CoinDesk Crypto

KuCoin left its customers’ accounts on lockdown Tuesday as the exchange’s weekend hackers continued to slosh around millions of dollars in stolen cryptocurrency.

• Transaction tracing twitter account Whale Alert flagged 18.4 million XRP tokens ($4.5 million) flowing into a “hack wallet” on Tuesday morning eastern time.
• Hackers routed 17 million of that haul into a sub-wallet less than an hour later. Shortly after that, four batches of roughly four million tokens apiece flowed into yet more sub-wallets, where they appeared to sit at press time.
• The XRP is only a drop of the $281 million in cryptocurrencies (especially bitcoin, Tron tokens, Stellar tokens and Ethereum tokens) that tracing firm Elliptic estimated was stolen from KuCoin over the weekend.
• Ethereum-based tokens in particular dominate the haul. Hackers made off with $150 million total in tether, chainlink and other Ethereum-based tokens, Elliptic said.
• The hackers have largely failed to sell those tokens on closely guarded centralized exchanges which quickly flag and often block hacked funds.
• Still, by Monday, Elliptic said that hackers had already flipped millions of stolen tokens for $7.5 million in ethereum (ETH) on decentralized exchanges (DEX) Kyber Network and Uniswap.
• Elliptic, which is now eyeing that ETH, said in its Monday blog post that the laundering will likely continue on DEXs.
• KuCoin maintained its post-hack deposit and withdrawal freeze well into Tuesday. It began cancelling previously scheduled programming (including a trading competition) as a result.

Related Stories

• Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals
• Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned
• SEC Won’t Take Action Against Compliance-Focused Digital Security Exchanges
• $28M MakerDAO ‘Black Thursday’ Lawsuit Moves to Arbitration

Gemini, one of a handful cryptocurrency exchanges regulated in New York, has said users can now withdraw privacy coin zcash confidentially.

• The New York-based exchange said in a blog post Tuesday it had added “shielded” zcash withdrawals – meaning users can take assets off the platform without disclosing their identities or the size of their transactions.
• The addition comes after Gemini received approval from the New York Department of Financial Services.
• The exchange claims it’s the first time shielded zcash transactions have ever been supported on a regulated exchange.
• “[W]ith the right controls in place and the proper education, regulators can get comfortable with privacy-enabling cryptos,” the blog post reads.
• “This announcement demonstrates that zcash is compatible with a robust AML/CFT regulatory regime,” Jack Gavigan, head of regulatory relations at the cryptocurrency’s lead developer, Electric Coin Company, said in a statement, referring to anti-money laundering/combating the financing of terrorism.
• Gemini, which only supports 24 digital assets, first listed zcash back in 2018. It has been registered under a Limited Purpose Trust Charter – which authorizes it to perform certain bank-like functions – since 2015.
• Although users have been able to deposit zcash into Gemini with the shield feature, they have previously been forced to turn off privacy settings in order to withdraw assets from the platform.
• A Gemini spokesperson declined to provide further comment, pointing CoinDesk instead back to its blog post.
• Last year, several exchanges dropped zcash and other privacy coins, citing regulatory compliance and concerns over money laundering.

See also: Gemini Exchange Launches in UK After Being Awarded EMI License

Related Stories

• KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto
• Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned
• SEC Won’t Take Action Against Compliance-Focused Digital Security Exchanges
• $28M MakerDAO ‘Black Thursday’ Lawsuit Moves to Arbitration

Six months after India’s highest court overturned a banking ban on crypto companies, investors have jumped at the chance to back decentralized finance (DeFi) projects hailing from the subcontinent.

• DeFi protocols UniLend Finance and PlotX announced Tuesday they had both successfully completed their seed rounds.
• UniLend, a lending protocol, raised $3.1 million in a round led by Woodstock Fund, which includes data oracle provider, Band Protocol, in its portfolio.
• (Disclosure: The author of this article has previously worked for one of the investors in UniLend, but has no current relationship.)
• Meanwhile, DeFi prediction market platform PlotX raised $2.4 million in seed, including a commit from NGC, whose portfolio ranges from Algorand and Zilliqa.
• The appeal of DeFi for investors has rapidly grown, as total value locked (TVL) increased more than tenfold over the summer, according to DeFi Pulse.
• Just in the past couple of weeks, Linear Finance has finalized a $1.8 million seed round, and Dune Analytics, which specializes in providing data on the DeFi space, raised $2 million.
• The raises for UniLend and PlotX come as the local cryptocurrency industry is finding its feet again after the Supreme Court of India overturned a two-year ban, imposed by the Reserve Bank of India (RBI), that prevented cryptocurrency companies from accessing mainstream financial services.
• Speaking to CoinDesk, a UniLend spokesperson said the lifting of the ban had been part of a broader thaw, as India’s government becomes “increasingly progressive” on the question of cryptocurrencies and blockchain.
• The spokesperson added that investors are turning to India as the hub for promising new blockchain projects.
• “With such a strong base of developer talent and a rapidly growing community of crypto enthusiasts, India is poised to become a leading hub of blockchain innovation and people are increasingly recognizing this,” they said.

See also: India May Be Starting Its Biggest Bitcoin Bull Run Yet

Related Stories

• KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto
• Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals
• First Mover: Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule
• SEC Won’t Take Action Against Compliance-Focused Digital Security Exchanges

Financial firms and governments overwhelmingly see cryptocurrencies as risky, a major survey found on Tuesday, with the potential for bitcoin and other digital tokens for use in money laundering and sanctions busting among the chief worries.

It might be part of every job in crypto to anticipate and react to fast-moving developments that seemingly change the industry’s direction overnight. 

And apparently not even Changpeng “CZ” Zhao, the high-profile leader of Binance, the world’s largest cryptocurrency exchange, is immune to the industry’s capricious shifts. 

In a video interview with CoinDesk’s Muyao Shen, Zhao acknowledged that the emerging blockchain sector of decentralized finance, known as DeFi, could eventually upend the business that Binance has grown to dominate: running a centralized cryptocurrency exchange.

Related: Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned

“Our mission is not to build a CeFi exchange,” Zhao said in the interview, using a shorthand term for centralized finance. “Right now it is one of our larger businesses that support our growth. But over the long term, we want to push decentralization.”

The company’s new foray into DeFi, Binance Smart Chain, attempts to replicate some of the features of the Ethereum blockchain that have proven fertile for developers building decentralized, blockchain-based trading and lending applications that theoretically could one day challenge traditional lenders and Wall Street trading firms. 

Like rival cryptocurrency exchanges OKEx, Huobi and Coinbase, Binance is trying to hold on to its central role in digital-asset markets as upstart DeFi projects like Uniswap, Curve, Balancer and SushiSwap attract a bigger share of industry trading volumes. Zhao says he’s open to the idea that Binance may have to adapt its business model to stay relevant, especially with total collateral locked into DeFi protocols surging 16-fold this year to $11 billion.

In designing Binance Smart Chain, the company had to sacrifice elements of decentralization to compete against Ethereum and protect the company’s brand. Binance Smart Chain is controlled by 21 node operators, which are elected by Binance Coin (BNB) holders. But because the company is one of the largest holders of the BNB tokens, it retains significant control over the project’s direction. 

Related: Ethereum 2.0 Developers Launch Spadina, a Three-Day Practice Testnet

“There is a trade-off between more decentralization versus speed, so we thought that 21 nodes run by the community is probably enough,” Zhao said in the interview.

Read More: Binance CEO Says He Fully Expects DeFi to Cannibalize His Crypto Exchange

Bitcoin Watch

With the U.S. elections just five weeks away, the market focus looks to be shifting back to bitcoin from ether. 

The spread between the six-month implied volatility (IV) for ether (ETH) and bitcoin (BTC), a measure of expected relative volatility between the two, fell to a 2.5-month low of 4% over the weekend, according to data source Skew. 

The IV spread peaked at 21% in mid-August and has been declining ever since. 

“The decline could signal a change in market leadership back to bitcoin after a couple of months focus on the Ethereum complex,” Skew’s CEO Emmanuel Goh told CoinDesk. 

The impending U.S. elections could be the most contentious in modern history and have a significant impact on traditional markets. As such, bitcoin, which some investors argue has evolved into a macro asset over the past six months, could lead the price action in the crypto markets in the near term. 

– Omkar Godbole

Token Watch

Filecoin IOU (FIL): Three years after $257 million initial coin offering, blockchain-based data-storage provider says main network is set to launch around mid-October. 

Ocean Protocol (OCEAN): Artificial intelligence and data service suspends old contract on Ethereum blockchain and hard-forks project to help thwart $150 million KuCoin hack. 

What’s Hot

Coinbase CEO Brian Armstrong’s we-don’t-engage-societal-issues stance draws Twitter jeers alongside the cheers (CoinDesk)

California enacts new consumer financial protection law with new rules and research efforts for cryptocurrencies (CoinDesk)

European crypto brokerage Bitpanda gets $52M Series A funding led by Peter Thiel’s Valar Ventures (CoinDesk)

CFTC charges firm with illegally providing leveraged trading of crypto, gold (CoinDesk)

Publicly traded crypto mining equipment maker Ebang blames coronavirus for 51% 1H 2020 revenue plunge (CoinDesk)

Crypto’s dependence on U.S. dollar could prove its undoing, Shiv Malik writes (CoinDesk)

Silvergate Bank’s deposits stagnate despite utility of SEN instant payment network (CoinDesk Research)

Analogs The latest on the economy and traditional finance

U.S. House Democrats release new $2.2T stimulus proposal (Bloomberg)

Consumers expect stimulus to remain in place with continued government support, surveys from the Federal Reserve Bank of New York’s Center for Microeconomic Data show (New York Fed)

Low interest rates are worsening retirement prospects worldwide (Bloomberg)

Just as Fed-fueled stocks rally fades, giant public pension systems decide maybe they’re missing out and should allocate more money into equities (WSJ) 

Amnesty International is suspending operations in India after New Delhi froze its bank accounts in response to criticism of Prime Minister Modi’s government (FT)

Global equities rally cools ahead of U.S. election debate (FT)

The U.S. economic response to coronavirus crisis “sparked a massive stock-market rally that left the rest of the world in the dust” (CNBC)

Tweet of the Day Related Stories

• Relief and Regret: Crypto Twitter Reacts as Coinbase Says ‘No’ to Corporate Activism
• Binance CEO Says He Fully Expects DeFi to Cannibalize His Crypto Exchange

O(1) Labs-led lightweight blockchain project Coda Protocol is being relaunched under a new name: “Mina.” 

The name change follows a confidential settlement reached between O(1) Labs and R3, a software and blockchain development firm. A trademark infringement lawsuit filed by R3 in October last year alleged that the name Coda was similar enough to R3’s Corda blockchain, and could possibly confuse prospective clients. 

• Although court documents show the lawsuit was dropped by R3 in December 2019, O(1) labs is now renaming the blockchain and phasing out its usage of Coda. 
  
• While O(1) labs said that settlement reached in the trademark dispute was confidential, a letter undersigned by the newly minted Mina community seemed to express some dissatisfaction. “Yes, you’re bigger and have more money than us – but we’ve got more important things to do. So today, we’re saying goodbye to Coda,” read the letter addressed to R3.
  
• The lightweight blockchain, which claims that it will always stay the same size – 22 kilobytes – is currently in its testnet phase. 

Also read: Coda Protocol Hoping to Expand User Base by Teaching People How to Run Nodes for Free

Related Stories

• Blockchain Capital Isn’t Flattered by Imitation, Sues Similarly Named Firm
• Coda Protocol Hoping to Expand User Base by Teaching People How to Run Nodes for Free
• Coda Protocol Touts User Growth One Year Into Testnet
• 85% of Italian Banks Are Exchanging Interbank Transfer Data on Corda

The Securities and Exchange Commission (SEC) has said digital security exchanges that ensure assets on their books are legitimate in origin can continue to operate unhindered.

• In a letter to a senior executive at the Financial Industry Regulatory Authority (FINRA), Wall Street’s self-regulatory body, the SEC’s trading and markets division said exchanges that go to lengths to comply with existing regulation will not face sanctions.
• As well as conforming to federal securities law, the SEC, which has jurisdiction over FINRA, said such entities will need to introduce procedures that assess if listed digital securities have been sold legitimately throughout their lifetimes.
• This includes checking the initial offering was either properly registered or came under a valid exemption, as well as ensuring secondary market transactions are also compliant.
• The SEC’s clampdown on initial coin offerings (ICOs) means it is often characterized as the industry’s boogeyman.
• But as the tokenized version of an already heavily regulated asset class, digital security offerings already largely comply with federal law.
• Thus, issuers have already used some of the exemptions allowing them to host a sale without first registering as a public company.
• Indeed, in recent months, the SEC has made steps to better accommodate these sorts of offerings. It published a proposal in March to increase the amount startups can raise under an SEC exemption.
• In the summer, an SEC-registered broker-dealer unveiled plans to launch the first security token platform that can also be used to host compliant offerings.
• FINRA itself has made tentative moves to move forward with the security token industry and just this month approved tZERO’s plans to launch a retail-focused broker-dealer.
• As the crusade against unregulated ICOs fades, U.S. regulators, the SEC in particular, may well be preparing the ground for a host of compliant digital security offerings.

See also: SEC Seeking ‘Smart Contract’ Tracing Tool That Can Spot Security Vulnerabilities

Read the letter in full here:

Related Stories

• KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto
• Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals
• Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned
• $28M MakerDAO ‘Black Thursday’ Lawsuit Moves to Arbitration

Some digital asset traders say they’ve been rotating funds out of alternate cryptocurrencies (altcoins) into bitcoin (BTC) in anticipation of the leading cryptocurrency significantly outperforming the entire crypto market for at least the next several months. 

Kevin Zhou, co-founder of San Francisco-based Galois Capital, told CoinDesk his firm is now bullish on bitcoin and expects the upward altcoin trend of the last few months to revert into several months of downward price action. 

During months of sustained excitement over new decentralized finance (DeFi) protocols and various altcoins, bitcoin became “under owned,” according to Kyle Davies, a prominent DeFi investor and co-founder of Three Arrows Capital. 

Related: CFTC Charges Firm With Illegally Providing Leveraged Trading of Crypto, Gold

Bitcoin is down so far in September, dropping more than 10%. But with a subsiding of the DeFi craze and yields “collapsing,” Davies said he expects investor interest to pivot from altcoins toward bitcoin.

Two futures indices recently launched by FTX reflect the recent cooling off in the altcoin market. After consistent double-digit percentage gains since April, the exchange’s Decentralized Finance and S**tcoin indexes have both dropped by double digits this month. 

In 2020, altcoins with lower market capitalizations significantly outperformed BTC and ether ETH thanks in part to global financial markets recovering and stabilizing “a bit,” said Ryan Watkins, bitcoin analyst at Messari.

Also aided by the DeFi and yield farming frenzies, most of the significant altcoin returns started in the second half of the year as tokens like COMP and YFI came onto the market.

Related: First Mover: Bitcoin Low Exchange Balance Looks Bullish but Chart Looks Bearish as $11K Nears

As Q4 approaches and returns for altcoins have started to cool off, some professional cryptocurrency traders are betting on significant upside for bitcoin amid continued downside for altcoins. 

“The market owns too much stablecoin and non-bitcoin,” Davies told CoinDesk, betting that cryptocurrency investors will rebalance toward bitcoin and away from altcoins for now.

September’s moderate altcoin sell-off could extend beyond Q4, however, according to Zhou who told CoinDesk that, although he’s not a fan of making predictions, this month’s downward trend for altcoins could last for “at least a year.”

Related Stories

• What Is DeFi?
• DeFi’s Good, Bad and Ugly

Ethereum 2.0 developers have launched yet another testnet, this time to give on-boarding stakers a dry run before the launch of Eth 2.0 sometime this autumn.

Called Spadina after a subway stop in Toronto, the testnet follows the official Ethereum Foundation’s Medalla testnet, which launched in early August. 

Developers will only be supporting Spadina for the next three days while Eth 2.0 stakers practice joining the network with the testnet, said Ethereum Foundation researcher Danny Ryan in a Sept. 14 blog.

Related: First Mover: Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule

“The main objective is to give us all another chance to go through one of the more difficult and risky parts of the process – deposits and genesis – before we reach mainnet. If all goes well, it should give us greater peace of mind before we jump into the real deal later this year,” Ryan said.

Read more: Everything You Need to Know About Ethereum 2.0

The release of Eth 2.0 – a fully functional Proof-of-Stake (PoS) blockchain to replace the current Proof-of-Work (PoW) Ethereum mainchain – has been years in coming. An official launch date has not yet been given, but is expected before the end of 2020.

Testnets

Testnets practicing different parts of Eth 2.0’s launch began rolling out in 2019.

Related: Binance CEO Says He Fully Expects DeFi to Cannibalize His Crypto Exchange

The Eth 2.0 software is maintained by five separate teams that have programmed the same central specification in different computer languages. Writing and developing those languages has been the main hurdle to deploying the project in a timely manner.

Medalla is the first Ethereum Foundation–backed testnet of Eth 2.0 phase 0. That testnet was preceded by a slew of others such as Goerli and Schlesi. The PoS version of Ethereum will deploy in at least three phases, according to current schematics. 

Read more: Ethereum 2.0 Testnet Medalla Goes Live With 20,000 Validators

Structurally, phase 0 is comprised of the Beacon chain, a central coordinator of the future multi-chained Eth 2.0 network. Once enough Ethereum investors have deposited ether (ETH) into the new blockchain’s deposit contract, the Beacon chain can begin validating transactions.

Those ether holdings work as skin in the game for those participating on the new blockchain. Stakers validate transactions and receive staking rewards in return. Ether deposits are slashable in the case that multiple investors try to collude against the blockchain by validating invalid transactions.

Yet, the process of moving ETH from one blockchain to another can be difficult for investors, particularly for those new to the space. In that vein, Eth 2.0 developers opted to have yet another testnet to practice moving funds over to the Beacon chain.

Related Stories

• First Mover: Bitcoin Low Exchange Balance Looks Bullish but Chart Looks Bearish as $11K Nears
• EY Releases Enterprise Procurement Solution on Ethereum Blockchain

A class-action lawsuit alleging the Maker Foundation and others associated with lending platform MakerDAO knowingly misrepresented the risks of investment has been stayed and the case sent to arbitration.

• In an order last Friday, Judge Maxine Chesney granted a motion by the Maker Foundation to refer the case to the American Arbitration Association as specified in a clause in the foundation’s terms of service.
• In the lawsuit filed in April, plaintiff Peter Johnson claimed the Maker Foundation, the Maker Ecosystem Growth Foundation and the Dai Foundation knowingly deceived investors, describing it as being a more secure investment than other assets because its DAI stablecoin is over-collateralized.
• The plaintiff claimed he and other investors each endured six-figure losses when the price of DAI’s primary collateral, ether (ETH), dropped sharply in the March 12 “Black Thursday” crash, liquidating thousands of collateralized debt positions (CDPs) held by investors.
• That was despite being assured that the over-collateralization policy would safeguard against large drops in the value of ether and result in a maximum 13% loss, Johnson claimed.
• According to the project’s white paper, the 13% figure is not a hard cap but may vary dependent on internal conditions in the Maker ecosystem, though the plaintiff claimed that various Maker products state the figure is the maximum strike.
• Johnson claimed to have lost more than $200,000-worth of ether during the crash.
• By bringing the matter to court, Maker has argued that Johnson acted in defiance of the arbitration clause he agreed to when signing the terms of service in 2018.
• Johnson attempted to counter in August, claiming Maker’s 2018 agreement was based on an outdated and “now abandoned product,” but the court rejected that claim on Friday.
• Legal proceedings have now been halted until the arbitration proceedings have been settled, vacating a previously scheduled court hearing on Oct. 2.
• The plaintiff had been expecting to have up to 1,000 members join the lawsuit seeking damages equivalent to the total claimed losses of around $8.325 million, plus punitive damages of $20 million.
• It’s not clear how many investors had joined the class action.

See also: MakerDAO Users Hosed by March Flash Crash Won’t Get MKR Payouts, Say MKR Whales

Read the court document in full below:

Related Stories

• California Governor Signs Law Bringing State ‘New Tools’ to Regulate Crypto
• Filecoin Confirms Long-Awaited Mainnet Launch for Next Month
• Bitcoin Miner Producer Ebang Blames Coronavirus for 50% Slump in Revenue
• EY Releases Enterprise Procurement Solution on Ethereum Blockchain

While not often in the limelight, Silvergate Bank serves as an integral part of the cryptocurrency ecosystem.

It’s often claimed by crypto-enthusiasts that bitcoin will eventually displace the financial system as we know it. As it stands today, however, banks still play the pivotal role of fiat on/off ramps for exchanges and investors.

CoinDesk Research presents an in-depth look into San Diego-based Silvergate Bank, a leading bank serving the cryptocurrency industry. With over 880 digital asset clients with an aggregate balance of $1.5 billion in deposits, Silvergate is one of the market leaders within this niche market.

Related: Around the Crypto World in 15 Charts: CoinDesk Research’s August Review

Some takeaways:

• Due to increased levels of risk and higher compliance requirements, there exist only a handful of U.S. banks, including Silvergate, who provide banking services to cryptocurrency customers.
• Silvergate sets itself apart through its deep list of industry connections as well is its unique products that cater to the digital asset industry such as its instant payment network, SEN.
• The total amount of customers continues to increase, but Silvergate’s deposits have failed to grow over the past two years. Despite the utility of SEN, management notes that they have experienced deposit outflows to competitors offering yield on deposits unlike Silvergate whose deposit base is almost exclusively non-interest bearing.
• As the space matures, it’s likely more banks will feel compelled to service the crypto market, just as JPMorgan recently announced its acceptance of Coinbase and Gemini as its first digital asset customers. This type of development could be a major cause for concern for Silvergate as it competes with much larger financial institutions with more access to capital. Should this become the case, it will become crucial for Silvergate to deepen its competitive moat by boosting SEN’s utility.

Read the full report here.

Related Stories

• Ethereum History in 5 Charts
• Silvergate’s Bitcoin-Backed Lending Product Grew 80% in the Last Quarter
• Everything You Need to Know About Ethereum 2.0

Coinbase’s Brian Armstrong dropped a bombshell on corporate America and the culture wars when he told employees, firmly, to keep activism out of the workplace.

In a blog post on Monday, Armstrong said Coinbase employees should be “laser-focused” on the company’s mission: to create an open financial system for the world. The message is clear: Coinbase won’t touch topics unrelated to its business and it expects employees to pursue social activism on their own time.

Armstrong predicted his blog might stir up some controversy. He was right. Twelve hours after publication, the post has split the crypto industry straight down the middle. Some have come out in praise of Armstrong’s public stance; others have criticized it as regressive and out of touch with the times.

Related: First Mover: Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule

Some supporters responding to Armstrong’s tweet picked up on the theme that business leaders should remove unnecessary distractions from the workplace. Building a business is hard enough, said Messari’s Ryan Selkis, “without feeling the need to build a pitch-perfect political platform.” Boost VC’s Adam Draper said focusing on a “unified mission” was the only way companies get things done.

Similarly, former Coinbase Vice President Dan Romero, who left last year, tweeted that “resolutely pursuing” the corporate mission of building an accessible finance system would do more social good for countries outside the U.S.

See also: Coinbase Has Drawn a Line in the Sand for Its Activist Employees

But not everyone saw it that way. Likely anticipating the negative reaction to his blog, Armstrong restricted comments to the Twitter accounts he followed. The only critical one, on his thread anyway, came from Reuben Bramanathan, a lawyer and former product manager at Coinbase, who said the exchange shouldn’t use its mission statement to ignore problems of inequality and injustice.

Related: Coinbase Has Drawn a Line in the Sand for Its Activist Employees

Others on a separate thread – where replies weren’t restricted – accused Coinbase of trying to bury its head in the sand. Coinbase and its employees are part of American society and can’t close the blinds on issues that directly affect their lives, both in and outside of work, said one.

Some highlighted that such a narrow focus on the mission might harm Coinbase’s business in the long run. One said the stance could inadvertently shrink the pool of talent willing to work at the exchange. Another, that screening for just the mission could likely lead to the wrong sort of people – those unable to handle and manage different objectives and perspectives – working at the company.

See also: Activists Document Police Misconduct Using Decentralized Protocol

Related Stories

• Why Bitcoin’s Longest Run Above $10,000 Matters
• Jack Dorsey Details Twitter’s Blockchain Strategy at Oslo Freedom Forum

Coinbase’s Brian Armstrong dropped a bombshell on corporate America and the culture wars when he told employees, firmly, to keep activism out of the workplace.

In a blog post on Monday, Armstrong said Coinbase employees should be “laser focused” on the company’s mission: to create an open financial system for the world. The message is clear: Coinbase won’t touch topics unrelated to its business and it expects employees to pursue social activism in their own time.

Armstrong predicted his blog might stir up some controversy. He was right. Twelve hours after publication, the post has split the crypto industry straight down the middle. Some have come out in praise of Armstrong’s public stance; others have criticized it as regressive and out of touch with the times.

Related: Coinbase Has Drawn a Line in the Sand for Its Activist Employees

Some supporters responding to Armstrong’s tweet picked up on the theme that business leaders should remove unnecessary distractions from the workplace. Building a business is hard enough, said Messari’s Ryan Selkis, “without feeling the need to build a pitch-perfect political platform.” Boost VC’s Adam Draper said focusing on a “unified mission” was the only way companies get things done.

Similarly, former Coinbase vice president Dan Romero, who left last year, tweeted that “resolutely pursuing” the corporate mission of building an accessible finance system would do more social good for countries outside the U.S.

See also: Coinbase Has Drawn a Line in the Sand for Its Activist Employees

But not everyone saw it that way. Likely anticipating the negative reaction to his blog, Armstrong restricted comments to the Twitter accounts he followed. The only critical one, on his thread anyway, came from Reuben Bramanathan, a lawyer and former product manager at Coinbase, who said the exchange shouldn’t use its mission statement to ignore problems of inequality and injustice.

Related: Why Bitcoin’s Longest Run Above $10,000 Matters

Others on a separate thread – where replies weren’t restricted – accused Coinbase of trying to bury its head in the sand. Coinbase and its employees are part of American society and can’t close the blinds on issues that directly affect their lives, both in and outside of work, said one.

Some highlighted that such a narrow focus on the mission might harm Coinbase’s business in the long run. One said the stance could inadvertently shrink the pool of talent willing to work at the exchange. Another, that screening for just the mission could likely lead to the wrong sort of people – those unable to handle and manage different objectives and perspectives – working at the company.

See also: Activists Document Police Misconduct Using Decentralized Protocol

Related Stories

• Jack Dorsey Details Twitter’s Blockchain Strategy at Oslo Freedom Forum
• Andreessen Horowitz Gets FTC OK for Unspecified Coinbase Transaction

Watch live on CoinDesk.com, Twitter and YouTube.

Tuesday, Oct. 6, 2020 | 4 p.m. ET

Related: Help Us Find the Best University for Blockchain

Speakers:
Reuben Youngblom, Stanford

1st panel
Whitney Griffiths, Microsoft and Howard
Adam Patel, Loyola, TokenDaily and Midwest Blockchain Consortium
Arshdeep Singh, UT Dallas Blockchain Club
Rob Klages, Gator Blockchain Club, University of Florida

2nd panel
Ashlie Meredith, Mousebelt
Erick Pinos, Blockchain Education Network
Tyler Wellener, BlockVenture Coalition
Cameron Dennis, Blockchain Acceleration Foundation

The episode concludes with an interview with the winning school.

Related Stories

• Internet 2030: The Future and How We Get There
• CoinDesk Live Recap: Co-Founders Revisit Ethereum’s Launch Drama

Binance CEO Changpeng “CZ” Zhao acknowledges the contradictions inherent in trying to tap into the fast-growing business of decentralized finance, or DeFi, while trying to defend his company’s reign as the world’s largest cryptocurrency exchange.

The company’s new foray into DeFi, Binance Smart Chain, attempts to replicate some of the features of the Ethereum blockchain that have proven fertile for developers building decentralized, blockchain-based trading and lending applications that theoretically could one day challenge traditional lenders and Wall Street trading firms. But DeFi could also threaten big cryptocurrency exchanges like his own.  

Like rival cryptocurrency exchanges OKEx, Huobi and Coinbase, Binance is trying to hold on to its central role in digital-asset markets as upstart DeFi projects like Uniswap, Curve, Balancer and SushiSwap attract a bigger share of industry trading volumes. Zhao says he’s open to the idea that Binance may have to adapt its business model to stay relevant, especially with total collateral locked into DeFi protocols surging 16-fold this year to $11 billion.

Related: Ethereum 2.0 Developers Launch Spadina, a Three-Day Practice Testnet

“Our mission is not to build a CeFi exchange,” Zhao said in an interview with CoinDesk, using a shorthand term for centralized finance. “Right now it is one of our larger businesses that support our growth. But over the long term, we want to push decentralization.”

In designing Binance Smart Chain, the company had to sacrifice elements of decentralization to compete against Ethereum and protect the company’s brand. Binance Smart Chain is controlled by 21 node operators, which are elected by Binance Coin (BNB) holders. But because the company is one of the largest holders of the BNB tokens, it retains significant control over the project’s direction. 

“There is a tradeoff between more decentralization versus speed, so we thought that 21 nodes run by the community is probably enough,” Zhao said in the interview.

Binance Smart Chain’s goal is not to be “the Ethereum Killer,” Zhao says, but to provide an alternative to users and developers frustrated with Ethereum’s soaring transactions fees.

Related: Market Wrap: Bitcoin Hits $10.9K; Ether Options Signal Short-Term Volatility

“There are people who are really more into more decentralization,” Zhao said. “They will probably stick with Ethereum.” 

An anything-goes culture thrives in DeFi, with ridiculously named projects from Yam to SushiSwap exploding in popularity seemingly overnight, only to quickly flame out. But Binance can’t afford to release the reins entirely on its DeFi project; there are reputational concerns, a brand to protect.

BakerySwap Falls Flat

After Binance Smart Chain launched earlier this month, anonymous developers used it to create BakerySwap, a type of decentralized trading network known as an automated market maker, similar to Uniswap. 

Zhao tweeted that he was “Introducing BakerySwap” and that his message was “not endorsement and SUPER HIGH RISK” but that the project was “causing quite a stir on the street.”

Within an hour of BakerySwap’s launch, the protocol collapsed. And Zhao deleted his earlier tweet.

“There are probably more projects that failed on Ethereum, but nobody complains to Vitalik,” Zhao said, referring to Ethereum founder Vitalik Buterin. “So I think it just takes time for people to realize that, ‘Look, the projects on Binance Smart Chain are not run by Binance.’”

Zhao sees DeFi becoming more popular in the Asian markets of China, Thailand and Singapore.

“We just experiment with a bunch of different things, that something will stick,” he said. “And when something sticks, we want to push ourselves and also push our innovation in the same space.”

Zhao has said that if decentralization wins out as the dominant business model for trading venues in digital-asset markets, Binance could still profit from its holdings of the BNB tokens. In the interview, he said the company could also profit by shifting its focus to building decentralized applications.

“So in my mind, I’m never worried about the business model,” CZ said. “I’m always much more worried about if we have users using the product. There’s always multiple options for business models, so the key is to build something that’s useful.”

Related Stories

• Why Bitcoin’s Longest Run Above $10,000 Matters
• Crypto Is Too Dependent on Dollars

The California department responsible for the regulation of financial services will soon have more powers to supervise the cryptocurrency industry.

• California Governor Gavin Newsom signed a bill into state law on Friday that will see the California Department of Business Oversight renamed as the Department of Financial Protection and Innovation.
• The bill (AB 1864), introduced by lead author Assemblywoman Monique Limón (D-Santa Barbara) on Jan. 7, will go into effect on Jan. 1, 2021.
• The changes will equip the regulator with “new tools to shape the regulation of virtual currency,” the department’s commissioner, Manuel P. Alvarez, told CoinDesk via email.
• The new California Consumer Financial Protection Law will, among other things, provide the department with greater enforcement powers designed to protect Californians from “pandemic-inspired scams,” per a Friday press release.
• The move means the department will have new regulatory authority to begin cracking down on deceptive or abusive practices undertaken by unlicensed financial services or products.
• But the new law will also see the creation of an Office of Financial Technology Innovation designed to engage with new industries and consumer advocates to encourage consumer-friendly innovation and job creation within the state.
• In addition, a new Division of Consumer Financial Protection will be created to monitor markets, with a research arm that will keep up with emerging financial products such as cryptocurrencies.
• With the expansion of the department, 90 additional employees will be added to the government payroll representing a 13% increase in staffing.
• The legislation would allow his department to increase consumer protections without hamstringing “honest and fair operations,” Alvarez said.

See also: California Assembly Considers Exempting Some Digital Assets From State Securities Law

Related Stories

• $28M MakerDAO ‘Black Thursday’ Lawsuit Moves to Arbitration
• Filecoin Confirms Long-Awaited Mainnet Launch for Next Month
• Bitcoin Miner Producer Ebang Blames Coronavirus for 50% Slump in Revenue
• EY Releases Enterprise Procurement Solution on Ethereum Blockchain

European crypto brokerage Bitpanda, based in Vienna and founded in 2014, is announcing the completion of a $52 million Series A led by PayPal legend Peter Thiel’s Valar Ventures. This fundraising round, plus a seed round in 2016 and an initial exchange offering in 2019, means the 240-employee company raised roughly $100 million to date, according to the team.

• Bitpanda co-CEOs Eric Demuth and Paul Klanschek said this raise, which included additional funds from SeedInvest, will help scale the company to 300 employees, and a variety of new products, in Q4 2020.
• According to CoinGecko, Bitpanda Pro facilitates roughly $2 million in daily volume. Klanscheck said the platform also offers precious metal trading, in addition to other crypto options, totaling “over a $1 billion in volume in 2019.”
• These co-founders said France, Spain and Turkey were among the fastest-growing crypto markets out of the roughly 34 countries the platform serves.
• The recent buzz around decentralized finance (DeFi) has been a boon for Bitpanda. “We just launched a DeFi market on our broker and it went through the roof,” Demuth said. “People are really crazy about buying DeFi coins.”
• Outside of crypto, Klanschek said roughly 100,000 people solely used Bitpanda this past year for trading gold options. Demuth said in 2021 Bitpanda will expand to include “all kinds of asset classes,” including stocks.
• As part of the deal, Valar’s Andrew McCormack will join Bitpanda’s board. “Together, we’re going to ensure everyone in Europe has the power to access the financial markets and invest in their financial futures as we build Europe’s next fintech unicorn,” McCormack said in a statement.

Read more: Brexit Divorce Is Advertising Opportunity for Crypto Firms

Related Stories

• Leaked EU Draft Proposes All-Encompassing Laws for Crypto Assets
• Diginex Going Public Is About More Than a Nasdaq Ticker Symbol
• ECB President: Europe Has Fallen Behind in the Digital Payments Race
• Crypto Exchange Kraken Returns to Japan After Two-Year Hiatus

An early rally Monday almost pushed bitcoin over $11,000; the ether options market expects volatility in the short term.

• Bitcoin (BTC) trading around $10,874 as of 20:00 UTC (4 p.m. EDT). Gaining 1% over the previous 24 hours.
• Bitcoin’s 24-hour range: $10,705-$10,956
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin’s price mostly traded around $10,800 Monday, after a rally at 00:00 UTC (8 p.m. EDT Sunday) that pushed the world’s oldest cryptocurrency as high as $10,956 before losing steam. Bitcoin traded at $10,874 as of press time. 

Read More: Bitcoin Sets Record 63 Straight Days Closing Above $10,000

Related: Why Bitcoin’s Longest Run Above $10,000 Matters

“In a sign of strength, bitcoin price has held above $10,000 for 63 days now,” said David Lifchitz, chief investment officer for quant trading firm ExoAlpha. “This is the longest time since December 2017 to January 2018.” 

“Also, we witnessed KuCoin getting hacked for $150 million this weekend but despite some chop on Saturday as news broke, bitcoin was broadly stable.”

Despite the bullish sentiment, not all traders think bitcoin can get past $11,000. “After the pause BTC took for the weekend, bitcoin is currently on a bullish impulse,” said Alessandro Andreotti, an Italian over-the-counter crypto trader. “It could easily surpass $11,000, but it could easily be a bear trap so we must be careful.” 

“Bitcoin continues to range between $10,000 and $11,000 after dropping to $10,100 amidst equity and gold weakness in the past week,” said Cindy Leow, portfolio manager for quant firm 256 Capital Partners. “With quarter-end coming up, we might also see some BTC rebalancing or profit-taking happening amongst hedge funds this week.”

Related: First Mover: Bitcoin Low Exchange Balance Looks Bullish but Chart Looks Bearish as $11K Nears

In the derivatives market, Leow points to the lack of overall activity there as a signal many investors are simply waiting out the market. Open interest in bitcoin futures, in particular, remains flat Monday.

The traditional markets are leading the way heading into the fourth quarter, Leow added. “In the short-term towards the quarter-end, our eyes are on macro movements to monitor any weaknesses which will inevitably flow into BTC and ETH.”

Ether options signal short-term volatility

The second largest cryptocurrency by market capitalization, ether (ETH), was up Monday trading around $362 and climbing 2.3% in 24 hours as of 20:00 UTC (4:00 p.m. EDT). 

Read More: Uniswap Now Bigger Than Entire DeFi Industry Just Two Months Ago

Volatility skew is a measure options traders monitor for placing bets at various expirations. The 1-month 25-day volatility skew for ether has been in positive territory for most of September after closely following the 3-month and 6-month for the better part of the past three months, which suggest volatility in the near future.

256 Capital Partner’s Leow says DeFi has contributed to increasing short-term volatility in ether. “ETH has seen much more reflexive movement in September versus bitcoin, no doubt a result of being the base currency for many DeFi pairs which have had a volatile September,” she said.  

Vishal Shah, an options trader and founder of derivatives exchange Alpha5, says this indicator signals options traders would have different strategies depending on expiration since short-term ether volatility is expected to continue. “This creates a distinct opportunity on calendar risk reversal spreads, and a part of this trade would naturally involve rich ETH puts in the short-term dates versus cheap ones in the long-term dates.”

Other markets

Digital assets on the CoinDesk 20 are mostly green Monday. Notable winners as of 20:00 UTC (4:00 p.m. EDT):

• 0x (ZRX) + 11.2%
• tezos (XYT) + 6.6%
• orchid (OXT) + 3.8%

Notable losers as of 20:00 UTC (4:00 p.m. EDT):

• chainlink (LINK) – 1.6%
• monero (XMR) – 0.86%

Read More: Bitcoin Has Been Less Volatile Than Tesla Stock for Months

Equities:

• Asia’s Nikkei 225 ended the day climbing 1.3% as investors picked up from last week’s optimism as well as US futures flashing in the green.
• Europe’s FTSE 100 closed in the green 1.4% led by gains in banking giant HSBC up 8.8% and beverage conglomerate Diego climbing 6%.
• In the United States the S&P 500 gained 1.8% as sentiment was boosted by the possibility of more coronavirus-related economic stimulus being passed by lawmakers.

Commodities:

• Oil was up 1.1%. Price per barrel of West Texas Intermediate crude: $40.56.
• Gold was in the green 1.1% and at $1,880 as of press time.

Treasurys:

• U.S. Treasury bond yields were mixed Monday Yields, which move in the opposite direction as price, were down most on the 2-year, dipping to 0.127 and in the red 3%.

Related Stories

• Bitcoin Has Been Less Volatile Than Tesla Stock for Months
• Bitwise Bitcoin Fund Doubles to $9M as Investor Fears Grow Over Runaway Inflation

Artificial intelligence and data service Ocean Protocol has suspended its old contract on the Ethereum blockchain and hard-forked its project, following the $150 million KuCoin hack.

On Sunday at 22:00 UTC, Ocean Protocol announced it had migrated from its old token address to a new one to thwart the KuCoin hacker’s attempts to offload 21 million OCEAN tokens worth some $8.6 million. According to a Sept. 27 blog post from the Ocean Protocol team:

“At 1600 GMT, a new contract was instantiated reflecting the balances of OCEAN as of block height 10943665 on the Ethereum mainnet. The new smart contract will allocate stolen token balances to an address which will be held in trust in Singapore for persons affected by the theft.”

Related: First Mover: Bitcoin Low Exchange Balance Looks Bullish but Chart Looks Bearish as $11K Nears

Moving contract addresses has effectively blacklisted the hacker’s stash of OCEAN tokens. But it also raises questions of the project’s true immutability if the protocol can be effectively hard-forked in one weekend.

Prior to the hard fork, the hacker offloaded some 330,000 OCEAN tokens worth $120,000, according to The Block head of research Larry Cermak. Ocean Protocol has a liquid supply of 587,622,921 OCEAN tokens with a maximum supply of 1.4 billion OCEAN.

KuCoin hack

Singapore-based Kucoin was hacked Friday beginning at 19:05 UTC. The hacker gained access to the platform’s hot wallet keys, said KuCoin CEO Johnny Lyu in a weekend livestream.

Lyu said the platform intends to cover for hacked losses with insurance funds.

Related: Over $150M Drained in KuCoin Crypto Exchange Hack

OCEAN’s price fell as much as 8% from $0.399 per token to $0.365 as the hacker sold the stolen tokens in tranches of 10,000 coins, according to CoinGecko. He or she then moved onto other holdings including COMP, SNX and LINK after the contract was paused.

The hacker swapped stolen ERC-20 tokens for ether (ETH), the native currency of the Ethereum blockchain. These swaps have largely been facilitated by Uniswap, a popular decentralized exchange (DEX) due to a novel liquidity model that reduces price slippage.

The Ocean Protocol team did not return questions for comment by press time.

Related Stories

• Ocean Protocol and Balancer Want to Do for Data What Uniswap Did for Coins
• US Charges 3 With Vast ‘Crypto Jacking’ Computer Fraud Scheme

Bitcoin is moving off exchanges, has been less volatile than TLSA and broke its record for longest streak trading above five figures. 

Also: Bitwise’s bitcoin fund has more than doubled in size, KuCoin was hacked and Jack Dorsey dropped a few more hints about his decentralized social media standard, Blue Sky. 

Top shelf

Accredited investor interest
Bitwise’s bitcoin fund has brought in $8.9 million, the single-largest increase in assets raised in the fund’s two-year history, according to a recently amended filing with the Securities and Exchange Commission (SEC). The firm’s Bitcoin Fund provides accredited U.S. investors with exposure to bitcoin through a traditional product. In 2019, the fund attracted $4.1 million in investment, meaning the fund has more than doubled in size the past year. Bitwise executives pointed to fears of inflation and bitcoin’s role as a hedge as reasons for increased interest in their product. Bitcoin’s well-known volatility is often seen as a barrier to entry for institutional clients, but the cryptocurrency has in fact been more stable than Tesla’s (TSLA) stock.

Related: Crypto Long & Short: The OCC’s Stablecoin Statement Is a Seed of Financial Innovation

Enterprise solutions
EY has unveiled a new Ethereum-based, enterprise-grade blockchain solution called the OpsChain Network Procurement. The platform is designed to enable companies to run private end-to-end procurement activities by allowing buyers and sellers to operate as networks, while automatically tracking volumes and spend and utilizing agreed terms and pricing. The platform utilizes open-source software including the Microsoft-backed Baseline Protocol and operates on the public Ethereum blockchain, CoinDesk’s Sebastian Sinclair reports. 

Twitter’s blockchain
Jack Dorsey said blockchain is the future of Twitter and his latest initiative is looking to hire at least five new roles, while speaking at the virtual Oslo Freedom Forum 2020 on Friday. The CEO of Twitter and Square revealed details of the nonprofit Blue Sky initiative meant to create an open standard for social media. Under this vision, users can contribute to and access data from a decentralized version of Twitter instead of a centralized service where the social media platform hosts content on its website. “Blockchain and bitcoin point to a future, point to a world, where content exists forever,” Dorsey said. “We’re not in the content hosting business anymore, we’re in the discovery business.”

KuCoin hack
Over the weekend, a hacker breached KuCoin’s hot wallets absconding with some $150 million in crypto. KuCoin said in a statement that it detected large withdrawals of bitcoin (BTC) and ethereum (ETH) tokens to an unknown wallet beginning at 19:05 UTC time on Friday. The exchange’s chief executive Johnny Lyu said KuCoin has transferred the remaining funds from compromised wallets to new addresses and momentarily froze customer deposits and withdrawals. While other exchanges including Bitfinex and Tether have blacklisted the stolen funds. An investigation is underway and stolen customer money will be “covered completely” by an insurance fund, Lyu said.

DeFi goes NFT
The excitement in DeFi has shifted to the NFT market, CoinDesk’s Brady Dale reports. NFTs, one-of-a-kind tokens made possible by Ethereum’s ERC-721 standard, have not captivated investor attention until quite recently when people realized these digital collectibles could be used for yield farming. Platforms like NIFTEX have enabled NFT indices, Rarible has added a native token and Uniswap’s liquidity pools are creating new avenues for financialization – a trend Dale traces back to John Lyall’s MEME experiment. 

Quick bites

• The Bahamas Reveal Details, October Date of Landmark Central Bank Digital Currency Debut (Danny Nelson/CoinDesk)
• Bitfinex Launches Tether-Settled Perpetual Contracts Based on European Equities (Omkar Godbole/CoinDesk)
• A cadre of crypto investment bankers is gearing up for a dealmaking frenzy (Frank Chaparro/The Block)
• Coinbase is a mission focused company (Brian Armstrong/Coinbase)
• How Hard Is It to Brute Force a Bitcoin Private Key? (Scott Chipolina/Decrypt)

At stake

Related: Blockchain Bites: Crypto Tax Switcheroo, Stablecoin Confusion, the Post-Capitalist Plunge

Growing the pie
Uniswap is now bigger than the entire decentralized finance space just two months ago, as the trading protocol becomes the first to pass the $2 billion milestone. Uniswap clocked the record figure just after midnight (UTC) Monday, according to crypto rankings website DeFi Pulse. The next biggest DeFi project, peer-to-peer lending platform Maker, trails slightly behind Uniswap at $1.96 billion in total value locked (TVL), according to DeFi Pulse. There’s now more than $11 billion in TVL in the DeFi ecosystem, with Uniswap making up approximately 18% of that.

Market intel

Five digit streak 
Bitcoin closed Sunday at $10,793 setting a record of 63 consecutive daily closes above $10,000, according to market data aggregated by Messari. The bellwether cryptocurrency’s previous record 62-day streak above $10,000 lasted from Dec. 1, 2017, through Jan. 31, 2018, when bitcoin reached its all-time high of just above $19,900 on Coinbase, CoinDesk’s Zack Voell reports.

Exchanges down?
The balance of bitcoin on major exchanges has hit its lowest levels since November 2018, potentially signalling a bullish view from bitcoin holders, as they move to longer-term holding strategies, such as cold wallets. Additionally, a rise in new investors during the coronavirus pandemic has led to a growth in “white glove” services, meaning fewer bitcoin on exchanges and more in managed portfolios. Another possible explanation? Bitcoin is being moved to tokenization solutions for use in the DeFi ecosystem, CoinDesk’s Muyao Shen reports.

Op-ed

Stablecoin guidance
Reading between the lines, CoinDesk Director of Research Noelle Acheson thinks the Comptroller of the Currency’s (OCC) latest stablecoin guidance is more than a nudge for the industry. “This could incentivize banks to actively seek stablecoin business, and in so doing, broaden both their client base and their stake in crypto markets… So, a bank could attract not just stablecoin issuers, but also their clients. It would then make sense to facilitate the transfers of stablecoins between clients, and (why not) even between banks. New payments networks could emerge, which in turn could give rise to a host of new banking services,” she writes.

Podcast corner

Stablecoins & power politics
On the inaugural episode of Opinionated, a new podcast featuring CoinDesk’s leading columnists and contributors, CoinDesk editor Ben Schiller is joined by cryptoratti Nic Carter to discuss crypto’s biggest story: the $20 billion stablecoin boom. 

Who won #CryptoTwitter? Related Stories

• Money Reimagined: Memes Mean Money
• First Mover: Tron’s Play for WBTC Shows Competition to Relieve Ethereum Congestion