accused Binance of “illegally exercising the functions of a digital asset service provider” and engaging in money laundering activities through operations involving investments, concealment, and conversion, carried out by criminals who profit from it. They stated that a thorough analysis of the documents and computer elements collected during the searches is now necessary. Previously, Paris and Dubai were designated as dual headquarters by Binance.

In response, Binance stated that in France, on-site visits by regulatory authorities and inspectors are part of the regulatory obligations that all financial institutions must comply with. Last week, Binance received on-site visits from the relevant authorities, fully cooperated, and fulfilled its obligations as required. Binance continues to closely collaborate with regulatory bodies and law enforcement agencies to ensure ongoing compliance. While ensuring the protection of user information and only providing it to government officials upon receiving proper documentation, Binance refrains from making specific comments on law enforcement or regulatory investigations.

4. BlackRock, the World’s Largest Asset Management Company, Submits Application for Bitcoin Spot ETF to the SEC link

On June 15th, according to CoinDesk, BlackRock, the world’s largest asset management company, is set to file an application for a Bitcoin ETF. Insiders reveal that BlackRock will utilize Coinbase Custody for pricing the ETF and obtaining spot market data from cryptocurrency exchanges. BlackRock has been collaborating with Coinbase since mid-2022 to enable institutional investors to directly access cryptocurrencies.

As per the SEC filing submitted by BlackRock’s subsidiary iShares, the application is for a physically-backed Bitcoin ETF called iShares Bitcoin Trust. The filing states that Coinbase will act as the custodian holding the underlying Bitcoin for the trust, while Nasdaq will oversee the provision of pricing data required for the spot market.

Anthony Pompliano, co-founder of Morgan Creek Digital, commented that the iShares Bitcoin Trust applied for by BlackRock is a redeemable trust, not an ETF. While ETFs and trusts are similar, they differ in terms of technicalities, particularly in regulatory approvals. However, for investors, the end result is similar. Pompliano also noted that if approved, the issuance of the trust could potentially force Grayscale’s GBTC to introduce daily redemptions and reduce fees to compete with it, leading many Wall Street firms to quickly follow suit and launch competing products.

5. USDT Experiences Slight Decoupling Amid FUD, Tether’s Stablecoin Reserves Previously Supported by Chinese Securities

a. FUD Resurfaces as USDT Experiences Slight Decoupling link

On June 15th, the price of the USDC/USDT trading pair on Binance continued to rise, reaching $1.0042, which is the highest point since June 13th, 2022. In reality, it indicates a 0.3% decline in USDT. The allocation within Curve’s 3pool shows that USDT accounts for 73.79%, DAI for 13.05%, and USDC for 13.16%, indicating an imbalance. In Aave V2, the borrowing rates for USDT have surged, with deposit rates increasing by over 20% and borrowing rates rising by over 30%. Some large holders have borrowed USDT on Aave and sold it on decentralized exchanges like Curve.

The CTO of Tether expressed that the current market is under tension, making it easy for attackers to exploit this prevailing sentiment. Tether is prepared to redeem any amount to address the situation.

b. Bloomberg: Tether Holdings Ltd.’s Stablecoin Reserves Received Support from Chinese Securities link

Documents released by the New York prosecutor’s office reveal that Tether Holdings Ltd. had listed securities issued by Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China as part of its USDT stablecoin reserves, contradicting their denial of such claims in July of last year. Additionally, Tether holds securities issued by Deutsche Bank, Barclays Bank, and ArcelorMittal SA, among other companies. An investigation by Bloomberg in October 2021 found evidence suggesting that Tether’s reserves actually include billions of dollars in short-term loans provided to Chinese companies and significant loans extended to the cryptocurrency platform Celsius Network.

6. South Korean Crypto Lending Firm Delio Announces Withdrawal Suspension in Public Statement link

On June 14th, Delio, the largest cryptocurrency lending company in South Korea, announced the suspension of withdrawals starting from 18:30. Delio stated that this decision was made due to increased market volatility following the suspension of deposits and withdrawals by Haru Invest. Following this announcement, the cryptocurrency exchange Upbit announced restrictions on Delio’s withdrawals.

Previously, on June 13th, the cryptocurrency asset management platform Haru Invest released a statement stating that a service partner had encountered certain issues. They are currently conducting further investigations and seeking emergency measures to rectify the situation. In order to protect the assets of their custodial users, all deposit and withdrawal requests have been suspended from June 13th, 8:40 (UTC+8) until further notice.

7. BNBChain Core Team to Take Over BNB Positions on Venus Protocol Upon Reaching Liquidation Threshold link

Recently, due to the decline in BNB price, the BNB position on Venus Protocol has been continuously close to the liquidation threshold (approximately $220). Venus Protocol announced via a tweet that the community has granted specific whitelist permissions to the BNBChain core team, as per a governance proposal submitted by the community through BNBChain in November 2022. This measure is aimed at safeguarding the misappropriated assets and preventing further impact and sell-offs of the liquidated BNB positions. Initially, the whitelisted wallet had $30 million worth of USDT support and received approval from the Venus governance mechanism to prevent undercollateralization on Venus and provide additional support.

Additionally, according to monitoring by 0xScope on June 12th, the liquidator address 0x5630 received a transfer of 30 million USDT from Binance. This amount will be used to repay the debt of the BNB bridge attacker on Venus when the BNB price falls below $220. The address currently holds 30 million USDT and 30 million BUSD.

8. CFTC Wins Ooki DAO Case, Setting Precedent for Legal Liability of DAOs link

On June 10th, a federal judge ruled in favor of the Commodity Futures Trading Commission (CFTC) in its enforcement action against Ooki DAO. This precedent establishes that DAOs can be held legally responsible for their actions. The court determined that Ooki DAO was liable for operating an illegal trading platform and acting as an unregistered futures commission merchant, thus imposing civil liability on the DAO. Due to the default judgment, their trading platform has been ordered to cease operations in the United States and is prohibited from doing business with any entities registered with the CFTC.

9. Grayscale Files Request to Withdraw FIL Trust Product Application with SEC link

On June 10th, Grayscale filed a request with the U.S. Securities and Exchange Commission (SEC) to withdraw its application for the launch of a Filecoin (FIL) trust product. In its withdrawal request, Grayscale stated that it still believes FIL is not a security. Previously, the SEC sent a letter to Grayscale stating that FIL “meets the definition of a security under federal securities laws” and, therefore, the application must be withdrawn.

10. FTX Debtor’s Customer Claim Website Goes Live link

On June 15th, according to @AFTXcreditor, the customer claims website for FTX debtors went live. It will be launched around July 3, 2023, following the signing of a court order related to the deadline agreement with customers. As shown in the screenshot published by @AFTXcreditor, the website follows the process as follows: 1) Log in to the FTX account again, 2) Verify email, 3) KYC authentication, 4) Browse FTX wallet, 5) Submit proof of claim, and 6) Prepare for subsequent steps.

Fundraising

ResearchHub, the crypto research platform founded by coinbase CEO, raises $5M in series A funding link
Blockchain-based AI computing protocol Gensyn closes $43M series A round led by a16z link
DeFi protocol Maverick completes $9 million funding round led by Founders Fund, with participation from Pantera Capital, Binance Labs, Coinbase Ventures and Apollo Crypto link
Decentralized identity startup Intuition raises $4 million in seed funding link

Learn more, check out crypto-fundraising.info.

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