Author: Jana Serfontein

Jana has keen interest in what cryptocurrencies have to offer in regards to NGO’s, governments and the financial system. And is also intrigued with the psychological effect that cryptocurrencies have on society.

Categories
Celsius Crypto Staking DeFi

Goldman Sachs is Raising $2 Billion to Buy Celsius’ Assets

Investment giant Goldman Sachs is said to be attempting to raise US$2 billion in an effort to buy the assets of distressed crypto lending firm Celsius amid the current turmoil engulfing the cryptocurrency industry.

The capital would allow Goldman Sachs to buy Celsius’ assets at a massive discount, should the company file for bankruptcy:

‘Fake News’ Claim Regarding Rumours

The bank has been looking into commitments from Web3 crypto funds specialising in distressed assets, and traditional financial institutions with cash on hand. The assets to be acquired, most likely cryptocurrencies having to be sold at a low, would then likely be managed by participants taking part in the fundraising.

However, angel investor Simon Dixon has claimed that the rumours are fake news, according to a “source” at Goldman Sachs:

Drama unfolded earlier this month with Celsius when the crypto lender had to halt withdrawals as well as other services on its platform, but only after it transferred over US$300 million in digital assets to FTX.

Users May Yet Be Left High and Dry

Concerns also exist that Celsius may be left unable to pay out users wanting to withdraw their funds if the value of staked ETH doesn’t regain parity with ETH. Staked ETH, which is extensively used by Celsius, started to lose parity with ETH when DeFi markets were sent into a spiral following the collapse of the Terra ecosystem. In the time since, Celsius has hired the restructuring consulting firm Alvarez & Marsal.

The company has also reached out to restructuring attorneys from the law firm Akin Gump Strauss Hauer & Feld. Additionally, global investment bank Citigroup has been employed by Celsius to advise on possible solutions, which include an assessment of an offer from rival crypto lender Nexo. Citigroup and Akin Gump have both recommended that Celsius file for bankruptcy.

Categories
Blockchain Crypto News eBay NFTs

eBay Expands NFT Foray With ‘KnownOrigin’ Marketplace Acquisition

The world’s largest e-commerce enterprise, eBay has extended its reach into the world of digital collectibles and blockchain by acquiring Manchester-based marketplace KnownOrigin.

The move comes only a month after eBay released its debut NFT collection in partnership with Tezos and Polygon-based NFT platform OneOf.

Timing Right for KnownOrigin

KnownOrigin enables artists and collectors to create, purchase and resell NFTs via blockchain-enabled transactions. Co-founder David Moore said in a statement that the company was built to “empower creators and collectors by giving them the ability to showcase, sell and collect unique, authenticated digital items”.

Moore added:

As interest in NFTs continues to grow, we believe now is the perfect time for us to partner with a company that has the reach and experience of eBay.

David Moore, co-founder, KnownOrigin

eBay Continues Digital Exploration

It was just over a year ago that eBay began allowing its users to buy and sell NFTs, at a time when the market exploded. Its foray into collectibles shows continued interest in leveraging cryptocurrency and blockchain technology to improve its operations, and eBay has even begun looking into integrating crypto payment options.

Jamie Iannone, eBay’s chief executive, said in a statement:

KnownOrigin has built up an impressive, passionate and loyal group of artists and collectors, making them a perfect addition to our community of sellers and buyers. We look forward to welcoming these innovators as they join the eBay community.

Jamie Iannone, chief executive, eBay
Categories
Crypto News FTX

FTX to Bail Out BlockFi With $250 Million Line of Credit

Crypto lender BlockFi has secured a deal with crypto exchange FTX for US$250 million in revolving credit, as tweeted by BlockFi CEO Zac Prince this week:

Injection of Strength

Under the terms of the agreement, BlockFi will have access to capital amid the current massive downturn in the crypto market. FTX founder and CEO Sam Bankman-Fried said in a return tweet that the facility would enable BlockFi to “navigate the market from a position of strength”.

Prince has indicated that the proceeds from the loan are contractually subordinated to all client balances, meaning that BlockFi will satisfy its obligations on client accounts before paying FTX.

The news comes amid a difficult time for BlockFi, which recently had to cut its staff by 20 percent. Last week, Celsius, one of BlockFi’s crypto lending competitors, froze account withdrawals, swaps, and transfers to help it through the crypto winter, reportedly transferring US$320 million in cryptocurrencies to FTX before doing so.

Deal May Lead to Future Partnership

Along with the announcement of the line of credit, Prince hinted that the deal could open the door to a full-fledged partnership between FTX and BlockFi. He said on Twitter:

This agreement also unlocks future collaboration and innovation between BlockFi and FTX as we work to accelerate prosperity worldwide through crypto financial services.

Zac Prince, CEO, BlockFi
Categories
Crypto News Korea Terra

South Korean Prosecutor Bans Terra Employees From Leaving the Country

Former employees of Terraform Labs have been reportedly prohibited from exiting South Korea as investigations into the company continue following last month’s Terra USD collapse.

Developers and other former staff have been unable to leave the country as prosecutors have imposed a departure ban on key personnel involved in the project:

Former Employees Knew Nothing of Travel Embargo

On June 20, the newly reconstituted Financial and Securities Crimes Joint Investigation Team announced a travel embargo had been put in place to prevent “persons of interest” in the case from leaving the country. The move could also be seen as preparation for additional investigative activities such as search and seizures, as well as subpoenas to be served on other prospective defendants.

One of Terra’s former developers, Daniel Hong, confirmed via Twitter that Terraform Labs employees had received an exit ban from the South Korean government. According to Hong’s tweet, none of the employees was notified to avoid any possibility of destruction of evidence as the investigation continues.

The move comes only weeks after South Korean authorities targeted Terraform Labs staff for questioning and moved to freeze the foundation’s assets.

Hong shared his dismay at the ban, stating that it shows employees are being treated as criminals, which he described as “unacceptable”.

Categories
Crypto News Cryptocurrency Law Dogecoin

Elon Musk Faces $258 Billion Lawsuit for Alleged ‘Dogecoin Pyramid Scheme’

Elon Musk, along with his companies Tesla and SpaceX, is facing a US$258 billion class-action lawsuit that claims they “are engaged in a crypto pyramid scheme (aka Ponzi scheme) by way of Dogecoin cryptocurrency”.

The lawsuit alleges that Musk “falsely and deceptively claims that Dogecoin (DOGE) is a legitimate investment when it has no value at all”, although crypto Twitter is already talking down the suit’s chances of success:

Order Sought to Classify DOGE Trading as ‘Gambling’

Plaintiff Keith Johnson, a Dogecoin investor, has filed a complaint in federal court accusing the world’s richest man of racketeering for touting DOGE and driving up its price, only to later allow it to tumble. According to the complaint, “[the] Defendants were aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading”, adding that “Musk used his pedestal as World’s Richest Man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure, and amusement”.

Johnson argues that DOGE is “simply fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price”. The plaintiff is seeking to represent a class of fellow investors who have lost money by trading DOGE since April 2019 and claims US$86 billion in damages and treble compensatory damages of US$172 billion.

Additionally, Johnson is seeking an order to block Musk and his companies from promoting DOGE, and declaring that DOGE trading constitutes gambling under US and New York law.

Musk Tweets Ongoing Support for Dogecoin

Musk has famously joked that Dogecoin could become the world’s currency. In May, he announced that SpaceX would soon accept DOGE for merchandise and also discussed allowing payment in DOGE for some Twitter services, should he become the owner of the social media platform – which he has since acquired for a cool US$44 billion.

Musk, for his part, remains unrepentant:

Categories
Crypto News DeFi Solana

Solana DeFi Protocol Votes to Liquidate Whale’s Account to Protect the Network

The team at Solana-based DeFi protocol, Solend, recently liquidated a whale’s account, ostensibly to mitigate risks posed to the Solana network.

A vote was undertaken by the Solend community on whether or not to take temporary control of the whale’s account and liquidate its holdings through an over-the-counter (OTC) trade.

Among the major concerns was that with the price of SOL dropping to US$22.30, the whale’s account would liquidate up to 20 percent of borrows, estimated at around US$21 million, and in such event could have landed Solend with a significant amount of bad debt.

Potential Chaos Alert

Apparently, but for Solend’s actions, liquidations would otherwise have placed significant strain on the Solana network, and liquidators would be especially active and spam the liquidate function – which has been a known factor causing Solana to go down in the past:

Solend Forced to Take Decisive Action

Despite its best efforts, the team at Solend has been unable to contact the whale via on-chain messages to reduce the risk, forcing it to take decisive action:

Options presented to the community included doing nothing, which would present a systemic risk to Solend and its users. Allowing liquidations of this magnitude to happen on-chain is risky as the DEX liquidity isn’t deep enough to handle a sale of this size and could cause cascading effects.

The team at Solend decided that any action taken had a set of trade-offs to consider and it posed a vote to the community with two possible outcomes:

  • Vote Yes – enact a special margin requirement for large whales that represents over 20 percent of borrows and grant emergency power to Solend Labs to temporarily take over the whale’s account so that liquidation can be executed OTC; or
  • Vote No – do nothing.

Votes were cast and the community voted yes:

Categories
CBDCs Crypto News Europe

European Central Bank Claims Fixed Supply for its CBDC: 1.5 Trillion Euros

The European Central Bank’s executive board member Fabio Panetta has announced that the ECB will limit the digital euro to a maximum supply of 1.5 trillion euros.

Panetta appeared before the European Parliament’s Committee on Economic and Monetary Affairs to report on the development of a digital euro as the program reaches the one-year mark:

Eurozone Set to Launch CBDC in Four Years

Since the eurozone’s central bank initiated a two-year investigation into a possible digital currency in July 2021, Panetta has said he was optimistic that a central bank digital currency (CBDC) would be ready for launch within four years. Panetta told the committee that should a digital euro be issued, it would be capped at 1.5 trillion euros as a major concern with a CBDC is that consumers might keep all their money in digital format, which would in effect mean depositing their entire savings with the central bank and starving consumer banks of the funds they need to lend to businesses and individuals.

Panetta said in a statement: “Keeping total digital euro holdings between one trillion and one-and-a-half trillion euro would avoid negative effects for the financial system and monetary policy.” He added: “As the population of the euro area is currently around 340 million, this would allow for holdings of around 3,000 to 4,000 digital euro per capita.”

Panetta continued by saying that many Europeans are “not enthusiastic, to put it mildly, about the digital euro”. This, he said, was partly due to the fact that very few people understand what a digital euro is because “it’s complicated”.

Categories
Coinbase Crypto News

Coinbase the Latest to Cut Staff Amid Crypto Winter, 1100 Layoffs Announced

Coinbase is the latest in a slew of companies that have had to let employees go amid the current bear market. The exchange announced in a blog post that it would be slashing 1,100 jobs, or around 18 percent of its total workforce, as it prepares for an “extended” crypto winter:

(Another) Crypto Winter Is Coming

Coinbase CEO Brian Armstrong has admitted “it is now clear to me that we over-hired”, noting that economic conditions are “changing rapidly” as the world appears to be entering a recession. He said it “could lead to another crypto winter, and [it] could last for an extended period”. Coinbase joins companies such as BlockFi and Crypto.com who announced this week that they would be shedding 400-plus jobs.

Armstrong’s latest plan, to be executed by the end of the second quarter, will see the company’s total workforce whittled down to 5,000 employees. The CEO conceded that the company “grew too quickly” in the bull market, scaling up from 1,250 employees at the start of 2021.

Coinbase shares are down almost 80 percent this year amid a sharp decline in crypto prices which has hurt the exchange’s transaction volumes.

Categories
CeFi Celsius Crypto News FTX

Claims Surface ‘Celsius’ Sent $320 Million to FTX Before Halting User Withdrawals

Before halting all withdrawals this week, crypto lending platform Celsius is alleged to have quickly transferred over US$320 million worth of cryptos to Bahamian exchange FTX. Rumours are now running rampant that Celsius may be heading to zero.

Celsius token (CEL) fell nearly 70 percent since the firm announced on June 13 it was pausing all withdrawals to “stabilise liquidity”. It now finds itself in troubled waters as the company is rumoured to have unstaked US$247 million in Wrapped Bitcoin from AAVE and sent it to FTX.

Transactions commenced over the weekend, with the first batch of 3,500 Wrapped BTC and 50,000 ETH, and continued to increase in subsequent hours. Celsius has yet to comment on the transfers, with the only communication coming from an announcement halting all users’ services, including withdrawals.

Twitter Accusations of Mismanagement

While the firm has not yet addressed the transfers to FTX, the crypto community is up in arms on Twitter and speculation runs wild that there are associated issues of liquidity.

Users have also criticised the platform for how they believe the project has mismanaged its funds following the collapse of the Anchor Protocol on the now-renamed Terra Classic blockchain. Celsius has been surrounded by scandal since its chief financial officer was arrested in December 2021 on charges of money laundering.

Some believe that if Celsius were to fail, it would precipitate a sell-off of its significant stack of staked ETH, which could cause it to depeg further from ETH.

While it is still unclear what the team at Celsius plans to do with the crypto it has moved, there is a real possibility that it could sell the assets it sent to FTX. Another option might be that it intends to stake the tokens it is sending to the exchange to earn yields. At this early stage, there appear to be more questions than answers. Hopefully some clarity will emerge shortly, particularly for those users who funds remained locked up.

Categories
Australia Metaverse NFTs

Australians Look to Virtual Real Estate Amid Overheated Real-Life Property Market

As prices in the real-life property market surge out of control, some Australians are settling for the next best thing – buying virtual properties.

Those who cannot afford to get into the actual property market purchased digital real estate to the tune of A$59 million in April alone, despite a 35.3 percent first-quarter drop in the Everyrealm Metaverse Index, which tracks virtual property across 14 different metaverses.

Many of Australia’s most prestigious addresses and landmarks have gone on the market at rock-bottom prices. Right now, 47 Aussie addresses are listed for sale in one virtual marketplace where people can “buy” property, or rather NFTs based on the real world.

Buy an Icon for Just Four Figures

Iconic Australian properties such as the Melbourne Cricket Ground have sold for as little as A$6078.90. While that sounds ridiculously cheap by the standards of tangible property, owners won’t actually own the real deal.

The Melbourne Cricket Ground, snapped up by a lucky virtual buyer for just $6078.90. Source: austadiums.com

Virtual land deals are becoming an increasingly frequent occurrence with companies such as McDonald’s setting up shop in the metaverse. NFT community the Bored Ape Yacht Club is also set to start selling large quantities of virtual land.

Royalties to be Earned, Money to be Lost

Dr Simone Brott, senior lecturer in architecture at the Queensland University of Technology and author of the book Digital Monuments, says that new platforms selling virtual land are popping up every day. As she notes, “When you buy a virtual piece of real estate, you’re buying an asset just as if you were buying a bricks and mortar building. If that asset appreciates, you can sell it for a profit.”

Brott also notes that, unlike real world property where you can only make a profit once, when you sell a real estate NFT to a second buyer who then sells it to a third, depending on how the deal was set up you might end up earning royalties each time the NFT changes hands.

There are pros and cons to the craze, warns Dr Brott. “It’s seen as a risky investment but also provides early entry and significant market opportunity.” She adds:

The metaverse is simply the next iteration of social media. But unlike Facebook, which is owned by a CEO, the metaverse is owned collectively by those who own the real estate.

Dr Simone Brott, senior lecturer in architecture, Queensland University of Technology

Canstar personal finance writer Nicola Field confirms that some virtual property owners have made big gains. “But, as is often the case with anything crypto-related, it’s a fair bet plenty have also lost money on virtual property.”