Coin360 Daily Dispatch | Crypto Market Updates & Highlights | September 21, 2023

Crypto Market Update

Written by Van

Table of Contents

Regulatory and Banking Updates

• Mt. Gox Extends Creditor Repayment Deadline
• CBDC Anti-Surveillance Act Advances in Congress
• US Federal Reserve Holds Interest Rates Steady
• Concerns Rise Over Huobi's stUSDT Project

Country-Specific Developments

• Hong Kong Charges JPEX for Operating Without License
• ASIC Files Lawsuit Against Kraken's Bit Trade
• Alchemy Pay Secures Arkansas Money Transmitter License

Crypto Exchanges and Platforms

• Tether Dives into Artificial Intelligence Sector
• MakerDAO Initiates Spark Lend on Gnosis Chain
• Rising Bitcoin Shorts Signal Bearish Market
• Linear Finance Suffers Liquidity Drain Attack
• Ethereum Large Holders Decline to 5-Year Low
• eToro Receives EU Crypto Asset Service Provider Registration
• Binance Wallet Spends $1M in ETH Gas Fees
• Alameda Research's Decimal Error Causes Bitcoin Price Drop
• Balancer Recovers Domain After DNS Attack
• Optimism Raises $157M in Private Token Sale
• IMX Token Price Surges on South Korean Exchanges
• Polygon Labs Proposes Celo Layer 2 Transition Plan
• Tether Continues Offering USDT Loans Despite Announcements

Crypto Scams and Security

• Crypto Investor Loses Millions in USDT Scam

Innovations and Features

• Elon Musk's Twitter to Introduce Payment Feature
• PSG Partners with Crypto.com for AI-Generated NFTs
• Proof of Play Raises $33M for Web3 Gaming

Mt. Gox Extends Creditor Repayment Deadline

Mt. Gox, the defunct bitcoin exchange, has extended the deadline for creditor repayments by 12 months, now allowing payouts to be made until October 31, 2024. Some creditors who have already provided their repayment information may still receive payments by the end of this year. 

The decision to adjust the repayment schedule was made to allow sufficient time for verification and coordination with banks and crypto exchanges involved in the repayments.

CBDC Anti-Surveillance Act Advances in Congress

The CBDC Anti-Surveillance Act has advanced in the US Congress, with 60 congressional members supporting the bill. It aims to limit the influence of unelected Washington bureaucrats in issuing a central bank digital currency (CBDC). 

The bill, designed to prevent the Federal Reserve from distributing CBDCs to individuals and using them for monetary policy, has cleared the House Financial Services Committee and is now preparing for a congressional vote. Representative Emmer emphasized that digital assets have become an important issue in US politics, affecting both state and federal levels.  

US Federal Reserve Holds Interest Rates Steady

The US Federal Reserve has kept its benchmark interest rate steady at 5.25% to 5.50% and projected higher interest rates for next year at around 5.1% compared to previous expectations of 4.3%. Fed Chair Jerome Powell said that more rate hikes are likely if the economy remains stronger than expected. Bitcoin's price initially remained flat but later dropped by 1% following the announcement. 

Bitcoin short-term holders are facing "a degree of panic" as 97.5% of them are experiencing unrealized losses, according to Glassnode. The cost basis for these holders is now $28,000, above the current spot price, leading to negative sentiment and panic in the market. Analysts are pointing to a shift in market sentiment, predicting that crypto price trends for BTC could continue to move downward.

Concerns Rise Over Huobi's stUSDT Project

Investments in the staked USDT (stUSDT) project have reached $1.8 billion, raising concerns about cryptocurrency exchange Huobi Global's ability to manage sudden outflows of funds and the transparency of its reserves. 

Huobi's heavy involvement in the project has led to institutional traders withdrawing their crypto holdings from the exchange. The lack of transparency surrounding stUSDT and the shift in Huobi's reserves pose potential risks to the exchange's financial stability.

Hong Kong Charges JPEX for Operating Without License

Hong Kong authorities have charged crypto exchange JPEX with operating without a license, and more people are coming forward with complaints. Influencers who supported the exchange could also face prosecution. 

Telecom firms have blocked JPEX from their websites, and the number of victims stands at 2,086 with a total loss of HK$1.3bn ($167m). Hong Kong police have arrested six individuals so far. Meanwhile, JPEX continues to promote itself as a reputable trading platform.

ASIC Files Lawsuit Against Kraken's Bit Trade

The Australian regulator ASIC has filed a lawsuit against Bit Trade Pty Ltd, the company behind crypto exchange Kraken, for violating its law and design requirements. The regulator claims that the margin trading product on Kraken is a credit facility that has resulted in over $12 million in losses. 

ASIC is seeking penalties against Bit Trade, including fines, a declaration, and an injunction. The regulator hopes that the lawsuit will send a message to other crypto entities in Australia to comply with regulatory obligations and protect consumers.

Alchemy Pay Secures Arkansas Money Transmitter License

Cryptocurrency payment gateway Alchemy Pay has obtained a Money Transmitter License in Arkansas, marking a significant milestone in its efforts to secure local regulatory approvals in global markets. Alchemy Pay plans to expand its services to users in the United States, bridging the fiat and crypto economies. It operates a crypto-to-fiat payment platform supporting transactions in 173 countries.

Tether Dives into Artificial Intelligence Sector

Stablecoin issuer Tether is entering the artificial intelligence (AI) sector through a subsidiary jointly owned with Northern Data Group. The subsidiary, Damoon Designated Activity, has purchased €400 million ($427 million) worth of Nvidia graphic processing units to be used in Northern Data's cloud service. 

Tether has been criticised for its lack of transparency and controversial investments. Northern Data has diversified from crypto mining into providing computing power for AI-related tasks.

MakerDAO Initiates Spark Lend on Gnosis Chain

MakerDAO is taking concrete action towards its "endgame" plan by initiating the Spark Lend DeFi protocol on the Gnosis Chain. This move sets the stage for the launch of its DeFi-focused subDAO. MakerDAO aims to reduce governance fatigue and will rely on a prototypical set of subDAOs until they become fully autonomous. 

Spark Lend, an Aave fork, is accessible on Gnosis Chain and Ethereum, with liquidity provided by Gnosis until Maker assumes operations. Other chains will be considered for future proposals.

Rising Bitcoin Shorts Signal Bearish Market

Bitcoin shorts have been increasing on cryptocurrency exchanges Binance and Deribit, according to data from analytics firm Santiment. The funding rate, which indicates the fee paid between derivative contract holders, has been negative, suggesting a bearish sentiment. 

However, this may result in a short squeeze that could contribute to further price rises for Bitcoin. In contrast, Ethereum's funding rates are positive, indicating a potential downside for the asset if longs are liquidated. The drop in Bitcoin's price to around $26,700 has stirred up the crypto coin prices landscape.

Linear Finance Suffers Liquidity Drain Attack

Hong Kong-based DeFi protocol Linear Finance experienced an attack that drained the liquidity of its Linear USD token. The attacker was able to mint an unlimited supply of lAAVE and traded it for lUSD on the Linear Exchange before selling it on PancakeSwap and Ascendex. The protocol has paused contracts, disabled the lUSD Linear bridge contract, and is working to rectify the situation for its users.

Ethereum Large Holders Decline to 5-Year Low

The number of addresses holding significant amounts of Ethereum has declined to a 5-year low, possibly due to liquidation activities by long-term holders. This decrease in large-scale holdings could make Ethereum more susceptible to market bears and potentially lead to a price drop. 

Additionally, a previously dormant Ethereum wallet has recently sold its entire holdings of 2,591 ETH for $4.18M stablecoins, contributing to selling pressures on the cryptocurrency. Despite these factors, over the past week, a slight uptick in Ethereum's price has been noted, affecting the Ethereum market cap positively.

eToro Receives EU Crypto Asset Service Provider Registration

Social trading app eToro has received Crypto Asset Service Provider registration from the Cyprus Securities and Exchange Commission, allowing it to offer crypto services throughout the EU. 

The registration signals eToro's readiness for the implementation of the European Union's Markets in Crypto Assets framework, which is expected to come into effect in December 2024. eToro's deputy CEO, Hedva Ber, said that the registration will enable the company to create a streamlined and efficient offering for European investors.

Binance Wallet Spends $1M in ETH Gas Fees

A Binance crypto wallet spent $1 million in ETH gas fees within 24 hours, causing concern among the community. Some attributed the high fees to Binance's engineers setting the gas allowance too high, while others criticized the exchange's technology. Binance claimed that they were aggregating wallets for user fund safety. The exchange has faced controversies, including a legal battle with the SEC, and its CEO refuted reports of borrowing funds.  

Alameda Research's Decimal Error Causes Bitcoin Price Drop

An ex-employee of Alameda Research claims that a trader at the firm made a decimal error, leading to a temporary 87% drop in Bitcoin prices on Binance.US in 2021. Alameda lost millions of dollars as arbitrage traders took advantage of the mispricing. 

Balancer Recovers Domain After DNS Attack

Decentralized finance liquidity protocol Balancer has regained control of its domain after a DNS attack compromised its user interface. The attack prompted the platform to warn users not to interact with the interface. Balancer is considering deprecating its .fi top-level domain in favour of a more secure registrar. The attack exposed a specific Ethereum address to which stolen funds were being routed. This follows a similar exploit on Balancer's liquidity pools last month.

Optimism Raises $157M in Private Token Sale

Optimism, an Ethereum-based layer-2 network, has conducted a private token sale, raising approximately $157 million through the sale of 116 million OP tokens. This has resulted in a 3% decline in the value of the OP token. 

Additionally, Optimism recently airdropped 19 million tokens to users, further impacting the market. Despite the token dip, the total value of assets locked on the network has increased by 4% to $2.62 billion. Optimism currently holds a 25% market share among Ethereum-based layer-2 networks. 

IMX Token Price Surges on South Korean Exchanges

A 38.1% surge in the price of IMX, the token for NFT platform ImmutableX, has made waves on cryptocurrency charts. The increase was attributed to high trading volumes across South Korean exchanges. However, experts warn that the price could experience a significant decline once the pump on Korean exchanges is complete. 

Traders are aggressively placing short orders for IMX derivatives, leading to negative funding rates. The funding rate for IMX contracts is currently -0.25% for an eight-hour interval, motivating traders to go long to capture the premium.

Polygon Labs Proposes Celo Layer 2 Transition Plan

Polygon Labs has proposed that the Celo blockchain community use its Chain Development Kit (CDK) to facilitate a planned Layer 2 transition on Ethereum. CDK is an open-source software development kit based on zero-knowledge rollup technology. 

Celo's core development team, cLabs, has already unveiled a separate plan to transform Layer 1 into an Ethereum-based Layer 2 using OP Labs' software package. Other blockchain ventures, including Canto, Astar, and IDEX, have already shown interest in Polygon's CDK for Ethereum Layer 2 migration.

Tether Continues Offering USDT Loans Despite Announcements

Tether has reportedly continued offering loans in its stablecoin USDT to clients, contrary to its previous announcement that it would stop offering secured loans in 2023. The company's quarterly financial report showed an increase in USDT-denominated loans, with $5.5 billion of loans as of June 30. 

Tether claims that the loans were made to preserve customer liquidity or prevent clients from selling collateral at unfavorable prices. The company stated that it intends to reduce loans to zero by 2024. Uncertainties remain about the collateral for these loans.

Crypto Investor Loses Millions in USDT Scam

A crypto investor lost $4.46 million in assets to a USDT Approval mining scam. Scammers manipulated a fake wallet address to imitate a legitimate cryptocurrency mining exchange. The scammers converted the stolen USDT tokens into the DAI stablecoin and split the loot between four separate wallet addresses. 

USDT approval mining scams have stolen over $337 million from nearly 22,000 victims, with an average loss of $21,953 per victim. Crypto scams, in general, continue to be a major issue, with high-profile figures like Mark Cuban and the CEO of Binance falling victim.

Elon Musk's Twitter to Introduce Payment Feature

Elon Musk's Twitter, known as X, will introduce a feature allowing users to send money to each other. Musk plans to turn Twitter into an "everything app" with payments, e-commerce, and social media, and has obtained a money-transmitter license in Rhode Island. Crypto functionality may be added later.

Top Altcoin Gainers and Losers

Gainers:

Immutable X IMX (+17.88%)

Frax Share FXS (+3.00%)

Terra Classic LUNC (+2.45%)

Losers:

Gala GALA (-6.09%)

Optimism OP (-5.74%)

Rocket Pool RPL (-5.39%)

NFT Market Map

PSG Partners with Crypto.com for AI-Generated NFTs

Paris Saint-Germain has partnered with sponsor Crypto.com to offer AI-generated NFT posters created by artist Benjamin Benichou. The posters will be displayed at seven matches throughout the season, with all seven NFTs being airdropped for free on Crypto.com’s NFT platform. 

Fans who collect all seven NFTs will be eligible to win signed shirts from PSG players and VIP tickets to attend the team’s final home match. PSG's deal with Crypto.com is reportedly worth $30m across three years. 

Proof of Play Raises $33M for Web3 Gaming

Proof of Play, led by Farmville co-creator Amitt Mahajan, raised $33 million to develop Web3 games. The funding came from investors such as Andreessen Horowitz, Twitch founders, and Web3 firms. Their first game, Pirate Nation, aims to provide a user-friendly and decentralized gaming experience without requiring players to learn about blockchain first.  

This article has been refined and enhanced by ChatGPT.