Crypto News Headlines (10-Feb-2023)

Crypto exchange Kraken will “immediately” end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities, the U.S. agency announced Thursday.

Payward Ventures, Inc. and Payward Trading Ltd., the registered companies that make up Kraken, will end staking services and programs, the SEC said. The programs offered the general public access to staking services since at least 2019.

“The complaint alleges that Kraken touts that its staking investment program offers an easy-to-use platform and benefits that derive from Kraken’s efforts on behalf of investors, including Kraken’s strategies to obtain regular investment returns and payouts,” the SEC release said.

Cloud Inc., a digital asset ATM operator doing business as Coin Cloud, voluntarily filed for Chapter 11 bankruptcy on Tuesday.

In its filing with the U.S. bankruptcy court for the District of Nevada, Coin Cloud declared an estimated number of creditors of between 5,000 and 10,000. In addition, the company estimated that its total assets range between $50 million and $100 million while its total liabilities fall between $100 million and $500 million.

Crypto lender Genesis Global Trading Inc. is listed as Coin Cloud’s largest unsecured creditor, with a total claim of $116,353,435. After deducting the value of collateral, Genesis Global Trading’s unsecured claim amounts to $108,568,655, the filing shows.

On Jan. 19, Genesis Global Holdco LLC and two of its lending business subsidiaries, including Genesis Global Capital, filed for Chapter 11 bankruptcy in the Southern District of New York. However, the filing does not include Genesis Global Trading. Genesis’ bankruptcy followed a lawsuit against the company by the U.S. Securities and Exchange Commission (SEC) alleging that the crypto lender offered and sold unregistered securities to retail investors.

Bitcoin (BTC) fell another 4% over the day, changing hands around $21,830, according to data from CoinGecko.

The drop comes just a day after the leading cryptocurrency slipped below $23,000 on Thursday, hitting a daily low of $21,696 in the process.

The last time Bitcoin was trading at these levels was on January 20 amid the New Lunar Year bull run that eventually took the price of BTC over $24,000.

Ethereum (ETH), the industry’s second-largest cryptocurrency, lost 5.4% in value over the day, currently trading around $1,545, with several other popular coins suffering even bigger losses over the past 24 hours.

These include Cardano (ADA) and Dogecoin (DOGE), which shed 6.5% and 7% over the day, respectively.

The American state of Mississippi is one step closer to protecting the rights of cryptocurrency miners after the state senate passed the Mississippi Digital Asset Mining Act on Feb. 8. There is a companion bill under consideration in the state house of representatives.

The senate bill, authored by state Sen. Josh Harkins, legalizes home digital asset mining and the operation of mining businesses in areas zoned for industrial use. There are already crypto miners operating in Mississippi, which has some of the lowest electricity rates in the country. However, the bill claimed:

“Digital asset mining has often faced regulatory challenges at the state and local level.”

In addition, the bill prohibits limiting noise from home mining beyond existing limits, imposing requirements on miners beyond those locally applied to data centers or changing the zoning of a mining center without proper notification and an opportunity to appeal. It prohibits the Public Service Commission from imposing discriminatory rates on mining businesses and exempts home and business miners from money transmitter status.

Korea announced its first independent sanctions related to cryptocurrency thefts and cyberattacks against specific North Korean groups and individuals.

According to Seoul’s Ministry of Foreign Affairs, four North Korean individuals and seven businesses have been placed on a blacklist for their alleged involvement in cyberattacks and cryptocurrency theft. The blacklisted individuals include the infamous Park Jin-hyok, Jo Myong-rae, Song Rim and Oh Chung-Seong.

The most notorious of the four hackers, Park, works in information technology for the Chosun Expo Joint Venture, a front company connected to the Lazarus Group in North Korea. He is well-known for participating in the WannaCry ransomware assault in 2017 and the cyberattack on Sony Pictures Entertainment in November 2014. The United States Treasury placed him on a blacklist in 2018.

U.K. crypto companies were urged on Monday to prepare for new restrictions on financial Kraken’s settlement with the U.S. Securities and Exchange Commission over its liquid staking platform spurred a market decline, with the impact felt most by futures traders betting on further growth.

Long trades, or bets on higher prices, took 90% of the $220 million in liquidations on crypto futures trading over the past 24 hours as bitcoin (BTC) and ether (ETH) fell nearly 5%. Bitcoin and ether futures cumulatively saw $100 million in liquidations, while futures tracking dogecoin (DOGE), solana (SOL), XRP (XRP) and aptos (APT) took on $4 million in liquidations apiece.

That’s the highest level of liquidations since last November for long traders, or those who hold the security directly. Crypto exchange Binance took over $95 million in liquidations, the most among counterparties, with OKX seeing $47 million.

The government of Argentina is preparing to launch a set of stringent regulations that crypto companies will have to comply with to operate in the country. According to reports from Bloomberg, the national securities regulator (CNV) is mulling the introduction of proof-of-solvency requirements for institutions handling cryptocurrency deposits for third parties.

The regulation that is currently being worked on will be focused more on the activity of exchanges and less on the classification of crypto and tokens, per CNV president Sebastian Negri’s statements. Negri also explained that this regulatory framework will be applied in a progressive way, but did not confirm the inclusion of the proof-of-solvency requirements.

Negri clarified that all measures will be taken in a joint effort with crypto companies in Argentina. He declared:

We will create a working group with the industry to agree on new regulatory parameters, which will include companies that meet the asset and solvency requirements to support the risk they assume.

A businessman from Bulgaria has transferred over 1 million leva (more than $550,000) to A member of Silvergate’s board of directors resigned Thursday, the crypto-friendly bank disclosed in a recent filing with the Securities and Exchange Commission (SEC).

Rebecca Rettig, who initially joined Silvergate’s board in March of last year, notified the company that she would be resigning yesterday. A graduate of Columbia Law School, she previously served as general counsel at Aave Companies, the group behind the decentralized finance (DeFi) platform Aave.

Silvergate stated in the filing that Rettig has decided to leave the company because she “has accepted an executive position at another company” and will focus on her new commitments, adding it was “not the result of any dispute or disagreement.”

According to data from DefiLlama, Ethereum staking service Rocket Pool reached $1 billion in total value locked (TVL) on Feb. 9. The move comes less than two years after the decentralized finance (DeFi) protocol launched its mainnet on Nov. 9, 2021. Dubbed a liquid staking solution for Ethereum, Rocket Pool allows users to join an Ethereum decentralized node operator or run their own node.

Unlike conventional staking solutions, the capital requirements are far less, as users can run their own node with just 16 Ether (ETH) as opposed to the network specified 32 ETH, with another 16 ETH coming from a pool of users who join a decentralized node operator. For the latter, the deposit requirement is only 0.01 ETH. Depositors receive liquid staking token rETH in exchange for their ETH, which proves the user is entitled to staking rewards over time and accrues yield.

Regulators in Hong Kong are stepping up their game when it comes to monitoring the Members of the crypto community seem outraged over the recent charges laid against crypto exchange Kraken in relation to its staking-as-a-service program in the United States. 

On Feb. 9, the United States Securities Exchange Commission (SEC) announced it had settled charges with Kraken over “failing to register the offer and sale of their crypto asset staking-as-a-service program,” which it claims is qualified as securities under its purview.

Kraken agreed to settle the charges by paying $30 million in fines and to immediately cease offering staking services to U.S. retail investors, though they will continue to be offered offshore.

The move appears to have attracted the ire of not only the general crypto community but also of investors, politicians and industry executives.