Binance Announces Recovery Fund Following FTX Collapse

Audy Castañeda
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Is Binance’s mission with Changpeng Zhao to avoid collapse with its recovery fund?

The Binance cryptocurrency platform proposed the creation of a rescue fund that would save healthy companies in the sector from failure, in order to protect them in case one of them collapses.

The proposal arose after the implosion of FTX last week, the third-largest cryptocurrency exchange in the world.

Binance founder and CEO Changpeng Zhao tweeted Monday that his company will create “an industry recovery fund, to help projects that are strong, but are in a liquidity crisis.”

Zhao explained, through a tweet, that the idea of ​​said creation is “to reduce further cascading negative effects of FTX.”

Zhao did not provide details on the size or scope of the fund, nor how the resources would be distributed.

Zhao’s Previous Comments in Regards to FTX Collapse

Changpeng Zhao, at a Fintech Conference held in Indonesia on Friday, called for new but stable and clear regulations for the industry, stating that, “We need some regulations, we need to do this correctly, we need to do it in a stable way.”

He added that. “I think the industry collectively has a role to protect consumers, to protect everyone. So it’s not just the regulators. Regulators have a role, but it is not 100% their responsibility.”

About Binance’s Recovery Fund

The new recovery fund is an alternative way to help a sector that is going through its most difficult time in years.

Now, while Zhao did not provide all the information about the projects that could be chosen, he did tell teams that they think might fit the criteria to contact Binance Labs. He also asked other interested industry players to get in touch with them, “More details soon. In the meantime, please contact Binance Labs if you think you qualify.”

By the way, some personalities, such as the founder of Tron, Justin Sun, and the CEO of BnkToTheFuture, Simon Dixon, have already expressed their willingness to join the initiative:

“I would like to join the fund. Let’s make this an industry effort.”

Interestingly, one user asked why FTX would qualify for the fund, to which Zhao replied that the fund is not for FTX:

“Hey, you misread the tweet I think. Liars or fraud never qualify as solid projects. This is for other projects in the ecosystem.”

In conclusion, it still seems too early to determine the more serious effects of the FTX collapse, but there are already other companies currently receiving withdrawal requests overloading their systems. BlockFi and Crypto.com said they were facing many withdrawal requests after the FTX crash.

Cryptocurrencies are not backed by the government, so there is no equivalent of deposit insurance or government protection. What Zhao proposes may be something similar to deposit insurance or a central bank-like entity for cryptocurrencies.

By Audy Castaneda

Ethereum, an “Ultra Solid” Cryptocurrency that Remains Vulnerable to Censorship

Audy Castañeda
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<strong>Ethereum, an “Ultra Solid” Cryptocurrency that Remains Vulnerable to Censorship</strong>

Due to an increase in network activity, this Thursday, November 10, more than 3,000 ETH were burned. Currently, 71% of Ethereum validators comply with OFAC regulations.

Almost two months after The Merge update, Ethereum is no longer issuing tokens. Its status as a deflationary currency and “Ultra Sound” is therefore indisputable, but its price has fallen by more than 18%.

“Can cryptocurrencies make me a millionaire? Yes, if you’re a billionaire”. If you follow the crypto community on Twitter, you’ve probably seen this meme making the rounds since the FTX crash.

In a matter of hours, the market capitalization of the crypto market fell below the $800 billion mark, a loss of 14%. For investors, the day after the FTX crash was a disaster by any measure. However, here is something that might cheer you up.

While all eyes are on the FTT course, do you remember Ethereum and its The Merge update that was released on September 15? Haven’t you forgotten ETH’s transition from the Proof-Of-Work (PoW) execution layer to the Proof-Of-Stake (PoS) Beacon Chain consensus layer, also known as ETH 2.0?

The Merge: ETH Becomes Deflationary

On September 13, a few hours before The Merge, BeInCrypto released a report on the impact of this long-awaited transition. Today, almost two months later, we take a look at this update that changed everything about Ethereum.

In short, The Merge has changed the issuance model and supply of ETH. “Previously, ETH tokens were issued from two sources: the execution layer (mainnet) and the consensus layer (Beacon Chain). Since The Merge, the broadcast in the runtime layer has gone to zero.

After The Merge, Ethereum became an ultra-strong and deflationary currency, which means that it is in limited supply; in other words, its purchasing power increases over time, because new coins/notes are not issued, as they develop resilience against sudden price increases, as well as against long-term declines in purchasing power.

Ethereum: an “Ultra Sound” Coin

After introducing a fee reduction mechanism with the EIP-1559 update, Ethereum has become, according to its proponents, an Ultra Sound coin, an asset whose total supply decreases (deflation) and increases in value over time. This will allow investors to generate a 4-5% return (currently 4.3%) on Ethereum stakes.

However, one major issue that could arise is the censorship of Ethereum. In fact, the MEV Watch platform reveals that some MEV (Maximum Extractable Value) enhancement software is regulated by OFAC (Office of Foreign Assets Control), meaning it can censor certain transactions if authorities deem it necessary.

Currently, 71% of Ethereum blocks comply with OFAC regulations. A figure that has increased considerably compared to the end of September when it did not exceed 25%

By Audy Castaneda

Lebanon Views Bitcoin as a Solution to Get out of Its Serious Economic Crisis

Alexander Salazar
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Lebanon Views Bitcoin as a Solution to Get out of Its Serious Economic Crisis

Many Lebanese citizens use their cryptocurrency wallets to exchange USDT for US dollars with interested parties in person. Although using cryptocurrencies as a payment means is illegal, many companies publicly accept them because they see no other alternative.

Amid persistent hyperinflation since 2019, Lebanon is looking for a way out of its current economic crisis. The country views Bitcoin (BTC) and USDT, the stablecoin of Tether, as a solution to its financial problems.

Lebanon Is No Longer The Paris of the Middle East

Beirut, called The Paris of the Middle East after World War II, experienced a period of prosperity. Lebanon enjoyed a global reputation for its tax advantages and anonymity despite a deadly civil war from 1975 to 1990.

In 2010, a growing budget deficit in a post-war context gradually worsened that situation. Finally, Lebanon went into default in early 2020, a few months before the fatal explosion at the Port of Beirut.

Lebanon is undergoing 3-digit hyperinflation, as the Lebanese pound (LBP) has devalued by just over 26%. The United Nations estimates that the precarious situation has pushed 78% of Lebanese citizens below the poverty line.

Backed by various fiat currencies, the Lebanese pound had a fixed exchange rate of LBP 1,500 per US dollar for 25 years. However, its value rapidly decreased, currently trading at around LBP 40,000 per US dollar on the Lebanese black market.

Bitcoin and Altcoins Protect against Inflation, Generate Income, and Allow Saving

Amid severe economic difficulties, the population of Lebanon adopts cryptocurrencies out of necessity. Those assets allow citizens to store and transfer money even if their banking system is down.

The Litani River has enabled the deployment of local hydro-powered Bitcoin mining farms. In addition, that activity is one of the few sectors that allow obtaining income in US dollars instead of in local currency.

Since many Lebanese use their cryptocurrency wallets daily, those wanting to exchange USDT for US dollars have created Telegram groups. After agreeing on the amount to exchange, the two interested parties meet in person to carry out the transaction.

Although the Lebanese authorities prohibit using cryptocurrencies as a payment means, many companies publicly accept them. The devaluation of the national fiat currency has led them to realize that there is no alternative.

Lebanon is just one example of the growing interest in Bitcoin in countries where the national fiat currency has drastically depreciated. Since its use on the black market resists censorship, it will continue developing to take on fiat currencies destined to perish.

Bitcoin is trading at around USD 16,716 and has accumulated a 0.8% gain over the last 24 hours. While its daily trading volume is above USD 29.67 billion, its market capitalization is about USD 321.06 billion, according to CoinGecko.

Investors should research Bitcoin before buying it to learn about its all-time high, behavior, and possible future price. It is a matter of time before seeing where the market will take the pioneering cryptocurrency.

By Alexander Salazar

Crypto.com Exchange to Transfer Billion USDC to FTX Discovered – CEO Claimed It Was to “Protect” End Users

Audy Castañeda
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<strong>Crypto.com Exchange to Transfer Billion USDC to FTX Discovered – CEO Claimed It Was to “Protect” End Users</strong>

Cryptocurrency exchange Crypto.com continues to be exposed to suspicious activity as it clearly has a close association with FTX.

After FTX, the cryptocurrency trading platform went bankrupt just five days after being identified as having liquidity problems, the awareness of the local crypto community turned to another platform, Crypto.com.

As reported by Coinlive, on the morning of November 13, many cryptocurrency end users spread the word on Twitter that Crypto.com had sent up to $400 million in ETH to the Gate.io account in late October, just before Gate.io released evidence of ownership of client assets, fueling rumors that these exchanges had been colluding with each other to make false claims.

Crypto.com CEO’s Explanation

The CEO of Crypto.com confirmed that the transaction was “accidentally transferred by mistake”, but this is a difficult explanation to verify, even in an irresponsible manner, given not only the nature and size of the transaction but also the place of Crypto.com and Gate.io. Subsequently, the two exchanges released official announcements stating that there was no suspicious association behind it, with the second Gate.io capturing stability before Crypto.com mistakenly transferred the proceeds.

In response to the most recent accusation, CEO Kris Marszalek mentioned, via Twitter, the following:

“This is false. We have minimal exposure to FTX (under US10m) and only used it as a trading venue to hedge customers’ trades. We never deployed capital for yield with FTX or any 3rd party.”

“To simplify for people who don’t understand how hedging works in this scenario: we deposit USDC, use it to buy other coins on the exchange, and withdraw back to our wallets.”

Difficulties Surround Crypto.com

Like FTX, Crypto.com is an up-and-coming trading platform in 2019-2022, resonating with hundreds of thousands of dollars in sponsorship deals, such as investing $700 million to buy back the naming rights of a city in Los Angeles (USA), dedicating a large amount of income to do a global promotion campaign with the talent of Matt Damon, or allocating $215 million to buy other cryptocurrency companies. The exchange also recently announced that it will create a new headquarters in France, with an investment of $145 million, despite having to cut 260 employees in the middle of the year.

Additionally, of the $2.8 billion in consumer reserves announced by Crypto.com, 19.68% are Shiba Inu (SHIB) tokens. The value of SHIB held by the exchange is even higher than ETH.

The value of the Crypto.com CRO coin has dropped over 60% in the last seven days due to continued negative data as well as the cryptocurrency industry crash due to the FTX crash.

By Audy Castaneda

The Recent Collapse of the Crypto Market Causes MicroStrategy to Lose USD 1.8 Billion

Alexander Salazar
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<strong>The Recent Collapse of the Crypto Market Causes MicroStrategy to Lose USD 1.8 Billion</strong>

Saylor has continued investing in Bitcoin as he considers it less risky than fiat money and gold. He recently said that the collapse of FTX favored Bitcoin because it is possible to self-custody the pioneering cryptocurrency.

MicroStrategy, the company with the most Bitcoin (BTC), has accumulated USD 1.8 billion in unrealized losses. They have acquired around 130,000 BTC, equivalent to around USD 2.2 billion at current prices.

The company co-founded by Michael Saylor bought that amount of Bitcoin at almost USD 4 billion, an average value of USD 30,369 per unit. Therefore, their coffers have suffered unrealized losses of about USD 1,800.

MicroStrategy Decides Not to Sell Its Bitcoin Holdings

Michael Saylor, the CEO of MicroStrategy, has said that they will not sell their BTC holdings. That means they face significant unrealized losses, as their coffers have depreciated by USD 917.8 million since January.

Since MicroStrategy describes Bitcoin as an intangible asset, they must constantly assess the decline in its value. If they sell their holdings, they must declare capital gains tax (CGT) to the Internal Revenue Service (IRS).

Saylor resigned as CEO of MicroStrategy in August to pursue his Bitcoin strategy after losing USD 1 billion. In September, the company invested USD 6 million of excess cash in 301 BTC, of which the value has fallen by almost 15%.

Since the company began buying Bitcoin in 2020, Saylor has remained firm in his resolve. He considers the pioneering cryptocurrency to be a less risky asset than fiat money and gold.

In February 2021, the American entrepreneur said it was necessary to look for scarce assets amid expansionary monetary environments. He highlighted that Bitcoin is the rarest asset, even above gold.

Michael Saylor Denies Receiving a Margin Call

In June, Saylor denied that Silvergate Capital had offered MicroStrategy a Bitcoin-secured loan of USD 205 million. That supposed margin call would mean that the investor had borrowed money to conduct transactions representing a multiple of an initial amount.

If the margin value falls below a certain threshold, MicroStrategy must pay additional funds to keep the trade open. However, Saylor said they had enough Bitcoin to guarantee the loan unless the price fell below USD 3,500.

Saylor Believes Clearly Stated Regulations Are Crucial

Saylor recently said that the FTX crash represented a blessing for Bitcoin but a disaster for the crypto market. He highlighted that, unlike tokens on exchanges, it is possible to self-custody the pioneering cryptocurrency.

He believes regulators should clearly state the guidelines for registering and exchanging a digital security, currency, or token.

Bitcoin is trading at around USD 16,814 and has accumulated a 1.4% gain over the last 24 hours. While its daily trading volume is above USD 29.98 billion, its market capitalization is about USD 323.21 billion, according to CoinGecko.

Despite the current price of BTC, it is still higher than when MicroStrategy started buying it in 2020. At the time, the company bought 21,454 BTC at around USD 11,652 per unit.

By Alexander Salazar

Janet Yellen and Nirmala Sitharaman Consider It Necessary to Regulate Cryptocurrencies Worldwide

Alexander Salazar
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<strong>Janet Yellen and Nirmala Sitharaman Consider It Necessary to Regulate Cryptocurrencies Worldwide</strong>

The Indian Finance Minister and the US Treasury Secretary believe high standards are necessary to regulate cryptocurrencies globally. Yellen called for international collaboration to manage the crypto market, saying that some exchanges do not protect their investors.

Nirmala Sitharaman, the Indian finance minister, and Janet Yellen, the US Treasury secretary, recently discussed cryptocurrency regulation. During the ninth US-India Economic and Financial Association meeting in New Delhi, they said international cooperation and high regulatory standards were necessary worldwide.

Jerome Powell, the chairman of the US Federal Reserve (Fed), and Shaktikanta Das, the governor of the Reserve Bank of India (RBI), also attended the meeting. It is the first time Yellen has visited India since she took office as the US treasury secretary.

At the end of the meeting, Yellen and Sitharaman stated that the United States and India look forward to further discussions on financial regulation. They consider it necessary to address emerging issues and priority areas like the digital asset market.

Yellen Considers It Necessary to Protect Cryptocurrency Users

After that, Yellen participated in a roundtable discussion on business and economic opportunities alongside prominent business leaders and economists from both countries.

The US Treasury Secretary called for international collaboration to handle the cryptocurrency issue. She said it is necessary to address some problems of inadequate consumer and investor protection in the crypto market.

Yellen explained that they discussed that area in the meetings, highlighting that international cooperation is crucial. She believes that public authorities, the private sector and public stakeholders need high regulatory standards.

In addition, Yellen commented that it is necessary to reduce the cost of cross-border payments, for which she has worked with various organizations. She said she had discussed the risks and some benefits of cryptocurrencies with the Financial Action Task Force (FATF) and the IMF, among others.

The US Treasury secretary noted that the Biden administration has focused on cryptocurrency regulation. She said that they had come a long way on the issues of illicit funding through cryptocurrencies. However, she considers that they still have a long way to go.

Sitharaman Considers There Should Be a Global Cryptocurrency Regulatory Framework

The Indian Finance Minister has also called for international cooperation to oversee cryptocurrencies. In September, she urged the International Monetary Fund (IMF) to lead the regulation of the crypto market.

Since India has no cryptocurrency regulations, Sitharaman said the Indian government would discuss the issue during its G20 presidency. They would seek to establish a technology-driven regulatory framework for digital assets.

According to reports, the Indian government plans to express its position on the legality of cryptocurrencies. They seek to do that during the first quarter of 2023 and thus comply with the Financial Action Task Force (FATF).

The use of cryptocurrencies has become increasingly evident in the global economic system. That has led regulators in many countries to seek ways to regulate and even ban them. They allege that those assets contribute to illicit activities such as money laundering and terrorism financing.

By Alexander Salazar

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