Ether ETFs face Senate opposition, Wright is not Satoshi, and Dencun goes live: Hodler’s Digest, March 10-16
Top Stories This Week
Senators pressure SEC’s Gensler not to approve any more crypto ETFs
Two United States senators want Gary Gensler to pull the pin on any further crypto exchange-traded funds (ETFs), citing “enormous risks” to retail investors. In a March 11 letter, Democrat senators Jack Reed and Laphonza Butler claimed that allowing any further approvals of crypto ETFs would see investors exposed to “thinly traded” markets rife with fraud and manipulation. The senators also urged the U.S. Securities and Exchange Commission to take “several specific steps” with the already launched Bitcoin ETF products, requesting that BTC ETF brokers and advisers be subjected to further regulatory scrutiny. There are eight proposed spot Ether ETF applications awaiting approval by the SEC.
Judge rules Craig Wright is not Satoshi Nakamoto
Craig Wright is not Satoshi Nakamoto, the pseudonymous creator of the Bitcoin network, according to Judge James Mellor’s ruling in the United Kingdom on March 14. Closing arguments began in London on March 12 in the lawsuit brought by the Crypto Open Patent Alliance (COPA) lawsuit against Wright, an Australian computer scientist who claimed to be Nakamoto since 2016. Wright has been accused of massive document forgery for supporting his claim of being the pseudonymous Bitcoin founder. COPA was seeking injunctive relief to prevent Wright from further claiming to be Nakamoto.
Prosecutors want $11B judgment, 40-50 years in prison for Sam Bankman-Fried
Prosecutors are asking for a sentence of 40-50 years for the former CEO of bankrupt cryptocurrency exchange FTX and convicted fraudster Sam Bankman-Fried. He faces up to 110 years behind bars under the law. The Government’s Sentencing Memorandum recounts Bankman-Fried’s activities in detail, focusing on five points: Bankman-Fried’s scheme to make illegal political contributions, his attempt to bribe Chinese government officials, his banking misconduct, his attempts to deflect blame, and various obstructions of justice. Bankman-Fried’s legal counsel asked the court for a maximum sentence of six-and-a-half years.
The Dencun upgrade was successfully rolled out on the Ethereum mainnet at 1:55 pm UTC on March 13. The most anticipated hard fork since the Merge is expected to significantly reduce the transaction fees of layer-2 networks and enhance Ethereum’s overall scalability. Dencun incorporates nine different Ethereum Improvement Proposals. The first part, Cancun, focuses on improving how transactions are managed and processed on the execution layer, while the second part, Deneb, aims to improve the consensus layer, which refers to how network participants agree on the state of the blockchain. The promised fee reductions won’t affect Ethereum mainnet users.
A lack of communication from the United States Securities and Exchange Commission around Ether exchange-traded funds (ETFs) toward issuers could be a bad sign for those hoping for Ether ETF approvals by May. Speaking to Cointelegraph, Bloomberg ETF analyst Eric Balchunas said there were more than a few reasons he’s now downgraded the chances of Ether ETF approval to just 35%. Balchunas also believes SEC Chair Gary Gensler’s stance on Ether could also play a part, arguing that Gensler still thinks of Ether as a security. Several asset managers are seeking the green light for a spot Ether ETF, including Fidelity and BlackRock.
Winners and Losers
At the end of the week, Bitcoin (BTC) is at $68,166, Ether (ETH) at $3,652 and XRP at $0.62. The total market cap is at $2.5 trillion, according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are 0x Protocol (ZRX) at 132.15%, Jupiter (JUP) at 57.27% and Gala (GALA) at 48.61%.
The top three altcoin losers of the week are Arweave (AR) at -20.84%, Bitcoin SV (BSV) at -20.65% and Filecoin (FIL) at -18.45%.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
Most Memorable Quotations
Sergei Gorev, risk manager at YouHodler
“Do I wish I had made the decision to have thrown $10,000, $50,000, $100,000 into it [Bitcoin]? Sure.”
Peter Schiff, economist and stockbroker
“The Elizabeth Warren crypto bill embodies a legislative effort expending a 1,000% effort to achieve a 1% outcome.”
“At the end of the day, Gensler thinks Ether is a security. He would not want to approve it unless he thought it to be a commodity like Bitcoin.”
Eric Balchunas, senior ETF analyst at Bloomberg
“Bears can’t win this game until spot Bitcoin ETF inflow stops.”
Ki Young Ju, CEO of CryptoQuant
“Global [crypto] standards are being established, […] and with many non-U.S. jurisdictions actively engaged in this area, the United States risks ceding influence at this critical stage.”
Travis Hill, vice chair of the U.S. Federal Deposit Insurance Corporation
Prediction of the week
Bitcoin has 6 months until ETF ‘liquidity crisis’ — New analysis
Bitcoin faces a “sell-side liquidity crisis” by September if institutional inflows continue, according to industry analyst Ki Young Ju, founder and CEO of on-chain analytics platform CryptoQuant.
Now holding nearly $30 billion, Bitcoin ETFs have become the most successful launch in ETFs history. Should the trend continue, however, a new phenomenon could arise where there will not be enough BTC available to meet demand.
“Bears can’t win this game until spot Bitcoin ETF inflow stops,” Ki summarized. He noted that ETFs alone put away more than 30,000 BTC last week, and with 3 million BTC in exchange and miner wallets, the odds of a supply-induced price shock become clear.
“Last week, spot ETFs saw netflows of +30K BTC. Known entities like exchanges and miners hold around 3M BTC, including 1.5M BTC by US entities,” he continued. “At this rate, we’ll see a sell-side liquidity crisis within 6 months.”
FUD of the Week
Hong Kong’s Securities and Futures Commission (SFC) has put cryptocurrency exchange Bybit on its warning list as of March 14, including 11 products offered by the exchange, such as Bybit Futures, Bybit Options, Bybit Leveraged Tokens, Dual Assets, Bybit Lending, Bybit Wealth Management and others. The following day, on March 15, the commission also added crypto exchange MEXC to its warning list. According to the SFC statement, MEXC is actively marketing its services to Hong Kong-based investors despite not having a license from the SFC or applying for a trading platform license.
Old Trust Wallet iOS vulnerability from 2018 may still affect some accounts
An old vulnerability in the Trust Wallet iOS app may still affect individuals who created accounts with it — even if they no longer use Trust Wallet — according to a recent report from security researchers at SECBIT Labs. The vulnerability only existed from Feb. 5 through Aug. 21, 2018 and does not affect accounts created after that time period, the researchers stated. However, some users may be unaware that the vulnerability existed and may still be planning to use the exposed wallets.
Bitcoin Fog crypto mixer founder guilty of money laundering, jury finds
The founder of crypto mixer Bitcoin Fog was convicted of money laundering in the United States on March 12. Roman Sterlingov, 35, was found guilty of money laundering, money laundering conspiracy, operating an unlicensed money-transmitting business, and violations of the D.C. Money Transmitters Act. The service moved over 1.2 million Bitcoin over the decade-long operation — worth $400 million at the time of the transactions — with the bulk of cryptocurrency coming from darknet marketplaces tied to narcotics, computer fraud abuse and identity theft, the government said. Bitcoin Fog also served distributors of child sexual abuse material.
Top Magazine Pieces of the Week
Inside Pink Drainer: Security analyst defends his crypto scam franchise
“I don’t phish, I just code.” Security researcher behind Pink Drainer defends his kit which drained $53M from 9000 “participants” last year.
South Africa’s digital-nomad crypto hub: Cape Town, Crypto City Guide
More than 2,000 grocery stores accept crypto in Cape Town, which also boasts unique arbitrage opportunities for savvy outsiders.
Herbert Sim says that Bitcoin surpassing its 2021 all-time highs is just the start of a massive bull run.