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Hello and welcome to The Node. This is Daniel Kuhn and Xinyi Luo, here to take you through the latest in crypto news and why it matters. In today’s newsletter: |
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'FTX Has Been Hacked': Beleaguered crypto exchange FTX, which filed for bankruptcy protection on Friday, and its U.S. subsidiary FTX US were hacked late Friday evening in an attack that drained approximately half a billion dollars worth of stablecoins and crypto. The company’s new CEO, John Ray, confirmed the news on Saturday adding it is working on tracking down the unknown perpetrator. In addition to working with law enforcement, FTX insiders sprung into action while the exploit was still happening to move remaining funds into a cold storage multi-sig wallet. Many FTX users reported seeing $0 balances in their wallets, and were told to delete FTX apps from their phone in case of malware. Meanwhile, Solana-based DeFi protocols began unplugging connections to decentralized exchange Serum, co-created by Sam Bankman-Fried, to mitigate potential effects from the hack. Binance Starts Recovery Fund for Crypto Projects Facing Liquidity Crisis: Binance CEO Changpeng "CZ" Zhao announced his exchange is setting up an industry recovery fund open to industry investors and developers affected by the FTX contagion. More details are expected this week, though interconnected firms Tron, Huobi Global and Poloniex are backing CZ’s project. CZ also called on members of the crypto community to take personal control of their digital assets using Binance-owned Trust Wallet, sending the app's native token, TWT, to a record high. Several exchanges are moving to post “proof-of-reserves,” or attestations they can meet redemptions, including Huobi Global, which claimed to have $3.5 billion. CoinDesk’s Tracy Wang dived deep into FTX's auditor, Prager Metis, which attested for the firm’s financials months back and has a cheesy HQ in Decentraland. Crypto.com CEO Claims FTX Exposure Is Minimal Amid Speculation: Kris Marszalek, chief executive of the other major crypto exchange with sports stadium naming rights, confirmed the firm accidentally sent $400 million to a rival exchange, Gate.io, in October. “The funds were at no risk of being lost,” he said. In an interview he said the firm, which counts SHIB among its top treasury assets, is financially sound and will post proof of reserves. |
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Putting the news into perspective |
(CoinDesk) Let's Actually Commit to Proofs of Reserve This Time Nic Carter, co-founder of Castle Island Ventures and CoinDesk columnist, has been advocating for “proof-of-reserves” for years, or the process where exchanges transparently reveal what crypto’s they hold, in what quantity and if they can meet all of their client’s deposits. After FTX imploded, and it was revealed they held almost no bitcoin, according to Financial Times, but had several billion in BTC-denominated liabilities, it’s clearer than ever centralized exchanges need to be as transparent as the blockchain’s they make money from. Read Nic Carter’s full op-ed here. |
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As the fallout from FTX's collapse cascades across crypto markets, how can you minimize your crypto tax burden and stay above water? For Tax Week presented by Koinly, CoinDesk presents a series of guides, features and interviews covering practical tax questions. The State of Crypto Taxation in India: Past, Present and Future Even though the legality of crypto in India is still a matter of debate, new crypto tax laws are already affecting businesses and individuals. The NFT Creator's Guide to Year-End Tax Planning A step-by-step guide to help NFT artists navigate taxes and find ways to reduce their tax bill. |
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Overheard on CoinDesk TV... |
"This does not kill crypto." – Kevin O'Leary, on the FTX collapse, in an appearance on CoinDesk TV's "First Mover" |
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Sam Bankman-Fried and the geometry of conscience (Shtetl-Optimized) Opinion: No one is coming to save the crypto industry (CNN) ‘The Devil In Nerd’s Clothes’: How Sam Bankman-Fried’s Cult Of Genius Fooled Everyone (Forbes)The Blockchain Socialist Interviews Vitalik Buterin (Podcast) Bahamian rhapsody: FTX users exploit loophole to withdraw crypto (Protos) |
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