Category: Crypto News

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Australia Binance Australia Crypto Exchange Crypto News

Aussies Transfer to Local Exchanges as Binance Suspends AUD Fiat Services 

Aussie crypto exchanges have reported a big increase in new customers following Binance Australia’s suspension of AUD fiat services.

On May 18, Binance Australia told customers that its Aussie dollar services were suspended “due to a decision made by our third-party payment provider”. Meanwhile, the Australian Financial Review reported that Westpac had stopped its customers from transacting with Binance amid concerns over the use of overseas exchanges by scammers.

National exchanges have since reported a significant increase in traffic and downloads across their platforms.

Aussie crypto users move to local exchanges

Jason Titman, chief operating officer at Australian-owned exchange Swyftx, said:

“We’ve just seen a seven-month high in the number of new customer registrations. Aussie crypto users want the peace of mind that comes from dealing with a secure, large national exchange at the moment.”

Binance Australia has told its customers that they can continue to withdraw AUD via bank transfer until June 1. In its latest update, the exchange also said it was “working hard to find an alternative provider to continue offering AUD deposits and withdrawals.”

In a media statement on May 18, Westpac Group Executive of Customer Services and Technology, Scott Collary, said: “Digital exchanges have a legitimate role to play in the financial ecosystem. But since the rise of digital currency, we’ve noticed that scammers are increasingly using overseas exchanges.”

New research reveals Aussie crypto users biggest consideration when choosing an exchange

Titman said new Swyftx customer research had shown Australian ownership was now the biggest consideration for local crypto users when choosing an exchange.

“There has been a major shift in sentiment over the last six months and especially since the collapse of FTX, with local crypto users opting for local crypto exchanges.”

“Australians want to trade on secure exchanges that are based in the country and operate to local standards.”

“Swyftx has one of the largest teams in the country and we work closely behind the scenes with banks and law enforcement to keep our customers safe, with around 15% of our team dedicated to security and scam prevention.”

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Binance Crypto Exchange Crypto News FTX Kraken

Binance Releases Proof of Reserve System – Kraken CEO Unsatisfied

In the wake of the collapse of FTX, cryptocurrency exchanges are rushing to convince customers that they’re safe and not likely to suddenly collapse — at least not in the next few weeks. Recently large exchanges like Crypto.com and Kraken have released proof of their reserves, and now Binance is following suit. 

Last Friday, Binance announced its new proof of reserve system, which allows customers to verify that their funds have been included in the proof of reserves report by querying data in a Merkle tree. Binance claims this proves that customer funds are held on a full-reserve basis.

However, Binance’s new system has been met with criticism by the CEO of rival crypto exchange Kraken, Jesse Powell.

Powell referred to the system as “hand wavey bullshit” that provides nothing more than a cryptographic hash of an entry in a spreadsheet, which does nothing to show that Binance holds more assets than it owes.

Powell’s Criticism Explained

Powell said a meaningful proof of reserve audit must include all client liabilities with negative balances excluded, user-verifiable cryptographic proof that all accounts have been included in the audit, and cryptographic signatures verifying the exchange’s control over the wallets containing the assets.

Without this information, Powell said proofs of reserve such as those released by Binance are “worthless” and tell users nothing of value about an exchange’s financial position.

Powell’s Kraken exchange has implemented a similar Merkle tree-based proof of reserve system that he claims is more rigorous than that offered by Binance. However Kraken does acknowledge its system has some shortcomings of its own. 

Crypto Journalists Cop It

Binance wasn’t the only target in Powell’s sights: he also took aim at crypto journalists for failing to understand the flaws in Binance’s system.

Previously, Powell had criticised the Binance-owned crypto tracking website, CoinMarketCap, for its implementation of its new proof of reserves feature, which he says simply includes a list of wallets and does nothing to clarify if an exchange has more assets than liabilities. 

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Crypto Exchange Crypto News FTX Regulation

Top Crypto Data Platform CoinMarketCap Launches Proof of Reserve Tracker

A new feature released by leading crypto price-tracking site CoinMarketCap reveals more data about crypto exchanges’ reserves — the assets that enable a company to cover potential withdrawals by customers.

With the contagion of FTX’s highly damaging collapse continuing to spread, and Proof-of-Reserves being touted as a needed failsafe against future incidents, the website’s move to give people information about crypto exchanges has been welcomed by many. 

According to CoinMarketCap, its new ‘Proof of Reserves’ feature “provides transparency to cryptocurrency reserves through a verifiable auditing practice.” The data seems to be drawn from audited proof of reserves information that the exchanges themselves have made public — with these sources aggregated by CoinMarketCap for the convenience of its visitors. For instance, it lists as a source this tweet from Crypto.com:

“More and more cryptocurrency exchanges have begun revealing their proof-of-reserves in the wake of the recent industry disquiet, and we believe in the importance of giving CMC users all of the information possible about each exchange, project and token.”

CoinMarketCap statement about its Proof of Reserves data

What information can you now get?

By exploring the web pages dedicated to each exchange featured on CoinMarketCap, users can now view details including:

  • The total assets held by the exchange
  • Public wallet address ownership
  • The balance, price and value of the public wallets.

A true sense of a company’s solvency is typically derived from the difference between its total assets and its total liabilities. Obviously, CoinMarketCap doesn’t have access to every company’s full balance sheet, and this feature at least gives investors some indication of an exchange’s ability to meet its financial obligations. 

Capital Adequacy and Audits on the Agenda for Australian Regulators

Safe-keeping crypto investor funds by licensing exchanges and custody arrangements are being considered by the Australian Government, which recently hinted it would prioritise legislation in 2023 in response to the FTX collapse.

The recently finalised Senate Select Committee report into digital asset regulation recommended establishing a market licensing regime for exchanges, and stressed: “The key requirements of a new DCE Market Licence category should include, at a minimum, requirements relating to capital adequacy, auditing and responsible person tests.” 

CEO of digital asset mining company Mawson Infrastructure Group, James Manning is quoted in the report airing his concerns about the current lack of compliance standards: “There’s no audit obligation. As you pointed out, there’s no capital adequacy obligation. There’s no one verifying this, yet some of these exchanges are holding billions of dollars of assets.”

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Banking Crypto News FTX Markets

Crypto Lender Genesis Warns Potential Bankruptcy

The fallout from the FTX fiasco could also topple crypto brokerage Genesis, which has warned customers it may need to file for bankruptcy unless it can urgently secure additional funding, according to reports published by Bloomberg and the Australian Financial Review.

An unidentified person cited in reports claims Genesis has been in talks with companies including crypto exchange Binance, in an attempt to raise US$1 billion in new capital for its lending arm, but with no success so far. 

While FTX and its disgraced CEO Sam Bankman-Fried had a broad footprint of associated ventures, Genesis’ troubles seem to have arisen as a consequence of the overall market turmoil caused by the exchange’s collapse.

Bankruptcy Warning Lending Liquidity Issues  

Genesis offers digital asset trading, derivatives, lending and custody services and posted third-quarter results in 2022 showing it had US$2.8 billion in total active loans. 

On November 16, Genesis tweeted it was temporarily suspending redemptions and new loans for its lending business because FTX’s collapse and reduced market confidence had led to “…abnormal withdrawal requests which have exceeded our current liquidity.” 

Genesis had previously clarified that while it had around US$175 million in locked funds in its FTX trading account, “our operating capital and net positions in FTX are not material to our business.” Upon halting loans it reiterated that its spot and derivatives trading and custody businesses remained operational.

It said at the time it was working on a plan for its lending arm, including sourcing new liquidity:

It’s clear those efforts have not paid off yet. While it seems there’s no immediate plan to file for bankruptcy, Genesis’ shaky position has further destabilised crypto markets — Bitcoin’s price dipped briefly immediately following the news.

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Bitcoin Crypto News Economics

El Salvador to Start Purchasing 1 Bitcoin a Day

The President of El Salvador, Nayib Bukele, announced via Twitter that the Central-American nation will start accumulating Bitcoin (BTC) at the rate of one Bitcoin per day starting from today, November 18, 2022. 

El Salvador previously became the first country in the world to recognise Bitcoin as legal tender last year and already reportedly owns 2,381 Bitcoins. 

So far however, El Salvador’s foray into Bitcoin investing hasn’t paid off — the nation is estimated to have spent around US$100 million on Bitcoin, which is currently valued at around US$40 million, meaning it’s currently sitting on unrealised losses of around US$60 million.

The International Monetary Fund has previously warned that the country’s use of Bitcoin poses “large risks” when it comes to the stability of El Salvador’s financial institutions, financial integrity, consumer protections, and liabilities related to the use of public money to fund Bitcoin’s adoption.

We’re Still Early, Says El Salvador

El Salvador had not bought any BTC since July, when it picked up 80 BTC at the price of around US$19,0000 per coin.

But since BTC’s price has fallen in the wake of the FTX collapse, El Salvador apparently believes now is the time to start dollar-cost averaging. 

On Twitter, Bukele explained his belief that BTC is “the opposite” of FTX, stating BTC was designed specifically to avoid frauds and bank runs, and that purchasers of BTC are “still early.”

Justin Sun Chimes in to Match El Salvador 

The founder and CEO of the Tron blockchain, Justin Sun, responded to Bukele’s announcement by stating that Tron DAO will also start buying 1 BTC per day to store in its reserve. The Tron DAO Reserve is used by Tron to maintain the value of Tron-based stablecoins and to mitigate other financial risks to the blockchain.

If El Salvador continues to buy at the rate of 1 BTC per day for a prolonged period of time it could substantially increase its bitcoin holdings by the the time the next crypto bull market arrives. 

For a country already saddled with significant national debt, this aggressive BTC accumulation strategy is high risk — both Bukele and the citizens of El Salvador will be praying it pays off over the next few years. 

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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
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.