🚨Feds Turn Up the Heat with Insider Trading Case
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SEC Defines 'Digital Assets' as Securities in Complaint
By Jason Levin
INSIDER TRADING The U.S. Justice Department’s crackdown on crypto just ratcheted up a notch. On Thursday, Federal prosecutors accused a former Coinbase employee and two others in the first-ever case of insider trading involving cryptocurrencies.
CONNECTIONS In a 22-page indictment, prosecutors in New York allege former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and his friend Sameer Ramani, used Ishan’s connections to learn which crypto assets were scheduled to be listed on Coinbase’s exchanges. The group then allegedly purchased the tokens and sold them after the information became public and typically boosted the value of the tokens.
ILLICIT PROFITS The three men traded over 25 different crypto assets on at least 14 occasions and walked away with $1.5M in illicit profits, according to the indictment. Using confidential information to profit from trading securities is illegal.
TIPPING OFF The U.S. Securities and Exchange Commission also sued the three defendants and accused Ishan of tipping off Nikhil Wahi and Ramani about the imminent listings of tokens, including lightly traded names POWR, LCX and AMP.
Users Challenge SushiSwap's Claims It has First Cross-Chain AMM
By Samuel Haig
CLOUDED SushiSwap is trying to reverse its declining market share by enabling cross-chain swaps across seven major chains. Yet the protocol’s launch of its new XSwap feature on July 21 was clouded by its claim that it’s the “first ever” automated market maker (AMM) exchange enabling cross-chain swaps.
CHALLENGE Some users on social media immediately challenged SushiSwap’s assertion. A community moderator at multi-chain exchange THORChain, told The Defiant that THORChain entered into a guarded launch supporting swaps between the Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Binance Chain networks in April 2021.
ANY CHAIN THORChain user, unchained.eth, said, “I only see ETH clones on their ‘first ever cross-chain AMM’… THORChain can support almost any chain, not just EVM-based.” SushiSwap members did not respond to requests for comment made through its social media channels.
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Ethereum's Chief Scientist Says Network Will Be Halfway Complete After Shift to PoS
By Samuel Haig
RALLY The Merge is on the verge of becoming reality. And mounting expectations of a new, more powerful and cleaner Ethereum have sparked a most welcome rally across DeFi in the last week.
SURGE But even after The Merge is done, Ethereum will only be halfway home. For starters, the network will next undertake a process called The Surge. That was the key message delivered by Vitalik Buterin, Ethereum’s chief scientist and co-founder, at a conference in Paris on July 21.
INSIGHTS Speaking before an audience of Ethereum developers, entrepreneurs, and users, Buterin said the network’s transition to Proof-of-Stake from Proof-of-Work will be “complicated.” He shared a raft of insights and details on what’s to come.
By Owen Fernau
NEWS A stablecoin from leading automated market maker (AMM) Curve Finance may be around the corner. The news comes right after DeFi lender Aave announced plans for its GHO stablecoin earlier this month.
CURVE TEAM Information is limited so far, but a post from Twitter user mrblocktw, who lists Curve Finance in his bio and also holds the “Curve Team” role in the project’s Discord, indicates that a stablecoin from the protocol is imminent.
MECHANISM Curve founder Michael Egorov reportedly confirmed that the stablecoin will be overcollateralized at a web3 summit. It stands to reason that the basic mechanism for a Curve stablecoin would be to mint it against liquidity provider (LP) positions. At a high level, this would be similar to MakerDAO’s collateralized debt position model.
FOUR-YEAR LOW Ether held on cryptocurrency exchanges such as Coinbase hit a four-year low on Thursday. Centralized exchanges held 19M ETH early Thursday, down from an all-time high of almost 32M ETH in the summer of 2020, according to data from Glassnode. The last time CeFi exchanges held less than 20M ETH was in July 2018.
DROP Among exchanges tracked by Glassnode, Huobi accounted for the most significant drop over the past four years. In the summer of 2018, it held 5M ETH. This week, it was down to less than 40,000 ETH.
DECLINE Coinbase also saw a steep decline, from 8M in custody four years ago to 5M this week. Meanwhile, outflows from exchanges tracked by Glassnode hit a 13-month high.
BANNED NFTs It’s no secret that gamers have it in for NFTs. But yesterday, Microsoft-owned Minecraft gave the NFT space a reason to fire back. The team behind the game released a statement that essentially bans NFTs from integrating with its platform, going on to say that it has “no plans of implementing blockchain technology into Minecraft right now.”
WORLDS A variety of NFT projects have been developing virtual worlds and accessories that are compatible with Minecraft, with plans to integrate with the actual game in the future. Chief among them is NFT Worlds, a collection of 10,000 metaverse lands.
TOKEN Minted for free in October 2021, the NFTs surged to a floor price of nearly 18 ETH in February at the height of GameFi fever. Following the news, prices crashed by over 80% from 3 ETH to 0.5 ETH. The project’s WRLD token dived more than 60%.
Stablecoin Yields Mirror Speculative and Deleveraging Cycles
On-Chain Markets Report by Pedro Negron, IntoTheBlock
BANKRUPT PROJECTS The crypto market plunge of 2022 is littered with bankrupt projects. Coupled with challenging macro conditions crypto investors are confronting a tough period. DeFi has been hit equally as bad, although its key protocols performed surprisingly well in contrast with the performance seen in the last market shock when the Covid pandemic struck in March 2020.
DELEVERAGE There is a third endogenous factor that has made the fall even worse — a massive deleveraging of the system. If this is truly happening, how do we measure it?
TVL The most direct metric to measure the capital allocated in DeFi is usually total value locked (TVL). Both the Ethereum price as well as the in DeFi have decreased in dollar terms by around 75% from their all-time highs. It makes sense considering that if the assets that are locked in DeFi decrease in price, equally the TVL metric decreases. DeFi decrease in price, equally the TVL metric decreases:
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The digital assets trading firm said it will shutter its Argentina-based offices and halt its expansion plans in several countries.
Billionaire tech entrepreneur Reid Hoffman, best known for co-founding business networking platform LinkedIn, is releasing a series of Solana-based NFTs based on images he creates using OpenAI's DALL-E 2 artificial intelligence software.
OpenSea now has its own minting platform to rival Magic Eden, but launch partner Zoonies appears to be stumbling out the gate.
Trending in The Defiant
The Merge Set For Dress Rehearsal as Anticipation Builds for Launch Virtually all that’s left before The Merge takes place is a dress rehearsal. The final testnet deployment for the next iteration of Ethereum is set to go live on the Goerli network in three weeks. Ethereum’s devs hope the code for The Merge will undergo minimal changes between launching on Goerli and hitting the mainnet.
Frustration Turned to Anger For Creditor Who Foresaw Three Arrows Collapse On June 14, concern among executives at crypto firm Deribit turned to frustration.
No amount of Smooth Love Potion is going to restore Axie Infinity’s healthy glow. But something else might — Origin, the most significant upgrade in the GameFi pioneer’s short history.
🧑💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Claire Gu, Samuel Haig, Jason Levin, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.
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