Investments

Binance says its Industry Recovery Initiative has 7 enrollees, 150 applicants

The initiative was announced Nov. 24 by CEO Chengpang Zhao (CZ) as an effort for “protecting consumers and rebuilding the industry.”

Binance announced on Nov. 24 that it is spearheading the creation of a so-called Industry Recovery Initiative (IRI) on BloombergTV. New details about the project to “lead the charge when it comes to protecting consumers and rebuilding the industry” have been released on the exchange’s blog. 

The company wrote:

“As a leading player in crypto, we understand that we have a responsibility to lead the charge when it comes to protecting consumers and rebuilding the industry.”

Binance has committed $1 billion to the fund at a public address, with an additional $1 billion to be added “in the near future if the need arises.” Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos and Brooker Group have committed an initial $50 million between them to participate in the fund. According to Binance, 150 other companies have also applied to participate.

The IRI is not an investment fund, the blog informs, but a “co-investment opportunity for organizations eager to support the future of Web3.” Participants that want to participate will be required to set aside committed capital in a public address. The fund may explore possibilities for traditional financial institutions to find an alternative commitment mechanism if they are unable to send money to a public address.

Casper Association launches $25M grant to support developers on its blockchain

To complement the launch of its grant program, Casper said it will provide education to support developers and innovators on its network.

Scalable blockchain network Casper announced the launch of its new Casper Accelerate Grant Program on Nov. 23, created to support developers and innovators who are building apps to support infrastructure, end-user applications, and research innovation on its blockchain.

The Casper Network is a proof-of-stake (PoS) enterprise-focused blockchain designed to help businesses to build private or permissioned applications aimed at accelerating businesses and the adoption of blockchain technology. The network also boasts of solving the “scalability trilemma,” which revolves around “security, decentralization, and high throughput.” It also features upgradeable smart contracts, relatively lower gas fees compared to other layer-1 blockchains, and developer-friendly features to make it easier for the protocol to evolve as businesses expand their use.

To complement the launch of its grant program, Casper said it is creating a new digital portal to support developers and innovators on the network with practical tools and code, to help build their products. The developer portal is scheduled to go live in the first quarter of 2023. 

Related: zkSync developer Matter Labs raises $200M, commits to open-sourcing platform

Despite being in a bear market, projects still appear to be raising and investing funds to improve the Web3 ecosystem and the adoption of blockchain technology. On Nov 23, Cointelegraph reported that Onomy, a Cosmos blockchain-based ecosystem, raised millions from investors for the development of its new protocol, a project that seeks to merge decentralized finance (DeFi) and the foreign exchange market. 

On Oct. 18, Celestia Foundation also announced that it had raised $55 million in funding for building a modular blockchain architecture with the goal of solving challenges inherent to deploying and scaling blockchains. The company shared that it intends to build infrastructure that will make it easy for anyone with the technical know-how to deploy their own blockchain at minimal expense.

DeFi protocol raises $10M from Bitfinex, Ava Labs despite turbulent market

The prolonged market volatility has not stopped investors from backing a new protocol that merges DeFi and the foreign exchange market.

The ongoing crypto bear market has proven itself to be a builders market as investments continue to find projects with promise.

Onomy, a Cosmos blockchain-based ecosystem, just secured millions from investors for the development of its new protocol. The project merges decentralized finance (DeFi) and the foreign exchange market to bring the latter on-chain.

According to the developers, the latest funding round garnered $10 million from big industry players such as Bitfinex, Ava Labs, the Maker Foundation and CMS Holdings among others.

Lalo Bazzi, co-founder of Onomy, said the underlying goal of building a decentralized autonomous organization with a public infrastructure should serve the “core tenant of crypto — self-custody — without sacrificing on the user experience.”

Both DeFi and self-custody have been hot topics in the crypto community due to the FTX liquidity-bankruptcy scandal. Some experts have said that one of the major lessons to take away from the situation is the value of DeFi platforms compared to centralized gatekeepers.

Related: Bank for International Settlements will test DeFi implementation in forex CBDC markets

Forecasts for the near future of the industry have shown a mixture of another tough year while still holding investors’ interest.

According to a Coinbase-sponsored survey that was conducted between Sept. 21 and Oct. 27, institutional investors are still keen on the space. It revealed that 62% of surveyed institutional investors with crypto investments increased their positions in the past year.

On Nov. 9, just days into the FTX scandal, Cathie Wood of ARK Investment added an additional $12.1 million to the company’s existing shares in Coinbase. Additionally, banks continue to show interest in the industry, with JP Morgan using DeFi for cross-border transactions and BNY Mellon launching its own Digital Asset Custody Platform.

Still, some research predicts a continuation of tough conditions for the blockchain industry, which have the potential to last into the upcoming year.

Crypto Twitter reacts to Binance CEO’s deleted tweet about Coinbase’s Bitcoin Holdings

Coinbase CEO Brian Armstrong indirectly addressed CZ’s tweets as “FUD.”

Coinbase was trending on Twitter on Nov. 22 after Binance CEO Changpeng Zhao, known also as CZ, sent out a tweet that appeared to question Coinbase’s Bitcoin (BTC) holdings.

In the since-deleted tweet, CZ referenced a yahoo finance article that alleged that “Coinbase Custody holds 635,000 BTC on behalf of Grayscale.” CZ added, “4 months ago, Coinbase (I assume exchange) has less than 600K,” with a link to a 4-month-old article from Bitcoinist. The Binance CEO made it clear that he was simply quoting “news reports,” and not making any claims of his own. However, his tweet was not received well by the crypto community. 

A screenshot of CZ’s since-deleted tweet.

Shortly after, Coinbase CEO Brian Armstrong indirectly responded to CZ in a series of tweets, stating, “If you see FUD out there – remember, our financials are public (we’re a public company),“ with a link to Coinbase’s Q3 shareholder letter. He clarified that his company holds “~2M BTC. ~$39.9B worth as of 9/30 (see our 10Q).”

CZ deleted his tweet shortly afterward, stating: “Brian Armstrong just told me the numbers in the articles are wrong. Deleted the previous tweet. Let’s work together to improve transparency in the industry.”

Given recent market events and Binance’s perceived role in instigating them, some have called out CZ for the insinuations. To recap, FTX’s liquidation crunch, which led to an overall spiral in the market over the past two weeks, is believed by many to have been initially triggered by the Binance CEO after his tweets caused panic and a bank run on FTX.

Will Clemente, co-founder of digital asset research firm Reflexivity Research, shared on Twitter; “That latest tweet CZ made about Coinbase’s Bitcoin holdings that he just deleted wasn’t a great look. I get the argument that he’s trying to protect the industry but CZ is more than smart enough to know that exchange and custody wallets are separate.”

Mario Nawfal, founder and CEO of IBCgroup.io, shared on Twitter: “Is CZ implying Coinbase custody does NOT hold 1 to 1 BTC on behalf of Grayscale Trust???? See his latest tweet. This is a concern I never had til now. This is a VERY serious question (implied accusation?) to ask.”

Analyst, trader, and investor 360_trader shared: “CZ just proved today he’s all about one thing… his empire. He IS NOT here to look out for the industry … he deleted the tweet… But now … as I already expected … He’s exposed himself as a villain.”

Trader and investor BobLoukas called out CZ for his lack of due diligence before tweeting. He shared: “CZ ‘Let’s work together to improve transparency in the industry.’ Also CZ – Let me tweet to millions some random FUD in the middle of a bear market major liquidity event before maybe just reaching out to confirm.”

Related: Binance CEO denies report firm met with Abu Dhabi investors for crypto recovery fund

On Nov 18, Cryptocurrency investment product provider Grayscale Investments shared that all digital assets that underlie Grayscale’s digital asset products are stored under the custody of Coinbase Custody Trust Company, LLC. Although the company has refused to provide on-chain proof of reserves or wallet addresses to show the underlying assets, citing “security concerns.” At the time of publication, Coinbase (COIN) had experienced a $5.3% increase in price. 

Approving a spot crypto ETF is ‘all about political power’ — Perianne Boring

According to the Chamber of Digital Commerce CEO, passing any kind of legislation — including bills on crypto and blockchain — will be “incredibly difficult” in a divided government.

Perianne Boring, founder and CEO of blockchain advocacy group Chamber of Digital Commerce, placed the lack of approval of a Bitcoin exchange-traded fund in the United States squarely on Securities and Exchange Commission chair Gary Gensler, suggesting politics played more of a role than economics.

Speaking to Cointelegraph at the Texas Blockchain Summit in Austin on Nov. 18, Boring said the events surrounding FTX’s collapse may have “emboldened the regulation by enforcement approach” from the U.S. Securities and Exchange Commission and Treasury, with Republican lawmakers likely to focus on oversight using their House majority in the next Congress. According to the Chamber of Digital Commerce CEO, passing any kind of legislation — including bills on crypto, blockchain, and stablecoins — will be “incredibly difficult” in a divided government, making the possibility of executive orders and regulation by enforcement more likely.

“In the House side, we’re going to see increased oversight efforts, but I don’t think crypto is actually going to be the priority,” said Boring. “Oversight hearings […] they’ll have subpoena authority, they have the authority to administer oaths, so they could bring in different people within the agencies to scrutinize their approach to digital assets.”

The Chamber CEO suggested the seeming lack of urgency from Congress could delay the passage of crypto-related legislation, while a Bitcoin (BTC) exchange-traded fund, or ETF, was in the SEC’s hands:

“It’s been a decade since the first spot Bitcoin ETF was put forward […] We still don’t have one, but we have a futures Bitcoin ETF. So, how does this make sense? It’s all about political power, so it really comes down to chairman Gensler.”

Related: Chamber of Digital Commerce says ‘the time has come’ for the SEC to approve a Bitcoin ETF

Boring clarified that Gensler prioritized oversight of crypto exchanges prior to the SEC approving any spot crypto investment vehicle. Under the SEC chair, the financial regulator has turned down or delayed decisions on numerous applications for spot crypto ETFs, including from Grayscale, Bitwise, VanEck, and ARK 21Shares. Grayscale filed suit against the government agency in June following its latest ETF rejection.

Approving a spot crypto ETF is ‘all about political power’ — Perianne Boring

According to the Chamber of Digital Commerce CEO, passing any kind of legislation — including bills on crypto and blockchain — will be “incredibly difficult” in a divided government.

Perianne Boring, founder and CEO of blockchain advocacy group Chamber of Digital Commerce, placed the lack of approval of a Bitcoin (BTC) exchange-traded fund (ETF) in the United States squarely on Securities and Exchange Commission chair Gary Gensler, suggesting politics played more of a role than economics.

Speaking to Cointelegraph at the Texas Blockchain Summit in Austin on Nov. 18, Boring said the events surrounding FTX’s collapse may have “emboldened the regulation by enforcement approach” from the U.S. Securities and Exchange Commission and Treasury, with Republican lawmakers likely to focus on oversight using their House majority in the next Congress. According to the Chamber of Digital Commerce CEO, passing any kind of legislation — including bills on crypto, blockchain and stablecoins — will be “incredibly difficult” in a divided government, making the possibility of executive orders and regulation by enforcement more likely.

“In the House side, we’re going to see increased oversight efforts, but I don’t think crypto is actually going to be the priority,” said Boring. “Oversight hearings […] they’ll have subpoena authority, they have the authority to administer oaths, so they could bring in different people within the agencies to scrutinize their approach to digital assets.”

The Chamber CEO suggested the seeming lack of urgency from Congress could delay the passage of crypto-related legislation, while a Bitcoin ETF was in the SEC’s hands:

“It’s been a decade since the first spot Bitcoin ETF was put forward […] We still don’t have one, but we have a futures Bitcoin ETF. So, how does this make sense? It’s all about political power, so it really comes down to chairman Gensler.”

Related: Chamber of Digital Commerce says ‘the time has come’ for the SEC to approve a Bitcoin ETF

Boring clarified that Gensler prioritized oversight of crypto exchanges prior to the SEC approving any spot crypto investment vehicle. Under the SEC chair, the financial regulator has turned down or delayed decisions on numerous applications for spot crypto ETFs, including Grayscale, Bitwise, VanEck and ARK 21Shares. Grayscale filed suit against the government agency in June following its latest ETF rejection.

CoinMarketCap launches proof-of-reserve tracker for crypto exchanges

The tool allows users to monitor exchanges’ reserves through displays of total assets and public wallet addresses, along with the balance and value of the wallets displayed.

CoinMarketCap, a leading market researcher and tracker in the crypto industry, announced the launch of a new feature on its platform that gives users updated financial insights on exchanges.

The proof of reserves (PoR) tracker audits active cryptocurrency exchanges in the industry for transparency on liquidity at a given moment. According to the announcement, the tracker details the total assets of the company, and its affiliated public wallet addresses, along with the balances, current price and values of the wallets.

CoinMarketCap reports the PoR trackers will update data every five minutes. On Nov. 22, the company tweeted a guide for users on how to navigate the tool.

In the five-part Twitter thread, Binance was given as an initial example with over $65 billion listed in its combined wallet addresses. Additional exchanges with PoR information available include KuCoin, Bitfinex, OKX, Bybit, Crypto.com and Huobi.

Binance CEO and co-founder Changpeng “CZ” Zhao retweeted the development from CoinMarketCap with a link to Binance’s page. Some in the crypto community on Twitter have called this feature a “great transparency addition.”

CZ was among the first to make a pledge to provide proof of reserves following the ongoing FTX liquidity and bankruptcy crisis.

On Nov. 10, it published a proof of assets, which included wallet addresses and activity. CZ then tweeted that what is available now is only the first iteration of what will be available via Merkle Tree PoR in the near future.

Related: Binance tops up SAFU fund at $1 billion amid price fluctuations

Following Binance’s example, many other platforms in the space began releasing their financial reserve and liquidity information in an effort of transparency. Chainlink Labs, Bitfinex and Bybit were among some of the first to come forward with their own data.

However, the cryptocurrency investment product servicer Grayscale has withheld its on-chain PoR due to what it says are security concerns. It did release a letter from Coinbase Custody that verified that Grayscale’s crypto holdings are fully backed, yet withheld wallet addresses.

SBF, FTX execs reportedly spend millions on properties in the Bahamas

At least 19 properties worth around $121 million were reportedly purchased under FTX’s name, Sam Bankman-Fried’s parents and senior-level executives.

The latest revelation from the FTX case reveals that Bahamian properties worth millions were bought in the company name. FTX, at the time operated by Sam Bankman-Fried (SBF), his parents and other high-level executives of the company, reportedly purchased at least 19 properties in the Bahamas over the last two years.

Collectively, these purchases have a worth of over $121 million, according to a Reuters report of the official property records.

Among the acquired properties were seven luxury condos. While the residents of the condos remain unknown at the time of writing, the property deed claims they were to be used as “residences for key personnel” of the defunct exchange.

Additionally, a property worth $16.4 million has SBF’s parents, Joseph Bankman and Barbara Fried, as signatories. The deed allegedly has the property designated a “vacation home,” with documents dating back to June 15 of this year.

According to original reports, a spokesperson for the couple did not answer the question as to how this leisure property was acquired and if any FTX funds were involved. Only the couple had been trying to return the property to FTX prior to the bankruptcy:

“Since before the bankruptcy proceedings, Mr. Bankman and Ms. Fried have been seeking to return the deed to the company and are awaiting further instructions.”

FTX moved its headquarters from Hong Kong to the Bahamas in Sept. 2021, which was purchased for $60 million and had a groundbreaking ceremony in April of this year. The official channel of the Prime Minister of the Bahamas released a video of the ceremony.

However, according to reports from a recent property visit by media outlets, the space has been untouched for months.

Related: Bahamian securities regulator ordered the transfer of FTX’s digital assets

As the liquidity crisis and bankruptcy scandal unraveled, Bahamian authorities had Sam Bankman-Fried and two former associates at the former exchange “under supervision” in the country, where they still remain today.

Court documents filed after the initial bankruptcy notice revealed that the company may have over one million creditors in total, with over $3 billion collectively owed to the 50 largest creditors.

On Nov. 21, the United States Senate committee announced a scheduled FTX hearing for Dec. 1, during which the head of the Commodity Futures Trading Commission (CFTC) head will testify.

Binance makes moves in hardware wallet industry with new investment

Binance Labs has made a strategic investment in the Belgian hardware wallet firm Ngrave and will lead its upcoming Series A round.

Cryptocurrency exchange Binance is making a move in the hardware wallet industry. The firm announced on Nov. 21 that its venture capital arm, Binance Labs, made a strategic investment in Belgian hardware wallet firm Ngrave and will lead its upcoming Series A round.

Founded in 2018, Ngrave specializes in self-custody and provides a security suite comprising three major elements: connectionless hardware wallet Zero, key backup tool Graphene and the Liquid mobile app.

Yi He, co-founder of Binance and head of Binance Labs, pointed out that security remains one of the biggest challenges for crypto adoption. “Self-custodial wallets are one of the most secure methods for storing digital assets,” He said, adding that Binance is looking to continue backing startups that enhance user security.

“Binance Labs is excited to capitalize on the emerging hardware wallet sector and partner with Ngrave to bring sophisticated wallet products to both retail and institutional users,” Binance Labs investment director Tyler Z added.

Ngrave is not the first hardware wallet provider in Binance Labs’ portfolio. It previously invested in hardware wallet maker SafePal through its incubation program back in 2018. Binance has also been integrating SafePal’s solution into its platform, adding the SafePal Mini App into the Binance app in October.

In early November, Binance also partnered with hardware wallet maker Ledger to allow Binance users to purchase crypto directly through the Ledger app with their bank cards.

As previously reported, the ongoing crypto winter has accelerated the growth of the hardware wallet industry, while many centralized crypto exchanges have been scrambling to maintain operations. Unlike exchanges, hardware wallets allow users to better control their funds by securing their own private keys. According to data from several studies released in July, the crypto hardware wallet industry could grow at a faster pace than exchanges in the near future.

On Nov. 14, Binance CEO Changpeng Zhao even admitted that centralized exchanges may no longer be necessary as investors shift to self-custodial solutions. “If we can have a way to allow people to hold their own assets in their own custody securely and easily, that 99% of the general population can do it, centralized exchanges will not exist or probably don’t need to exist, which is great,” Zhao said.

Related: Trezor reports 300% surge in sales revenue due to FTX contagion

The latest news comes shortly after Ledger CEO Pascal Gauthier argued that Binance-owned software wallet Trust Wallet must offer the Ledger Connect option in order to provide better security to its users. “Otherwise it’s just unsafe,” the CEO declared in a tweet on Nov. 13. The connection option essentially allows Trust Wallet users to store their keys on a Ledger device instead of storing them on a mobile phone or a computer.

A spokesperson for Trust Wallet told Cointelegraph that the platform is planning to release its integration with Ledger Connect soon, as the feature is a top priority item. The representative also stressed that Trust Wallet users have “full recoverability” for accessing their funds on a chain as long as they remember their secret phrase or private key.

Binance CEO CZ begins working on Vitalik Buterin’s ‘safe CEX’ ideas

While long-term solutions will need the involvement of multisig and social recovery wallets, Buterin pointed out two alternatives for the short-term — custodial and noncustodial exchanges.

The collapse of numerous major crypto ecosystems in 2022 revealed the urgent need for revamping the way crypto exchanges operate. Ethereum co-founder Vitalik Buterin believed in exploring beyond “fiat” methods to ensure the stability of crypto exchanges, including technologies such as Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zk-SNARKs). 

Following a discussion with angel investor Balaji Srinivasan and crypto exchanges such as Coinbase, Kraken and Binance, Buterin recommended options for the creation of cryptographic proofs of on-chain funds that can cover investor liabilities when required, also known as safe centralized exchanges (CEX).

The best case scenario, in this instance, would be a system that does not allow crypto exchanges to withdraw a depositor’s funds without consent.

Fellow crypto entrepreneur CZ, who has been vocal about Binance’s intent for complete transparency, acknowledged the importance of Buterin’s recommendations, stating:

“Vitalik’s new ideas. Working on this.”

The earliest attempt to ensure fund safety was proof of solvency, wherein crypto exchanges publish a list of users and their corresponding holdings. However, privacy concerns eventually fueled the creation of the Merkle tree technique — which dampened the privacy leakage concerns. While explaining the inner workings of the Merkle tree implementation, Buterin explained:

“The Merkle tree technique is basically as good as a proof-of-liabilities scheme can be, if only achieving a proof of liabilities is the goal. But its privacy properties are still not ideal.”

As a result, Buterin placed his bets on cryptography via zk-SNARKs. For starters, Buterin recommended putting users’ deposits into a Merkle tree and using a zk-SNARK to prove the actual claimed value. Adding a layer of hashing to the process would further mask information about the balance of other users.

Buterin also discussed implementing proof of assets for confirming an exchange’s reserves while weighing the pros and cons of such a system, considering that crypto exchanges hold fiat currencies and the process would require crypto exchanges to rely on trust models better suited for the fiat ecosystem.

While long-term solutions will need the involvement of multisignature and social recovery wallets, Buterin pointed out two alternatives for the short-term — custodial and noncustodial exchanges, as shown below:

Two short-term options for alternatives for safe CEX. Source: hackmd.io (via Vitalik Buterin)

“In the longer-term future, my hope is that we move closer and closer to all exchanges being non-custodial, at least on the crypto side,” added Buterin. On the other hand, highly centralized recovery options can be used for wallet recovery for small funds.

Related: Crypto self-custody a ‘fundamental human right’ but not risk-free: Community

On Nov. 4, Buterin added a new category of milestones to the Ethereum technical roadmap — aimed at improving censorship resistance and decentralization of the Ethereum network.

The updated technical roadmap now inserts the Scourge as a new category, which will run parallel to other previously-known segments — the Merge, the Surge, the Verge, the Purge and the Splurge.