Tether CEO breaks down reserves backing USDT stablecoin

October 27, 2024 Coin Telegraph

Ex-FTX execs team up to build new crypto exchange 12 months after FTX collapse: Report

November 12, 2023 Coin Telegraph

The cryptocurrency exchanges offers a self-custody solution that integrates a multiparty computation technique to secure funds.

Several former FTX executives have teamed up to help build a new cryptocurrency exchange in Dubai with a specific focus on what FTX failed to do — secure customer funds.

Ex-FTX lawyer Can Sun is leading the way with Trek Labs, a Dubai-based startup that received a license to offer cryptocurrency services in the region in late October. Backpack Exchange is the name under which Trek Labs will offer those services.

Sun will receive support from ex-FTX employee, Armani Ferrante, who serves as CEO of Trek’s holding company in the British Virgin Islands, according to a Nov. 11 report by the Wall Street Journal. Ferrante also runs Backpack, a cryptocurrency wallet which is integrated in Backpack Exchange.

Sun’s former legal deputy at FTX, Claire Zhang, who is also Ferrante’s wife, is also on Trek’s executive team. However, once Trek raises an investment round, Zhang plans to transition out of the company as she has been working without pay to “help bootstrap the exchange," WSJ said.

Sun and Ferrante iterated they wanted to use the lessons learned from FTX’s failure to protect customer funds. Backpack’s technology offers a self-custody solution which integrates a multiparty computation (MPC) technique to ensure funds remain secure. MPC typically involves several parties approving a transaction before funds are moved.

With things heating up, please be aware of phishing attacks on the rise.

Backpack will NEVER ask you for your private keys.

The only valid website URLs are in our bio. Assume anything else is a scam.

Stay safe.
— Backpack (@xNFT_Backpack) November 11, 2023

It will also enable Backpack customers to verify funds whenever they want, Sun told WSJ:

“In a post-FTX world, you need trust and transparency to create a true alternative to the other players.”

Backpack Exchange is currently in beta and a wider launch will come later this month, the firm said.

Sun was a witness at Bankman-Fried’s recent fraud trial where he revealed that the former FTX CEO turned to him seeking a legal justification as to why FTX’s funds were at Alameda Research. Bankman-Fried was convicted on all seven fraud-related charges.

Sun said he quit as FTX’s general counsel the day after Bankman-Fried told him about the use of customer money.

“This went against everything that I stood for and was represented to me by Sam.”

Bankman-Fried’s former empire commingled billions of dollars of customer funds through Alameda Research for investment purposes. About $9 billion in customer funds went missing.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

SEC’s Gensler hints he’s open to a FTX reboot under proper leadership: Report

November 9, 2023 Coin Telegraph

Bullish

“If Tom or anybody else wanted to be in this field, I would say, ‘Do it within the law,’” SEC Chair Gary Gensler iterated.

The United States securities regulator chief has hinted he would be open to a rebooted crypto exchange FTX — as long as its new leadership stays within the bounds of the law.

SEC Chair Gary Gensler’s comments were made in response to reports that Tom Farley, a former president of the New York Stock Exchange, is now in the running to buy the bankrupt cryptocurrency exchange founded by now-convicted fraudster Sam Bankman-Fried.

“If Tom or anybody else wanted to be in this field, I would say, ‘Do it within the law,’” Gensler said in an interview at DC Fintech Week on Nov. 8, according to CNBC. He added:

“Build the trust of investors in what you’re doing and ensure that you’re doing the proper disclosures — and also that you’re not commingling all these functions, trading against your customers or using their crypto assets for your own purposes.”

Farley is the CEO of cryptocurrency exchange Bullish, which was founded in 2021.

Fintech startup Figure Technologies and cryptocurrency venture capital firm Proof Group are the other two bidders in the mix to buy FTX, according to a Nov. 8 report by the Wall Street Journal, who cited people familiar with the matter.

3 FTX bidders in the Auction are:

Bullish - Crypto exchange run by Tom Farley
Figure Technologies - fintech start up and
Proof Group - crypto venture-capital firm

Three bidders will be leading a consortium
— Sunil (FTX Creditor Champion) (@sunil_trades) November 8, 2023

The winner could restart the exchange after its planned exit from bankruptcy next year, according to the WSJ report.

Crypto still has its fair share of fraudsters, says Gensler

Meanwhile, in light of Bankman-Fried’s conviction, Gensler said the cryptocurrency industry is still rife with fraudsters and suggested more work needs to be done to keep them away from investors.

“Think about how many actors in this space are not complying right now with international sanctions and money laundering laws and are using crypto for nefarious or bad actions. He said, without naming individuals or companies. Gensler added:

“If it’s a non-compliant fraudster, why would we want them in our markets?”

Despite the SEC’s crackdown on the cryptocurrency industry, U.S. representative Tom Emmer has previously called out Gensler and the securities regulator in December for missing the FTX, Terra-LUNA, Celsius and Voyager failures which collectively wiped out billions of dollars from cryptocurrency investors.

JUST IN: US Congressman Tom Emmer says SEC Chair Gary Gensler is as ineffective as he is incompetent.

pic.twitter.com/6EDvRdOfCh
— Watcher.Guru (@WatcherGuru) November 8, 2023

Emmer went as far to suggest Gensler helped Bankman-Fried gain a “regulatory monopoly” on the cryptocurrency industry prior to FTX’s collapse, but the statement wasn’t backed by any evidence.

The SEC is currently battling out lawsuits against Binance, Coinbase and Ripple over alleged securities violations and Grayscale for its application to convert its Bitcoin Trust product into a spot Bitcoin exchange-traded fund.

Magazine: The truth behind Cuba’s Bitcoin revolution — An on-the-ground report

WSJ debacle fueled US lawmakers’ ill-informed crusade against crypto

October 30, 2023 Coin Telegraph

Coin Telegraph

The Wall Street Journal corrected its misreporting about crypto funding Hamas, but it was too late to stop lawmakers from amplifying false claims.

Following October’s tragic events in Israel, a narrative linking Hamas funding to cryptocurrencies emerged from The Wall Street Journal in an Oct. 10 story authored by the paper’s Angus Berwick and Ian Talley. It fueled Sen. Elizabeth Warren’s crusade against the crypto sector. Subsequent insights from Chainalysis and Elliptic cast serious doubt on the claims, demanding a more judicious examination of the accusations levied against the crypto industry.

At the heart of this discourse is an underlying issue — the United States' precarious position on crypto regulations. The narrative surrounding Hamas's crypto funding is emblematic of the U.S. government’s broader inability to grasp the nuanced dynamics of cryptocurrencies. The hasty generalizations and lack of thorough analysis in the WSJ reporting echo a disturbing trend of misinformation that can foster misguided regulations, a concern gravely shared.

Contrastingly, other regions like the European Union and Asia have taken a more balanced and informed approach towards crypto regulation. Their endeavors to understand and integrate this new financial frontier stand in stark contrast to the reactionary stance by some U.S. regulators. The recent acknowledgment by a member of the Securities & Exchange Commission on the missteps regarding the LBRY lawsuit epitomizes this disconnect.

The assertions made by the WSJ and amplified by Warren exemplify premature judgements of the crypto sector made without a comprehensive understanding of the facts at hand. Both Elliptic and BitOK clarified their methodologies, essentially discrediting the inflated figures flaunted by WSJ. This not only questions the integrity of the reporting but also the subsequent political maneuvering by Sen. Warren, which dangerously hinges on dubious data.

On Oct. 27, the WSJ issued a correction related to its initial story, a positive step in rolling back the misinformation. However, the damage from the misreporting was already amplified in a Senate hearing on Oct. 26, when members cited the inflated figure of "more than $130 million" in crypto donations to terrorist organizations. The episode highlights the ripple effects misinformation can have, especially in a sensitive domain like crypto regulation, and the essential role of precise, evidence-based reporting in fostering informed discussions and policies.

Refutation could not be stronger.

Will WSJ’s @AABerwick and @IanTalley correct the record?

“There is no evidence to support the assertion that Hamas has received significant volumes of crypto donations.” https://t.co/uHhhjrf49b pic.twitter.com/2CApmwGCsd
— Balaji (@balajis) October 25, 2023

WSJ blinked. pic.twitter.com/kXrMwg5snJ
— nic carter (@nic__carter) October 27, 2023

The scenario unveils a perilous pathway where misinformation can catalyze a cascade of ill-informed policy decisions. The unfounded aggression towards the crypto sector, spurred by misleading narratives, threatens to stifle innovation and alienate a burgeoning industry that holds immense potential for economic growth and financial inclusivity.

The WSJ correction was a positive step towards transparency. Yet, the delay in issuing that correction — even as the misinformation was being used in political circles — arguably shows a woeful disregard for truth. This scenario is not only detrimental to the crypto industry but also erodes trust in media and political institutions, which is foundational to a functioning democracy.

The U.S. is at a crossroads. Policymakers can either delve deeper into a dark abyss of ignorance and reactionary regulation, or they can foster an environment conducive to discourse and understanding. Their choice will significantly impact the crypto industry and the country's position as a frontrunner in the global financial ecosystem.

It is imperative that the media do a better job of shedding misinformation and embrace a more nuanced, evidence-based approach toward the crypto industry. Giving credence to unfounded accusations will only serve to undermine America’s standing in the global arena and obstruct the immense potential harbored by cryptocurrencies. The time is ripe for informed discourse to supplant misguided narratives.

Daniele Servadei is the 20-year-old founder and CEO of Sellix, an Italian e-commerce platform that has processed more than $75 million in transactions for more than 2.3 million customers worldwide. He's also attending the University of Parma for a degree in computer science.

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.

Wall Street Journal corrects article misciting Hamas’ crypto terrorism funding data

October 28, 2023 Coin Telegraph

Blockchain data

Elliptic, the firm which Wall Street Journal sourced the data from, said it was “pleased” to see the news outlet acknowledge its mistakes.

The Wall Street Journal (WSJ) has partially corrected an article whic mischaracterized the extent to which Hamas and other militant groups have been funding its terrorism activities with cryptocurrencies.

The Oct. 10 article — titled “Hamas Militants Behind Israel Attack Raised Millions in Crypto” — cited blockchain forensics firm Elliptic to say Palestinian Islamic Jihad (PIJ), a terrorist organization operating on the Gaza Strip, raised as much as $93 million between August 2021 and June 2023.

In the cited report, Elliptic said Israel’s counter-terrorism unit seized PIJ-linked wallets which received $93 million from over that timeframe. However, Elliptic made it clear that this in no way meant that PIJ raised these funds to finance its terrorism activities.

Research from blockchain forensics firm Chainalysis suggests only $450,000 of these funds were sent to a known terrorism-affiliated wallet.

In WSJ’s correction, it stated PIJ and Lebanese political party Hezbollah “may have exchanged” up to $12 million in cryptocurrency — far less than its initial $93 million figure.

“Palestinian Islamic Jihad and Hezbollah may have exchanged up to $12 million in crypto since 2021, according to crypto-research firm Elliptic. An earlier version of this article incorrectly said PIJ had sent more than $12 million in crypto to Hezbollah since 2021,” WSJ said.

WSJ said it updated other parts of the article to include “additional context” about Elliptic’s research.

*Corrections made by the WSJ’s Oct. 10 article. Source: WSJ*

WSJ’s retraction follows an Oct. 25 statement by Elliptic which called on WSJ to correct its misinterpretation of the data. Elliptic added that cryptocurrency funding by Hamas remains “tiny” relative to other funding sources.

On Oct. 27, Elliptic was “pleased” to see WSJ acknowledge its mistakes but said it would've liked to see WSJ be more specific about its corrections.

We're pleased to see the Wall Street Journal issue some corrections to their article based on our feedback. While we would like to have seen them go further, we will continue to engage constructively.
— Elliptic (@elliptic) October 27, 2023

Coinbase's chief legal officer Paul Grewal also noted that WSJ's opening paragraph is still framed as though cryptocurrency was the primary funding source behind Hamas' Oct. 7 attack on Israel.

2/ @WSJ's lede still maintains that the funding supported Hamas attacks hinged on “One answer: cryptocurrency.” There's no evidence of that, and WSJ knows it. pic.twitter.com/BQK80b1jMd
— paulgrewal.eth (@iampaulgrewal) October 27, 2023

"This is barely a correction," he added.

Nic Carter, partner of Castle Island Ventures and others are now calling on United States Senator Elizabeth Warren to retract a related letter backed by over 100 U.S. lawmakers written to the White House on Oct. 17.

The letter cited WSJ’s misinterpreted data from Elliptic in an attempt to argue that cryptocurrency poses a “national security threat” to the U.S. and that Congress and the Biden administration should act swiftly before cryptocurrencies are used to finance another “tragedy.”

Liz Warren wyd? pic.twitter.com/e0Ew2TQzRb
— nic carter (@nic__carter) October 27, 2023

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

Crypto donations raised by Hamas ‘remain tiny,’ says Elliptic

October 26, 2023 Coin Telegraph

Blockchain Forensics

Elliptic’s statement was framed as a rebuttal to recent articles and letters circulating among the media and U.S. lawmakers this month.

Blockchain forensic firm Elliptic says there’s “no evidence” that Hamas is receiving a significant volume of cryptocurrency donations to fund its attacks against Israel.

“There is no evidence to support the assertion that Hamas has received significant volumes of crypto donations,” Elliptic said in an Oct. 25 statement. The amounts raised “remain tiny,” the firm added.

Elliptic’s statement was framed as a rebuttal to recent articles and letters written by The Wall Street Journal and United States lawmakers, which the firm says had misinterpreted data to make the case that cryptocurrency is widely used to fund Hamas’ "terrorist” activities.

As an example, Elliptic pointed to a “prominent” Hamas cryptocurrency fundraising campaign, operated by Gaza Now, a pro-Hamas news outlet, which has only raised $21,000 since the Hamas attack on Israel on Oct. 7.

Of the $21,000 raised, $9,000 was frozen by stablecoin issuer Tether, while another $2,000 was frozen after it was sent to a cryptocurrency exchange — presumably to cash out, Elliptic noted.

Setting the record straight on crypto crowdfunding by Hamas https://t.co/1tZrE1C43V
— Elliptic (@elliptic) October 25, 2023

Elliptic said it reached out to WSJ to correct a statement that initially claimed that over $130 million in cryptocurrency was raised by Hamas and Palestinian Islamic Jihad between Aug. 2021 and June 2023. WSJ later revised the statement to say “as much as $93 million” in an Oct. 10 update.

The WSJ article had been cited in a letter written by Elizabeth Warren and over 100 other U.S. lawmakers to the White House and U.S. Department of the Treasury on Oct. 17.

Warren and other lawmakers argued that cryptocurrency poses a “national security threat” to the U.S. and its allies and that Congress and the Biden administration must take “strong action” to thoroughly address risks with cryptocurrencies in facilitating illicit activity before it can be used to finance another “tragedy.”

However, Elliptic reiterated that its data was misinterpreted:

“Over the past two weeks, politicians and journalists have portrayed public crypto fundraising as a significant source of funds for Hamas and other terrorist groups, but the data simply does not support this.”

~20% of US Congress signed a letter based on incorrect facts. Elliptic just corrected the facts. Will @WSJ & the ~20% of Congress correct their statements now?@nic__carter, thank you for demanding truth here, and holding power accountable for misstatements of fact https://t.co/TazXQnjjgW
— Caitlin Long ⚡️ (@CaitlinLong_) October 25, 2023

On Oct. 18, blockchain forensics firm Chainalysis also posted a blog attempting to address supposed misconceptions circulating in the media. One particular wallet highlighted by media reportedly received $82 million across 7 and a half months, but Chainalysis explained that of that, only $450,000 was transferred to a known terror-affiliated wallet.

Meanwhile, Elliptic also noted that in April 2023, Hamas suspended cryptocurrency fundraising conducted through Bitcoin (BTC), citing a “concern about the safety of donors and to spare them any harm.”

In 2021, Israel’s National Bureau for Counter Terror Financing also began issuing seizure orders for cryptocurrency wallets tied to Hamas and worked with exchanges to freeze accounts used by them.

These events suggest cryptocurrency isn’t an ideal means to facilitate terrorism fundraising, Elliptic argued:

“This illustrates the weakness of crypto as a terrorism fundraising tool. The transparency of the blockchain allows illicit funds to be traced, and in some cases linked to real-world identities.”

Cointelegraph reached out to WSJ for comment but did not receive an immediate response.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

Sequoia slashes its crypto fund by 66% after industry collapses: Report

July 28, 2023 Coin Telegraph

Coin Telegraph

The $85-billion venture capital firm launched the Sequoia Crypto Fund in February 2022.

Venture capital giant Sequoia Capital reportedly downsized its cryptocurrency fund from $585 million to $200 million, amid a liquidity crunch and a pivot away toward smaller crypto players.

According to a July 27 Wall Street Journal report, the tech-focused VC firm told investors in March it would reduce its Sequoia Crypto Fund — along with its ecosystem fund — to better reflect changed market conditions.

Sequoia Capital curbed crypto investments by a hefty 65% , opting for a nurturing stance on startups. Not a volatile market apathy, but strategic cognition, folks! #CryptoInvestments $BTC https://t.co/hfsAAd8jeV pic.twitter.com/8JvtyShg0n
— Chain Review (@Chain_Review) July 27, 2023

The cryptocurrency fund will now focus more on backing early-stage startups, given the recent crypto industry turmoil that took away many of the opportunities to back larger companies.

Another motive behind the cuts is to lower the capital threshold and thus the barrier to entry for investors to partake in Sequoia’s fund offerings, according to the sources.

“We made these changes to sharpen our focus on seed-stage opportunities and to provide liquidity to our limited partners,” reportedly said Sequoia in remarks to the Financial Times. The firm added it had returned more than $15 billion to investors over the past three years.

The firm’s cryptocurrency fund launched in February 2022, when the market cap of the cryptocurrency market was 39.1% down from its all-time high of $3 trillion in November 2021.

One of the firm’s toughest blows in recent times was its $214 million investment into the now bankrupt FTX, which the firm later marked down to $0.

Sequoia Capital’s $214M #FTX stake marked down to $0 ⚰️ pic.twitter.com/RHQJaRq1dL
— CryptoSavingExpert ® (@CryptoSavingExp) November 10, 2022

Cointelegraph reached out to Sequoia Capital for comment but did not receive an immediate response.

Sequoia’s reported move is reflective of a broader trend among venture capital firms that are choosing to downsize their cryptocurrency bets.

Venture capital investments fell 29.7% in June, with $779.32 million raised across 62 separate deals, according to data from the Cointelegraph Research Venture Capital Database.

Venture capital inflows have fallen 77.7% from June 2023 compared to June 2022.

*VC fund inflows into the cryptocurrency market over the last 12 months. Source: Cointelegraph Research*

However not every VC firm is reducing its cryptocurrency portfolio.

Polychain Capital and Coinfund recently raised $200 million and $152 million for respective investment and seed funds earlier this month.

Magazine: The secret of pitching to male VCs: Helping female crypto founders blast off

Wall Street Journal