Crypto News Headlines (08-Jul-2022)

Belgian-born Bitcoin Core developer Peter Wuille is scaling back his contributions to Bitcoin Core. Nevertheless, he will continue contributing code to the project and remains a key player in the Bitcoin ecosystem, given both his influence in the Bitcoin community and his role at Chaincode Labs.

Bitcoin Core is the primary implementation of the Bitcoin software that connects to the blockchain. Open-source developers provide vital research, peer review, testing and documentation. A small group with commit access can directly access Bitcoin Core’s code in order to merge new code changes.

Up until now, Wuille was part of this smaller group. With his departure, only four developers remain with commit access: Wladimir J. van der Laan, Marco Falke, Michael Ford and Hennadii Stepanov.

He made the request to remove his key from the set of trusted keys through the Bitcoin GitHub on Thursday.

A crypto trading platform may be established at the Moscow Exchange (MOEX), according to a statement by Anatoly Aksakov, who chairs the Financial Market Committee at the State Duma, the lower house of Russian parliament.

The lawmaker, who has been involved in the ongoing efforts to adopt a comprehensive regulatory framework for cryptocurrencies, believes that a Russian digital asset exchange will be in the best position to process crypto transactions in the country.

MOEX is the largest Russian exchange, which facilitates trading of equities, bonds, derivatives, precious metals and operates Russia’s forex market, central securities depository and the country’s largest clearing service provider.

The exchange suspended trading following the Russian invasion of Ukraine on Feb. 24. It also became a target of western sanctions imposed on Russia over military conflict. MOEX opened almost a month later, on March 21, but only for state bonds.

After weeks of being in the red, Bitcoin and Ethereum are climbing.

Bitcoin, the world’s top cryptocurrency by market cap, is $21,663, up roughly 10% in the past week and is up 6% on Thursday alone, per CoinMarketCap data. Similarly, Ethereum has also seen notable gains, up to $1,238 or 7% Thursday and 19% over the past seven-day period. The rest of the cryptocurrency market appears to be following suit, with Solana up 4%, Polkadot up 5%, Cardano up about 3%, and Dogecoin up 3.% in the last 24 hours. 

Blockware analyst Joe Burnett has a few thoughts as to what might be happening. He cited Bitcoin’s correlation with the NASDAQ—which is up 5% in the past five days—as well as recent selloffs from bankrupt firms like Three Arrows Capital creating a “local bottom.”

“This forced selling definitely contributed to creating at least a local bottom that the price could move up from,” Burnett told Decrypt via Twitter DM.

In his view, the Bitcoin mining industry is also impacting the cryptocurrency’s price.

Reddit’s Polygon-based collectible avatar marketplace – allowing users to purchase blockchain-based profile pictures for a fixed rate – is open for business, said the company on Thursday.

“Collectible Avatars are backed by blockchain technology, giving purchasers rights (a license) to use the art – on and off Reddit,” the company said.

The avatars can be stored and managed on Reddit’s own blockchain wallet Vault, which is currently used to earn blockchain-based community points and spend them on in-app features such as badges.

Customers do not need an existing crypto wallet to purchase these NFTs, but instead can use credit or debit cards to buy the assets, which have listing prices currently pegged at $9.99, $24.99, $49.99, $74.99, or $99.99.

Some ninety different designs have been produced in collaboration with independent artists, with the total amount of NFTs going for sale in this early-access phase being in the “tens of thousands,” Reddit said. The NFT avatars are initially available to members of the r/CollectibleAvatars invite-only subreddit and will be available to buy on Reddit’s avatar builder page in the coming weeks.

Solana Labs is the latest crypto company to be hit with a lawsuit accusing it of promoting an unregistered security.

The class action was filed on July 1 by Roche Freedman LLP and Schneider Wallace Cottrell Konecky in the district court for the northern district of California on behalf of plaintiff Mark Young, a state resident.

The lawsuit accuses Solana Labs, the Solana Foundation, Anatoly Yakovenko, Multicoin Capital Management, Kyle Samani and FalconX of selling unregistered securities tokens in the form of Solana (SOL) from March 24, 2020:

“Defendants made enormous profits through the sale of SOL securities to retail investors in the United States in violation of the registration provisions of federal and state securities laws, and the investors have suffered enormous losses,”

Beleaguered crypto lender Celsius deposited $500 million in wrapped bitcoin (WBTC), a bitcoin derivative product of the Ethereum blockchain, to crypto exchange FTX just hours after Celsius repaid its debt to the decentralized lending protocol Maker and reclaimed $450 million of collateral in WBTC.

Blockchain transaction data shared by blockchain data firm Nansen shows that a wallet linked to Celsius sent 24,463 WBTC to the FTX in various steps.

Earlier Thursday, CoinDesk reported Celsius reclaimed 21,963 wrapped bitcoin (WBTC) tokens after it fully paid off its debt to Maker. Celsius already redeemed a 2,000 WBTC installment of the collateral on Tuesday.

Fundstrat analyst Walter Teng said that Celsius’s “de-leveraging activity on-chain will add sell-side pressure to assets that have been used as collateral,” including WBTC, which has been the firm’s largest holding pledged against its decentralized finance (DeFi) loans.

The move suggests that Celsius might sell the assets for more liquid assets, although market data on the exchange did not indicate that it had already happened. At press time, WBTC traded closely in tandem with bitcoin, changing hands at $21,600, up 6% in the last 24 hours.

Jason Stone, the founder of Keyfi, a decentralized finance (defi) aggregator startup that Celsius had a stake in, has accused Celsius of practicing a number of bad standards including “operating a Ponzi scheme.” Stone addressed the public via Twitter and used an account called “0xb1,” a well known NFT whale in the crypto industry with 121,200 Twitter followers. News reported on 0xb1 inking a deal with the talent agency Creative Artists Agency (CAA) in October 2021.

Stone said on Thursday, using the 0xb1 official Twitter account, that he and a “group of talented individuals” managed the 0xb1 address from August 2020 until April 2021. In the Twitter thread, he said that he felt “it is only prudent to finally set the record straight.” When Celsius partly acquired Keyfi, Stone explained that by the time the two firms went separate ways, his team was “managing nearly $2 billion of assets.”

The Keyfi founder then detailed that Celsius assured him that there was “risk management and hedging in place to account for fluctuations in token prices.” “But in late Feb 2021, we discovered Celsius had lied to us,” Stone wrote. “They had not been hedging our activities, nor had they been hedging the fluctuations in cryptoasset prices. The entire company’s portfolio had naked exposure to the market,” he added.

Compass Mining announced today that it would reduce staff by 15% and reduce compensation for executives by up to 50%.

“Today, we have made the difficult decision to reduce the size of the Compass team by 15% and to implement significant compensation and spend reductions across the rest of the business,” wrote Compass co-founders and interim CEOs Thomas Heller and Paul Gosker.

The pair said the changes will enable the hardware mining company to “stay agile” and well-positioned in what they call an “evolving market.”

“Given recent market downturn and anticipated future market conditions, we had to take a hard look at our [spending] and recalibrate for the future of the business,” they wrote.

According to the post, Compass will provide “financial and non-financial assistance” to those affected by the downsizing.

Per a report from BNN Bloomberg, strategists from JPMorgan have noted that the ongoing crypto crisis or deleveraging has hit an advanced stage and recovery might be on the way.

Firms with higher leverage are more vulnerable to the contagion

Strategists from JPMorgan noted on Wednesday that the ongoing crypto contagion which has seen the declaration of bankruptcy by at least one VC might come to a stop soon, they added that the recent events are not shocking because it is expected when price declines heavily.

They also pointed out that firms who utilized higher leverage in the past are more susceptible to the contagion citing Three Arrows Capital as an example, the strategists which included Nikolaos Panigirtzoglou described the liquidity woes in the firm as a sign of “this deleveraging process”.

Furthermore, they continued, another indication that this deleveraging pattern might hit a dead-end soon is the support beleaguered firms are receiving from stronger companies. FTX has given credit facilities to a few affected crypto firms, and investors haven’t shown disinterest despite the downturn.

Decentralized finance (DeFi) giant Aave has unveiled plans to launch an overcollateralized stablecoin called GHO, subject to the community decentralized autonomous organization’s (DAO’s) approval.

The announcement was made by Aave Companies — the centralized entity supporting the Aave protocol — on its Twitter page on Thursday, stating: 

“We have created an ARC for a new decentralized, collateral-backed stablecoin, native to the Aave ecosystem, known as GHO.”

According to the governance proposal shared on Thursday, GHO would be an Ethereum-based and decentralized stablecoin pegged to the U.S. dollar that could be collateralized with multiple assets of the user’s choice.

To obtain GHO, users would need to mint the stablecoin against their deposited collateral. However, the list of supported collateralized assets and the collateral ratio has yet to be detailed.

As users are essentially borrowing the stablecoin against their holdings, the position will need to be overcollateralized as per any normal Aave loan.