Cryptocurrency Researcher Debunks the 3 Biggest Misconceptions about FTX Hacking

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On-chain investigator ZachXBT took to Twitter to correct “tons of misinformation” about the event and possible culprits.

On-chain researcher ZachXBT shared his findings on what he sees as the three most common misconceptions about the FTX hack, taking to Twitter to correct a “ton of misinformation” about the event and potential culprits.

In a lengthy November 20 post on Twitter, the self-proclaimed “chain detective” debunked speculation that Bahamian officials were behind the FTX attack, that the exchanges knew the hacker’s true identity, and that the culprit was trading memecoins.

Bahamian Officials behind the FTX Hack?

The hack of nearly half a billion dollars in cryptocurrency from bankrupt FTX last weekend was actually a government asset seizure, acknowledged by The Securities Commission of the Bahamas.

“The Securities Commission of the Bahamas, in the exercise of its powers as regulator acting under the authority of an order made by the Supreme Court of the Bahamas, took the action of directing the transfer of all the digital assets of FTX Digital Markets Ltd. to a digital wallet controlled by the commission, for safekeeping,” the agency said in a statement.

However, ZachXBT argued that the wallet address “0x59” associated with the hacker was a blackhat address and was not affiliated with either the FTX team or SCB because it “began selling tokens for ETH, DAI, and BNB and using a variety of bridges so crypto couldn’t be frozen on 11/12.”

Zach also notes that the blackhat wallet has had contact with another wallet, 0x24, which he suggests “has very suspicious behavior on-chain using sketchy services.”

Blockchain analytics firm Chainalysis reached a similar conclusion on November 20, noting that, “Reports that the stolen FTX funds were actually sent to the Bahamas Securities and Exchange Commission are incorrect. Some funds were stolen and other funds were sent to regulators.”

Do Exchanges Know who the Hacker is?

ZachXBT highlighted potential misinformation surrounding the claim that “Kraken or other exchanges” had discovered the hacker’s identity.

Zach says that the user identified as the hacker was likely just the FTX group securing assets in a multi-signature wallet on Tron, using Kraken because the active FTX wallet had no transaction fuel for it. He further states that the withdrawals “also matched what Ryne Miller (FTX GC) had said at the time. This took place hours after the initial 0x59 withdrawals.”

FTX Hacker Presumably Trading Memecoins?

As a last point, ZachXBT took aim at the rumor that hacker FTX is trading memecoins, which was first noted by Blockchain analytics firm CertiK.

Instead, the Blockchain detective claims that, in fact, “it is someone spoofing transfers to make it look they are,” citing a March blog by Etherscan community member Harith Kamarul, who explains how transactions can be forged.

ZachXBT concludes by advising users to “triple check who you get your info from,” and claiming that. “many people are using the FTX event to appear knowledgeable for engagement, when in fact they have zero clue what is going on.”

By Audy Castaneda

The Same as with Some Cryptocurrencies, the Price of Stocks Rises by over 200%

The shares of Grindr remind of Dogecoin, which increased by over 10,000% to USD 0.68 between January and May 2021. This year has been bad for the stock of MicroStrategy, which has lost nearly 70% to USD 170.12.

The price of the shares of Grindr, an LGBTQ social media platform, skyrocketed by over 200% to around USD 40. That happened after its merger with Tiga Acquisition Group in a USD 2.1 billion deal.

The stock of Grindr rose by 46.2%, going from USD 11.63 to USD 17.00 within 24 hours. The low volume of shares in circulation (500,000) and the interest earned by the company contributed to that increase.

Another company whose stock recently accumulated significant gains is PaxMedica, a pharmaceutical company. The price of its shares rose by 36.8% within 24 hours to reach USD 2,135. Besides, the stock of YTRA, a travel company, increased by 33% to USD 2.82 overnight.

The shares of Grindr bring to mind the early rallies for meme coins like Dogecoin (DOGE), whose increases by over 10,000% were uncommon in 2021. Between January and May of that year, DOGE gained over 10,000%, going from USD 0.002 to USD 0.68.

Features of Meme Coins like Dogecoin and Shiba Inu

In 2021, speculative investors turned to cryptocurrencies amid the COVID-19 pandemic, causing the price of DOGE to rise. International lockdowns led to record trading volumes thanks to the efficient trading interfaces of some financial services companies.

Dogecoin preceded Shiba Inu (SHIB), which rose by around 11,000% in late September and October 2021. Those meme coins differ from other cryptocurrencies as they offer little value or utility beyond speculation.

Elon Musk Has Influenced the Course of the DOGE Price

Renowned influencers have expressed their sentiment, leading the price of cryptocurrencies to rise. These include Dogecoin, whose price has followed the bullish statements of Elon Musk, the new owner of Twitter. His tweets have caused the meme coin to rise by up to 20% within 24 hours.

On the contrary, negative sentiment from a celebrity like Changpeng Zhao can push prices lower. After he announced that Binance would sell its FTT holdings, the price dropped by 76% within two days.

That message scared investors, leading to significant withdrawals of the token from FTX, which is now bankrupt. After Sam Bankman-Fried filed for bankruptcy protection, many clients lost their money due to the price of FTT plummeting.

Crypto-Related Stocks Have Undergone Serious Difficulties this Year

This year has been bad for cryptocurrency-related stocks, like those belonging to the enterprise analytics platform MicroStrategy. The company, co-founded by Michael Saylor, is the largest Bitcoin holder, with over 130,000 BTC on its balance sheet. The value of its shares has dropped by nearly 70% to a low of USD 170.12.

Meanwhile, the stock of cryptocurrency exchange Coinbase has fallen by around 80% to USD 45.44. The company lost USD 540 million in the third quarter of 2022, the third time it has struggled with falling trading revenue.

By Alexander Salazar

Cardano (ADA) Will Have Its First USD-Backed Stablecoin in 2023

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The Cardano community has welcomed this development as it would help boost their DeFi ecosystem.

Cardano will finally have its own fiat-backed stablecoin after one of its founding entities, EMURGO, announced that the USDA stablecoin will launch on the Proof-of-Stake network in Q1 2023.

EMURGO announced on November 18 that the stablecoin would be fully compliant, and designed to protect Web3 participants from the inherent volatility of the crypto market.

The US dollar will fully support the stablecoin, to ensure it provides long-term price stability.

EMURGO USDA Stablecoin Fully Backed by USD

EMURGO said it has a partnership with an unnamed regulated financial services company in the US that will act as custodian for the cash deposits. It also noted that USDA would be the first product to come from its new suite, Anzen, which will focus on connecting traditional financial services with cryptocurrencies.

Through the Anzen portal, users can tokenize their dollars, and use them on the Cardano Blockchain. Plans for Anzen include loans, bridges between DApps and traditional finance, as well as crypto debit cards.

EMURGO Fintech Managing Director, Vineeth Bhuvanagiri, said that, “This stablecoin not only offers stability to investors conducting financial transactions on the Blockchain, but also opens a path for the Cardano ecosystem to address a problem we are facing. a unique position to resolve: banking the underbanked”.

Cardano Community Welcomes Stablecoin Idea

The Cardano community has welcomed the new announcement. Other stablecoins may have also launched on Cardano before the arrival of USDA.

Talks about a Cardano-based stablecoin have been ongoing for a while. Several analysts have predicted that it would help propel Cardano’s decentralized finance (DeFi) ecosystem, which currently has a TVL of $53.32 million, really far from the $300 million-plus peak recorded in March.

Meanwhile, other developments are also ongoing at Cardano. Charles Hoskinson, founder of Cardano (ADA), recently revealed that the web is about to enter the Voltaire Age.

In this phase, the network would drive a more decentralized decision-making process; in fact, the first Cardano Improvement Proposal (CIP) is already available on GitHub.

Charles Hoskinson Introduces the ‘Midnight’ Private Blockchain

In a recent interview, Charles Hoskinson stated that Input-Output Global (IOG), which is the company behind Cardano, plans to implement a new Blockchain and privacy token, which will be called ‘Midnight,’ while the accompanying token for the private Blockchain will be called Dust.

The Cardano CEO mentioned that the new private Blockchain differs from ZCash and Monero by being written in “A normal programming language, not some weird Snark thing, but JavaScript or something like that, something developers can understand and get a guarantee of privacy from.”

By Audy Castaneda

Grayscale Will Not Publish Proof-of-Reserve “For Security Reasons”

The announcement comes as cryptocurrency exchanges are unveiling their Proof of Reserves following the FTX collapse.

Digital asset management firm Grayscale Investments revealed that it will not publish its Proof of Reserves “for security reasons.” The announcement comes as cryptocurrency exchanges are unveiling their Proof-of-Reserve following the FTX crash.

Grayscale Investments made its decision known through a thread posted on Twitter on Friday, November 18. The digital asset management company highlighted that it has been so, “due to security concerns”:

“We do not make on-chain wallet information and confirmation information publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure.”

Grayscale Acknowledges That Decision May Breed “Disappointment”

The digital asset management firm also acknowledged that the decision not to share its Proof-of-Reserve (PoR) could turn out to be a “disappointment” for investors. However, Grayscale points out that, “panic caused by others is not reason enough to circumvent the complex security arrangements that have kept our investors’ assets safe for years.”

On the other hand, through an official statement, Grayscale indicated that the transparency issue is taken very seriously, and highlights that the company has “A long history of constructive work with regulators to create and strengthen complete and fair risk disclosures for our digital asset products.”

Grayscale’s statement further affirms the following:

  1. “The holdings of Grayscale’s digital asset products are safe and secure.
  2. Each of Grayscale’s digital asset products is set up as a separate legal entity.
  3. All digital assets that underlie Grayscale’s digital asset products are held by Coinbase Custody Trust Company, LLC (Coinbase Custody) as custodian for each product.
  4. The organizational documents governing each of Grayscale’s digital asset products, as well as the custodian agreement with Coinbase Custody, prohibit the digital assets underlying the products from being lent, borrowed, or otherwise encumbered.”

At the same time, the firm ruled that its investment products are audited following US GAAP principles, and subsequently, documents from the public filings of its cryptocurrency-based trusts are shared.

It is worth noting that, amid expectations for the Proof-of-Reserve release, both Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE) hit all-time lows recently.

What is the Importance of “Proof of Reserves”?

The recent collapse of the FTX cryptocurrency exchange, as well as the bankruptcies of companies such as Celsius Network, Voyager Digital, and Three Arrows Capital, have intensified investor confidence in centralized institutions.

It is for this reason that Proof of Reserves emerged as an opportunity for platforms to show the transparency of the assets —and therefore their funds— that they have deposited.

Currently, platforms such as Ledn, Nexo, Kraken, BitMEX, Gate.io, Binance, Crypto.com have already shared their respective Proof of Reserves.

By Audy Castaneda

The Crypto Market Crash Causes the Stock-to-Flow Model to Predict the Bitcoin Price Inaccurately

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Although the Stock-to-Flow model predicted the price of BTC accurately between 2015 and late 2021, it failed this time. When the collapse of FTX affected the market, the S2F Multiple dropped below 1.5, a negative analysis never seen before.

This year, Bitcoin (BTC) has moved like a roller coaster, going from a high of USD 47,000 to just above USD 16,600. Although investors use the Stock-to-Flow (S2F) ratio to predict the price of the pioneering cryptocurrency, it seems wrong this time.

Any investor would dream of knowing when to buy an asset at the best price. On social networks, many traders and analysts gain hundreds of thousands of followers that seek to enter the market.

Well-known analyst PlanB, the creator of the Stock-to-Flow predictive analysis model, gets some of the most conflicting opinions from the community.

The Stock-to-Flow Model Aims to Assess the Relative Abundance of Bitcoin

Investors usually use the Stock-to-Flow model to price commodities by assessing two attributes: stock and flow.

While the stock is the existing supply of a good, the flow is the new merchandise supply created yearly. It is possible to determine the relative abundance of Bitcoin by comparing these two attributes.

One of the most prominent features of Bitcoin is that investors know the exact amount of new supply entering circulation yearly. Given that factor, predicting its price with the Stock-to-Flow model may be highly accurate.

The Stock-to-Flow Ratio Fails to Predict the BTC Price Accurately

Over the years, the Stock-to-Flow ratio has proven its ability to help predict the price of Bitcoin accurately. Since the cryptocurrency skyrocketed during the COVID-19 pandemic, the model gained traction due to its preciseness.

In 2011 and 2013, before Bitcoin became a mainstream investment, the value of the cryptocurrency and the Stock-to-Flow ratio diverged. Although the model predicted the price accurately between 2015 and late 2021, it failed this time.

The FTX Collapse Causes the Stock-to-Flow Multiple to Drop

Amid the FTX collapse, the continued decline in the price of BTC has reinforced an already negative trend. That has affected miners, well-known metrics, and many other essential parts of the Bitcoin network.

The price predictions by the Stock-to-Flow model are under increased scrutiny and criticism due to wide fluctuations. Current targets remain significantly higher than the current market price despite those factors.

According to the tracking resource S2F Multiple, Bitcoin should be trading at around USD 72,000. When the collapse of FTX reached the market, the multiple reached below 1.5, a negative reading not seen before.

Despite the Bearish Crypto Market, PlanB Maintains His Position

The creator of the Stock-to-Flow model believes FTX only represents a small error, although the world seems to be ending.

By the way, PlanB has faced accusations, including claims that his analytics tool is fraudulent. For example, Vitalik Buterin thinks financial models that falsely indicate that a number will increase deserve receiving ridicule.

Although nobody knows where the price of Bitcoin will head next, many consider the Stock-to-Flow model might have the answer. However, the uncertain situation in the crypto market might continue to affect the creation of Satoshi Nakamoto.

By Alexander Salazar

Bitcoin on November 19, 2022 – A Historically Complicated Position

Bitcoin looks poised to close below the critical $20,000 support or 2017 ATH, although November is not over yet.

Beware of the black flag over the king of crypto! – It is useless to remind you how much ink the FTX issue has spread in the financial world. To the point that unfortunately it generates disastrous publicity against cryptocurrencies.

If in the near future, what has happened to FTX could hurt Bitcoin, although there are some who remain firmly convinced that it will grow in the long term. At the moment, there is still talk of its bearish run since the last ATH in November 2021, with the bulls finding themselves in a difficult position.

Bitcoin in Monthly Units: November below $20,000?

Although November isn’t over yet, Bitcoin seems poised to close below the critical $20,000 support or 2017 ATH.

Firstly, prices would risk falling below the Kumo (cloud) in the coming months. Given the scale of FTX’s business, a spectacular reassembly would seem like an impossible mission.

Second, Chikou Span, while above the cloud, would probably be below BTC prices.

Lately, the unfavorable reversal of the future Kumo, via a bearish cross between the Senkou Span A (SSA) and the Senkou Span B (SSB), is a matter of concern. The bear market for the crypto king may continue to stall in the first half of 2023.

Bitcoin in Weekly Units – The Hangover

Bitcoin prices fell sharply below $20,000, while the Chikou Span, which lags behind price movements, is now below the 2017 ATH.

Despite the new lows for the year, it may be tempting to assume that this has no real relationship to the BTC Price Status Quo and Chikou Span below Kumo. However, the bulls would feel the specter of a third wave of correction, as well as the widening of the Kumo thickness after last week’s fall, would not advocate a definitive truce in the bearish run.

Bitcoin in Daily Units: Unfavorable Polarity Shift Around $20,000

As luck does not smile on the bulls, they would take a dim view of the unfavorable polarity reversal around $20,000, that is, the move from support to resistance according to the daily chart. Especially since this simultaneously coincides with Bitcoin prices and a Chikou Span below the Kumo. Worse still, the break of $20,000 could definitely line up on weekly units by the end of the weekend.

As long as the king of cryptocurrencies remains at the mercy of a difficult-to-understand market context, it will have a hard time profiting from bad news.

This is precisely because the lack of liquidity – a consequence of the restrictive monetary policies of the central banks – does not favor upturns likely to maintain positive momentum. In any case, Bitcoin could be headed for a third wave of correction.

By Audy Castaneda