Author: Jody McDonald

Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.

Categories
ASX Australia Blockchain Crypto News Regulation

ASX Scraps $250 Million Blockchain-Based CHESS Project

The Australian Securities Exchange (ASX) announced Thursday morning that it would scrap the blockchain-based replacement for its ageing Clearing House Electronic Subregister System (CHESS) settlement and clearing system. The blockchain-based system had been in development for seven years and had already cost ASX in the order of A$250 million.

The new system had originally been scheduled to launch in 2021 but was delayed several times due to ongoing issues throughout its development.

ASX’s use of blockchain had been seen globally as a significant milestone in the adoption of the emerging technology, however, today’s announcement now marks a further blow to mainstream confidence in blockchain, coming on hot on the heels of the calamitous collapse of FTX last week.

Blockchain-based Replacement Abandoned After Scathing Report

The decision to scrap the blockchain-based system comes after a scathing report from Accenture found it wouldn’t be up to the task of replacing the existing CHESS.

The report, which was commissioned in August of this year, found that the software to run the new system was only 63 percent complete, despite having been in development since 2015. 

Commenting on the findings of the report, ASX Chairman Damian Roche told the Australian Financial Review: 

“The path we were on will not meet ASX’s and the market’s high standards. There are significant technology, governance and delivery challenges that must be addressed…On behalf of ASX, I apologise for the disruption experienced in relation to the CHESS replacement project over a number of years.”

Damian Roche, ASX Chairman

Setback for Australian Financial Infrastructure

The new blockchain-based system was to form a crucial part of Australia’s financial infrastructure. Its abandonment is a significant setback, and means Australian investors will be relying on the now 25-year old CHESS system for the foreseeable future.

Speaking on the abandonment of the new system, Governor of the RBA, Phillip Lowe said:

“The announcement by ASX after many years of investment by both ASX and industry is very disappointing. ASX needs to prioritise developing a new plan to deliver safe and reliable clearing and settlement infrastructure.”  

Philip Lowe, RBA Governor

Back to Square One

ASX will now start over again looking for solutions to replace the CHESS system. ASX CEO, Helen Lofthouse said the search for new solutions will be conducted with an open mind, insisting it’s possible the new system may utilise some elements of the abandoned system, including using blockchain or some other distributed ledger technology (DLT):

“To be clear, the derecognition charge reflects the uncertainty of the future value of the current solution design. It does not prevent us from using parts of what we have already built if we determine there are adjustments we could make to our current design, which will enable it to meet ASX’s and the market’s high standards.”

Helen Lofthouse, ASX CEO

Former Westpac executive, Tim Whiteley, has been appointed by ASX to oversee the new search for a replacement for its CHESS system.

ASX says that until a suitable replacement is developed and rolled out it will continue to invest in and maintain the existing CHESS system.

Categories
Binance Football NFTs Sports

Cristiano Ronaldo Partners with Binance to Launch NFT Collection

Cristian Ronaldo, widely considered one of the greatest soccer players to ever lace up the boots, has partnered with cryptocurrency exchange Binance, to launch an NFT collection as part of an exclusive multi-year deal with the exchange. 

The collection will reportedly include seven animated statue NFTs depicting various pivotal moments in Ronaldo’s life and career, ranging from important events in his childhood in Portugal through to his most iconic footballing feats.

Collection to Introduce Fans to Web3

Binance Co-Founder He Yi said collaborations with high-profile figures like Ronaldo would help bring more people into Web3:

“We believe the metaverse and blockchain are the future of the internet…We are honored to collaborate with Cristiano to help more people understand blockchain and showcase how we are building Web3 infrastructure for the sports and entertainment industry.” 

He Yi, Binance

Since it launched in mid-2021, Binance’s NFT marketplace has sought to feature high-profile creators, with some of its earliest collections from popular musician Lewis Capaldi, and professional football stars Michael Owen and Alphonso Davies.

From Ronaldo’s perspective the collection is more about rewarding his loyal fans and thanking them for their years of support:

“It was important to me that we created something memorable and unique for my fans as they are such a big part of my success…With Binance, I was able to make something that not only captures the passion of the game but rewards fans for all the years of support.” 

Cristiano Ronaldo
Source: Binance

NFTs Include Additional Perks

The collection will include NFTs of four different rarity levels, from super super rare (SSR), through to normal (N). Depending on the rarity level of the NFT, buyers may receive additional perks such as:

  • A personal message from Ronaldo
  • Merchandise autographed by Ronaldo
  • Guaranteed access to future Ronaldo NFT collections
  • Complimentary mystery boxes for future Ronaldo NFT collections
  • Entry into giveaways for signed merchandise and other prizes

Ronaldo’s first NFT collection will launch at 9am UTC on November 18 and will be available only to Binance users. Subsequent Ronaldo NFT collections are planned to launch through Binance starting in 2023.

Engaging sports fans has been a popular application of NFTs, with collections released by the US National Basketball Association (NBA) and Australia’s AFL code this year.

Categories
Fashion Gaming NFTs Polygon Sport and Leisure

Nike Launches Web3 Platform .SWOOSH to House NFTs

Global footwear giant, Nike, has announced the launch of its new NFT platform which is touted to become the centrepiece of the brand’s push into Web3.

The platform, known as .Swoosh, will feature Nike’s virtual apparel and footwear creations, which will be able to be purchased, traded and used in a range of yet to be announced Web3 games and “other immersive experiences”. 

.Swoosh, which runs on the Polygon blockchain, will also provide future opportunities for select co-creators to partner with Nike to make NFTs on the platform and earn royalties. 

.Swoosh Nike’s Latest Push Into Web 3

Nike has slowly been increasing its adoption of Web 3 tech over the past few years — in 2019 the brand filed a patent for Web3 enabled sneakers known as ‘Cryptokicks’ and in 2020 Nike acquired fashion NFT startup RTFKT Studios.

The launch of .Swoosh however, suggests a more strategic approach and deeper commitment to Web 3 from Nike. In the release announcing the launch of .Swoosh, Nike spelled out its ambitious hopes for the new platform saying its purpose is to “expand the definition of sport” by “democratising the web3 experience so that everyone can collect, create and own a piece of this new digital world.”

Speaking on the launch of the new platform, Ron Faris, General Manager of Nike Virtual Studios further explained:

“We are shaping a marketplace of the future with an accessible platform for the web3-curious…In this new space, the .SWOOSH community and Nike can create, share, and benefit together.” 

Ron Faris, General Manager of Nike Virtual Studios

.Swoosh will remain in invite-only beta for the rest of 2022, with the first collection planned to be launched sometime in 2023. 

Categories
Crypto News Crypto.com FTX Shiba Inu

A Preview of Crypto.com’s Reserves Reveals 20% in SHIB Tokens

In the fallout of the swift and shocking collapse of FTX last week, rival exchange Crypto.com chose to share their cryptocurrency reserves publicly in an effort to shore up customer confidence. 

However, this attempt to ease customer concerns backfired when it was revealed just over 20 percent of Crypto.com’s reserves, valued at close to US$500 million, are held in the meme-coin Shiba Inu (SHIB).

This means that Crypto.com holds more SHIB than Ethereum (ETH) and USD Coin (USDC) — in fact, the only cryptocurrency the exchange holds more of than SHIB is Bitcoin (BTC).

What Exactly Does This Mean?

Initially many in the crypto community incorrectly believed that Crypto.com’s large holdings of SHIB were part of an irresponsible meme-coin heavy investment strategy. 

It’s since been clarified that the exchange holds so much SHIB because its customers have purchased a lot of the token, the exchange holds 1:1 reserves of customer assets — as a Crypto.com spokesperson explained:

“The reason our Proof of Reserves include Shiba is because we hold customers’ balances 1:1. Thus, our Proof of Reserves are dictated by our customer holdings.”

Crypto.com spokesperson

Crypto.com Sent 320,000 ETH To Wrong Address

In another concerning piece of news, a Twitter user named @jconorgrogan unearthed a transfer of 320,000 ETH from Crypto.com to a wallet on rival exchange Gate.io.

This transfer, representing over 80 percent of Crypto.com’s ETH holdings, occurred on October 21 but it wasn’t until @jconorgrogan noticed it and tweeted that the wider crypto community became aware of it.

Crypto.com says that the transfer was an error, claiming the ETH was accidentally sent to a whitelisted account under its control on Gate.io instead of being transferred to a new cold storage wallet. 

Since the accidental transfer occurred, 285,000 ETH have been confirmed to have been returned to Crypto.com, while the remaining 35,000 have been sent to a different address whose ownership is yet to be confirmed.

Crypto.com CEO Kris Marszalek says the incident has been resolved and claims new processes have now been put in place to avoid a recurrence:

Fear Triggers Flight to Safety, CRO Dump

This string of bad news has sparked fear among Crypto.com customers, prompting many to move their assets off the exchange and sell their holdings of CRO, Crypto.com’s exchange token. As a result, Crypto.com’s reserves have fallen significantly over the past few days, from close to US$3 billion to just over US$2 billion. 

Similarly, the price of CRO has dropped precipitously in the past few days — at the time of writing data from CoinGecko showed it was down over 50 percent since Wednesday, changing hands at US$0.05

Categories
Crypto News FTX Justin Sun

FTX CEO Sam Bankman-Fried Apologises in a Flurry of Tweets

Sam Bankman-Fried, CEO of FTX, took to Twitter on Thursday 10 November to offer an apology to his customers following FTX’s breathtakingly fast collapse this week. SBF didn’t mince words in his apology, saying “I’m sorry. That’s the biggest thing. I fucked up, and should have done better.”

The apology comes as SBF scrambles to raise funds to “do right by users” and ensure they don’t lose assets they had stored on FTX. According to SBF, FTX is currently in talks with numerous parties to access liquidity, which he claims will go “straight to users”.

SBF Updates Community On FTX Situation

In his Twitter thread, SBF also outlined how exactly it all came to this — essentially he says he made two crucial mistakes that led to FTX’s collapse. 

Firstly, due to poor internal processes, he drastically underestimated users’ margin, and secondly, he massively overestimated FTX’s USD liquidity. These two mistakes, in the context of an enormous bank run, meant the exchange simply did not have access to the liquidity required to cover all the customer withdrawals.

SBF says FTX has now entered into LOIs (letters of intent) with numerous parties and is hopeful of getting access to enough liquidity to cover all customer withdrawals. 

Going forward, SBF says his trading firm Alameda Research will be “winding down”, while also denying the firm is doing any of the “weird things” that have been speculated on Twitter and in the media.

Here Comes the Sun, Justin Sun

In a somewhat surprising turn of events, the founder of the Tron (TRX) blockchain Justin Sun (who himself is far from scandal-free) has swooped in to help by promising holders of Tron-related tokens stuck on FTX — including TRX, SUN, JST, BTT and HT — that they’ll be able to redeem them 1:1 even if withdrawals from FTX itself fail.

The result of this ‘Tron Ark’ as Sun calls it, is that many FTX users have flocked to Tron tokens in hopes of salvaging something from the exchange’s collapse. In turn, this has seen the value of these tokens on FTX soar to many times their value on other exchanges. For example, Tron’s native token TRX spiked to as high as US$2.50 on FTX, while it remained at around US$0.5 on other exchanges.

Investigations Into FTX Collapse Underway

According to a report published in the Wall Street Journal on Thursday, for months the SEC has been quietly investigating FTX.us, the US-only part of FTX’s business, but this investigation has now been expanded to look at the collapse of FTX’s international operations.

The US Department of Justice has apparently also opened an investigation into FTX — this will be a troubling development for SBF as the DOJ prosecutes criminal cases such as fraud, whereas the SEC is responsible for civil cases in which investor protection laws have been violated.

Categories
Binance Crypto News FTX

Binance Opts Not To Purchase FTX, Citing Significant Concerns Raised During Due Diligence

Binance, the world’s largest cryptocurrency exchange, has walked away from a deal to purchase cash-strapped rival FTX just one day after signing a non-binding letter of intent to acquire the stricken exchange.

The about-face came after Binance conducted its initial due diligence of FTX’s financial position and business practices, which sparked significant concerns. Binance CEO Changpeng Zhao, commonly referred to as CZ, retweeted a tweet from the Binance account on Wednesday declaring the deal was off:

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com”  

Binance

CZ Publicly Releases Letter to Binance Staff

Earlier on Wednesday CZ had tweeted an internal letter sent to Binance employees updating them on the FTX situation. In the letter CZ told his staff the due diligence for the deal was ongoing and they must not trade any FTT, presumably to avoid running afoul of regulators.

CZ also stressed in the letter that he had not masterminded FTX’s collapse, as some had speculated:

“We did not master plan this or anything related to it. It was less than 24 hrs ago that SBF called me. And before that, I had very little knowledge of the internal state of things at FTX.” 

Changpeng Zhao, Binance CEO

He went on to insist the collapse of one of Binance’s largest rivals should not be viewed as a win, and that it would have ongoing harmful consequences for investors and for the entire crypto space:

“FTX going down is not good for anyone in the industry. Do not view it as a “win for us”. User confidence is severely shaken. Regulations will scrutinize exchanges even more. Licenses around the globe will be harder to get.”

Changpeng Zhao, Binance CEO

Market Tanks In Reaction

The market’s reaction to the news that Binance would not be acquiring FTX has been swift and negative, with prices down virtually across the board. Unsurprisingly, the biggest losers have been those cryptocurrencies most closely linked to FTX. 

At the time of writing, data from CoinGecko showed FTT was down almost 90 percent since Tuesday, changing hands at US$2.47, down from US$22. Solana (SOL), which was heavily backed by FTX, was also hit hard, dropping around 51 percent since Wednesday.

Other major cryptocurrencies have also dropped considerably, with Bitcoin (BTC) down over 20 percent since Wednesday and Ethereum (ETH) down over 25 percent.

Categories
Binance Crypto News FTX

Binance to Acquire FTX Following “Significant Liquidity Crunch”

Following days of rumours, heavyweight Twitter spats, and a frenzied bank run, Binance CEO Changpeng Zhao (CZ) has confirmed his exchange will fully acquire Sam Bankman-Fried’s (SBF) FTX exchange, pending proper due diligence. If this deal goes ahead as planned, it would see the two largest crypto exchanges in the world merge into a single entity.

CZ tweeted Tuesday that FTX had reached out to request help from Binance following what he described as “a significant liquidity crunch” triggered by a rush of customers withdrawing their funds from FTX. 

CZ agreed to offer assistance and stated: “to protect users, we signed a non-binding LOI (letter of intent), intending to fully acquire FTX.com.”

SBF Confirms Forced Sale

In a Twitter thread of his own, SBF confirmed the news and said the Binance takeover would ensure customers assets are protected.

Despite the tense exchanges between SBF and CZ over the past few days, SBF went out of his way to thank CZ for his help and praised him for the work he has done to grow the crypto industry.

SBF also clarified that Binance.us and FTX.us would be unaffected by this deal, noting that FTX.us continue to operate as normal.

How Did This Happen?

Somewhat ironically, FTX’s troubles really began on Sunday when CZ tweeted that Binance would be unloading its holdings of FTX’s exchange token FTT, valued at around US$580 million, due to what he described as “recent revelations”. Those revelations referred to reports casting doubt on the financial security of SBF’s trading company, Alameda Research — suggesting FTX itself may be in financial peril.

Unsurprisingly, these tweets spooked a crypto market still very much shaken by the numerous high profile collapses in the past few months, leading to a bank run on FTX.

SBF hit back, accusing a “competitor” of trying to topple FTX with false rumours of financial problems. Customers however, preferring to be safe than sorry, continued to withdraw their assets from FTX up until Tuesday morning when the exchange suspended withdrawals, before announcing later that day that it would be acquired by Binance.

Both CZ and SBF insist all customer funds will be safe under the new deal with SBF tweeting, “all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. – we apologize for that. But the important thing is that customers are protected.”

This episode demonstrates just how volatile and unpredictable the crypto market currently is. Mere weeks ago SBF was flying high as one of the world’s youngest billionaires — appearing on the cover of Fortune magazine and donating millions to political parties, now his empire lies in ruins, destroyed in the space of just a few days.

Categories
Crypto News Illegal Markets Regulation

SEC Wins Case Against LBRY – LBC Tokens Ruled as Securities

Gavel with a bookshelf background

A court ruling in favour of the US Securities and Exchange Commission (SEC) that upholds allegations that LBC tokens were illegally sold as securities has caused the token’s value to plummet by over 36 percent.

US District Judge Paul J. Barbadoro said in his ruling that the evidence shows “LBRY promoted LBC as an investment that would grow in value over time through the company’s development of the LBRY network.”

Following its loss, LBRY tweeted it would not give up, and warned that the ruling had set “an extraordinarily dangerous precedent that makes every cryptocurrency in the US a security, including Ethereum.”

Upon news that LBRY had been found to have violated the law by offering its LBC tokens as unregistered securities, LBC’s value dropped sharply and was trading at just US$0.012636 at the time of writing. 

LBC token price plunges. Source: CoinMarketCap

Precedent Applied Could Cripple US Crypto

Founder and CEO of the LBRY network, Jeremy Kauffman vented his frustration on Twitter: 

Kauffman also tweeted his belief that the ruling “threatens the entire US cryptocurrency industry.” 

The blockchain-based LBRY network is a protocol for building apps that enable creators and users to publish and purchase digital content including videos, music and ebooks.

Judge Barbadoro said he was not persuaded by LBRY’s argument that it hadn’t received fair notice that its offering was subject to securities laws, particularly given the network did not issue an Initial Coin Offering (ICO).

He said the SEC’s case was backed by a Supreme Court precedent that had been applied in hundreds of cases for more than 70 years. “While this may be the first time it has been used against an issuer of digital tokens that did not conduct an ICO, LBRY is in no position to claim that it did not receive fair notice that its conduct was unlawful,” Barbadoro said.

“Because no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked notice, the SEC is entitled to judgment.” 

US District Judge Paul J. Barbadoro
Categories
Binance Crypto News FTX Markets

Binance to Liquidate FTX Token Holdings Following a Balance Sheet Report on FTX’s Sister Company

Speculation about the financial position of the Sam Bankman-Fried backed companies FTX and Alameda Research has led to Binance dumping its FTT and shaken the value of the crypto tokens. 

On November 7, Binance CEO Changpeng “CZ” Zhao tweeted that the company would liquidate the FTT it holds “due to recent revelations that have came to light…” and would aim to avoid impacting the market.

Those “revelations” arise from a recent report by CoinDesk that raised concerns about the ties between Sam Bankman-Fried’s two companies and how Alameda Research’s financials indicate its biggest asset is unlocked FTT.

FTX Financial Concerns “Unfounded”: SBF 

CEO of trading firm Alameda Research, Caroline Ellison, claimed on Twitter that the balance sheet that sparked the concern was incomplete and did not reflect more than $10 billion of assets held by the company. 

FTX founder and CEO of crypto exchange FTX, Sam Bankman-Fried took to Twitter to thank supporters and especially “those who stay level headed during crazy times” in light of what he describes as the “unfounded rumours” circulating. 

In his tweet about liquidating Binance’s FTT tokens, CZ Zhao said Binance encouraged industry collaboration and had no intent to hurt users or other platforms, stating: “Regarding any speculation as to whether this is a move against a competitor, it is not.”

The taint of scandal has already had an impact, with FTT down more than 12 percent in the past seven days, currently trading at $22.35. Many social media users are wary of the token’s collapse.

Bankman-Fried said the exchange would keep going:

“And in the end you should do what you want, and trade where you want.  We’re grateful to those who stay; and when this blows over we’ll welcome everyone else back.”

Sam Bankman-Fried, FTX CEO
Categories
Bitcoin ETFs Markets

Australian Asset Manager to Delist Crypto ETFs after 6 months

In the same year that Australia’s first crypto exchange-traded funds (ETF) launched — they’re ending: the asset manager behind the highly-anticipated ETFs has said that it intends to delist its funds that invest in Bitcoin (BTC) and Ethereum (ETH).

On November 2, Cosmos Asset Management advised the Cboe exchange of its plan to revoke its Bitcoin and Ethereum ETFs and that trading had been halted. 

Cosmos Company Secretary Hollie Wight said that after receiving “in-principle advice for Cboe that it will agree to the request”, the funds would be delisted effective from close of trade on Tuesday, November 8, 2022.

Bitcoin ETF Not Immune From Crypto Winter

It’s a disappointing end for the first Bitcoin ETF listed on the Australian stock market, but not totally surprising given broader crypto market conditions. 

Cosmos indicated that from November 9, the company would return funds to investors and that Cosmos would cover the funds’ closure costs.

“Subject to Cboe’s formal decision on the application, the responsible entity will commence the process on 9 November 2022 to redeem all investors at NAV as calculated by the Funds’ administrator and return their capital as soon as possible.”

Cosmos Company Secretary Hollie Wight

There was much hoopla when Cosmos launched its Purpose Bitcoin Access ETF (CBTC) and Purpose Ethereum Access ETF (CPET) funds in early 2022. The announcement was closely followed by news of competing Bitcoin ETFs from 21Shares.

But almost simultaneously the crypto winter was cooling the market. The price of Cosmos’ Bitcoin ETF has fallen around 19 percent since its launch in May.

CBTC price fall in the past year. Source: Cboe Australia