Other Crypto exchanges going on completely as normal

Crypto exchange claiming $1.4B trading volume uses reportedly fake licence data

This week, an exchange reporting $1.4 billion in daily trade volume was making it all up. Is this even news?

Here’s what we know:

1. Bitspay had reported $1.4 billion in daily trade volume on CoinMarketCap. For a while, it was the 4th biggest exchange by daily trade volume. It also claimed to hold a licence in and be regulated by Estonia, specifically by Estonia’s Financial Intelligence Unit
2. “Bitspay Limited registered with the registration number FVR000796, under the Laws of the Republic of Estonia,” the exchange stated on its Bitspay.io domain. This was fake. Bitspay was showing this fake licence data until at least Sept. 18, 2023, after which it was deleted following inquiries into its licensing
3. Bitspay subsequently rebranded its website from Bitspay.io, which briefly became unavailable, to Bitspay.global on Sept. 21. It also deleted all its comments about being registered or regulated in Estonia
4. Bitspay.io is now back up, Bitspay.global is now redirecting to bitspay.io. The site’s strapline? ‘Honest Exchange at the best price’ 😭 🤯 🤦‍♀️
5. You always know a crypto exchange is honest if it says it’s honest in its strapline*. Just like you know a pizza shop is guaranteed to give you food poisoning if its called Best Pizza or the clothes you buy from Top Fashion shop will fall apart/break/fall off you on your first outing**
6. Estonia’s Financial Intelligence Unit, when contacted, reported that Bitspay didn’t hold any valid licence in Estonia

Bitspay is far from being the only exchange known to fake crypto trading volumes or other facts

1. CoinMarketCap (owned by Binance) (and other crypto ranking sites) have had their share of criticism about reporting false trading volumes and data. Crucially, ranking sites get more money for more listings.
2. In 2019, 95% of volumes on unregulated exchanges (basically, most or near all) reported on CoinMarketCap were fake or non-economic wash trading in nature, according to a 2019 claim by Bitwise Asset Management
3. Similarly, in 2019, data analytics firm The Tie claimed that more than 86% of reported crypto trading volume appeared suspicious

*This is obviously a joke

** No offence to any places called Best Pizza or Top Fashion- any names are made up for an example and references here are purely coincidental

Gemini’s Founders Face Scrutiny over $280M Crypto Withdrawal from Genesis months before its collapse

Just months before the now bankrupt crypto lending platform Genesis collapsed and suspended all customer withdrawals, the Winklevoss twins allegedly withdrew $282 million.

Here’s what we know:

The twins, co-founders of Gemini, with which Genesis is in legal dispute, are now under scrutiny for this alleged secret withdrawal.

The twins’ decision to withdraw hundreds of millions from Genesis not long before its collapse has raised concerns about whether these funds were part of their personal crypto holdings, corporate assets, or…? The $282 million they withdrew reportedly did not include any customer funds

It has been speculated that the timing of the move hints the twins knew Genesis might soon collapse. If this is found to be the case, this would somewhat undermine their claims of innocence.

In response, the twins Xed (is that what it’s now called? Tweeted on X? posted a message on X formerly known as Twitter)- that:

“The $282 million that was withdrawn from Genesis in August 2022 was in fact Earn users’ money. It was not Gemini corporate funds and it was not the personal funds of our Founders @cameron and @tyler or their investment firm @winklevosscap.”

So maybe it’s just a coincidence that they withdrew these funds before Genesis collapsed…

OKX report showcases $11.2 billion in primary assets in 11th proof of reserves report since FTX collapse

OKX is going proof of reserve heavy with 11 proof of reserve reports in a year. The most recent reveals a holding of $11.2 billion in crypto, primarily in Bitcoin, Ether and Tether. This shows an increase of $800 million in reserves since August, but a decrease of $100 million compared to July. The value of the reserves is dependent on the value of crypto assets.

Binance is now suspending EUR operations which it had offered through Paysafe

After withdrawing support for GBP payments in May, Binance is now suspending EUR operations offered through Paysafe. Binance has now suggested its users to transfer their euros to Tethers, despite Tether being, according to many sources, less than risk-free, with many doubting its backing. Binance claims Paysafe “unilaterally decided” to cease processing euro deposits for its users in a statement. This is just the latest of the problems facing the exchange…

Other crypto platforms going on completely as normal

Do Kwon of the $50 billion Terra Luna ecosystem collapse tries to deny the Slack messages he wrote count as evidence

“I can just create fake transactions that look real”…

“I wont tell if you wont”

wrote Do Kwon, co-founder of failed crypto ecosystem Terra.

So we have Kwon messaging his co-founder about how he intends to create fake transactions to fool investors and then trying to create a pact with that co-founder to keep the manipulation secret.

Now, Kwon is trying to claim these Slack messages shared with his fellow co-founder, Daniel Shin shouldn’t count as evidence against them.

The folks at the SEC, who included the Slack chat as evidence, disagree…

Meanwhile, Kwon’s lawyers are saying he can’t be extradited to the US because he has no set release date from the prison where he’s held in Montenegro after being found guilty of passport fraud.

The collapse of the Terra and Luna ecosystems cost investors about $50 billion.

Three Arrows Capital co-founder Zhu arrested in Singapore airport, sentenced to four months in prison

One of the founders of failed crypto fund 3AC (Three Arrows Capital) has been arrested at Singapore Changi Airport while trying to leave the country, according to liquidators for the fund. The whereabouts of the other co-founder, Davies, remain unknown. This was after the duo fled the sinking ship to go chill on beaches and take mind-altering substances. It isn’t quite clear why they ever left the beach.

US government vs crypto

While it’s mildly reassuring that the US still has some form of government, until November at least, it’s fair to say it hasn’t done much positive for crypto.

The US has passed zero crypto legislation since FTX collapsed

In the almost 11 months since the collapse of the (allegedly) fraudulently run FTX, only two crypto bills have made it out of congressional committees. One is about regulating stablecoins, and one is about defining when digital tokens are classified as commodities or securities—a matter that shouldn’t be this unclear (most shouldn’t be securities except that regulators are trying to work out how to make them be). Both of these bills are facing stiff opposition.

Crypto VC Paradigm accuses the US SEC of bypassing laws in its lawsuit against Binance

Crypto VC firm Paradigm has criticised the SEC for bypassing the standard rule-making procedures in their current legal action against Binance. Paradigm claims the SEC is trying to use the accusations to alter the law without adhering to the established rule-making procedure. The firm also stated that the SEC is exceeding its regulatory boundaries. This isn’t the first time this complaint has been made. Overstepping its remit regarding crypto assets has been a frequent complaint against the SEC since Gensler’s rule.

Paradigm also asserted that many assets are marketed, purchased, and traded based on their potential for profit, and yet the SEC has consistently exempted these assets from being classified as securities, which differs from the SEC’s stance on crypto or digital assets.

It goes back to the same old question. Is a Pokemon card a security? No. Is a digital and/or tokenised Pokemon card a security? Suddenly Gensler isn’t sure, but wants to make it a yes.

In other news

Epic Games lays off 830 staff, citing ‘unrealistic’ metaverse ambitions

Epic Games, the company behind Fortnite, has laid off about 16% of its workforce, about 830 people, after “Spending way more than we earn” on its ‘unrealistic’ metaverse ambitions. “We concluded that layoffs are the only way and that doing them now and on this scale will stabilize our finances” wrote CEO Tim Sweeney in a memo. Even Meta seems to be going full tilt AI rather than Metaverse.

Banking clients had $96 billion in crypto positions in 2022

Between June 2022 and December 2022, banks’ global holdings of cryptocurrency drastically decreased. In December 2022, clients of global banks held cryptocurrency positions worth roughly €91 billion ($96 billion), according to the Basel Committee. The clients of seven banks in the Americas made up the entirety of this. No other banks globally gave figures on this, implying they held no crypto positions for clients. Prior periods indicated zero ‘other exposures’. This figure was made up of Bitcoin-linked exposures of $57.5 billion and Ethereum-linked products of $36.5 billion, with the remaining balance in products linked to Ethereum Classic. No alt coins, not surprisingly.

Direct bank exposures to crypto and digital assets dropped massively between June and December 2022, declining 69% to €343 million globally across 13 banks. Over a third of this was not cryptocurrency. €125 million of this was held in tokenised securities by two banks in the rest of the world (likely Asia). European banks with direct crypto exposure decreased from four banks holding over €300 million to two banks holding negligible amounts. The seven banks in the Americas reporting direct crypto exposure decreased their crypto and digital asset holdings by 70% to €200 million during this time.

And in good news!

Zumo first to conform to FCA’s tech-based crypto promotion rules 🏴󠁧󠁢󠁳󠁣󠁴󠁿 🏴󠁧󠁢󠁳󠁣󠁴󠁿

Scotland-based Zumo is the first digital asset platform to integrate the tech-based requirements of the UK FCA’s new financial promotion regime for crypto-asset firms. Congratulations to Zumo!

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