Coin360 Daily Dispatch | Crypto Market Updates & Highlights | May 15, 2024

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Crypto Market Update

Table of Contents

CPI and Market Reactions

• CPI Increase Affects Markets

Regulatory Updates

• Ethereum ETF Uncertainty
• FTX Extends Creditor Claims Deadline

Institutional Investments

• Institutional Investments Boost Bitcoin ETFs

Crypto Hacks and Security

• Crypto Hacks Expose Security Flaws

Meme Coins and Market Movements

• Floki Inu's Surge and Meme Coin Market

Blockchain and Investment Developments

• Neoclassic Capital Connects Crypto Projects
• Circle's Planned Relocation and IPO
• Bitcoin Staking Solution
• Robinhood Crypto's Solana Staking
• Degen Chain Resumes Operations
• Worldcoin's New SMPC System

Exchange and Regulatory Challenges

• Huobi Withdraws Hong Kong License
• Developer Misuses Funds
• Explosion of New Tokens
• IOTA's Decentralization Milestone
• Symbiotic Restaking Project

Ecosystem Funds and Investments

• Bitget Wallet Launches Ecosystem Fund
• Shogun Raises $6.9 Million
• Humanity Protocol Secures Funding

Regional Regulatory Actions

• KuCoin Halts Naira Trading
• Brothers Arrested for Ethereum Attack
• Sichuan Smuggling Operation Uncovered

Luxury and NFT Innovations

• Château d’Esclans' NFT Wine Launch

CPI Increase Affects Markets

On May 15, 2024, data showed that the U.S. Consumer Price Index (CPI) for April increased by 0.3% month-over-month, slightly below the expected 0.4%. The annual increase was 3.4%. The core CPI increased by 3.6% year-over-year, a decrease from the previous month, which fueled market expectations for possible interest rate cuts by the Federal Reserve. Bitcoin's price responded positively to this data, rising from $63,500 to $65,104, an increase of over 6.2%. Additionally, the lower-than-expected CPI data also boosted the stock and precious metals markets. 

Ethereum ETF Uncertainty

The U.S. Securities and Exchange Commission (SEC) is reevaluating Ethereum's classification, potentially affecting its approval as a spot ETF. A key filing in March 2023 highlighted doubts about Ethereum's status as a commodity, which could undermine its ETF applications, including those from BlackRock and VanEck. The SEC's decision, expected by May 23, 2023, is influenced by its ongoing consideration of Ethereum as a security, not just a commodity. 

This stance was evident in multiple filings and has led major analysts to speculate a low probability of approval. ARK and 21Shares have also amended their spot Ethereum ETF application, possibly in response to SEC feedback, reflecting the precarious status of Ethereum ETFs under current SEC scrutiny.

FTX Extends Creditor Claims Deadline

FTX has extended the deadline for creditor claims submission, promising refunds to creditors and customers in cash within 60 days post-court approval. The initial deadline, before May 15, 2024, was extended by 10 to 12 weeks. Additionally, a significant claim against FTX EU was transferred to FTXcreditor on May 15, 2023, which could accelerate further proceedings but also poses risks for smaller creditors. FTXcreditor now consolidates all claims under a single entity, simplifying administrative processes but potentially disadvantaging smaller creditors in terms of settlement terms.

Institutional Investments Boost Bitcoin ETFs

As of May 2024, substantial institutional and corporate investments have rejuvenated the Bitcoin ETF market. Pine Ridge Advisors and the State of Wisconsin Investment Board made notable allocations, $205 million and $162 million respectively, across prominent funds such as BlackRock's IBIT and Fidelity's FBTC. Inflows into crypto investment products hit $130 million in one week, with institutional investors increasing their stakes. 

Amidst fluctuating inflows and outflows, Bitcoin spot ETFs observed a net inflow of $100.5 million on May 14, despite Grayscale's GBTC experiencing significant outflows. Notably, ARKB's inflow dominance contributed to this surge. Additionally, the hiring of Salim Ramji as Vanguard's CEO, known for his Bitcoin ETF advocacy, hints at potential shifts in crypto fund management by major asset managers.

Crypto Hacks Expose Security Flaws

On May 14, 2024, Sonne Finance suffered a $20 million crypto hack, losing cryptocurrencies including WETH and USDC, with no negotiations with the hacker. The next day, Alex Lab disclosed a $4.3 million theft, compromised via a private key, offering a 10% bounty for fund return. Concurrently, BlockTower Capital encountered an unspecified loss due to a hack with ongoing investigations; details of the stolen amounts remain undisclosed. The losses signify significant vulnerabilities in crypto security practices across various platforms.

Floki Inu's Surge and Meme Coin Market

Floki Inu's recent 15% surge is fueled by the apparent return of Roaring Kitty, leading to a meme coin market uptick. Roaring Kitty's influence spiked with cryptic videos after a three-year hiatus, boosting GameStop-themed meme coins by 1,900% in the first 24 hours since his return. 

Meanwhile, Floki is set to burn 15 billion tokens, boosting its month-on-month gain to 45%, mirroring Pepe's bullish run. However, on May 15, 2024, GameStop and AMC's stocks plunged by 34% and 25% respectively, despite Roaring Kitty's active meme posting. GameStop memecoins rose by 2,727% over two days due to traders' boredom and speculation, highlighting short-lived market confidence.

Neoclassic Capital Connects Crypto Projects

Neoclassic Capital, founded by ex-Goldman Sachs professionals, bridges crypto projects and investors globally, focusing on SoFi, GameFi, lending, derivatives, and tokenization. It secures investments from industry giants and drives blockchain growth. Co-founders Steve Lee and Michael Bucella connect East and West markets, investing in pioneering projects for long-term success.  

Circle's Planned Relocation and IPO

Stablecoin issuer Circle plans to relocate to the US from Ireland, potentially aiming for an IPO. The move could subject the company to heavier tax burdens and less favorable regulatory conditions. The firm previously initiated the IPO process, filing for equity securities under a confidential status. Meanwhile, its USDC stablecoin experiences notable growth.  

Bitcoin Staking Solution

pSTAKE Finance partners with Babylon for a Bitcoin liquid staking solution, expanding beyond Cosmos. The collaborative effort aims to simplify staking processes for Bitcoin, boosting yield while maintaining asset liquidity. This innovation is set to enhance Bitcoin's role in DeFi, democratizing yield opportunities historically tied to Ethereum and offering potential via BTC Layer-2 technology.  

Robinhood Crypto's Solana Staking

Robinhood Crypto introduces Solana staking for European users, enabling them to earn rewards and withdraw anytime. New customers will receive a 10% bonus on net buys over their initial 30 days on the app, paid in USDC stablecoins. The trading company also aims to roll out localized versions of the app in Italy, Poland, and Lithuania to cater to local users.

Degen Chain Resumes Operations

Degen Chain, a Layer 3 network, resumed operations after a 50-hour block production failure. Third-party infrastructure provider Conduit reported a configuration change triggered the outage. The DEGEN token price dropped 22% since May 12. After a surge, the network’s throughput crashed 73%. The ecosystem hosts DegenSwap, a decentralized exchange with a TVL of $1.26 million.  

Worldcoin's New SMPC System

The Worldcoin Foundation has open-sourced its Secure Multi-Party Computation (SMPC) system for enhanced biometric data security. The new system allows the deletion and encryption of iris codes, with high resilience against quantum computing. Global biometrics market growth is projected, while data breaches alarmingly increased by 20% in recent years.  

Huobi Withdraws Hong Kong License

HBGL Hong Kong Limited behind Huobi Hong Kong withdrew its license application a second time in Hong Kong. No comments from the market regulator or Huobi on the withdrawal. The Securities and Futures Commission website noted the retraction. Crypto exchanges like OKX, Crypto.com, and Bullish await SFC license reviews. Justin Sun projected Huobi Hong Kong would secure

Developer Misuses Funds

Hoak, a Cypher Protocol developer on Solana, admitted to misappropriating $300K of user funds for gambling. His actions, involving 36 transactions, were unveiled after issues with fund withdrawals. Cypher, previously hacked for $1M, faced another setback. Hoak attributed the thefts to a severe gambling problem amid concerns over increasing gambling issues in crypto.

Explosion of New Tokens

According to a Dune Analytics dashboard, the cryptocurrency market has seen over 1 million new tokens since April, with Ethereum hosting 370,000 and Solana with an impressive 640,000 new tokens. A significant portion were memecoins. Critics raise concerns about scams, rug pulls, sniper bots, and the lack of transparency and accountability within the memecoin space. Memecoin presales accrued a total of $150 million.  

IOTA's Decentralization Milestone

The IOTA Foundation launched the IOTA 2.0 Public Testnet, signifying a shift to a fully decentralized network. The upgrade eliminates the centralized Coordinator, introduces a congestion control mechanism, and replaces proof of work with proof of stake. This change reduces environmental impact and enhances network security, making IOTA more attractive for green technology and various industries.

Symbiotic Restaking Project

The co-founders of Lido, backed by Paradigm, quietly fund Symbiotic, a restaking project rivalling EigenLayer. Symbiotic, differentiating from EigenLayer, allows users to stake Ethereum assets and thousands of other ERC-20 tokens, compatible with Lido's staked ETH (stETH). Lido faces market share loss as assets shift to EigenLayer. Symbiotic's launch is anticipated this year.  

Bitget Wallet Launches Ecosystem Fund

Bitget Wallet has launched a $10 million BWB Ecosystem Fund, denominated in its native token, BWB. The fund will support the development of the Bitget OnChain Layer, investing in Web3 trading services, price aggregators, derivatives market, trading bots, and an interchain swap service. The upcoming BWB token will power the ecosystem and governance.  

Shogun Raises $6.9 Million

Shogun developer Intensity Labs raised $6.9 million in a seed round, valuing Shogun at $69 million. The round was co-led by Polychain Capital and DAO5, supported by Angel investors, and structured as a SAFE with token warrants. Shogun, a DeFi protocol aiming to maximize trader extractable value, plans to launch in phases and introduce its token, GUN. It will offer on-chain routing tools and interfaces for various ecosystems.  

Humanity Protocol Secures Funding

Humanity Protocol, utilizing palm scans for identity verification, secured $30 million in a seed round, valuing it at $1 billion, announced on May 15, 2024. Led by Kingsway Capital, with contributions from Animoca Brands and Blockchain.com, the funding aims for rapid hiring and development. The protocol features a Proof of Humanity consensus mechanism, enhancing privacy and data self-ownership. Humanity Protocol plans a public testnet in the second half of the year, after achieving significant interest with over half a million waitlist sign-ups shortly after its introduction.

KuCoin Halts Naira Trading

KuCoin has suspended naira-based peer-to-peer trading due to Nigerian regulatory pressure. Authorities intensified scrutiny of crypto trading, leading to bank account closures. SEC blamed crypto traders for the naira's depreciation. Binance accused a Nigerian official of demanding a $150 million bribe. Binance faced a $10 billion fine and regulatory charges globally. (Words: 50)  

Brothers Arrested for Ethereum Attack

The US Department of Justice arrested brothers Anton and James Pepaire-Bueno for the alleged Ethereum attack, swiping $25 million in cryptocurrency within 12 seconds. They exploited MEV to manipulate pending transactions, committing wire fraud, money laundering conspiracies. The IRS-CI's Thomas Fattorusso highlighted their unprecedented Ethereum blockchain manipulation for personal gain.  

Sichuan Smuggling Operation Uncovered

Police in Sichuan, China, dismantled a smuggling operation worth $1.9B involving USDT. The network used stablecoin for illegal foreign exchange, causing financial fraud and tax fraud. 193 suspects were arrested, with significant funds confiscated. The second case involved tax fraud, with criminals obtaining over 137 million yuan in fraudulent tax refunds through counterfeit invoices.