ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 22
We have some great updates for you from last week. The much-anticipated Ethereum Merge upgrade became a thing of the past, the White House signaled readiness to regulate crypto, and the defendant in the first insider trading case in the cryptocurrency markets admitted his guilt, and more.
Ethereum’s Merge happened without a hitch
History was made last week. The highly-anticipated Merge upgrade happened on the Ethereum network as scheduled. While most exchanges suspended deposits and withdrawals of all Ethereum-related assets before the upgrade, transactions resumed after the switch from proof of work (PoW) to proof of stake (PoS) — without a hitch.
Some PoW alternatives that were earlier suggested to accommodate displaced miners after the transition saw some actions afterward. The hash rate of Ethereum Classic (ETC) soared to 92.48TH/s with a 24h increase of 55.17%; RavenCoin (RVN) to 10.092TH/s (+35.463%/24h); and Conflux (CFX) reached 1.6158 TH/s (+55.74%/24h) .
While the last Ethereum PoW block was mined by F2pool, the first PoS block (height 15537394) reward of 45.03 ETH was worth over $72,000 at the current price.
Some of the notable developments in the aftermath of the switch include the world’s largest financial derivatives exchange, CME Group, announcing the launch of options on Ether futures. Coinglass crypto futures trading platform reports that after the Merge, the ETH-USDT perpetual funding rate on Binance dropped from -0.5% to about -0.24%. The next stop for Ethereum is supposed to be the Shanghai upgrade among some other potential updates.
White House takes the first step at crypto regulation
The past week saw the White House release its first-ever framework on what crypto regulation should look like. It builds on an executive order issued in March, in which President Joe Biden called on federal agencies to examine the risks and benefits of cryptocurrencies and issue official reports on their findings.
Amongst other things, it seeks to fight illicit finance by mitigating crypto risks through regulation, oversight, and law enforcement action. One of the options being considered is whether the US President will evaluate calling upon Congress “to amend the Bank Secrecy Act, anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers — including digital asset exchanges and nonfungible token (NFT) platforms.”
Also, as part of efforts to monitor the digital assets sector and its associated illicit financing risks, the framework states that the US Treasury will complete an illicit finance risk assessment on decentralized finance (DeFi) by the end of February 2023 and an assessment on non-fungible tokens (NFTs) by July 2023.
Starbucks rides the NFT train
Talking NFTs, the multinational chain of coffee houses, Starbucks, last week took the integration of NFTs into its loyalty program to another level. It unveiled Starbucks Odyssey as a Web3 technology-powered program to offer rewards to customers and employees in the United States. The event will offer the opportunity to earn and buy limited-edition digital collectible assets — directly with a credit card as no crypto wallet or cryptocurrency will be required — that will unlock access to new benefits and immersive coffee experiences. Built on Polygon, the company says Starbucks Odyssey is their way of “entering the Web3 space differently than any other brand”. It won’t be the first global brand to do so. From Facebook to Instagram — following a recent Meta update — — to luxury jewelry retailer, Tiffany & Co., moving into the digital asset space as well as other global brands including Prada, Burberry, and Gucci which expanded its range of cryptocurrencies available for in-store purchases, several others have been trying their hands at the space.
Defendant in first ever crypto insider trading case pleads guilty
For the first time, a defendant admitted his guilt in an insider trading case involving the cryptocurrency markets. Nikhil Wahi, 26, of Seattle, Washington, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison. The defendant admitted before U.S. District Judge, Loretta A. Preska, last week that he traded in crypto assets based on Coinbase’s confidential business information to which he was not entitled. Wahi was arrested in July of this year. According to Damian Williams, the United States Attorney for the Southern District of New York, Wahi now awaits sentencing for his crime and must also forfeit his illicit profits. Wahi allegedly got tips from Ishan Wahi who worked at Coinbase as a product manager assigned to an asset listing team as to which crypto assets the exchange was planning to list. Wahi would then use anonymous blockchain wallets to acquire those crypto assets shortly before they are publicly announced to be listed and later sold for a profit.
US OFAC publishes FAQ on Tornado Cash
Following the US Treasury’s Office of Foreign Assets Control (OFAC) sanctioning of Tornado Cash last month, the department last week released a FAQ on the crypto mixer platform. It is to provide clarity for those who sent their virtual currency to the platform “but did not complete the mixing transaction or otherwise withdraw my virtual currency before Tornado Cash’s August 8, 2022 designation.”
The Q&A section is to guide on how to do so “without violating U.S. sanctions regulations”. Some of the relevant information that affected persons would be expected to provide regarding their transactions with Tornado Cash includes the wallet addresses for the remitter and beneficiary, transaction hashes, the date and time of the transaction(s), as well as the amount(s) of virtual currency, it states.
Other questions clarified in the Q&A include: Do OFAC reporting obligations apply to “dusting” transactions? What is prohibited as a result of OFAC’s designation of Tornado Cash?
Dutch police arrest crypto money launderer
While the Tornado Cash mixer saga is still on, police in the Netherlands last week say they arrested a man suspected of laundering tens of millions of euros in cryptocurrencies by converting Bitcoin to Monero to make it harder to trace. The 39-year-old man from the village of Veenendaal was reportedly identified after tracing Bitcoin transactions over the anonymous Bisq network from funds stolen using a malicious software update purporting to be from the open source Electrum wallet. Though the man was later released, he remains a suspect.
Last month, a judge in the country ruled that Tornado Cash dev Alexey Pertsev, who was arrested and accused of facilitating money laundering, has to stay in jail for at least 90 days.
Chainalysis says Vietnam leads global crypto adoption in 2022
The 2022 Global Crypto Adoption Index by Chainalysis came out last week for the third year. Based on five sub-indexes and a ranking of 146 countries, the blockchain analysis firm finds that overall crypto adoption slowed worldwide in the bear market but remains above pre-bull market levels. It finds that 10 lower-middle-income countries including Vietnam, Philippines, Ukraine, India, Pakistan, and Nigeria, and 8 upper-middle-income countries like Brazil, Thailand, Russia, China, and Turkey dominate the top 20 of the index.
