Issue #20

Market Overview

As of the time of writing (Monday 5pm), the total market cap of the crypto asset market is $US842.4B, down 3.9% from last week.

Below is the weekly performance of the top crypto and NFT assets. 

News Headline Highlights

• Sam Bankman-Fried (SBF) was arrested on Monday by Bahamian authorities after US prosecutors filed criminal charges.  “S.B.F.’s arrest followed receipt of formal notification from the United States that it has filed criminal charges against S.B.F. and is likely to request his extradition,” the government of the Bahamas said in a statement. 
  
• Shortly after, SBF was charged by the SEC, the US Department of Justice (DOJ) and the CFTC on separate counts of wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering. The overview of the DOJ charges are here. The CFTC charges are here. The SEC charges are here. 
  
• Ethereum blockchain technology company, ConsenSys, has partnered with Paypal to allow users to simply and conveniently buy ETH within the Metamask app. This partnership marks the first Web3 wallet to leverage PayPal to drive more successful on-ramp transactions.
  
• The Hong Kong Stock Exchange has launched its first BTC and ETH Futures ETF. CSOP Asset Management, a China Southern Asset Management subsidiary, was the issuer of the ETFs, which received more than $74m in initial investments on their first day.
  
• Credit Suisse, Pictet and Vontobel have conducted a proof of concept to issue, trade and settle tokenized investment products recorded on a public blockchain (Ethereum).  The three processes took place within hours, whereas in a traditional financial environment they take days.
• The CFTC charges against SBF claim Bitcoin, Ether and Tether have precedent as commodities, and as such the CFTC has jurisdiction over commodity spot markets for manipulation/fraud. The excerpt below is the language used by the CFTC in their filing. 

• The Canadian Securities Administrators (CSA) have banned crypto leverage and margin trading for platforms operating in the country in the aftermath of the FTX collapse. Both local and foreign exchanges servicing the Canadian public are required to operate under the new laws.
  
• Starbucks’ NFT rewards platform has received ‘unprecedented interest’ one week after its launch. Starbucks Odyssey, the coffee chain’s new Web3 rewards platform is built on Polygon, an Ethereum sidechain network.

 Crypto Asset Project Updates

• The world’s largest stablecoin issuer, Tether, announced plans to eventually stop the practice of lending out funds (secured loans) from its reserves. The announcement cited that doing so was “mission critical to restore faith" in the crypto market.
  
• Trust Wallet has added the ability for users to conduct in-app cross chain swaps after their integration with THORChain.  Trustwallet’s 25m users will now be able to swap between BTC, ETH, BNB and BUSD in a decentralised manner without any centralised counterparty risk.

The Weekly Deal Room

• Crypto training firm, Amber Group, raised a $300m Series C led by Fenbushi Capital. The raise was timely as Amber Group were reported to have experienced troubles in the fallout from FTX after losing <10% of their trading capital on the fallen exchange.
  
• Aztec Network, a privacy layer smart contract platform, raised $100m in a Series B round led by Andreessen Horowitz (a16z).
  
• Nillion, a web3 startup building  a new internet infrastructure for securing storage and data computation, closed an oversubscribed round of more than $20m.
  
• Evertas, a specialist insurance firm for the crypto industry, raised $14m in Series A funding led by Polychain Capital.
  
• Blocknative, a Web3 infrastructure company, raised $15m in a new funding round to build a viable, stand-alone block-building business in the new Ethereum ecosystem.
  
• Virtualness, a mobile-first platform designed to help creators and brands navigate Web3, raised $8m in an oversubscribed seed round led by Blockchange Ventures.
• Decentralised sports prediction market Frontrunner, raised a $4.75m funding round by Susquehanna Private Equity Investments.
  
• Decentralised Identity platform Nametag raised a $2m seed round co-led by GSR Ventures and OKX Ventures.

Metric of the Week

Binance experienced a lot of heat this last week as many speculate the financial health and solvency of the world's largest crypto asset exchange. However, there are many differences between Binance and the failed FTX, primarily Binance's ability to conduct Proof of Reserves (Assets).

Real time proof of reserves (PoR) is a feature of crypto that traditional financial institutions cannot provide. Cryptographic proof of asset ownership can be performed on a Blockchain’s public ledger for anyone to observe.

The challenge is that a complete PoR requires checking both on-chain assets, but also off-chain liabilities (which cannot be cryptographically proven on-chain).

Whilst PoR’s aren’t perfect, they are a good start. Without knowing for sure how the Binance situation ends, we do know they hold custody of approximately $40B in assets including 480k BTC, 4.8m ETH and 24B in US Dollar stablecoins.

Source: Glassnode