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Stablecoin dominance slides as market cap falls to near 2-year lows: CCData

After 16 consecutive months of decline, the stablecoin market dominance has fallen to 10.3% of the total crypto market capitalization.

The market capitalization of stablecoins has hit the lowest level since August 2021 coming on the back of 16 consecutive months of decline, a new report says.

Cryptocurrency analytics platform CCData released a report on July 20 saying the stablecoin market cap fell 0.82% from the start of the month until July 17, taking the sector's market cap to $127 billion.

Stablecoin market dominance took a slight fall and is currently at 10.3%, dropping from 10.5% in June.

Of the top ten stablecoins, Pax Dollar (USDP) was hit hardest, falling 43.1% to $563 million in July — its lowest figure since December 2020.

CCData believes the fall was largely attributed to MakerDAO — a decentralized autonomous organization behind the Maker protocol — which elected to remove $500 million of USDP from its reserves because it failed to accrue additional revenue.

Tether (USDT), the largest stablecoin by market cap, managed to record its all-time high market cap of $83.8 billion as of July 17, increasing its stablecoin market cap dominance to 65.9%.

The market cap of USD Coin (USDC) and Binance USD (BUSD) fell 3.01% and 4.57% to $26.9 billion and $3.96 billion, respectively. For USDC, it is the seventh consecutive month of decline in its market cap and the lowest since June 2021.

Most stablecoins market caps have remained relatively stable since May, except for USDP which has fallen 43.1%. Source: CCData.

Despite consecutive falls, stablecoin trading volumes increased 16.6% to about $483 billion in June, recording the first monthly increase since March.

CCData believes the lawsuits against Binance and Coinbase from the Securities and Exchange Commission (SEC) and the surge in spot Bitcoin (BTC) exchange-traded fund filings contributed to the increase in stablecoin trading volumes last month.

Related: Aave Protocol launches stablecoin GHO on Ethereum mainnet, $2M minted

Another major event in June was the suspension of fiat deposits on Binance.US due to the SEC’s lawsuit against the firm. CCData said this led USDT and USDC to depeg from the U.S. dollar on the exchange.

“The suspension of fiat deposits has led to a drastic decline in the liquidity of the [USDT and USDC] stablecoins, resulting in a discount of around 27% and 18% respectively.”

The decentralized stablecoin market, which includes Dai (DAI), Frax (FRAX) and USDD (USDD) increased its market cap by 0.43% to $7.52 billion in July — the first positive month since February. The market cap, however, is still 78.1% down from its all-time high of $34.3 billion in April.

The beginning of this downward trend was triggered by the collapse of the Terra Luna ecosystem and the near 100% depeg of the algorithmic stablecoin TerraClassicUSD (USTC).

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Terra Classic Advocates Propose Plan to Re-Establish USTC’s Peg With US Dollar, Token’s Value Surges by Over 9%

Terra Classic Advocates Propose Plan to Re-Establish USTC’s Peg With US Dollar, Token’s Value Surges by Over 9%Almost 12 months back, terrausd (UST), an algorithmic stablecoin, suffered a detachment from the U.S. dollar, causing the Terra ecosystem to crumble shortly thereafter. At present, supporters of the Terra Classic blockchain community are deliberating on a plan to revive the ecosystem by re-establishing the once-stable token’s peg with the U.S. dollar. In response to […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

FBI, NY authorities probes collapse of TerraUSD stablecoin: Report

The controversial founder of Terraform Labs, Do Kwon is at the center of the investigation, despite believed to be hiding out in Serbia.

The United States Justice Department is reportedly investigating the collapse of the TerraClassicUSD (USTC) stablecoin which contributed to a $40 billion wipe out in the Terra ecosystem last May.

Two agencies within the department — the Federal Bureau of Investigation (FBI) and Southern District of New York (SDNY) have interrogated former staff at Terraform Labs in recent weeks, according to a Mar. 13 report by the Wall Street Journal (WSJ).

The probe covers similar ground to a lawsuit filed against Terraform Labs and its founder Do Kwon by the U.S. Securities Exchange Commission on Feb. 16, according to people familiar with the matter.

Among topics that investigators have asked about was the relationship between Chai, a South Korean-based payment platform and the Terra blockchain on which USTC operated.

The SEC alleged in its filing alleged that Kwon misled investors into believing that Chai transactions were processed on the Terra blockchain.

Do Kwon speaking at a conference about Terra before the LUNC and USTC collapsed. Source: Terra.

The SEC in its lawsuitalso accused Kwon of misleading investors about the risks of the algorithmic-based stablecoin, which is designed to be pegged 1:1 to the U.S. dollar.

It is unclear what specific charges the Justice Department is potentially pursuing. The investigation does not necessarily mean that charges will be filed. 

Related: Do Kwon had the right idea, banks are risk to fiat-backed stablecoins — CZ

Since the collapse, Kwon reportedly left South Korea for Singapore, Dubai, and now Serbia, where he is now believed to be, according to South Korean officials. Two South Korean authorities were recently sent to Serbia to find Kwon but were unsuccessful in their search attempts.

Kwon however claims he is not “on the run” despite the South Korean prosecutors issuing Kwon an arrest warrant on Sept. 14 and a red notice filed by Interpol, a global law enforcement agency on Sept. 26.

However, Kwon claims that he hasn’t seen a copy of the South Korean arrest warrant, according to an October interview on the Unchained Podcast with Laura Shin, and he continues to deny fraud allegations on social media.

Meanwhile, New York prosecutors are understood to be investigating a series of chat-group investigations from former members at Jump Trading, Jane Street and Alameda Research, which filed for bankruptcy alongside FTX, according to a Mar. 13 report by Bloomberg.

The investigation is reportedly looking into whether market manipulation tactics were involved in the TerraUSD stablecoin project.

Cointelegraph reached out to Terraform Labs but did not receive an immediate response.

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Stablecoin issuer Paxos reportedly probed by New York regulators

While the exact reason for the investigation hasn’t been revealed, it has been reported that the New York regulator plans on upping its efforts to protect consumers this year.

Paxos Trust Company — the New York-based stablecoin issuer behind Binance USD (BUSD) and Paxos Dollar (USDP) — is reportedly being investigated by the New York Department of Financial Services (NYDFS).

A “person familiar with the matter” told Bloomberg in a Feb. 10 report that the exact motive behind the probe is currently unclear.

An NYDFS spokesperson declined to comment on ongoing investigations but noted that the department is broadly working to protect consumers from risks associated with investing in the cryptocurrency market:

“The department is in continuous contact with regulated entities to understand vulnerabilities and risks to consumers and the institutions themselves from crypto market volatility we are experiencing.”

Paxos has issued BUSD — a U.S. Dollar-collateralized stablecoin — since the firm struck a partnership with Binance in September 2019. It is the third largest stablecoin, with a market cap currently exceeding $16 billion.

It is also the creator of the Paxos Dollar (USDP) which was launched in 2018. Today it is the sixth largest stablecoin with a market cap of about $875 billion, according to CoinGecko, and is the founder of PAX Gold (PAXG), a gold-backed-Ethereum token.

The company is also behind digital asset exchange itBit, which it launched in 2012 alongside the founding of Paxos.

The NYDFS issued Paxos with “BitLicense” in 2015, which legally permits companies to conduct digital currency-related activities in the state of New York.

Paxos recently refuted rumors that the U.S. Office of the Comptroller of the Currency (OCC) may order Paxos to withdraw its application for its full banking charter, despite the firm only receiving a preliminary approval in April, 2021.

Paxos also claims on its website that its BUSD and USDP token reserves are backed wholly in U.S. Dollars and U.S.Treasuries.

Related: New York State issues guidance for banks seeking to engage in activities with crypto

If reports of the investigation are true, it wouldn’t be the first one initiated by the NYDFS over the last year.

Coinbase Global U.S. reached a $100 million settlement with the New York regulator on Jan. 4 after they found that they failed to look over about 100,000 suspicious transactions from customers who opened accounts without sufficient background checks.

Shortly after Terra LUNA ecosystem and its failed algorithmic stablecoin TerraClassicUSD (USTC) collapsed in May, 2022, the NYDFS published stablecoin guidance report to ensure stablecoin issuers fully back their assets and attest regularly.

Cointelegraph reached out to Paxos and Binance to comment on the matter but did not receive an immediate response.

BlackRock’s tokenized fund registers over $240 million in inflows within a week

South Korean officials traveled to Serbia to find Do Kwon

South Korean authorities have previously requested cooperation from the Serbian government to bring Kwon back.

The hunt for the controversial founder of the now-collapsed Terra ecosystem, Do Kwon, has intensified with South Korean officials reportedly confirming they sent at least two people to Serbia to track him down.

According to a Feb. 7 Bloomberg report, the prosecutor’s office in Seoul said the reports “aren’t false” regarding members of its team trekking out to the Balkan state to find Kwon.

It appears at least two state officials went — one from the prosecutor’s office and the other from  South Korea’s Justice Ministry.

Do Kwon speaking at a conference about Terra before the ecosys. Source: Terra.

South Korean-based publication Chosun Media reported on Dec. 11 that a state intelligence official informed them that Kwon had based himself in Serbia.

There is currently no extradition treaty between South Korea and Serbia.

This likely made Serbia a great hideout spot for Kwon, according to a recent opinion article from Minso Kim, a writer for the South Korean publication Chosun Media.

South Korea has however stripped Kwon of his passport, which may make future travel more difficult.

Kwon has been accused of being on the run since Sept. 14, when South Korean prosecutors issued an arrest warrant against him, an accusation that he denied in October.

The 31-year-old fallen entrepreneur has also been accused of breaching capital markets laws.

While Kwon is known to be a prolific tweeter, he went nearly two months without tweeting or retweeting a single post — causing some to speculate what the controversial figure has been up to.

But Kwon recently responded to an evocative tweet targeted at him, stating that he hasn’t stolen any money and has never had any “secret cashouts.”

To date, Kwon denies any wrongdoing.

Related: Terraform Labs claims case against Do Kwon is ‘highly politicized’: WSJ

The collapse of the Terra ecosystem was in part triggered by the de-peg of its TerraClassicUSD (USTC) algorithmic stablecoin, UST. Terra Classic (LUNC) was closely linked to the stablecoin, with that too falling close to 100%.

Approximately $60 billion worth of value was wiped out of the ecosystem.

Cointelegraph reached out to Terraform Labs and the South Korean Prosecutor’s office for comment but did not receive an immediate response.

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Terra co-founder Do Kwon hiding out in Serbia, authorities say

South Korean authorities have requested cooperation from the Serbian government in order to bring Kwon back to face charges in South Korea.

The global manhunt for Terraform Labs' controversial founder and CEO Do Kwon continues to rage on, with South Korean authorities now believing he's in Serbia after leaving Singapore in September.

According to a Dec. 11 report from Chosun Media, South Korean authorities followed a tip-off concerning Do Kwon's whereabouts suggesting he is now in Serbia and has been able to confirm it. 

"Recently, we obtained intelligence that CEO Kwon was in Serbia, and it was found to be true," an official told the outlet. 

The report also states that South Korea’s Ministry of Finance “is in the process of requesting cooperation from the Serbian government” as part of the investigation.

South Korean authorities have been on the hunt for Do Kwon since Terra's collapse, but haven't seemed to have had much luck pinpointing his location until now.

The 31-year-old was understood to have moved to Singapore toward the end of April, just before the Terra ecosystem’s shock collapse.

On Sept. 14, the Seoul Southern District Prosecutor's Office's Financial and Securities Criminal Unit issued an arrest warrant against Kwon for allegedly violating South Korean capital markets laws.

Around that time, authorities in Singapore confirmed that Kwon was no longer in the country, and was understood to have flown to Dubai in transit to a new unknown destination. 

Shortly after that, on Sept. 26, Interpol also reportedly issued a “Red Notice” against Kwon. As of Dec. 11, however, Do Kwon doesn't appear to have been added to Interpol’s Red Notice database on the website. 

On Oct. 6, South Korea’s Ministry of Foreign Affairs issued an order for Kwon to surrender his passport. The ministry added that failure to comply would result in the cancellation of his passport altogether.

Later that month, prosecutors in South Korea confirmed reports that Do Kwon had flown to Dubai for a possible stopover before heading to another destination — which, as it turns out, might have been Serbia. 

If Do Kwon turns out to be in Serbia, it remains to be seen what, if any, legal strings can be pulled from South Korea to try to extradite the Terraform Labs founder.

While South Korea has entered into a bilateral extradition treaty with 31 countries, Serbia is not among them. However, South Korea has also entered into a much broader multilateral extradition treaty with the Council of Europe, to which Serbia is a signatory.

Related: Terra co-founder Do Kwon faces $57-million lawsuit in Singapore

Kwon has maintained that he is not “on the run” and has been “making zero effort to hide." He's continued to be active on social media over the last few months.

The collapse of the Terra ecosystem in May was partly triggered by the depegging of its algorithmic stablecoin Terra USD Classic, USTC (formerly UST), which in turn brought down its sister asset Luna Classic, LUNC (formerly LUNA) by nearly 100%.

Cointelegraph reached out to representatives for Terraform Labs for comment but did not receive an immediate response.

BlackRock’s tokenized fund registers over $240 million in inflows within a week

FTX’s Bankman-Fried to face market manipulation probe, Do Kwon chimes in

As part of a broader inquiry into FTX's collapse, federal prosecutors are looking at the role that FTX and Alameda may have played in the fall of Terra LUNA.

United States federal prosecutors have reportedly begun investigating whether the collapse of the Terra ecosystem was in fact triggered by market manipulation tactics by former FTX CEO Sam Bankman-Fried.

According to a Dec. 7 report from The New York Times (NYT), the prosecutors — as part of a broader inquiry into FTX’s own collapse — are investigating whether Bankman-Fried’s empire intentionally caused a flood of “sell” orders on Terra’s algorithmic stablecoin TerraClassicUSD, USTC (formerly UST).

The sudden increase in UST sell orders were said to make it difficult to match them with corresponding “buy” orders, which in turn forced more downward price pressure on UST, causing it to depeg from its intended 1:1 ratio with the U.S. Dollar.

The events also led to the fall of Terra’s native token, Terra Classic, LUNC (formerly LUNA) as the two cryptocurrencies were designed to be linked.

But while no one has been able to precisely determine the root cause behind the collapse of LUNC and USTC in May, it is known that the majority of the USTC sell orders came from Bankman-Fried’s trading firm Alameda research, according to the NYT.

A person with knowledge on the matter also told NYT that Alameda Researched also placed a big bet on the price of LUNC falling.

Like with most comments Bankman-Fried has shared since FTX’s collapse, the former CEO claimed that he was “not aware of any market manipulation and certainly never intended to engage in market manipulation,” according to NYT.

“To the best of my knowledge, all transactions were for investment or for hedging,” he added.

Related: The nightmare continues for Sam Bankman-Fried and FTX — Law Decoded, Nov. 14-21 

Responding to the recent report, Terraform Labs CEO Do Kwon shared his thoughts on the matter to his 1 million Twitter followers in a Nov. 8 tweet, who suggested it was time for Genesis Trading come clean about an alleged  $1 billion loan in UST to “SBF or Alameda” shortly before Kwon’s Terra ecosystem crashed.

Kwon also stated that a large currency contraction that UST underwent in Feb. 2021 was started by Alameda “when they sold 500mm UST in minutes to drain its curve pools during the MIM crisis.”

“What’s done in darkness will come to light,” Kwon added on the matter.

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Terra Supporters Hope to ‘Defy the Odds’ by Pumping the Now-Defunct Stablecoin USTC Back to $1 Parity

Terra Supporters Hope to ‘Defy the Odds’ by Pumping the Now-Defunct Stablecoin USTC Back to  ParityIt’s been six months since Terra’s algorithmic stablecoin UST (now USTC) depegged from the U.S. dollar and the price has remained depegged from the greenback since May 9, 2022. Currently, the former stablecoin is exchanging hands for $0.02 per unit, but a number of Terra Classic supporters believe there’s a chance USTC can regain its […]

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Celsius had ‘insufficient’ accounting and operational controls, says examiner

The examiner revealed that Celsius’ digital assets in its customer’s Custody wallets account officially became underfunded on Jun. 11.

The independent examiner in crypto lender Celsius’ bankruptcy case has alleged that the company failed to set up “sufficient” accounting and operational controls in its handling of customer funds. 

In an interim report released on Nov. 19, examiner Shoba Pillay made a number of stark observations in her court-appointed investigation into the bankrupt cryptocurrency lending platform.

One of the main revelations in Pillay’s report was that Celsius’ “Custody” program was launched “without sufficient accounting and operational controls or technical infrastructure,” which allowed shortfalls in Custody wallets to be funded from its other holdings.

“[...] no effort was made to segregate or separately identify any assets associated with the Withhold accounts, which were commingled in the Main wallets.”

When it was launched on Apr. 15, Celsius’ Custody program allowed users to transfer, swap and use coins as loan collateral. It was introduced after the firm was ordered by the New Jersey security regulators to create a product that was distinguished from Celsius’ “Earn” product, which receives rewards.

This co-mingling of wallets means that there is now uncertainty on which assets belonged to the customer at the time of the bankruptcy filing, said Pillay, noting: 

“As a result, customers now face uncertainty regarding which assets, if any, belonged to them as of the bankruptcy filing.”

The interim report has also shed light on what ultimately forced the lending platform to halt withdrawals on Jun. 12. 

Pillay said the breaking point came around on Jun. 11, when customers’ Custody wallets became underfunded. By Jun. 24, this fell a further 24% to $50.5 million in underfunding.

Celsius’ Surplus and Deficit of Digital Assets in Custody Wallets. Source: U.S. Bankruptcy Court.

The revelation comes as a filing with the New York-based bankruptcy court last week states that Celsius customers must file claims against Celsius by Jan. 3. 2023 in order to be eligible for distributions from the case.

However, customers who agree with Celsius’s scheduling of their claims do not need to submit proof of claim, according to a Nov. 20 Twitter post from Celsius.

Related: Celsius bankruptcy proceedings show complexities amid declining hope of recovery

Pillay said that Celsius’ Custody and Withdrawal programs were created on short notice following “intense regulatory pressure” from New Jersey’s Bureau of Securities, who started an investigation into whether Celsius’ “Earn” accounts constituted securities pursuant to U.S. securities laws in mid-2021.

Other accounting insufficiencies highlighted in the report include a revelation that Celsius, founded in 2017 by Alex Mashinsky and Daniel Leon, didn’t start tracking its balance sheet until after this confrontation with regulators in May. 2021, which it then used Google Sheets.

The collapse of the Terra ecosystem was one of the main factors that led to Celsius’ financial troubles in May. 2022, which saw its native coin, Luna Classic (LUNC), formerly LUNA, and the network’s algorithmic stablecoin TerraClassicUSD, USTC — previously TerraUSD (UST) — fall north of 98% in value.

Celsius also stated on Nov. 20 that its next court date is scheduled for Dec. 5, where they plan on advancing discussions around its Custody and Withhold accounts, among other matters.

BlackRock’s tokenized fund registers over $240 million in inflows within a week

Terra developers propose revised 95M LUNA ecosystem funding program

It is an update to the original 100M ecosystem funding proposal, which Terra developers say did not fit the community's needs.

On Monday, developers of the Terra ecosystem, which consists of Luna Classic (LUNC) — formerly known as Terra (LUN, TerraUSD (USTC), and Luna 2.0 (LUNA), proposed a revised expansion program for allocating 95 million LUNA ($248 million). As told by Terra, the new proposal is designed to incentivize development in the Terra ecosystem and fix issues in the original proposal.

In the original plan, around 10% of LUNA's total supply, or 100 million LUNA, would be allocated to the ecosystem, with 80% of this amount going to developer mining rewards. However, Terra staff explains that there are only a handful of projects with total value locked on the protocol, and such lack of competition would not result in the proper distribution of mining revenue.

Under the new proposal, developer mining rewards would decrease from approximately 80 million LUNA to 20 million LUNA. On the other hand, 50 million LUNA would be reallocated as liquidity mining rewards to incentivize building decentralized exchanges on the Terra ecosystem. Another 20 million LUNA would be given as developer grants, with a maximum recipient amount of 125,000 LUNA per project per year. Finally, 5 million LUNA will be given to users to incentivize traction.

A seven-member committee consisting of TerraForm Labs (TFL) employees, community leaders and external experts will oversee the allocation of funds. The appointment period will be one year, with non-TFL employees in the group receiving a monthly compensation of 1,000 LUNA. Although the committee members will vote to decide on funding proposals, the committee, itself, will have discretionary authority over the allocation of funds.

Meanwhile, the treasury will be managed by a separate group consisting of two validators, two community members and three members of TFL. A few months earlier, the Terra Luna ecosystem suffered a devastating $40 billion collapse, with the algorithmic LUNC-USTC coin pair spiraling out of control as part of a week of intense sell-offs. Since then, the ecosystem has partially stabilized but remains well below of pre-crash market valuation. According to DefiLlama, TVL on Luna currently stands at $51 million. 

BlackRock’s tokenized fund registers over $240 million in inflows within a week