Crypto News Headlines (17-Jan-2023)

Wintermute, the large crypto market maker, was quick to distance itself from a new fundraise by the co-founders of bankrupt hedge fund Three Arrows Capital (3AC), echoing similar sentiments from the community.

The co-founders of Three Arrows Capital, Su Zhu and Kyle Davies partnered with Mark Lamb and Sudhu Arumugam, co-founders of crypto exchange CoinFlex – which is going through a restructuring process – to raise $25 million for a new exchange called GTX, according to a pitch deck seen by CoinDesk.

GTX said it plans is to create an exchange where users can trade crypto, stocks and debt claims on bankrupt companies like FTX. The founders sees a “clear market need” to unlock $20 billion of crypto claims, which GTX said it could “dominate” within 2-3 months, according to the presentation.

Europol announced Thursday that authorities from Bulgaria, Serbia, Cyprus, and Germany, in collaboration with Europol and Eurojust, have taken down “call centers selling fake crypto.”

The criminal network, operating through call centers, “lured victims into investing large amounts of money into fake cryptocurrency schemes,” Europol explained, elaborating:

The suspects used advertisements on social networks to lure victims to websites covertly operated by the criminals, which offered seemingly exceptional investment opportunities in cryptocurrencies.

Fifteen people have been arrested in the case while 261 were questioned and 22 locations were searched, including four call centers. The authorities also seized three hardware wallets containing about $1 million in cryptocurrencies, approximately 50,000 euros in cash, three vehicles, electronic equipment, documents, and data backups.

After a long crypto winter, Bitcoin miners and average BTC investors are now back in the black, according to a report today from blockchain intelligence firm Glassnode.

Bitcoin rallied over the weekend and is now trading above $20,000 for the first time since the spectacular collapse of Sam Bankman-Fried’s FTX. This means it’s now profitable again for mining companies to run the expensive hardware necessary to mine the Bitcoin network. It also means that your average Bitcoin hodler, if they sold their stash now, would no longer be selling for a loss.

Glassnode estimates that Bitcoin’s “realized price,” the average price that current investors paid for BTC, is at around $19,700. The average price that Bitcoin traded for in the last 155 days is $18,000, says Glassnode. In either case, Bitcoin is now trading well above that mark, today changing hands at more than $21,000.

The company behind the Cardano blockchain said it has deployed a toolkit for building custom sidechains, allowing developers to create blockchains for specific use cases on the system.

The toolkit, available initially on a testnet – a blockchain that mimics real-world usage, will allow the sidechains to benefit from Cardano’s security and decentralization as well as the support of the existing community, Input Output Global (IOG) said Thursday. Sidechains are separate blockchains built on, but running independently of, a main blockchain.

Cardano joins Polkadot in offering the framework, which allows developers to experiment with niche applications in a live environment without compromising the main network. Sidechains can increase the transaction capacity, enabling more data to be processed without increasing the risk of network downtime.

The Securities and Exchange Commission (SEC) of Thailand is working to better protect cryptocurrency investors by introducing new rules for crypto custody services.

On Jan. 17, the Thai SEC issued regulations requiring virtual asset service providers (VASP) to establish a digital wallet management system to guarantee efficient custody. The new rules target crypto custodians or VASPs that provide crypto storage services.

The regulations include three major requirements, including the provision of policy and guidelines for overseeing the risk management of digital wallets and private keys. The rules require VASPs to communicate with regulators regarding such policies and provide action plans to ensure compliance.

Additionally, the SEC requested crypto custodians provide policies and procedures for designing, developing and managing digital wallets and keys. The authority will also require crypto custodians to establish a contingency plan in case of unforeseen events that may affect the wallet management system.

IT services and consulting firm Accenture is leaning heavily on the potential of Web 3, according to David Treat, senior managing director at the company.

Joining CoinDesk TV’s “First Mover” from the World Economic Forum (WEF) at Davos 2023, Treat said that metaverse-enabled capabilities, including augmented reality (AR), virtual reality (VR) and the ability to tokenize “identity, money and objects,” can simultaneously shift business models and tap into new revenue streams.

In a survey earlier this year, the Dublin, Ireland-based consulting firm said that by late 2025, the metaverse is likely to fuel a $1 trillion opportunity for businesses.

Nonetheless, according to Treat, it comes down to building “architectural patterns” that establish trust with users in the event something does go wrong.

On Jan. 11, 2023, Ethereum developers launched a new testing network for the Shanghai upgrade, a hard fork that’s anticipated to happen in March 2023. The developer’s new testing environment is called “devnet 2” as it follows “devnet 1” released in Nov. 2022. The new testnet was discussed briefly during the All Core Devs (ACD) meeting held on Jan. 5, 2023.

At that time, Ethereum core developers stressed that the focus remains vigilant on staked withdrawals. It has been 123 days since The Merge, the point in time when the Ethereum blockchain transitioned from a proof-of-work (PoW) blockchain to a proof-of-stake (PoS) network. The transition meant that instead of miners and ASIC devices verifying transactions, Ethereum validators now handle the verification of onchain transactions on the main layer.

North Korea-linked cybercrime syndicate Lazarus Group has reportedly transferred $63.4 million in Ethereum from 2022’s mammoth Harmony bridge hack, depositing it on Binance, Huobi, and OKX.

According to on-chain sleuth ZachXBT, the group used the privacy and anonymity system Railgun before consolidating the funds and depositing them on the exchanges.

Railgun is an Ethereum-based smart contract system that lets users obscure the nature of their crypto transactions, removing identifying information.

The sleuth claimed that the transfers, made on January 13, involved 350,000 separate wallet addresses.

1/2 North Korea’s Lazarus Group had a very busy weekend moving $63.5m (~41000 ETH) from the Harmony bridge hack through Railgun before consolidating funds and depositing on three different exchanges.

Bitcoin’s (BTC) recent double-digit rally has sparked a positive sentiment shift among crypto options traders.

The leading cryptocurrency by market value has gained 13% this month, topping the $19,000 mark for the first time since Nov. 8, CoinDesk data show.

Tumbling U.S. inflation, weaker U.S. dollar, and expectations for slower Federal Reserve rate hikes have helped the cryptocurrency look past the lingering fallout from FTX’s collapse.

And consistent with the resilient rally, bitcoin options’ “volatility smile” shows the demand for out-of-the-money (OTM) call options – bullish bets at strikes higher than the cryptocurrency’s going market price – has increased relative to puts or bearish bets.

“BTC’s short-dated OTM calls have seen an increase in implied volatility compared to OTM puts. This continues the trend of the volatility smile towards a more neutral smile, which was previously driven by a falling demand for downside protection [puts] throughout December,” Andrew Melville, research analyst at crypto derivatives analytics firm Block Scholes, wrote in a note published Thursday.

Financial regulators in Japan have urged global regulators to treat crypto the same way as they do banking, calling for tougher rules for the sector.

According to the deputy director-general of the Financial Services Agency’s Strategy Development and Management Bureau, Mamoru Yanase, crypto needs to be controlled.

“If you like to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions,” he said, according to a Jan. 17 Bloomberg report.

The comments from Japan’s financial watchdog come in the wake of the collapse of FTX in November, which rattled the industry and sparked urgency for regulatory action.

Unlike some of his U.S. counterparts, Yanase has acknowledged that the problem wasn’t with crypto. “What’s brought about the latest scandal isn’t crypto technology itself,” he said, adding that the blame lay with “loose governance, lax internal controls and the absence of regulation and supervision.”