Weekly Attestations #3

Investors had mixed reactions juxtaposing healthy growth and profit signals while worrying about inflation, potentially pushing US Treasury yields and the dollar to increase, thus hurting oil prices and energy stocks (Oil is priced in U.S. dollars on international markets, resulting in pressure on demand when the dollar appreciates). Despite longer-term trends remaining intact, monthly inflation surprised on the upside with a 0.5% rise in consumer prices in January and a 0.7% rise in producer prices. Bond returns were negative for the week with potentially correlation to economic data supporting the Fed's hawkish stance on inflation, leading to an increase in the probability of a rate hike in March. Municipal bonds declined due to rising Treasury yields and an uptick in new issuance, while investment-grade corporate bonds tracked U.S. equities lower. No new high yield securities were issued, and investors remained focused on the primary issuance calendar in the loan market.

“Confidence is quiet insecurity is loud” - Don Corleone

Token Specific News

A Blur(y) hunt for whales in the OpenSea

• Blur, a non-fungible token (NFT) marketplace, has surpassed OpenSea in daily trading volume on Wednesday, Feb. 15, according to Nansen.ai. Blur's daily trading volume stood at 6.02 ETH while OpenSea's stood at 5,649 ETH. The surge in Blur's trading volume followed the release of its native token, which led to a quadrupling of its daily trading volume, according to data scientist Hildebert Moulié's Dune dashboard. Despite the rise in Blur's trading volume, OpenSea's weekly trading volume is still several times higher than Blur's, with OpenSea's weekly volume standing at 36,608 ETH and Blur's at 11,424 ETH, as of the most recent week, per Nansen. Additionally, the number of sales and wallets on OpenSea are still greater than on Blur, but the gap between the two in terms of the number of sales and wallets has been closing, with the number of wallets interacting with OpenSea only twice as great as those interacting with Blur as of Wednesday. Blur also recently airdropped its BLUR token, which led to it amassing over $500mm in trading volume in less than 24 hours, with over 33,000 unique wallet holders of BLUR as of Wednesday morning. The tokens were initially listed at $1 on crypto exchange Coinbase but fell to as low as 48 cents late on Tuesday. Meanwhile, the total value of tokens on the Blur marketplace spiked by $10m in the past 24 hours. However, the token has seen some sellers after the airdrop, leading to over $4m worth of Ethereum being burned in the last seven days.
  

Lido Finance Kicks Off Yield Farming Event on Ethereum Scaler Optimism

• Lido Finance and Optimism are launching an incentive program to encourage users to migrate to the layer-2 network. The program is part of the LidoOnLayer2 initiative, which aims to improve liquidity for Lido's staked Ethereum (stETH) product. Lido Finance, the market's largest liquid staking platform, has been granted 1 million OP tokens from Optimism, which will provide an additional reward for users who stake their Ethereum with Lido, move it to Optimism and provide liquidity for select token pairs. Lido users who choose to move their stETH over to the layer-2 network will now earn additional rewards in the form of Optimism's native OP token. However, users will not be migrating stETH to Optimism; instead, wrapped stETH (wstETH) will be the available asset. This specific asset is more compatible and easier to integrate with crypto protocols.
  

MakerDAO Integrates Chainlink to Enhance DAI Stablecoin Infrastructure

• MakerDAO, a decentralized finance (DeFi) platform, has integrated Chainlink’s smart contract automation into its Keeper system to help maintain the stability of its DAI stablecoin. Chainlink Automation will execute specific tasks such as price updates, liquidity balancing, and debt ceiling upgrades for assets held as collateral. The integration was approved by the community in an executive vote and will be available for execution on Saturday. Chainlink’s technology, also known as oracle, has been widely adopted by blockchain networks to feed them with external data from the real world. The integration is expected to further enhance the security and reliability of Maker’s DAI stablecoin
  

Soros adds crypto exposure

• Soros Fund Management, the investment firm of billionaire George Soros, appears to have added exposure to some crypto firms before the end of 2021, according to a filing with the US SEC. The document showed that the firm had purchased $39.6m worth of convertible debentures of crypto miner Marathon Digital Holdings and had ownership of call options and put options on 50,000 shares of MicroStrategy, up from just put options in the previous filing. However, the nature of the trades is not entirely clear
  

Go, Go, GMX

• Arbitum-based decentralized exchange GMX logged fees of over $5 million in a 24-hour period over the weekend, temporarily making it the largest revenue generator in DeFi, ahead of even the Ethereum blockchain. This added to the $120 million in total fees accrued from GMX since September 2021 compared to Ethereum’s $4.7 million over that period (not including ETH-based applications’ fees).
  

Celsius hits absolute zero

• Celsius Network debtors tapped Nova Wulf Digital Management to help sell off assets as the shuttered crypto lender continues its corporate reorganization. The plan follows a court-approved sales process Celsius lawyers put forward in January, and comes as Celsius creditors take to the court to recover millions from ex-CEO Alex Mashinsky, his wife and former business partners. Notably, the creditor's 150-page legal document accuses Celsius management of making “negligent, reckless and sometimes self-interested investments” before declaring bankruptcy last July.
  

Blockchain IRL

• Shopify has introduced new blockchain tools that allow merchants to create token-based apps using NFTs to offer unique discounts and benefits to their customers. The company has also added a "Sign-in with Ethereum" feature that enables users to verify themselves without having to share personal information with third parties. This move is significant as Shopify is a leading e-commerce platform with a large user base, with 450 million buyers placing orders and $80 billion worth of orders processed in 2021. With these new tools, millions of people could get exposure to the blockchain and NFTs, leading to an interesting intersection of two significant forces in the tech world.
• The United States Air Force (USAF) has recently partnered with SIMBA Chain and invested $30 million in the company to tackle its supply chain management problems. SIMBA Chain specializes in building blockchain solutions for government agencies and will be creating blockchain-based apps to improve the efficiency of supply chain management. The solution will also be used by other government organizations, such as the Navy, Army, and Defense Logistics Agency. This partnership is not the first time SIMBA Chain and the USAF have worked together. They have already collaborated on seven projects, including DiBaT, a budgeting and accounting platform that tokenized dollars within the USAF supply chain budget and tracked funds across multiple suppliers, purchasing teams, and billing centers. The goal of this new partnership is to create a similar blockchain solution to address the challenges in supply chain management.
• Global payment giant PayPal held $604 million in cryptocurrencies for its customers at the end of 2022, with Bitcoin and Ethereum comprising almost 90% of that amount. According to the company's annual report to the U.S. Securities and Exchange Commission (SEC), PayPal held $291 million in BTC, $250 million in ETH, and another $63 million in Litecoin and Bitcoin Cash as of December 31. This marks the first time the payments giant has included a breakdown of its crypto holdings in its annual financial report. The company plans for further international expansion of its cryptocurrency service, which it introduced in the US in October 2020 and later expanded to the UK. However, PayPal's crypto holdings have dropped from $690 million held in September, amid plunging crypto prices and dwindling user trust in the industry following the collapse of cryptocurrency exchange FTX.

Regulation

Paxos gets crushed bringing down plagued Binance, paving the way for a new King-Stable yearning for stability

• The US Securities and Exchange Commission (SEC) enforcement division issued a Wells notice to Paxos on February 13th after being tipped by rival protocol. The notice ordered Paxos to stop minting the Binance USD stablecoin (BUSD), stating that the company had violated securities laws. The notice was followed by an SEC investigation into Paxos' relationship with Binance. A Wells notice doesn't necessarily mean the SEC will pursue action against the firm, as the matter will require approval from the SEC's five commissioners. That said, the protocol is required to submit a response to the Wells notice, and present its case as to why it should not be sued. In the interim, Paxos must stop minting new BUSD and allow all customers to redeem their BUSD for US dollars. Paxos has said it has and always will back all BUSD tokens 1:1 with US dollar-denominated reserves while BUSD holdings report shows that the stablecoin is backed mainly by long-term maturity assets. Since the SEC's investigation, there has been scrutiny over BUSD, which caused unprecedented FUD in the market, with over $1bn worth of various stablecoins leaving the Ethereum network since February 13. The majority of this loss is attributed to BUSD, which saw the total number of outstanding tokens decrease by around 700,000 between 10 and 14 February. Binance, which witnessed a historical withdrawal of funds in November 2022 following the FTX collapse, is expected to experience negative consequences from the SEC's enforcement action against Paxos. The SEC's notice cited Paxos' relationship with Binance as the reason behind the enforcement. As BUSD's market cap declines, USDT's market cap and sector dominance is expected to increase even further. Since November, USDT has seen a significant increase in liquidity on Binance, after the exchange delisted USDC, USDP, and TUSD-denominated pairs from the platform. Tether's USDT grew by almost $1 billion following a regulatory crackdown on BUSD, which saw its value decline by almost an equivalent amount. Tether's market cap rose to $69.23 billion, while BUSD's fell to $15.46 billion. This may indicate investors seeking stablecoin liquidity are turning to Tether to avoid future regulatory crackdowns in the US. Tether's latest gains bring its stablecoin market dominance to 50.77%, with the entire market worth $136.93 billion. However, USDC may also benefit from BUSD's decline in the long run, as Binance CEO Changpeng Zhao confirmed the exchange will pivot away from BUSD when consolidating stablecoin liquidity.
  

Congressmen Launch Probe Into SEC Handling of FTX, Sam Bankman-Fried

• Two Republican Representatives, Bill Huizenga and Patrick McHenry, have sent a letter to the SEC Chairman, Gary Gensler, requesting information on the SEC's investigation into the collapsed crypto exchange FTX and the handling of its former CEO, Sam Bankman-Fried. The Representatives are questioning the timing of Bankman-Fried's arrest in the Bahamas just before he was set to appear before the House Committee on Financial Services. The letter requests all records and communications from the SEC's Division of Enforcement regarding FTX between November 2, 2022 and February 9, 2023, and raises concerns about the SEC's cooperation with the Department of Justice. FTX filed for Chapter 11 bankruptcy protection in November, and Bankman-Fried stepped down as CEO before being arrested on December 12 and later extradited to the US to face charges of fraud, money laundering, and conspiracy.
  

Nexo will stop its Earn Interest Product for US clients in April

• Nexo, a crypto lender, is discontinuing its interest-earning crypto accounts for US customers in April after settling with the SEC for $45 million over unregistered securities. US customers have until April 1 to close their accounts and non-US customers with incorrectly flagged accounts need to update their verification information.
  

Not your keys, not your crypto

• It appears that U.S. Senator Thom Tillis, a Republican from North Carolina, is drafting legislation that would require American crypto exchanges and custodians to prove they have sufficient reserves. This move comes as a response to the collapse of FTX and the concerns that some crypto exchanges may not have enough funds to back up client demand. Tillis believes that this draft legislation is easier to pass than a comprehensive framework around cryptocurrencies, and he is in favor of a lean regulatory regime. While the legislation may face difficulties passing in a divided Congress, the collapse of FTX has prompted concerns in Washington, D.C., which may drive support for Tillis' measure.
  

Like on your first apartment, SBF’s cosigners were his parents and his college professors

• It seems that there has been a development in the legal case involving Sam Bankman-Fried, the former leader of collapsed cryptocurrency trading platform FTX. After a long-running dispute, the names of Bankman-Fried's bond co-signers have been revealed as Larry Kramer and Andreas Paepcke, who both teach at Stanford University and have close ties to the Bankman-Fried family. The media has been closely following the case, as Bankman-Fried faces numerous criminal charges in connection with his leadership of FTX. In recent weeks, there have been several decisions in the case, including a ban on Bankman-Fried's use of VPNs as part of his bail agreement and stays in both SEC and CFTC civil cases.
  

Congressmen Launch Probe Into SEC Handling of FTX, Sam Bankman-Fried

• Two Republican Representatives, Bill Huizenga and Patrick McHenry, have sent a letter to the SEC Chairman, Gary Gensler, requesting information on the SEC's investigation into the collapsed crypto exchange FTX and the handling of its former CEO, Sam Bankman-Fried. The Representatives are questioning the timing of Bankman-Fried's arrest in the Bahamas just before he was set to appear before the House Committee on Financial Services. The letter requests all records and communications from the SEC's Division of Enforcement regarding FTX between November 2, 2022 and February 9, 2023, and raises concerns about the SEC's cooperation with the Department of Justice. FTX filed for Chapter 11 bankruptcy protection in November, and Bankman-Fried stepped down as CEO before being arrested on December 12 and later extradited to the US to face charges of fraud, money laundering, and conspiracy.
  

Other Domestic Regulation Updates

• SEC Proposes Including Crypto in Asset Custody Regulations
• ‘Wishing Jurisdiction Over Crypto Into Existence’: SEC Commissioner Opposes Agency Again
• Republican Initiative Would Counter Labor Department Crypto 401(k) Caution
• Banks Cut Ties With Crypto Amid Regulatory Scrutiny
• Wyoming Lawmakers Pass Bill Prohibiting Forced Disclosure of Private Crypto Keys
• SEC’s ‘Lack of Clarity’ Latest Target for Twitter’s ‘Crypto CFA’ 
  

Other International Regulation Updates

• Dubai Prohibits Privacy Coins Under New Rules
• Seoul Sanctions North Korea Over Crypto Theft 
• Russia’s Largest Bank to Launch DeFi Platform on Ethereum
• UK Financial Regulator Takes Enforcement Action Against Crypto ATM Operators

Pain & Gain

Misc. Pain

• Former Paxos Exec: Regulators Failed to Address Crypto Collapses, Now They’re Going After 'On-Ramps'
• Accused Mango Markets Exploiter Wants to Keep $47M in Disputed Funds: Court Filings
• Binance Moved $400 Million to Trading Firm Managed by CZ: Report
• Microsoft Culls Metaverse Team It Created 4 Months Ago
• Bakkt Set To Discontinue Consumer App in B2B Push
• Magic Eden Cuts 15% of Staff, Takes ‘Hard Look’ at Restructuring
• Binance Withdrawals Surge as Paxos-BUSD Drama Weighs on the Exchange

Misc. Gain

• NFT Collector Donates Prized On-Chain Art To Museum
• Centrifuge Wants To Back Aave’s GHO Stablecoin With Real-world Assets
• Institutions Bullish on ETH Price Growth in 2023, Survey Finds
• Abu Dhabi Starts $2B Initiative to Back Web3 Startups
• Curve Stablecoin in the Works as Proposal Goes to Governance Vote
• DBS Bank Reports 80% Growth in Bitcoin Traded in 2022
• Napster Begins Planned Acquisition Spree Amid Shift to Web3
• Balancer Shakes Off Rivals’ Shadow With Novel Strategy
• Flashbots Poised to Offer MEV to Ordinary Investors
• Former Amazon, Starbucks exec launches Yelp-like platform to review and discover NFTs
• Asia Pacific Now Has a New Crypto-enabled Debit Card
• Coinbase Hits Back At SEC Over Staking as a Service
• LACMA Art Museum Acquires NFT Collection With CryptoPunk, Art Blocks
• Crypto Startup Monad Labs Aims to Create Next ‘Ethereum Killer’ After Raising $19M
• Credit Suisse, Deutsche Bank in Taurus digital assets $65m funding
• Crypto Transparency Top of Mind for Institutional Investor Execs

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