Crypto News Headlines (17-May-2022)

Bitcoin (BTC) saw seven straight weeks of losses for the time first in its history amid a downturn in broader markets, stricter crypto regulations, waning retail interest, and systemic risks in the crypto space, data shows.

Bitcoin neared the $47,000 level in mid-March in a run that lasted a couple of weeks after a fall to $37,000 from November’s lifetime highs of nearly $69,000. The asset has since slid every week and could fall to as low as $20,000 if current market conditions continue.

Bitcoin, the world’s largest cryptocurrency by market capitalization has been long positioned as an inflation hedge, or an investment that is supposed to protect the decreased purchasing power of currencies or other assets.

That has failed to happen so far, however, as bitcoin is highly correlated with global markets and has traded similar to a risky technology stock in the past few months. Meanwhile, some analysts say investors are selling bitcoin as it advances.

Crypto exchange Coinbase (COIN) will slow down hiring and reassess headcount needs as the broader crypto market sees a downturn, the firm said in a note to employees.

“We’re slowing hiring so we can reprioritize our hiring needs against our highest-priority business goals,” said Emilie Choi, president and chief operating officer at Coinbase, in the note.

Choi added the move was to ensure the business was “best positioned to succeed during and after” the current market downturn. “Market downturns can feel scary…we plan for all market scenarios, and now we are starting to put some of those plans into practice,” Choi said.

The move is a departure from Coinbase’s plan to triple its headcount earlier this year, as reported. The exchange planned to hire up to 2,000 people to expand its product, engineering and design teams as recently as February.

Choi stated the crypto exchange remained in a strong position and had a “solid balance sheet” to make it through a market downturn.

The blockchain project Terra is a Cosmos-based network, which leverages the consensus protocol Tendermint, the Cosmos SDK, and the Inter-Blockchain Communication protocol (IBC). Terra’s network has a native token called LUNA and a suite of algorithmic fiat-pegged tokens such as terrausd (UST).

Last week, UST lost its $1 parity and after the de-pegging event, LUNA’s value dropped well below a U.S. penny per unit. Terra’s fallout not only rippled across the crypto economy, but it wreaked significant havoc across the Cosmos ecosystem tokens built with the open-source Tendermint protocol.

For instance, on March 7, 2022, all the Cosmos-based crypto assets combined were worth $61.6 billion. At the time, terra (LUNA) was changing hands on that day for $79.55 per LUNA, in contrast to today’s price of $0.00020932 per unit. LUNA has lost 99.9997% in value over the past two months.

Cronos (CRO) changed hands for $0.38 two months ago and today, on May 16, 2022, CRO is trading for $0.19 per coin. Cosmos (ATOM) traded for $28.95 per unit on March 7, and today a single ATOM trades for $11.27 per coin. While LUNA was the top Cosmos-based token two months ago, today the largest Cosmos ecosystem token market cap is held by CRO with its market cap around $4.95 billion on Monday.

South Korea’s Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have launched “emergency” inspections into local crypto exchanges, according to a report by Yonhap citing industry sources.

The move is reportedly linked to the recent collapse of  Terra’s native TerraUSD (UST) algorithmic stablecoin and its governance token LUNA and aims to ensure better protection for investors.

“Last week, financial authorities asked for data on the amount of transactions and investors, and sized up the exchanges’ relevant measures,” a representative for an unnamed South Korean cryptocurrency exchange operator told Yonhap. “I think they did it to draw up measures to minimize the damage to investors in the future.”

The Chinese government has not managed to take down cryptocurrency operations as part of its crypto ban last year as China has re-emerged as one of the world’s largest Bitcoin (BTC) mining hubs, according to a new report.

China became the second-largest Bitcoin hash rate provider as of January 2022, months after the local government banned all crypto operations in the country, according to the latest update from the Cambridge Bitcoin Electricity Consumption Index (CBECI) shared with Cointelegraph on Tuesday.

Bitcoin miners in China accounted for 21.1% of the total global BTC mining hash rate distribution as of early 2022, following only the United States, which produced 37.8% of the total hash rate as of January, according to the data.

China was once the world’s largest Bitcoin mining country, with the local BTC hash rate power accounting for more than 75% in 2019. The hash rate then plummeted to 0% in July and August 2021, following a series of crypto mining farm shutdowns in the country. 

Despite the crypto ban in September 2021, the hash rate share surged to 22.3% that month and did not drop below 18% over the analyzed period.

Japanese investment bank Nomura is launching a subsidiary to give institutions access to digital assets, according to a report in the FT.

The new unit will be have a staff of 100 by the end of 2023, according to the report, and will offer exposure to cryptocurrency, decentralized finance (DeFi) and non-fungible tokens (NFTs).

The bank declined CoinDesk’s request for a comment.

Nomura began trading Bitcoin futures and options last week on the CME with Cumberland DRW, joining rivals such as Goldman Sachs (GS) and JPMorgan (JPM) in giving their clients access to crypto markets.

Nomura was one of the first banks to explore custody of crypto assets, joining the Komainu custody joint venture alongside fund manager CoinShares and custody specialist Ledger, in June 2020.

The Nomura Research Institute, an economic consulting arm of the bank, launched a crypto-asset index tracking the Japanese cryptocurrency market in 2020.

This article is adapted from CoinDesk Brasil, a partnership between CoinDesk and InfoMoney, one of Brazil’s leading financial news publications. Follow CoinDesk Brasil on Twitter.

Brazil’s only stock exchange, B3, plans to launch bitcoin (BTC) futures “in the next three to six months,” Chief Financial Officer André Milanez said during a conference call on Monday.

The exchange is currently building the infrastructure to offer crypto market access to end users Milanez added.

B3 information technology director Jochen Mielke de Lima said in January the exchange planned to offer both bitcoin and ether (ETH) futures sometime in 2022/2023.

“It is natural for us to expand into the unregulated world of cryptocurrencies,” said B3 President Gilson Finkelsztain in December, adding that the company planned to offer crypto services to traders, as opposed to being a crypto exchange.

At the moment B3 offers exposure to crypto exchange-traded funds (ETF) listed in the Brazilian regulated market, Equities Manager Marielle Brugnari said recently. Currently, 10 crypto ETFs are available in Brazil.

The Luna Foundation Guard (LFG), the organization tasked with safeguarding the dollar peg of UST, the algorithmic stablecoin of the Terra ecosystem, has broken its silence to explain the use of the assets it had under its custody. The institution had amassed more than 80K BTC, which was to be used in case of market imbalances affecting the value of terrausd (UST).

According to reports on social media, the foundation spent almost all of its BTC reserves in a failed attempt to save UST. This was made in three different operations. In the first one, LFG sold 26,281,671 USDT & 23,555,590 USDC for an aggregate of 50,200,071 UST, in what was the first defensive transaction against the depeg incident.

Also, the LFG stated it:

Transferred 52,189 BTC to trade with a counterparty, net of an excess of 5,313 BTC that they have returned, for an aggregate of 1,515,689,462 $UST.

However, the company did not identify the counterparty involved in this transaction.

From Sunday, May 8—when the TerraUSD stablecoin began losing its peg to the U.S. dollar and crypto markets began slipping—to Saturday, May 14, Bitcoin derivatives traders lost over $1.2 billion in liquidations, according to data analytics site CoinGlass.

That’s more than double the amount for the same period of the previous week, which saw $542 million in trades liquidated. The picture across all markets was similarly grim. According to Coinglass data, over $1 billion in all crypto assets was wiped out on May 8 alone—the largest figure in over three months.

As for why, take a look at the prices. Crypto shed over $300 billion in market cap as Bitcoin dropped from $35,500 on May 8 to $30,100 on May 14. BTC is currently trading at around $29,700, per CoinMarketCap.

The United States Department of Justice, State and the Treasury issued a joint advisery warning against the influx of North Korean workers in various freelance tech jobs, especially in the crypto industry

The public advisory was released on Friday, highlighting the critical red flags and identifiers for private firms to avoid hiring North Korean workers. The U.S. agencies warned that these workers pose a range of risks including theft of intellectual property, data and funds that could be used to violate sanctions.

There has been a significant increase in the freelance job market due to the pandemic, and crypto being a decentralized sector, offers some of the most lucrative IT jobs in the current industry. This is the reason for concern for the U.S. agencies who are wary of North Korea’s interest in the crypto sector.