As always, it was a busy week for crypto. From Ethereum kicking off its merge and Coinbase (COIN) suing the Treasury Department to the newest developments in Celsius Network’s bankruptcy case and the “Crypto Unicorn” linked to Cathie Wood. Catch up on the latest cryptocurrency news and price action from the past week.
Be sure to also check this week’s coverage of cryptocurrency ETFs like BITQ, BLOK and BITS.
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Cryptocurrency Price Action
Cryptocurrency prices popped yesterday amid the stock market’s rally and slight decline of the U.S. dollar, which has been rising sharply in recent weeks. Bitcoin and Ethereum’s Friday rebound lifted the broader crypto markets.
Bitcoin bounced near $21,300 by Friday afternoon. Ethereum climbed toward $1,720 by the stock market close, it’s highest price since mid-August. Ethereum is now well above its lows under $1,000 from June as it upgrades its network to a proof-of-stake consensus algorithm.
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SEC Chair Gensler Still Wants Crypto Regulation
SEC Chair Gary Gensler reiterated the need to regulate cryptocurrencies in a speech at the practicing Law Institute yesterday. Gensler said most crypto tokens are securities and the industry needs regulation to protect investors.” Nothing about the crypto markets is incompatible with the securities laws,” he said.
Coinbase Sues The Treasury Department
Crypto exchange Coinbase (COIN) is funding a lawsuit against the Treasury Department over its sanctions of Tornado Cash smart contracts. Coinbase is asking the court to remove Tornado Cash from the U.S. sanctions list. CEO Brian Armstrong says the sanctions exceed the Treasury’s authority, harm innocent people, remove privacy and security options for crypto users and stifle innovation.
FTX’s Spending Spree
Sam Bankman-Fried’s FTX continues to make headlines. The crypto exchange’s investment arm, FTX Ventures, is buying a 30% stake in SkyBridge Capital, the investment firm led by former Trump press secretary Anthony Scaramucci. Financial terms weren’t disclosed, but SkyBridge will use a portion of the funding from FTX to deploy $40 million in crypto investments to hold on its balance sheet long-term.
But FTX Ventures didn’t stop there. It also led a $300 million investment round in Mysten Labs, a web3 development company behind the Sui blockchain. The Series B round values Mysten upward of $2 billion and included investments from a16z, Apollo, Binance, Coinbase, O’Leary Ventures and others.
FTX Partners With GameStop
Late Wednesday, original meme stock GameStop (GME) reported a second-quarter loss while revenue fell 4% to $1.14 billion while video game inventory swelled. But GME stock spiked Thursday and Friday on a new partnership with crypto exchange FTX.
The pair will collaborate on new e-commerce and marketing initiatives. GameStop has tried to latch on to non-fungible token (NFT) hype as its retail base withers. And FTX has become a lending lifeline for struggling crypto companies as Bitcoin’s price plunged this year.
“In addition to collaborating with FTX on new e-commerce and online marketing initiatives, GameStop will begin carrying FTX gift cards in select stores,” GameStop said in a release. Financial terms for the deal were not disclosed.
Bankruptcy Filings Imply Celsius Network Ran Ponzi Scheme
Things are going from bad to worse for bankrupt crypto lender Celsius Network. New filings from the Vermont Department of Financial Regulation say Celsius was insolvent as early as 2019. And in its 341 bankruptcy meeting, where creditors question debtors under oath, Celsius admitted that the company never earned enough revenue to support the yields paid to investors. Vermont regulators say this suggests yields to existing investors were probably paid with assets of new investors.
Cathie Wood-Linked Crypto Firm Claims ‘Crypto Unicorn’ Status
21.co, the newly formed parent of crypto investment firm 21Shares, has raised $25 million in a funding round led by London-based hedge fund Marshall Wace. The round gives 21.co a $2 billion valuation and the company touts itself as “Switzerland’s largest crypto unicorn.”
With the financing news, Zurich-based 21.co was announced as the parent company of 21Shares, the world’s largest issuer of crypto exchange traded products (ETPs), and token provider Amun.
The crypto firm hit its peak of $3 billion in assets under management last November, when Bitcoin was at all-time highs near $69,000. 21.co did not include updated figures in the release.
21.co has over 100 employees according to its website, and its board includes ARK Investment Management CEO Cathie Wood. “This round is a testament to 21.co’s early success and its ability to thrive in both bull and bear markets. I’m proud to be a part of the 21.co growth story,” Wood said in the financing announcement.
Marathon Digital August Bitcoin Update
Marathon Digital (MARA) produced 184 Bitcoin in August, according to its latest monthly production update. That brings its production total for the year to 2,222 through Aug. 31, a 26% increase compared to the same period last year.
Marathon’s total bitcoin holdings increased to 10,311 by the end of the month, with a fair market value of $206.7 million as of Aug. 31, when the price of BTC was around $20,000. As of Sept. 7, the holdings are worth around $194 million.
Its unrestricted Bitcoin holdings were 6,483 BTC, valued at $130 million at the end of August. While its unrestricted cash on hand stood at $71.4 million, down from $120.7 million the month prior.
Marathon energized 25,000 miners in August, bringing its total fleet to 34,000 active miners. And it plans to activate 65,000 additional mining rigs at multiple facilities over the next 90 days.
Signature Bank Deposits Fall From Crypto
Signature Bank (SBNY) said Tuesday that spot deposit balances fell by $1.64 billion as of Sept. 2, essentially driven by the recent crypto downturn. Signature Bank saw $4.27 billion in outflows from its digital banking space caused by the crash in the crypto markets, the bank said in its mid-quarter update.
Excluding the digital asset banking team, Signature’s deposit balances increased $2.64 billion so far during Q3. The bank says its spot loan growth is nearly $2.39 billion so far this quarter across almost all of its lending businesses.
Signature Bank reported it is well-positioned to meet the upper range of its target of $1 billion — $3 billion in combined loans and securities growth for the quarter.
Ethereum Begins The Merge
Ethereum kicked off its transition to the highly anticipated proof-of-stake consensus algorithm on Tuesday. The network is wrapping up the first phase of its update with the Bellatrix upgrade, which will prepare the Ethereum blockchain for the merge. The next “Paris” upgrade will complete the merge, which is expected to finalize sometime between Sept. 15-20.
Binance’s Stablecoin Shake-Up
On Monday, Binance announced major changes to its stablecoin trading services that take effect late September. The world’s largest crypto exchange will automatically convert users’ stablecoin funds to its Binance USD (BUSD) token beginning on Sept. 29. Binance says the move will enhance liquidity and capital efficiency for users. But it also gives it a major advantage over its stablecoin competition.
With the changes, balances and deposits of USDC, the second-largest stablecoin, Pax Dollar (USDP) and TrueUSD (TUSD) stablecoins will be automatically converted into Binance’s BUSD stablecoin. Binance will cease most of its trading, staking, saving and gift card services for those stablecoins — essentially killing their utility on the platform. However, Binance will still allow withdrawals in the form of USDC, USDP and TUSD.
This could give BUSD a major edge over USDC in the race for stablecoin supremacy. Binance’s token is currently the third-largest stablecoin, with a $19 billion market cap, and trails USDC’s $52 billion market value. Tether’s USDT token is by far the largest stablecoin, with a $68 billion market value.
Zappos Founder Combines Fantasy Sports and NFTs
The NFL kicked off its season Thursday, and fans around the world will celebrate or curse their fantasy draft results. Meanwhile, Zappos founder and Golden State Warriors co-owner Nick Swinmurn is bringing a new form of fantasy sports to the blockchain.
Swinmurn’s Hellebore platform goes live on Thursday and will be the first NFT sports prediction game. Players guess the outcomes of live sporting events and athlete performances to earn blockchain rewards, similar to fantasy “pick ’em” games.
Users gain access by purchasing a Siber NFT and can then join leagues and play head-to-head matchups for various NFT prizes and fan experiences. Play Hellebore is the latest blockchain project capitalizing on sports hype. Dapper Labs emerged as a leader in the space with its lines of officially licensed NFTs and partnerships with the NBA, NFL, UFC and more.
But this is the first big move into fantasy sports on the blockchain. And there could be a major market for it. Over 59 million people in North America played fantasy games in 2020, according to the Fantasy Sports and Gaming Association. And the global fantasy sports market is expected to hit $38.6 billion by 2025, up from $22.31 billion in 2021, ResearchAndMarkets data shows.
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