FreeCryptoCurrency.Me

Two Chinese intelligence officers were charged with obstruction of justice for bribing a government worker with $61,0000 in bitcoin, according to the U.S. Attorney’s Office.

The action from the U.S. Attorney’s Office for the Eastern District of New York related to the ongoing federal criminal investigation and prosecution of a global telecommunications company based in the People’s Republic of China, according to a statement released Monday. 

The “double agent” in question was working for the Federal Bureau of Investigation (FBI), the office also said. According to the statement, the individual received payments in bitcoin on two separate occasions. 

“This was an egregious attempt by PRC intelligence officers to shield a PRC-based company from accountability and to undermine the integrity of our judicial system,” U.S. Attorney General Merrick Garland said in a statement. 

This is a developing story.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Securities and Exchange Commission Chair Gary Gensler doesn’t view decentralization as a fact of crypto markets, despite the origins of digital currencies in circumventing centralized authorities.

“There’s a tendency for central intermediaries to benefit from scale, network effects, and access to valuable data. Though technological innovations repeatedly disrupt incumbent business models, centralization still tends to reemerge,” Gensler said in remarks prepared for a virtual appearance at the Securities Industry and Financial Markets Association’s annual meeting in New York City.

“We’ve even seen centralization in the crypto market, which was founded on the idea of decentralization,” Gensler warned. “This field actually has significant concentration among intermediaries in the middle of the market.”

Added the SEC chair: “Thus, we must remain vigilant to areas where concentration and potential economic rents have built up, or may do so in the future.”

Much of the digital asset industry has chafed at Gensler’s stance towards cryptocurrencies during his tenure as leader of the securities regulator, and he and Commodity Futures Trading Commission Chair Rostin Behnam have not always appeared to be on the same page. Though the two appear to be in agreement on an expanded role for the CFTC in regulating markets for digital commodities like bitcoin, they may not agree on what cryptocurrencies fall under that definition.

Without addressing crypto in particular, Gensler emphasized the importance of treating market participants alike, to focus “competition on price, service, and other key factors,” rather than market manipulation or “whether the game is fair.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto mining data center developer Soluna Holdings has seen its stock drop more than 40% since Friday when it put forward an equity capital raise.

The deal is priced at $1.44 per share, with the 1,388,889 shares totaling $2 million, the company said Monday.

The stock hit a low Monday morning at $0.88 (down from $1.81 on Friday), but later in the day recovered to $1.19.

The new capital will be put towards the “acquisition, development and growth of data centers, including cryptocurrency mining processors,” including its site in Texas.

The company is currently developing a 50-megawatt data center connected to a wind farm in that state, which is expected to go online in the last quarter of 2022, the company said on its website.

In addition to the $2 million in shares, Soluna is also issuing 593,065 shares to Spring Lane, which will raise at least an additional $850,000.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ether’s legal status may be contested ground between the leadership of the U.S.’s two federal market regulators. 

The head of the Commodity Futures Trading Commission, Chair Rostin Behnam, suggested on a panel this morning that he and Securities and Exchange Commission Chair Gary Gensler may not see eye-to-eye on the cryptocurrency’s definition, which would determine which agency has more power over it. 

“Ether, I’ve suggested that it’s a commodity, I know Chairman Gensler thinks otherwise — or at least hasn’t certainly declared one or the other,” said Behnam at an event in New York City hosted by Rutgers University. 

Behnam also noted that, while the SEC and CFTC are both members of the Financial Stability Oversight Council, that council focused on systemic stability rather than defining jurisdictions in recommending Congress grant regulators expanded oversight and rulemaking power in digital asset spot markets. Behnam and Gensler both sit on the super committee of regulators, which Behnam described as not the place “to figure out the details of how we’re going to split it up,” pointing instead to Congress as the right entity to set those boundaries. 

Added Behnam, in relation to the current debate over expanding the CFTC’s authority, “I get very irritated when folks start to talk about the CFTC as a more favorable regulator.”

The CFTC has touted the agency’s record in crypto enforcements, and Behnam recently has cautioned that the regulator will not be “light touch” if it gets authority over crypto commodity markets, which the 

Gensler himself indicated support for a more robust CFTC role over crypto commodities, but in remarks to press made last month suggested that proof-of-stake cryptocurrencies could fall under the definition of a security. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The U.S. government should use its enforcement authorities to crack down on crypto scams and operational failures, Treasury Secretary Janet Yellen said, reiterating her agency’s call for “beefed up” enforcement on digital assets.

The Biden administration released a series of digital asset reports in September and October, in an attempt to unite the many federal agencies that touch cryptocurrency issues. Yellen spoke about the reports at the Securities Industry and Financial Markets Association’s annual meeting in New York City. 

“Our report found that there are too many instances of fraud and scams and operational failures,” Yellen said. “There are some existing enforcement authorities and we would like to see those beefed up, and greater enforcement in this area.”

Yellen spoke broadly about risks to the economy and said cryptocurrencies do not yet pose a significant risk to financial stability. The crypto market is “not yet big enough or connected enough,” but that could change as the technology matures, Yellen noted. 

“It could pose a risk,” Yellen said. “So we would like to see an improvement in regulation in these areas.” 

The administration’s digital asset reports identified three areas that require regulation: Spot markets for crypto assets that are not securities, stablecoins and vertical integration by crypto firms. Yellen touched on each issue in her remarks at the SIFMA meeting.

Lawmakers on the House Financial Services Committee have spent months drafting stablecoin legislation, although it’s unclear whether a bill could advance out of committee before this Congress ends in January. 

Yellen doubled down on her call for new stablecoin rules in her remarks in New York City. 

“That’s kind of an example of regulatory arbitrage. We think that’s essentially a banking-type product that really needs a much firmer regulatory framework to operate safely,” Yellen said. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Cathie Wood is sitting on over $7 million worth of bitcoin after buying the cryptocurrency when it was trading at just $250, the Ark Invest founder revealed in a podcast interview. 

Wood bought $100,000 worth of bitcoin on the advice of Reagan-era economist Arthur Laffer, she told Peter McCormack on the What Bitcoin Did podcast last week. Wood made the investment after asking Laffer — who taught her at the University of Southern California — to look into bitcoin. 

“I’ve been looking for this ever since we went off the gold standard,” Laffer told her, before saying bitcoin was a rules-based monetary system. Wood said she asked the economist how big bitcoin could be, to which he responded with a question: “How big is the U.S. monetary base?”

Bitcoin’s market cap was around $6 billion at the time, and the U.S. monetary base — the total sum of dollars in circulation as well as reserve balances — was $4.5 trillion. 

Based on today’s bitcoin price of about $19,250, Wood has made an unrealized profit of over $7.6 million on her $100,000 investment. 

Ark Invest rose to prominence in the 2020 stock market boom as its bets on unprofitable tech companies paid off handsomely and attracted a swell of funds to its exchange traded funds. ETFs are limited to investing in securities, which meant Wood’s fund couldn’t invest in bitcoin at the time. However, Ark did begin to explore investing in bitcoin through products like the Grayscale Bitcoin Trust and eventually added it to several funds.

Arthur Laffer first rose to prominence in the 1970s when he came up with a tax theory dubbed the Laffer Curve. This said that somewhere between 0% and 100% tax rate there is a maximum tax revenue.

He famously wrote his theory on a napkin during a dinner in Washington, DC, with journalist Jude Wanniski and politicians Dick Cheney and Donald Rumsfeld. It was later donated to the National Museum of American History by Wanniski’s wife Patricia.

Napkin with sketch of Laffer Curve, on display at the National Museum of American History.

This theory was used by the Reagan administration to justify cutting taxes in order to increase tax revenue. Many critics argue the curve is over simplistic.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The coordination between the European Union’s financial supervisors has “increased tremendously” and will continue to do so thanks to new crypto regulatory framework, said European Banking Authority’s Chair Jose Manuel Campa.

Campa made the remarks while addressing the European Parliament’s Committee on Economic and Monetary Affairs. The EBA chair referred to legislation before the Parliament, including the Markets in Crypto-Assets framework expected to pass in November. After the anticipated passage of MiCA, Europe’s financial watchdogs will have a key role in finalizing new crypto rules will be implemented across EU member states in the coming months. 

The proposed regulatory framework for digital assets, as well as cybersecurity legislation before the Parliament, will be a “qualitative change” for the EU, said Campa. “This is not only for the financial sector – that qualitative change is broader in society.”

Campa’s remarks came as part of a regular appearance by the three heads of EU financial authorities before the European Parliament. The heads of the European Securities and Markets Authority and the European Supervisory Authorities representatives also testified.

MiCA receives its expected final parliamentary vote in November, regulators will grapple with multiple questions around how to apply the new law to digital assets, though MiCA is not expected to be enforced until 2024 at the earliest.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Bitcoin mining hardware manufacturer Canaan is introducing two ASIC models with its new Avalon A13 series.

The A1366 will have a hash rate of 130 TH/s and an efficiency of 25 J/TH, beating its predecessors in computing power and power efficiency, the company said. It’s unclear when they will start shipping.

“We are now working around the clock across the supply chain to prepare for future purchase orders and deliveries of the new products to our clients worldwide,” Nangeng Zhang, chairman and CEO of Canaan said in a filing with the U.S. Securities and Exchange Commission.

The new series and the A1366 in particular are “extremely competitive” when compared to Bitmain’s flagship S19 XP and MicroBT’s M50S on an efficiency basis, said Ethan Vera, COO of bitcoin infrastructure company Luxor Technologies.

The second model, the A1346, has slightly lower specs at 110 TH/s hash rate and 30 J/TH efficiency.

“We expect the A13 series to get a lot of interest due to the top-tier efficiency, if the price is in line with competitors,” Vera said. “Miners are flocking to the latest-generation machines as hashprice has been plummeting, creating a dynamic where the most-efficient miners have higher resistance to hashprice.”

Hashprice is a term coined by the company, referring to revenue miners earn from a unit of hash rate over a specific timeframe.

Bitcoin miners have seen their profit margins squeezed over the past few months as they deal with the sharp decline in the value of bitcoin at the same time as power costs and mining difficulty rise. On Sunday, the difficult metric jumped by 3.4% after climbing 13.55% two weeks ago.

“While the current challenges in the industry persist, the fundamental values and the long-term growth prospects of bitcoin and the supercomputing industry remain strong,” Zhang said.

Vera also pointed out that Canaan has in the past had “mixed reviews” from North American miners and, because of its use of chips from SMIC, which was blacklisted by the US, the company “is seen as more likely to face supply chain disruptions.” To be clear, Canaan hasn’t announced whether the two new models are made with SMIC chips.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

There is a growing opportunity to get more digital assets into consumer portfolios, according to Fidelity Institutional President Michael Durbin.

“As digital assets extend beyond cryptocurrencies and other sorts of wrapped tokens, or whatever the regulatory environment facilitates for us, we think there will be an increased funding for that portfolio construction,” Durbin said. “A basis to get more digital assets into the end consumer portfolios.” 

Durbin spoke at a Securities Industry and Financial Markets Association’s annual meeting in New York City. The talk was moderated by SIFMA Chief Operating Officer Joseph Seidel. 

As consumer interest in digital assets grows, however, Durbin is urging investors to be conservative when assessing risk in the volatile crypto market. Fidelity Institutional will tell advisers to be careful in allocating risk budgets when investing in digital assets, Durbin noted. 

“What we’ll be putting out to advisors is just be careful in your risk budget if you’re going to allocate any money to bitcoin for alpha creation,” Durbin said. “You better set aside a pretty meaningful amount of your risk budget, which can be defendable, but that’s sort of the evolution we need to get into.” 

Fidelity has been quicker to embrace digital assets than most other large investment companies, including offering a bitcoin exchange-traded fund in Canada, multiple crypto and metaverse-related ETFs in the U.S. and allowing investment in bitcoin through the 401(k) retirement accounts it provides to employers. Durbin added that the company will continue to lean into digital assets, and that he sees Fidelity experimenting more with blockchain-related technology.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• Storytelling has been an integral part of the prevalent growth strategies in the NFT space for a long time.
• A new generation of projects has taken this aspect one step further by converting storytelling into the central value proposition.
• Although this approach may be well-adapted to the inertia that inevitably abounds during prolonged bear markets, it also seems to come with additional risks.

This research piece is available exclusively to
members of The Block Research.
You can continue reading
this Research content on The Block Research.