Former Lido holder files class action lawsuit against Lido DAO for crypto losses

December 18, 2023 Coin Telegraph

The investor claimed that 64% of Lido tokens are controlled by just a few venture capital firms, preventing ordinary investors from having any control over decisions.

A Lido holder initiated a class action lawsuit against the governing body for liquid staking protocol Lido, according to a complaint filed in a San Francisco United States District Court on Dec. 17. The lawsuit alleges that the Lido token is an unregistered security and that Lido decentralized autonomous organization (Lido DAO) is liable for plaintiffs’ losses from the token’s price decline.

Lido is a liquid staking protocol that allows users to delegate their Ether (ETH) to a network of validators and earn staking rewards, while also holding a derivative token called “stETH” that can be used in other applications. It is governed by holders of Lido (LDO), which collectively form Lido DAO.

The lawsuit was filed by Andrew Samuels, who resides in Solano County, California, the document states. The defendants are Lido DAO, as well as venture capital firms Paradigm, AH Capital Management, Dragonfly Digital Management, and investment management company Robert Ventures. The document alleges that 64% of Lido tokens “are dedicated to the founders and early investors like [these defendants],” and therefore, “ordinary investors like Plaintiffs are unable to exert any meaningful influence on governance issues.”

SEC sues Kraken alleging it violated securities laws

November 20, 2023 Coin Telegraph

Chainlink (LINK) pumps 26% in 6 days — Is there room for more?

November 8, 2023 Coin Telegraph

Coin Telegraph

LINK token continues to strengthen as professional traders and enterprise solution clients enter Chainlink’s ecosystem.

Chainlink's (LINK) token has experienced a remarkable 26% surge between Nov. 2 and Nov. 8, approaching $14, a level not seen since April 2022. This solidified its position as the 10th largest cryptocurrency (excluding stablecoins) by market capitalization.

While the price action is a welcome sight for traders, is Chainlink's current valuation of $8.1 billion justified? Cointelegraph research shows that the impressive price surge is driven by expectations of real-world asset (RWA) tokenization and initial signs of institutional adoption. However, let's delve deeper to assess the sustainability of the current rally.

Spot Bitcoin ETF expectations and real world asset tokenization boost sentiment

Bloomberg's ETF strategists, James Seyffart and Eric Balhunas, issued a research note on Nov. 8, which has boosted the confidence of cryptocurrency traders.

New Research note from me today. We still believe 90% chance by Jan 10 for spot #Bitcoin ETF approvals. But if it comes earlier we are entering a window where a wave of approval orders for all the current applicants *COULD* occur pic.twitter.com/u6dBva1ytD
— James Seyffart (@JSeyff) November 8, 2023

In their note, they explain that the window for approving a Bitcoin spot exchange-traded fund is set to open on Nov. 9, as the U.S. Securities and Exchange Commission concludes its latest round of postponements.

Seyffart maintains a 90% likelihood of approval, but cautions that the regulator's final decision may be delayed until mid-January.

Altcoins have also seen notable price increases in the past seven days, with Trust Wallet Token (TWT) surging by 41%, Immutable X (IMX) by 29%, and NEO by 28%. LINK's appreciation is indicative of the positive sentiment towards altcoins, particularly following Bitcoin's (BTC) apparent stagnation around the $35,500 mark.

Within the Chainlink's ecosystem several positive developments have contributed to the LINK’s recent performance.

On Nov. 7, Vodafone, a major European and North Africa-based telecom company, officially launched its partnership with the Japanese financial conglomerate Sumitomo Corporation, utilizing Chainlink oracles to facilitate transactions and offer diverse applications, including electric vehicle charging stations and toll roads.

This digital platform, known as Pairpoint, enables vehicles and devices to autonomously interact and trade in the emerging Internet of Things (IoT) landscape. Pairpoint leverages Vodafone's existing digital assets platform and has full integration with partners such as MasterCard, HSBC, Deloitte, and IBM.

Apart from IoT, a broader trend appears to be favoring Chainlink's oracle solution. RWA tokenization is poised to become mainstream, as evidenced by HSBC's launch of custody services for regulated securities on Nov. 8.

HSBC's Zhu Kuang Lee has noted the increasing demand for custody and fund administration of digital assets from asset managers and owners. HSBC's press release indicates that the custody service will complement its HSBC Orion platform for issuing digital assets and a recently introduced tokenized gold offering. It's also worth mentioning that HSBC manages approximately $3 trillion in assets globally.

Professional traders’ increased demand for LINK token

Despite the promising future prospects, traders are questioning whether there have been substantial institutional inflows into Chainlink to support the 26% rally in just six days. Unfortunately, there is no foolproof metric to gauge this, but Grayscale's Chainlink Trust (GLNK) presents an optimistic perspective, despite its relatively modest $3.9 million in assets under management.

This over-the-counter instrument is traded through regular stock market brokers, making it accessible to asset managers who cannot directly invest in cryptocurrencies. Notably, GLNK's price is trading at a 320% premium compared to the proportional underlying LINK token holdings held by the fund, indicating robust buying demand.

*Grayscale Chainlink Trust (GLNK) premium vs. LINK. Source: Coinglass*

Further fueling Chainlink's impressive gains is the listing of LINK on the HashKey exchange, a licensed trading platform catering to professional investors in Hong Kong. Although it launched in August 2023, the exchange is affiliated with the same group behind HashKey Capital, a prominent digital asset venture investment firm founded in 2015.

From an on-chain metrics perspective, Chainlink's price surge is supported by increased network activity.

*Chainlink 1-day transaction count. Source: Messari/Coin Metrics*

Notably, the most recent peak occurred on Nov. 7, 2022, coinciding with issues at the now-defunct FTX exchange. Excluding this specific instance, the current two-day average of 7,700 daily Chainlink transactions is the highest since June 2021.

While some valid criticisms have been raised regarding Chainlink's excessive centralization, its oracle dominance remains unchallenged. Consequently, any tailwind for the RWA market should likely have a positive impact on LINK's price, paving the way for further price hikes above $14.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Do Kwon and Terraform Labs ask judge to toss SEC’s lawsuit

October 31, 2023 Coin Telegraph

Coin Telegraph

Do Kwon, the co-founder now-collapsed Terraform ecosystem maintains he and his firm did not skirt U.S. securities laws.

Terraform Labs co-founder Do Kwon has requested a United States district judge to reject the securities and fraud suit from the federal securities regulator, claiming it has failed to prove they did anything wrong.

In an Oct. 27 filing to a New York District Court, lawyers for Kwon and Terraform argued its cryptocurrencies Terra Luna Classic (LUNC), TerraClassicUSD (USTC), Mirror Protocol (MIR) and its Mirrored Assets (mAssets) that reflect stocks on-chain are not securities as the Securities and Exchange Commission alleged.

“After two years of investigation, the completion of a discovery period that resulted in the taking of more than 20 depositions, and the exchange of over two million pages of documents and data, the SEC is evidentiarily no closer to proving that the Defendants did anything wrong,” the lawyers wrote.

They added the “evidence does not exist to support many of the SEC’s claims” and asserted the regulator “knew some of its allegations were false” — in particular, an allegation that Kwon and Terraform secretly moved millions into Swiss bank accounts for their own gain.

*Kwon’s lawyers claimed the SEC is trying to draw parallels between Terraform and FTX. Source: CourtListener*

In its suit against Kwon and Terraform filed in February, the SEC claimed the pair sent 10,000 Bitcoin (BTC) to a Swiss financial institution and withdrew $100 million. It also claimed they committed fraud by “repeating false and misleading statements.”

“The SEC knew this allegation was false when it filed this case,” Kwon’s lawyers wrote. ”This is made even worse by the undisputed fact that TFL had no customers, and thus no customer funds.”

The $40 billion Terra ecosystem collapsed in May 2022 after its USTC algorithmic stablecoin lost its U.S. dollar peg.

Kwon and Terraform also moved to exclude the opinion of the SEC’s experts including a report from Rutgers University economics professor Bruce Mizrach which they called “junk science.”

Judge Jed Rakoff, who oversees the case, denied Terraform’s earlier attempt to toss the lawsuit.

Kwon is currently detained in Montenegro and has previously asked the court to reject the SEC’s motion to extradite and interview him in the U.S.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

Decentralized finance yet to pose ‘meaningful risk’ to stability — EU regulator

October 12, 2023 Coin Telegraph

Coin Telegraph

The European Securities and Markets Authority argued that DeFi was still too small to pose any sizeable risks to overall financial stability, but should be monitored.

Decentralized finance (DeFi) is yet to pose a meaningful risk to overall financial stability but does require monitoring, according to the European Union’s financial markets and securities regulator.

On Oct. 11, the European Securities and Markets Authority (ESMA) released a report titled Decentralized Finance in the EU: Developments and Risks. Aside from discussing the nascent ecosystem's benefits and risks, the regulator concluded it is yet to pose a sizeable risk to financial stability.

“Crypto-assets markets, including DeFi, do not represent meaningful risks to financial stability at this point, mainly because of their relatively small size and limited contagion channels between crypto and traditional financial markets.”

The total crypto market capitalization is just over $1 trillion, and DeFi total value locked is a mere $40 billion, according to DefiLlama. Comparatively, the total assets of financial institutions in the EU amounted to around $90 trillion in 2021, according to the European Commission.

*DeFi TVL by protocol type. Source: ESMA*

The report said that the total crypto market is about the same size as the EU’s twelfth largest bank or 3.2% of the total assets held by EU banks.

The ESMA also looked into several crypto contagions of 2022, including the collapse of the Terra ecosystem and FTX, noting that this crypto “Lehman moment” still had “no meaningful impact on traditional markets.”

Nevertheless, the regulator observed that DeFi has similar traits and vulnerabilities to traditional finance, such as liquidity and maturity mismatches, leverage, and interconnectedness.

It also highlighted that although investors’ exposure to DeFi remains small, there are still serious risks to investor protection due to the "highly speculative nature of many DeFi arrangements, important operational and security vulnerabilities, and the lack of a clearly identified responsible party."

It cautioned that this could “translate into systemic risks if the phenomenon were to gain significant traction and/or if interconnections with traditional financial markets were to become material.”

Furthermore, the report identified a “concentration risk” associated with DeFi activities.

“DeFi activities are concentrated in a small number of protocols,” it noted adding that the three largest ones represent 30% of the TVL.

*Top ten DeFi protocols by TVL. Source: ESMA*

“The failure of any of these large protocols or blockchains could reverberate across the whole system,” it said.

The regulator is paying much closer attention to DeFi and crypto markets following the publication of its second consultative paper on the Markets in Crypto Assets (MiCA) regulations earlier this month.

Magazine: Bitcoin is on a collision course with ‘Net Zero’ promises

SEC Says ‘Stoner Cats’ Are Unregistered Securities in New NFT Enforcement Action

September 13, 2023 The Daily Hodl

LBRY decides to fight: Blockchain firm files notice of appeal against SEC

September 8, 2023 Coin Telegraph

Appeal

Blockchain-based file-sharing and payment network LBRY is planning to pick up the fight against the federal regulator again after losing the battle in November last year.

Blockchain-based file-sharing and payment network LBRY may be reversing course on an earlier decision to wind down, filing a notice of appeal against a federal judge ruling in July that sided with the Securities and Exchange Commission.

On Sept. 7, LBRY filed a notice of appeal to the United States Court of Appeals for the First Circuit, seeking to appeal the final judgment entered on July 11, 2023, where LBRY was ordered to pay a civil penalty and barred from participating in unregistered offerings of crypto asset securities in the future.

“Defendant LBRY, Inc. now appeals to the United States Court of Appeals for the First Circuit this Court’s final judgment entered on July 11, 2023,” it read.

LBRY has filed a Notice of Appeal against the SEC. pic.twitter.com/Zp9S0TP0Qw
— LBRY (@LBRYcom) September 7, 2023

The SEC first sued developer LBRY, Inc. in March 2021, claiming that its LBRY Credit token (LBC) was sold as a security under the 1933 Securities Act.

The U.S. District Court for the District of New Hampshire granted the SEC’s motion for summary judgment against LBRY on Nov. 7, which barred the platform from offering “unregistered crypto asset securities” and ordered it to pay a $111,614 civil penalty to the SEC.

The regulator originally sought a punishment of $22 million but revised it after conceding the defunct firm couldn’t pay.

In January, founder and CEO of LBRY Jeremy Kauffman told Cointelegraph “LBRY as a company is almost certainly dead.”

Following the final judgment in July, the firm seemed to admit the same, tweeting:

“In accordance with the court's order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely.”

However, LBRY’s most recent move appears to be a possible change icourse. It also comes amid a number of high-profile crypto industry victories against the federal regulator including Ripple and Grayscale.

Cointelegraph contacted LBRY for further comments but had not received a response at the time of publication.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

Crypto Exchange Gemini Slams SEC in New Court Brief in Lawsuit Over Earn Program

August 21, 2023 The Daily Hodl

Bitcoin price is down, but data signals that $30K and above is the path of least resistance

July 25, 2023 Coin Telegraph

Bitcoin price is down, but data signals that K and above is the path of least resistance

Coin Telegraph

Even with a price correction to $29,000, several Bitcoin price metrics show traders casting bets on a quick rebound.

On July 24, Bitcoin (BTC) experienced a flash crash, plummeting to $29,000 in a movement now attributed to significant BTC holders potentially liquidating their positions.

Amidst the crash and market uncertainty, Bitcoin's three major trading metrics continue to project a bullish outlook, signifying that professional traders have not reduced their leverage longs through the use of margin and derivatives.

Analytics firm Glassnode reported a surge in whales' inflow to exchanges, reaching its highest level in over three years at 41% of the total. This forceful sell-off from whales alarmed investors, especially in light of the absence of any significant negative events impacting Bitcoin in the past month.

Notably, a major concern stems from the ongoing court cases by the U.S. Securities and Exchange Commission (SEC) against leading exchanges, Binance and Coinbase. Still, there hasn’t been any major advancement on those cases, which will likely take years to settle.

Bitcoin’s price crash might have been related to the U.S. dollar reversion

Despite historical volatility, Bitcoin’s crash became more pronounced following 33 consecutive days of trading within a tight 5.7% daily range. The movement is further accentuated by the S&P 500 gaining 0.4%, crude oil rising by 2.4%, and the MSCI China stock market index surging by 2.2%.

However, it is essential to consider that the world's largest global reserve asset, gold, experienced a dip of 0.5% on July 24. Furthermore, the dollar strength index (DXY) reversed its two-month-long trend of devaluation against competing fiat currencies, climbing from 99.7 to 101.4 between July 18 and July 24.

*U.S. dollar strength index (DXY). Source: TradingView*

The DXY index measures the strength of the U.S. dollar against a basket of foreign currencies, including the U.K. Pound, Euro, Japanese Yen, Swiss Franc and others. If investors believe that the U.S. Fed will manage a soft landing successfully, it makes sense to reduce exposure to gold and Bitcoin while increasing positions in the stock market. Lower odds of a recession can positively impact corporate earnings.

Margin and derivatives markets show resolute professional traders

To understand whether Bitcoin’s price move down to $29,000 has successfully ruptured the market structure, one should analyze margin and derivatives markets. Margin trading allows investors to leverage their positions by borrowing stablecoins and using the proceeds to buy more cryptocurrency.

*OKX stablecoin/BTC margin lending ratio. Source: OKX*

The margin lending of OKX traders based on the stablecoin/BTC ratio rose between July 22 and July 24, suggesting that professional traders added leveraged long positions despite the recent price crash.

Traders should corroborate this data with derivatives to ensure its market-wide impact. In healthy markets, BTC futures contracts typically trade at a 5 to 10% annualized premium, known as contango, which is not exclusive to crypto.

*Bitcoin 2-month futures annualized premium. Source: Laevitas*

Notice how the indicator sustained a healthy 5.7% average annualized premium, slightly lower than two days prior but still within the neutral range. This data confirms the resilience of margin markets, but to gauge market sentiment further it’s also helpful to look at the options markets.

The 25% delta skew can reveal when arbitrage desks and market makers charge higher prices for protection against upside or downside movements. In short, a skew metric rising above 7% suggests traders anticipate a drop in Bitcoin's price, while periods of excitement generally yield a negative 7% skew.

*Bitcoin 30-day options 25% delta skew. Source: Laevitas*

The 25% delta skew remained negative, indicating that bullish call options were trading at a premium compared to protective puts. This further supports the thesis that professional traders remain unfazed by the flash crash, with no evidence indicating pessimism among whales and market makers.

The path to $30,000 and above shows the least resistance

All factors considered, irrespective of the rationale behind the price move on July 24, Bitcoin bears could not dampen investor optimism, resulting in higher odds of a recovery above $30,000 in the short term. Notably, the mere appreciation of the U.S. dollar does not impact Bitcoin's predictable monetary policy, censorship resistance and autonomous nature as a means of payment.

On the brighter side, there are some positive triggers on the horizon, including the possible approval of a spot Bitcoin ETF and gaining regulatory clarity. Proof of this comes from a recent U.S. bill introduced on July 20 that seeks to establish a clear process for determining the classification of digital assets as commodities or securities. If the bill becomes law, it would give the Commodity Futures Trading Commission (CFTC) authority over digital commodities.

Australia’s financial regulator cancels license for FTX’s local entity

July 19, 2023 Coin Telegraph

AFS

ASIC had previously suspended FTX's license to operate in Australia, now the securities regulator has canceled it entirely.

The Australian financial services regulator has finally canceled the financial license of FTX Australia, the bankrupt crypto exchange's local subsidiary — effective July 14.

On July 19, the Australian Securities and Investments Commission (ASIC) announced the cancellation, before noting that FTX Australia will still be allowed to provide limited financial services while it wraps up its dealings with clients until July 12 next year.

It would still be bound to make arrangements for compensating clients until that time, the regulator said. FTX Australia had around 30,000 retail clients and serviced 132 local companies.

In November 2022, ASIC suspended FTX Australia's Australian Financial Services (AFS) license which allowed it to create derivatives and foreign exchange contracts to local clients.

ASIC has cancelled the Australian financial services licence held by FTX Australia https://t.co/Gsmsg9XcYj
— ASIC Media (@asicmedia) July 19, 2023

The suspension came just days after the Bahamian-based FTX filed for bankruptcy on Nov. 11, 2022.

The same day as FTX's bankruptcy, voluntary administrators from the Sydney-based investment and advisory firm KordaMentha were appointed to assist in restructuring FTX Australia and a subsidiary, FTX Express.

In a report to a United States bankruptcy court last month, the restructuring chief for FTX's global entity said it had recovered around $7 billion in liquid assets but estimated a total of $8.7 billion worth of customer assets were allegedly misappropriated.

It's reported FTX could re-launch as an entirely new exchange, with its restructuring team holding talks with parties potentially interested in financially backing such a reboot.

Asia Express: China expands CBDC’s tentacles, Malaysia is HK’s new crypto rival

securities

Spot Bitcoin ETF expectations and real world asset tokenization boost sentiment

Professional traders’ increased demand for LINK token

Bitcoin’s price crash might have been related to the U.S. dollar reversion

Margin and derivatives markets show resolute professional traders

The path to $30,000 and above shows the least resistance

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