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The Federal Bureau of Investigation on Thursday said it arrested a 25-year-old man for his role in the alleged hack of the Securities and Exchange Commission's X account to falsely post the agency had approved bitcoin exchange-traded funds. Eric Council Jr., of Athens, Alabama, conspired with others to take over the X account, according to a Thursday press release from the U.S. government. After gaining access to the account, he passed control off to unnamed co-conspirators who issued the false tweet. On Jan. 9, a post on SEC's X declared "approval for #Bitcoin ETFs for listing on all registered national securities exchanges," causing bitcoin to quickly jump $1,000 in price. The cryptocurrency then cratered $2,000 when the SEC regained control of its account, deleted the post and declared it false. The SEC did end up approving the ETFs the next day. Council was paid in bitcoin (BTC) for orchestrating the account takeover, according to the FBI. |
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Asian Private Wealth Pours Into Crypto |
A growing number of Asia-based private wealth managers are entering the crypto market, with some forecasting bitcoin (BTC) will hit $100,000 by year's end, according to a report by digital asset technology platform Aspen Digital. Digital assets have emerged as an alternative investment class for private wealth in Asia, with 76% of family offices and high-net-worth individuals investing in cryptocurrencies and 16% planning to do so in the future. That's a notable improvement from the previous study in 2022, when 58% had exposure to digital assets and 34% planned to invest. Most respondents cited higher returns as a primary driver, with an increasing number of respondents citing diversification and inflation hedge appeal as key motivations to invest in digital assets, the report shared with CoinDesk said. The latest findings are based on a survey of more than 80 family offices and high-net-worth individuals conducted in the second half of this year. Most respondents had assets under management (AUM) between $10 million and $500 million, with 20% boasting an AUM of $500 or more. The report includes contributions from contributions from SBI Digital Markets and Family Office Association of Hong Kong. Decentralized finance (DeFi) remained a significant area of interest, with 67% of respondents interested in DeFi development, followed by 61% in artificial intelligence and decentralized physical infrastructure network (DePin), 50% in blockchain infrastructure 47% in real-world assets (RWA) tokenization. |
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Coinbase Says Liquidity Is Unaffected |
Trading conditions on Coinbase (COIN) remain stable, the Nasdaq-listed cryptocurrency exchange said on Tuesday, downplaying reports of a notable drop in the bitcoin (BTC) order book liquidity amid the U.S. SEC's lawsuit against market maker Cumberland. "We have not seen a material change or decline in BTC-USD depth at 2% throughout Oct," Coinbase's spokesperson told CoinDesk in an email, responding to a recent report by Paris-based Kaiko, which said liquidity, measured by the 2% market depth, declined on Oct. 10 after the SEC charged Cumberland for operating as an unregistered dealer in more than $2 billion worth of crypto assets traded since March 2018. In a report published Monday, crypto data analysis firm Kaiko said the 2% BTC depth on Coinbase started declining on Oct. 10 at 18:00 UTC, dropping by 37% to 315 BTC within a few hours. The decline meant an order 37% smaller in size than before 18:00 UTC could have moved the spot price by 2% in either direction. The 2% market depth represents a collection of buy and sell orders within 2% of the mid-price or average bid and the ask/offer prices. The metric helps gauge liquidity or the market's ability to process large trading orders at stable prices while minimum slippage – the difference between the expected price and the price at which the order is filled – for the market participant. Kaiko noted that while the ask-side depth, representing sell orders, dropped, bid depth for buy orders increased, indicating that "market makers had readjusted their positions, possibly anticipating a price decline." Other exchanges also witnessed a drop in liquidity, Kaiko added, saying overall liquidity on U.S. exchanges remained below pre-lawsuit levels. In a mail to CoinDesk, Cumberland expressed reservations with the analysis, drawing attention to their recent public statement, which suggested no changes in its activities due to the SEC's lawsuit. |
Can Pulse Transition Social Media from Web2 to Web3? The growing SocialFi project cultivates an expanding community and bridge to mass adoption. Hard to believe that Web2 was once considered a radical advancement. All it really did was take a technology designed to push information and use it to spread information. The real radical advancement is yet to come, but a new project, the SocialFi startup Pulse, might just be the first pebble of the coming avalanche to drop. Continue reading here. |
Vitalik Wants 100K Transaction Speeds |
Ethereum will eventually be able to push through 100,000 transactions per second (tps) according to a roadmap laid out in a new blog post from the network co-founder Vitalik Buterin, which outlined what users can expect from 'The Surge' – the next chapter in the protocol's Dencun upgrade. Buterin says this 100,000 TPS goal will be achieved through Ethereum’s rollup-centric roadmap, which combines Layer 2 scaling solutions, advanced data availability sampling, and data compression techniques. "The rollup-centric roadmap proposes a simple division of labor: the Ethereum L1 focuses on being a robust and decentralized base layer, while L2s take on the task of helping the ecosystem scale," Buterin wrote in the post. "This is a pattern that recurs everywhere in society: the court system (L1) is not there to be ultra-fast and efficient, it's there to protect contracts and property rights, and it's up to entrepreneurs (L2) to build on top of that sturdy base layer," he continued. Buterin writes that the easy solution to all of this might be to simply increase Ethereum’s gas limit, however, this would increase centralization as any increase would demand costly hardware, pushing out smaller nodes and leading to fewer, more centralized validators. Instead, Buterin advocates a nuanced approach, exploring cost-optimized gas fees and introducing an efficient bytecode format, EOF (Ethereum Object Format). Buterin also took aim at the friction between Layer 2s, which play an important role in helping scale Ethereum, but feel like walled gardens. "Ethereum should feel like one ecosystem, not 34 different blockchains," he wrote, suggesting adding standardized chain identifiers to addresses and improving cross-L2 standards to streamline multi-chain interactions. Buterin gave an example of how he lost $100 on Polymarket not from a bad bet, but by selecting the wrong chain. "If we are serious about the idea that L2s are part of Ethereum, we need to make using the L2 ecosystem feel like using a unified Ethereum ecosystem," he wrote in the post. |
The Takeaway: New Blockchain Trilemma |
By Paul Brody The original blockchain trilemma claimed that blockchain users were always going to have to choose between decentralization, scalability, and security. At best, they could have two out of three. The new trilemma is about products, customers, and regulatory approval. Again, pick any two. When it came to the technology trilemma, at least in the case of Ethereum, the network was long seen as having strong decentralization and robust security, but seriously constrained when it came to capacity. Today, while the trade-offs between these different priorities have never gone away, blockchains themselves have advanced so enormously that in all three areas, most users consider them to be “good enough.” For many, Ethereum’s transition from Proof of Work (PoW) to Proof of Stake (PoS) and launch of layer 2 networks, is seen as a transition point from a time when trade-offs between these options had big impacts. Ethereum continues to offer solid security and decentralization as a base layer, but the many layer 2 networks available, also offer massive scalability. The shift into this new trilemma was triggered earlier this year by the nearly simultaneous approval of Bitcoin and Ethereum ETFs in the US and the start of the Markets in Crypto Assets regulation (MiCA) which came into effect in Europe. Between these two landmark events and a host of other countries implementing regulatory regimes for digital assets, a fundamental shift is underway in the market. For many of the biggest companies in the world of digital assets, they possess products and customers, but lack regulatory approval. More than 70% of crypto assets and trading is done offshore, and many of the crypto-native firms cut back their efforts to get licensed in big markets during the recent downturn. As a result, these firms have an existing customer base and quite a few digital asset offerings but lack regulatory approvals to move their businesses onshore and chase new revenues. A second set group of firms we see a lot of, are digital-asset natives in regulated markets. They have products and regulatory approvals but no customers. These firms have focused on creating digital assets in a regulated environment. They were ahead of their traditional financial peers and have had approvals for their products, but no legacy customer base with whom to sell them. Finally, you have the biggest and most mature financial institutions. These, often banks, have enormous customers bases and mature regulatory compliance processes, but usually no digital assets to offer. Like the technical trilemma, there is no perfect solution for matching the entities and creating the perfect union that offers complete regulatory approval, an enormous range of products and a giant customer base. There are several obstacles that stand in the way of that outcome. First and foremost, the biggest obstacle to offering everything to everyone are the regulators themselves, and with good reason. Over and over again, in my conversations with regulators, they make a clear distinction between the kinds of offerings they believe are suitable and safe for mass market customers, and those that ready for sophisticated investors. Crypto and digital assets are high risk, they are volatile and not such a good idea for people who are living paycheck to paycheck. The second big obstacle are the cultures of all these different entities. Even the most legitimate, well-audited and well-run offshore crypto native is an entirely different beast from the world’s big banks. These are the people who went ahead and started companies even when many of their friends and family told them crypto was a scam. They definitely aren’t going to work well in a big bank culture. In the end, my own expectation is that, like the technical trilemma, the market will reach a level of maturity for all types of customers and offerings that will be “good enough” for most. Those with an appetite for risk will be able to find it inside a regulated ecosystem, but just not with the most conservative traditional financial entities and individual users will find a curated, lower-risk window into the world of digital assets. |
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