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Bitcoin tumbled Monday on the news that Binance and its Chief Executive Officer Changpeng Zhao were being sued by the U.S. Commodity Futures Trading Commission.

The cryptocurrency has been on a two-week tear spurred by a banking crisis in the U.S., but it fell sharply after the CFTC’s lawsuit became public, at one point hitting $26,750 before rebounding to $27,350.

BTC/USD chart by TradingView.

Notably, Binance’s BNB also plunged to $314.9 from around $327.

Most crypto prices generally were trending down on Monday. Ethereum was down 2.8% over the last 24 hours, while Solana slid 4.9% and Litecoin fell 4.1%. Ripple’s XRP has been outperforming other cryptocurrencies but also saw a dip after the news about Binance.

Companies in the crypto space saw shares fall throughout the morning. Coinbase is down around 9.6%, and MicroStrategy — which just announced that it bought $150 million in bitcoin in the past few weeks — fell 8.3%.

Most publicly traded miners were also down, including CleanSpark (-8.7%), Riot (-6.5%) and Hut 8 (-6.6%). 

© 2023 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.

Cega, a DeFi derivatives protocol focused on exotic options, raised $5 million in a new funding round led by Dragonfly Capital that also saw participation from Pantera Capital and Robot Ventures.

The seed extension round was realized via a Simple Agreement for Future Equity plus token side letter, Cega co-founder and CEO Arisa Toyosaki said in an interview. She declined to comment on the valuation but said it was an up round, meaning it was more than Cega’s last valuation of $60 million.

The latest round brings Cega’s total funding to date to $9.3 million. It raised $4.3 million last March.

Cega is a Solana-based derivatives protocol focused on exotic options structured products. While regular options allow users to buy or sell an underlying asset at a specific price and time, exotic options, on the other hand, are more customized and have additional conditions attached to them.

Toyosaki said Cega’s exotic options are carefully designed that help traders earn “safer yields in volatile market environments.” The company offers principal protection against severe market movements of up to a 90%, she added.

“A very popular strategy on Cega is you are betting that in the next 27 days that neither bitcoin nor ether will fall more than 50%. And if you are right, which like 90% of the time you are, you would be able to get 12% APY,” Toyosaki said.

Cega expansion

Cega’s protocol went live last June and has seen a peak total value locked of around $50 million, Toyosaki said, adding that the collapse of the FTX exchange saw massive withdrawals. Cega’s current TVL stands at $6.3 million, according to its website.

The main reason for the fundraise was to expand its protocol on Ethereum, Toyosaki said, adding it will launch new products there including leveraged options. The launch on Ethereum is scheduled for next week.

As part of the expansion, Cega will keep its Solana-based products in “maintenance mode,” meaning its existing products will continue to be available on Solana. The availability of new products on Solana, however, will depend on factors including volume. 

Cega will also launch a new market-making entity called Tras Mobian next week that will focus on both vanilla and exotic crypto derivatives.

“The new, separate entity is so far funded by my personal trades as I had quite a successful last year,” Toyosaki said. Cega currently employs 15 people, and the new entity has already hired a small team, she added.

Airdrop plans

Given its expertise in exotic options, Cega also plans to launch white-label services in the future to develop strategies for other centralized and decentralized platforms, said Toyosaki.

Cega also has plans to launch a token in the future, Toyosaki said, declining to comment on the timeline.

“We do look to compensate early users,” she said, adding that Cega also plans to support other blockchains, especially DeFi-native chains.

© 2023 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.

Binance Holdings Ltd. and its CEO Changpeng “CZ” Zhao are being sued by the Commodity Futures Trading Commission for allegedly violating federal laws and not registering the exchange in the U.S.   

The agency filed a complaint against Binance, the world’s largest crypto exchange, on Monday in a Chicago federal court.  Bloomberg News first reported the suit. 

Since 2017, Binance has “taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to ‘block’ or ‘restrict’ customers located in the United States from accessing its platform,” the agency argued in the 74-page complaint.  

This was despite Binance, Zhao and other executives knowing that soliciting customers in the U.S. without register to business in the country, as required under U.S. law, the CFTC said. The agency also charged Binance’s former Chief Compliance Officer Samuel Lim. 

“But Binance, Zhao, and Lim have all chosen to ignore those requirements and undermined Binance’s ineffective compliance program by taking steps to help customers evade Binance’s access controls,” the agency said. 

The move comes after crypto service provider Paxos received notice of an investigation into its joint stablecoin offering with Binance and voluntarily ended its minting of the dollar-pegged token.

The price of bitcoin immediately declined on the news, trading down 4% to $26,8871 at 10:39 a.m. EDT. 

© 2023 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 prices trended lower after the weekend, but Ripple’s XRP bucked the trend and increased more than 6% over the past day.

Bitcoin was trading at around $27,950 as of 9:45 am EDT, down about 1.1% in the last 24 hours.

Ethereum was down slightly by 1.7% and priced at $1,764.

BTC/USD graph by TradingView

Dogecoin and OKB were also trending higher. 

MicroStrategy slid after saying it bought $150 million in bitcoin between mid-February and last week.

XRP/USD chart by TradingView.

Other crypto companies were also mostly trading down, with Galaxy Digital declining 1.3% and Coinbase lower by 3.2%. Block was rose 2.9%.

In traditional markets, the Nasdaq 100 and the S&P 500 were both trending slightly higher, rising 0.5% and 0.8%, respectively.

© 2023 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.

Scaling project Polygon has released a highly anticipated zero-knowledge-based rollup network, with Ethereum founder Vitalik Buterin set to perform the first symbolic transaction in a YouTube broadcast scheduled for 10:30 a.m. EDT. 

The network, called Polygon zkEVM, was under development for a year and provides a scalability solution for Ethereum apps, with ZK-rollups performing off-chain computations on a secondary layer to enable faster and cheaper transactions while still maintaining Ethereum’s security as a priority.

The network is EVM-equivalent, meaning it will support the same code as Ethereum and allow developers to use their existing tooling and infrastructure. The mainnet is permissionless, and anyone can bridge assets and use them in zkEVM native apps, according to the development team.

 “With zkEVM, you will be able to deploy any Ethereum application without any modifications, using existing Ethereum developer tools like Remix, and interact with the network using standard wallets like Metamask,” Polygon co-founder Mihailo Bjelic said in an interview. “Close to 6,000 smart contracts were deployed on the testnet without any single modification without any problem.”

A ZK-rollup is a Layer 2 scaling solution for blockchain networks, such as Ethereum, that sets out to improve transaction throughput and reduce transaction fees. It works by aggregating a large number of transactions off-chain into a single batch, which is then submitted to the main chain as a single transaction. Most ZK-rollups don’t have natively supported Ethereum applications, which is starting to change with the public release of a few zkEVMs.

More than 50 projects deploy on Polygon zkEVM

The launch of Polygon’s zkEVM has attracted more than 50 projects from the crypto, web3 and gaming spaces, including dApps such as Lens and Aavegotchi, DeFi projects 0xvix and Quickswap, as well as Etherscan, Phantom, Midnight Society, Luganodes, Celer, Gameswift, and Yeeha Games. In addition to these projects, the Uniswap decentralized exchange and Aave lending protocol also have floated governance proposals in a process for joining the Polygon zkEVM Mainnet Beta.

Polygon Labs, the developer of the network, has subjected the zkEVM to two independent audits and one internal audit over a period of nearly four months to ensure its security. However, the team has still advised users to exercise caution in terms of security, as the network is still in beta phase.

The team has made all aspects of the zkEVM open-source under an AGPL v3 license to share their code and encourage collaboration with the developer community.

The zkEVM technology has been identified as a major area of focus for scaling the Ethereum network, and several blockchain projects, including Polygon, Starknet, ZkSync, and Scroll, have been competing over the past year to develop a functional ZK-based Layer 2 solution capable of natively supporting Ethereum apps. So far, only ZkSync’s chain called Era and Polygon have finalized the release of their ZK-rollup networks on the mainnet.

© 2023 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.