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U.S. Treasury bills account for 58.1% of stablecoin issuer Tether’s reserves, the firm’s CTO, Paolo Ardoino, said on Monday.

Throughout 2022, Tether has repeatedly made it known that it plans to improve the quality of its reserves, in part, by reducing the amount of commercial paper held in its reserves. As of September 30, it reduced its commercial paper holdings to less than $50 million, Ardoino tweeted. Tether’s U.S. Treasury bill holdings are up over 14% from June 30 to last Friday.

Tether previously shared its plans to reduce commercial paper holdings amid the Terra crisis in May — at the time it had commercial paper holdings of $19.9 billion. This amount was brought down by more than 58% by August 19, when Tether’s disclosures showed commercial paper holdings of $8.5 billion.

#tether portfolio update. Tether as of 30 September 2022 holds ~58.1% of its assets in US t-bills. Up from 43.5% on June 30 2022.
CP exposure is < 50M now.@Tether_to

— Paolo Ardoino 🕳🥊 (@paoloardoino) October 3, 2022

Last Thursday, Binance converted all existing balances and new deposits of stablecoins USDC, USDP and TUSD to its own stablecoin, BUSD. In addition to this, it ended trading pairs for the three stablecoins against BUSD and Tether (USDT), as well as major cryptocurrencies, such as BTC and ETH.

JPMorgan analysts believe this will benefit Tether. “In our opinion, this decision is likely to bolster the importance of Tether in the stablecoin universe which had been under threat by USDC,” they wrote in a research note on Wednesday.

Tether is live across eleven different blockchains, compared to USDC’s eight, and its annualized daily trading volume is much higher than USDC — or even BTC and ETH. The investment bank found both of these facts to be beneficial to Tether.

© 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 exchange Binance signed an agreement with Kazakhstan’s Financial Monitoring Agency to formalize their shared interest in developing the digital asset market in the country. 

The ‘memorandum of agreement’ expresses mutual support in developing cryptoasset and data circulation as well as targeting illicit trade.

Binance “plans to expand its Kazakhstani office”, Kazakh President Kassym-Jomart Tokayev said in a plenary discussion last Wednesday, explaining that the exchange plans to build a “hub for the entire region.”

Binance received authorization to operate in the country in August from the Astana Financial Services Authority. The exchange giant also signed an agreement with the Ministry of Digital Development of Kazakhstan in May when CZ met with President Kassym-Zhomart Tokayev and other top Kazakh officials. 

The developments in Kazakhstan are part of Binance’s wider global law enforcement training program to link up local and international financial authorities to “fight together against cyber and financial crimes globally,” as CZ said in a tweet announcing of the news.

The training program is already completed in France, Germany, Italy, the UK, Norway, Canada, Brazil, Paraguay and Israel, as Binance continues to seek approval and registration in countries worldwide.

© 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.

Ethereum infrastructure service Flashbots is currently creating 39% of Ethereum blocks, even though it continues to censor transactions from sanctioned crypto mixing service Tornado Cash.

Flashbots is a service that proposes blocks for validators running the Ethereum blockchain. It is widely used because it offers blocks that provide more value to validators. Yet, despite censorship and growing frustration from the Ethereum community, usage of Flashbots is only increasing.

According to Flashbots’ Transparency Dashboard, 39% of all Ethereum blocks are using Flashbots — including those proposed by other relays offering a similar service, or ones that haven’t used a relay service. This is up from 12% on September 15. Additionally, 47% of validators are now registered with Flashbots, which means they are integrated with its service and are able to use it.

More validators are electing to process blocks proposed by Flashbots. Image: Flashbots Transparency Dashboard.

The adoption of Flashbots has been rising because of its superior profitability. The service offers an average payout per block of 0.12 ETH ($147) to validators, compared to an average of 0.036 ETH ($44) from non-Flashbots blocks — a difference of 234%.

Not going to plan

While Flashbots offers a main relayer that censors transactions related to Tornado Cash, it has open-sourced its offering. It is possible to use alternative relayers that provide a similar service, though these do not necessarily offer the same rewards.

“To your other point we built mev-boost in such a way to maximize choice and competition: validators and users are empowered to choose which builders and relays they want to use,” emphasized Flashbots product lead Bert Miller, in response to criticisms of the service, on Twitter. 

Yet, so far, this doesn’t appear to be the case. Flashbots usage continues to rise, and some prominent Ethereum community members have called on Flashbots to shut its main relayer down — which would force validators to choose other providers. “If FlashBots truly cared about a credibly neutral Ethereum, they would shut down their relaying service TODAY,” said well-known NFT investor DCinvestor on Twitter.

Unnecessary censorship?

While Flashbots has been clear on its decision to censor transactions related to Tornado Cash, some believe it is an unnecessary move. In an opinion piece for CoinDesk, two lawyers at crypto venture capital firm Paradigm — the main capital partner for Flashbots — argue that those running blockchain services have misinterpreted the sanctions placed on Tornado Cash. 

“But the most pernicious result of the OFAC sanctions is they have the potential to be misinterpreted by “base layer” participants – which includes validators and other actors such as builders, pool operators, relays, searchers and sequencers – as requiring the censorship of blocks involving sanctioned addresses,” the lawyers wrote, while noting that this is not the right way to interpret the law. 

They added that the blockchain’s base layer — the part that generates blocks and processes transactions — isn’t required to censor blocks involved in sanctioned transactions, in the same way that the Simple Mail Transfer Protocol (SMTP) underlying email isn’t responsible for monitoring spam or illegal activity.

“To maintain its utility, crypto’s base layer must also maintain its neutrality and lack of bias,” they 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.

Episode 94 of Season 4 of The Scoop was recorded at SALT New York 2022 on September 13 with The Block’s Frank Chaparro, and Blockchain Association’s executive director Kristin Smith.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests to podcast@theblockcrypto.com.

The Blockchain Association recently launched a new political action committee (PAC) designed to build relationships with pro-crypto congressional candidates.

In this episode of The Scoop, the Blockchain Association’s executive director Kristin Smith shares the objectives of the new Blockchain Association PAC, and why she believes Congress is the appropriate authority to design a regulatory framework for the crypto industry.

As Smith explains, the Blockchain Association PAC is intended to promote pro-crypto candidates:

“For us, this PAC is really about building relationships… This isn’t the type of PAC where we go and buy a bunch of airtime or print out a bunch of mailers and spend a few hundred thousand dollars or $1,000,000 in a single race.”

While SEC chair Gary Gensler recently remarked that multiple crypto regulators could undermine the SEC’s efforts, Smith believes the Congress is in the best position to effectuate change:

“We need Congress to step in and help sort through these issues because they are the ones that can grant new authority and they’re the ones that have the flexibility to design a regulatory system that matches the risks that we see in crypto.”

During this episode, Chaparro and Smith also discuss:

• How the Blockchain Association is responding to the Tornado Cash sanctions
• Whether or not the bear market impacted crypto lobbying efforts
• When we might see Congressional crypto legislation

This episode is brought to you by our sponsors Tron

About Tron
TRON is dedicated to accelerating the decentralization of the internet via blockchain technology and decentralized applications (dApps). Founded in September 2017 by H.E. Justin Sun, the TRON network has continued to deliver impressive achievements since MainNet launch in May 2018. July 2018 also marked the ecosystem integration of BitTorrent, a pioneer in decentralized web3 services boasting over 100 million monthly active users. The TRON network completed full decentralization in December 2021 and is now a community-governed DAO. | TRONDAO | Twitter | Discord |

© 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.

September marks the fifth month in a row during which fiat exchange volumes fell, according to The Block’s Data Dashboard. 

Of the crypto exchanges with fiat support, FTX saw the most volume in September — 24.6%. Next was Coinbase with 22.7%, followed by Upbit with 13%.

Exchanges reported $210.6 billion in total fiat exchange volume during Sept., compared to $219 billion in August.

The month-over-month change between August and September was -3.8%, though the largest decrease in the last five months was between May and June at -20%. 

Falling crypto exchange volume and the broader crypto market downturn spurred many of these companies to conduct layoffs in recent months. In June, Coinbase laid off 18% of its employee base. The next month, Gemini cut its staff by 68 positions.

© 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.

Celsius Network founder and ex-CEO Alex Mashinsky withdrew $10 million before the company froze customer withdrawals and ultimately declared bankruptcy, the Financial Times reports.

Citing people familiar with the matter, the FT reported that Mashinsky withdrew the $10 million in May. Withdrawals were frozen on June 12 due to customer concerns about the crypto bear market and the crypto lender’s financial stability. 

Mashinksy and his family had $44 million worth of crypto assets frozen in the crypto lender following his withdrawal, a spokesperson told FT. Mashinksy resigned as CEO on Sept. 27, 2022. 

“In mid to late May 2022, Mr Mashinsky withdrew a percentage of cryptocurrency in his account, much of which was used to pay state and federal taxes. In the nine months leading up to that withdrawal, he consistently deposited cryptocurrency in amounts that totalled what he withdrew in May,” the spokesperson was quoted as saying.

Mashinsky co-founded Celsius in 2017, and the firm reached a $3 billion valuation by the end of 2021. The firm filed for Chapter 11 bankruptcy on July 18 and has been embroiled in legal proceedings since. 

The Vermont Department of Financial Regulation even alleged that the firm ran a Ponzi-like scheme and that client funds were not safe – despite the firm assuring users that they were.

© 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.

September’s trading volumes saw the first notable increase since May of this year, The Block’s Data Dashboard shows.

September’s exchange trading volume jumped to $733 billion, or a 16% month-over-month increase.

The Block’s Legitimate Volume Index reported volumes of $629 billion for June, $633 billion for July and $630 billion for August. 

Following the crypto market decline that started in May, 2022’s summer saw relatively stagnant monthly volumes for crypto exchanges.

Those volumes occurred during a tumultuous period for the crypto market. 

May saw the collapse of the  Terra ecosystem, during which the stablecoin TerraUSD (UST) de-pegged from the U.S. dollar and the price of governance token LUNA fell 97%. The collapse’s impact cascaded across the crypto industry, affecting NFTs and crypto miners, among other areas.

© 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.

A hacker stole $21 million from decentralized exchange (DEX) Transit Swap, later returning about 70% of it.

The multi-chain DEX revealed the hack happened after an attack on a bug in its code, which it identified through a self-review, it said today on Twitter. Working in conjunction with SlowMist, Bitrace, PeckShield and TokenPocket, the firm acquired relevant information, including valid information on the hacker, its post confirmed.

“We now have a lot of valid information such as the hacker’s IP, email address, and associated on-chain addresses. We will try our best to track the hacker and try to communicate with the hacker and help everyone recover their losses,” it read. 

Transit Swap later confirmed that the hacker had returned 70% of the funds. “With the joint efforts of all parties, the hacker has returned about 70% of the stolen assets to the following two addresses,” the post read.

The $21 million hack is perhaps the most high-profile exploit since crypto market maker Wintermute was hacked for $160 million on Sept. 20. Hacks have been on the rise throughout the year, according to Crypto analytics firm Chainalysis, which said that they are significantly outpacing last year’s numbers.

© 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.

Cryptocurrency was somewhat of an oasis of calm last week, while traditional markets were volatile. 

Bitcoin was up about 1% over the past week at $19,229, while ether lost a little more than 1% and was trading at $1,300 at the time of writing, according to Coinbase data.

The global crypto market cap remains at less than $1 trillion, although trading in cryptocurrencies was not so volatile as stocks and bonds. Correlation between stocks and bitcoin declined throughout the week, with the Nasdaq correlation down to 0.77, while the S&P 500 fell to 0.75 according to The Block’s data dashboard. 

Fiat crisis sets the tone 

The pound sterling hit an all-time low of $1.0327 against the U.S. dollar on Monday as markets reacted to the U.K. government’s mini-budget.

“New Chancellor Kwasi Kwarteng’s tax-slashing, deficit-ballooning Budget — let’s call a spade a spade — was met with a mixture of surprise, incredulity, and downright bafflement by financial markets, particularly as the full extent of extra borrowing required to fund the largest tax cuts in 50 years became clear,”  Michael Brown, head of market intelligence at Caxton’s, wrote on Monday. 

Going forward, the macroeconomic outlook remains challenging, UBS’s head of FX strategy James Malcolm told The Block on Friday.”Implied volatilities have already repriced much higher, so the thing you have to make a call on is whether they can keep rising near-term,” he said.

Monday’s meltdown set the tone for the week as traditional markets remained highly volatile throughout, U.K. government bonds — known as gilts — were also tested as yields rose and the Bank of England stepped in to buy bonds with a remaining maturity of 20 years or more. 

Stocks ticked lower to close the month and the quarter in the red, with UBS noting that bitcoin shrugged off its typical beta of 3x to major U.S. stock indices that dropped twice as much during September, 

The most worrying development in traditional finance came toward the end of the week as rumors began to circulate over the health of Credit Suisse. The bank’s CEO Ulrich Koerner wrote multiple memos to staff last week amid the turmoil, noting that the bank was at a “critical moment.” 

The Swiss bank is part of the Global Systemically Important Banks (GSIB), which is maintained by the Basel Committee, the primary global standard setter for bank regulation. Failure of a GSIB might trigger further financial crisis, and as such the health of Credit Suisse should be monitored going forward for its potential macroeconomic impact.

© 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.

Following a relatively busy week here’s what to keep an eye on as we enter the fourth quarter of the year.  

Celsius, the next hearing

Last week, bankrupt crypto lender Celsius parted ways with CEO Alex Mashinsky after a group representing customers and creditors in the bankruptcy process called for his removal.

The firm’s CFO Chris Ferraro then moved into the role of “Chief Restructuring Officer” and interim CEO.

On Friday, the Department of Justice sought to block withdrawals from the platform until an independent examiner has completed her investigation. Celsius had filed a motion to return funds to customers in the custody and withhold accounts program at the start of this month, with the U.S. Trustee objecting to that motion, saying “the motions are premature and should be denied until after the Examiner Report is filed.”

The next hearing is set for Thursday, Oct. 6.

GUSD stablecoin volume in MakerDAO

Last week, Tyler Winklevoss submitted a proposal on the MakerDAO forum to boost the adoption of the Gemini dollar (GUSD) stablecoin in the latter’s ecosystem. 

The proposal sets out plans to grow the volume of GUSD in the MakerDAO PSM, which refers to the peg stability module that allows users to mint DAI by swapping any MakerDAO-accepted collateral. The PSM is considered useful for maintaining DAI’s peg to the U.S. dollar.

Since yesterday, and for the next 3 months, Gemini will contribute to MakerDAO a fixed rate of 1.25% for any GUSD present in the PSM, as long as the average monthly balance on the last day of the month is over $100m GUSD.

Gemini’s proposal is just the latest move by a stablecoin issuer to promote the use of their token; over the last month several stabelcoin issuers have jostled for position with various announcements and partnerships. The adjusted transaction volume of stablecoins came in at just over $765 billion in September, according to The Block’s data dashboard. 

Crypto events to keep an eye on

 There are two crypto events on the docket this coming weekend, first the Blockchain Economy Dubai Summit on Oct. 4 and 5 , then Blockchain Expo 2022 in Silicon Valley on Oct. 5 and 6. 

Ivan Liljeqvist, the founder of web3 development platform Moralis, will be speaking in Dubai along with a host of other speakers. Meanwhile, Spanish telecom giant Telifonica’s head of IOT will be speaking in Santa Clara, California, a week after reports suggested the $19 billion firm is allowing the use of cryptocurrency for purchases on its Tu.com marketplace.

Last week, the Converge22 conference in San Francisco facilitated a plethora of announcements, from Circle’s acquisition of Elements to California’s intentions to develop a crypto and web3 regulatory regime that could be a model for other states to adopt, with a particular eye toward crypto mining operations. 

© 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.