FreeCryptoCurrency.Me

Silvergate suspended its Silvergate Exchange Network on Friday, the result of what it called “a risk-based decision.” 

The network shutdown comes after Moody’s downgraded Silvergate’s credit rating for the second time in less than two weeks. Moody’s said it downgraded Silvergate due to insufficient capitalization and “governance deficiencies” after the company delayed its annual report filing and following the company telling the Securities and Exchange Commission it was “less than well-capitalized.”  

Although SEN is now shut down, other deposit-related services are unaffected, according to Silvergate.

A number of major blockchain industry companies, including Circle, Blockchain.com, Wintermute, GSR, Coinbase and Paxos, severed ties with Silvergate.

The bank recently also will release $9.9 million to distressed crypto lender BlockFi, as stipulated and ordered in BlockFi’s bankruptcy.

Silvergate now faces a number of issues, including litigation, as well as regulatory and congressional scrutiny, according to its SEC filing.

© 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.

Arthur Hayes, a co-founder founder of the Bitmex exchange, said he’s ready to “be more public” about his family office dubbed Maelstrom.

“You will see our head of investments, Akshat Vaidya at conferences globally,”  Hayes said in a post on LinkedIn, adding, “let’s fuck some shit up!”

Maelstrom invests “in cool shit with a focus on crypto and digital assets,” according to the family office’s website. The home page for the office features the slogan “we are entropy.” The office didn’t immediately respond to a request for comment. 

Hayes, alongside investors FalconX, Commonwealth, OP Crypto, and ChapterOne, participated in a $2.1 seed round for Elixir, a decentralized finance protocol and market maker, that was announced earlier this year. 

Last May, Hayes was handed a sentence of six months in home detention for his role at BitMEX. He told the court he was “ready to turn the page.”

© 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.

Securities and Exchange Commission staff believe Binance.US is operating an unregistered securities exchange in the United States, a lawyer said during a Voyager Digital bankruptcy hearing on Friday evening. 

SEC lawyer William Uptegrove also raised concerns that the offering and sale of Voyager’s VGX token have the attributes of a securities transaction. 

“The commission has not made any determination on either of these issues and the staff beliefs do not represent the position of the commission,” Uptegrove said during a hearing in the U.S. Bankruptcy Court for the Southern District of New York. Commissioners vote on enforcement actions based on recommendations provided by staff. 

The comments come as the SEC ramps up its crypto enforcement activity, including settling with crypto exchange Kraken over its staking service last month and proposing tighter rules for crypto custodians. Representatives for Binance and Binance.US did not immediately comment.

Judge Michael Wiles is weighing whether to approve the proposed sale of Voyager assets to Binance.US. The SEC has objected to the sale, and has faced pushback from Wiles on Thursday for offering limited evidence to back up the objection. 

The commission’s lawyer asked the judge to meet behind closed doors on Friday evening, citing “statutory restrictions on our ability to share nonpublic information.” After a brief private conversation between the judge, the SEC, the Voyager debtors and lawyers for Binance.US, the judge pressed the commission to make its statements in public. 

“This is a public court proceeding,” Wiles said. “Anything that further explains the basis for the SEC’s position, that seems to me is something everybody’s entitled to hear.”

The commission’s enforcement investigations are nonpublic, Uptegrove replied, calling the matter a “complicated, complicated situation.”

After the SEC lawyer clarified that staff believes Binance is operating an unregistered securities exchange, Wiles said he still did not have “very much clarity” because the commission did not take an official position. Over the last two days, witnesses have testified on the proposed sale for more than 13 hours.

© 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.

Moody’s downgraded Silvergate for the second time in less than two weeks, citing a lack of capitalization as well as “governance deficiencies,” after the company Wednesday told the U.S. Securities and Exchange Commission it may be “less than well-capitalized” and delayed filing its annual financial report. 

The actions “highlight significant governance deficiencies in terms of the bank’s risk management and its ability to properly assess and respond to abruptly changing operating conditions for its specialized business model, increasing the institution’s exposure to adverse developments,” Moody’s said. “The bank’s negative governance risk has a discernible negative impact on Silvergate’s credit ratings.”  

Moody’s dropped the bank’s long-term issuer rating to Ca from B3, or near default, and its non-cumulative preferred stock to C from Caa3, or high credit risk, less than two weeks after its Baseline Credit Assessment was lowered. 

Silvergate also said that it has sold additional investment securities to fully repay its outstanding Federal Home Loan Bank advances, realizing additional investment losses, which had previously been recorded as other-than-temporary impairment of securities, Moody’s said. 

© 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.

A bankruptcy judge has ordered Silvergate Bank to release nearly $9.9 million to crypto lender BlockFi, days after the bank said it was “reevaluating its business” and could be “less than well-capitalized,” which led to a swarm of companies severing ties with the bank. 

U.S. Bankruptcy Judge Michael B. Kaplan said Silvergate had to return $9,850,000 deposited by BlockFi, according to a court filing on Friday.  

BlockFi filed for bankruptcy protection in November 2022. Soon after filing, BlockFi began negotiating with Silvergate for the release of $10 million in a reserve account held at the bank, and it reached an agreement on Friday for the bank to release a majority of those funds within two business days. 

Silvergate has faced its own issues this week. In addition to capitalization problems, the La Jolla, Calif.-based bank said in a Securities and Exchange Commission filing on Wednesday that it faces, “various litigation (including private litigation) and regulatory and other inquiries and investigations against or with respect to the Company, investigations from our banking regulators, congressional inquiries and investigations from the U.S. Department of Justice.” 

That’s led to a raft of customer departures from the bank that built itself a position in the center of much of the U.S. crypto industry. Customers began dropping the next day, including Coinbase, Circle, Paxos and Gemini, some citing their moves were made out of an “abundance of caution.”  

© 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.

Bitcoin mining stocks tracked by The Block were mixed on Friday, with nine gaining and the other 10 declining.

Bitcoin fell 4.9% to $22,328 by market close.

Here is a look at how the individual miners performed today:

© 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 continued to decline heading into the weekend.

Bitcoin was trading around $22,400 by 12:45 a.m. EST, down 4.5%, according to TradingView data. Ether dropped 4.7% to $1,570.

BTCUSD chart by TradingView

Altcoins were trading in a similar direction. Binance’s BNB slid 2.7%, Ripple’s XRP shed 2.3%, and Polygon’s MATIC was down 2.1%

Crypto stocks

Silvergate’s plunge to a breather, with shares rising 5.6% to $6.05, according to TradingView data. The bank’s stock took a beating on Thursday, a day after it warned in a regulatory filing that it may be “less than well-capitalized” and was “re-evaluating its business.” Shares sank about 50%.

Jack Dorsey’s Block added 2.5% to trade above $80. Coinbase shares were up 0.1% to about $63.80.

Shares in MicroStrategy were trading down 2.2% to $247. Co-founder Michael Saylor said Silvergate was “responsible” amid the collapse of other crypto institutions, including the FTX exchange, and said he’d keep doing business with the crypto-friendly bank.

Saylor failed in his bid to dismiss claims that he didn’t adequately pay his income taxes, interest and penalties due in Washington, DC.

© 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.

Base, a new Ethereum Layer 2 developed by Coinbase, has integrated Chainlink on its testnet in a move to provide secure, off-chain price feeds to decentralized app developers.

The Base team said it joined the Chainlink Scale program, which aims to offer oracle data to developers at a reduced price as part of the “Chainlink Scale” program. Under this program, Base will support some of the operational expenses of Chainlink services on its network and decrease the gas expenses of Chainlink nodes when submitting oracle reports on Base.

“We’re super excited to launch Base with collaborators such as Chainlink, and to join the Chainlink SCALE program to empower developers with the critical data and services they need to build their applications,” Jesse Pollak, the Project Lead at Base said in a statement.

Chainlink’s oracle network is designed to enable smart contracts and applications to utilize off-chain data in a secure and decentralized manner. It is the most widely used oracle network in the industry with over 650,000 active users, according to data from Dune Analytics.

© 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.

Gemini disclosed incidents attributed to a third party that resulted in a phishing campaign targeting users in the UK and Europe, according to a client email seen by The Block.

Scammers have used emails and websites mimicking Gemini’s branding, with the company saying that it believes the campaigns resulted from two third-party vendor incidents. No account information or systems were impacted, and all customer accounts remain secure.  

“We are aware of two incidents during which bad actors obtained the names, email addresses, and/or truncated (partial) phone numbers of certain Gemini customers from two third-party vendors that we use,” the email noted, going on to say the firm had previously mentioned one of these scams. The exchange said it just recently learned of another one that occurred last fall.

The second incident involved “bad actors” who “phished and tricked” employees of a third-party vendor into providing logins to their platforms. The bad actors used the login credentials to access the names, email addresses, and in some cases, partial phone numbers of some Gemini customers.

“We understand that these incidents may be part of a broader attack on crypto platforms by this group of bad actors,” Gemini said in the email.  The UK Information Commissioner’s Office and the Irish Data Protection Commissioner have been informed.

Gemini did not immediately respond to requests for comment from The Block.

© 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.

Blockchain development firm ConsenSys will begin a public test of a zkEVM rollup network compatible with Ethereum on Mar. 28.

The zero-knowledge, or ZK-Rollup, network performs off-chain computations on a secondary layer for faster and cheaper transactions while prioritizing Ethereum’s security; a private beta phase was successfully completed, having processed over 490,000 transactions from various decentralized apps, ConsenSys said.

One of the key features of the zkEVM rollup is its functionality with Ethereum Virtual Machine, which enables easy migration of existing dApps to the Layer 2 network. Developers can onboard apps from Ethereum, and use them on the zkEVM network without making significant changes, the firm noted.

The zkEVM technology is considered the next major step in the development of Layer 2 solutions, but it has remained in the testing phase so far.

While they are considered more scalable than existing Layer 2 solutions like Arbitrum and Optimism, which have seen growth, zero-knowledge Layer 2 solutions currently lack Ethereum compatibility. To address this, teams including Polygon, Starknet, zkSync, Scroll and ConsenSys have fiercely competed over the past year to develop a functioning ZK-based Layer 2 that can support Ethereum apps.

While ConsenSys is one of the top contenders, Polygon is attempting to take a lead by releasing their zkEVM on the Ethereum mainnet in beta phase on March 27, one day before the ConsenSys public testnet goes live.

There’s also zkSync, which launched a zkEVM solution in October for restricted internal use only. Its mainnet launch may also take place in the coming months.

© 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.