Block 1 : The Essential News

Happy Birthday Bitcoin!

The market leader in cryptocurrencies celebrated its 14th birthday this week. Yes, it's been that long since the first block of the Bitcoin blockchain, called Genesis, was mined on January 3, 2009. Gravitating around $0.001 when it took its first steps, Satoshi Nakamoto's work has since grown up nicely with all its speculation, monetary ambition, decentralized spirit and also instilled the direction of the 20,000 cryptocurrencies in existence today.

Coinbase has reached a $100 million settlement with regulators

The largest U.S. cryptocurrency platform has been forced to pay $100 million with the New York Department of Financial Services in New York for negligence in anti-money laundering and know-your-customer standards within the company. Specifically, Coinbase will pay a $50 million fine and invest an additional $50 million in strengthening internal compliance programs.

Binance leads alone in the Cryptosphere

While the past year has been particularly tough for all players in the cryptocurrency ecosystem, Binance, the world's largest cryptocurrency exchange platform has continued to establish its leadership position. Binance boasts 77.8% of the spot cryptocurrency trading volume compared to only 9.8% for Coinbase, the main competitor. Binance also captured 92% of bitcoin spot trading in the year 2022.

Gemini's attack on Digital Currency Group to recover $900 Million

To give you some context, Digital Currency Group is a very large entity including media company CoinDesk, asset management company Grayscale Investments, and the Genesis platform. In the wake of the FTX collapse, Genesis announced it was halting customer withdrawals as $175 million evaporated in the Sam Bankman-Fried case. But the company also held assets of Gemini clients on one of its services offering annual returns, Gemini Earn. Those assets, too, were frozen by Genesis. In an open letter on Twitter, Gemini CEO Cameron Winklevoss claims that DCG (Digital Currency Group, which owns Genesis) CEO Barry Silbert is allegedly shirking his responsibilities by refusing to pay $900 million to reimburse Gemini customers. On top of that, the Winklevoss CEO estimates that he owes Genesis $1.7 billion in debt, which would pay Gemini the $900 million. The two executives are expected to meet on January 8, 2023 to get this matter straightened out.

BONK, the new crypto-currency that jumped 4400%

This is yet another copy of DOGE and SHIB. This cryptocurrency claims on its official website, "BONK is the first dog-like cryptocurrency on Solana for the people and by the people." It generated several tens of millions of dollars of trading volume in a few hours which represented 40% of the total volume traded on the Solana blockchain during a short period of time. This allowed it to multiply its price by 10 in the space of a week. Be careful though, the concentration of tokens is a must since only 20 addresses, out of more than 50,000 holding BONKs, hold more than 50% of the total supply in circulation. Since the BONK price peak on January 5, the price has already dropped by 70%. This crypto-meme is not based on anything concrete, the team remains unknown and has no fundamentals. The interest is purely speculative. This event will have at least allowed the Solana blockchain to regain some interest, but not for the right cause...

Block 2: The Crypto Analysis of the Week

This week again, we'll focus on Sam Bankman-Fried. Yes again, but this may be the last Cryptic Analysis on the former FTX boss before October 2, 2023.

 

Sam Bankman-Fried appeared in Manhattan court on January 3 to plead not guilty to several alleged offenses, including wire fraud and conspiracy.

Although some of his former colleagues at the now-defunct FTX and Alameda Research have already pleaded guilty to their own fraud charges, the fact that Sam Bankman-Fried continued to defend his own version of events - that he knew nothing about what was happening on the exchange in which he had a 90% stake and that he had made a mistake but had not knowingly committed misconduct - came as little surprise to court observers. They simply raised their eyebrows.

Indeed, his defense has been well publicized on his Twitter profile since FTX filed for bankruptcy in November, along with a whirlwind media tour during which Bankman-Fried gave numerous in-person and virtual interviews. When we learned late last week that suspicious moves were appearing in Alameda Research's portfolios, he again took to social media to defend himself: "None of them are me. I don't and couldn't move any of these funds; I don't have access to them anymore." We are still waiting for the light to be shed on these transactions.

Particularly in the crypto sphere, the use of tweets as a way to defend oneself- or to tout the merits of a new cryptocurrency - seems to be the preferred option for the bosses of these crypto-banks. This was the case for Binance CEO Changpeng Zhao, who defended himself on Twitter when the financial strength of his platform was questioned. Or, as we saw in Block 1, it was the case related to the open letter from Gemini's CEO to pressure DCG's CEO. All of this is obviously wrapped up in a lot of media hype: The network becoming the 3.0 arena of the cryptosphere.

Returning to FTX, the prosecution of Sam Bankman-Fried has shown that authorities are "increasingly comfortable" with classifying cryptocurrency-related offenses under existing categories of securities or commodities fraud. John J. Ray, the new CEO of FTX, said there was nothing special or new about SBF's actions, but that it was just "good old-fashioned embezzlement."

Will Bankman-Fried's trial - which is shaping up to be one of the most high-profile white-collar fraud trials in recent history - set by the Judge in charge of the case, Lewis Kaplan, for October 2, 2023 be a game-changer for the crypto? In the meantime, he will be free but will be under house arrest at Mom and Dad's house in Palo Alto, California with an electronic bracelet, thanks to the largest bail ever requested in the United States: $250 million.

He will not be allowed to access the accounts linked to FTX and Alameda Research or he will lose his parole. But it's hard to imagine that he couldn't find a subterfuge, or an innocent hand, to tamper with some accounts or hidden funds in the next nine months...

 

Block 3: Tops & Flops

The evolution of the Top 20 cryptocurrencies in terms of capitalization over one week.
(Click to enlarge)

Heatmap Crypto
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Block 4: Things to read this week:

Sam Bankman-Fried's problems at Alameda started long before the cryptocurrency crash (Wall Street Journal)

Are Meta's Horizon workrooms up to the task? Customers say yes... and no (Wired)

Microsoft and OpenAI are working on a ChatGPT-powered Bing to challenge Google (The Information)