Fei is a decentralized, scalable, and DeFi-native stablecoin protocol. It utilises protocol controlled value (PCV) to create a tight peg to the US dollar, providing 1:1 redeemability for FEI, the stablecoin. TRIBE is the governance token which allows holders to manage the PCV backing FEI with the community-owned reserve.

Fei USD

Katherine Ross

BlockFi&#8217;s Chapter 11 plan received approval earlier this week, supported by both the company&#8217;s management and the Committee of Unsecured Creditors.



According to a blog post, the plan got 90% approval across all voting classes. 



The former crypto lender filed for bankruptcy in late 2022 following the collapse of FTX. It followed in the footsteps of bankrupt lenders Voyager and Celsius.



<a href="https://blockworks.co/tag/blockfi">BlockFi</a> will continue to seek recoveries from the Three Arrows Capital and FTX bankruptcies as part of the plan, which would then increase recoveries for customers.&nbsp;



As Blockworks previously reported, BlockFi is also <a href="https://blockworks.co/news/blockfi-ftx-3ac-claims-creditor-funds">fighting claims from both FTX and 3AC</a>, which both seek to recover funds. The company alleged, however, that it fell victim to the former crypto exchange.



Read more: <a href="https://blockworks.co/news/how-blockfi-went-from-tech-unicorn-to-crypto-burnout">How BlockFi went from tech unicorn to crypto burnout</a>



Additionally, back in early September, <a href="https://blockworks.co/news/ftx-blockfi-sam-bankman-fried-oppose-bankruptcy-plan">FTX objected to BlockFi’s bankruptcy plan</a>, alleging that it “still suffers from certain fundamental shortcomings.”



The plan will ensure that digital assets are distributed to customers, including <a href="https://blockworks.co/news/blockfi-return-300m-some-customers">BlockFi Interest Account holders</a>.&nbsp;



Regarding the interest accounts specifically, the <a href="https://blockfi.com/blockfi-plan-confirmed/">blog</a> post said that “the company expects that this will be the first wave of distributions, which will be followed by additional distributions.”



BlockFi is still working to distribute “funds to clients with assets in the BlockFi Wallet product,” it said.



After the plan goes into effect, BlockFi will exit bankruptcy, and then start winding down the business. However, the timing is still uncertain due to being dependent on “a few factors, including the Bermuda court, which regulates our international clients, recognizing the US bankruptcy court’s approval of the plan.”



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BlockFi to move forward with Chapter 11 plan

Casey Wagner

The federal government’s budget is set to expire over the weekend, and lawmakers appear no closer to passing legislation that will prevent a shutdown. If Congress doesn’t come to an agreement soon, it could spell trouble for the crypto industry.&nbsp;



The odds of a government shutdown increased Friday afternoon when the House failed to pass its last-ditch attempt to extend the federal budget past Saturday, with the bill losing in a vote of 198-232. The last government shutdown in 2018 lasted 35 days.&nbsp;



“A government shutdown could cost taxpayers $1 billion to $2 billion per day,” Rep. Blaine Luekemeyer, R-Mo. said.&nbsp;



A government shutdown stops non-essential federal work. A shutdown leaves most federal agencies, including the US Securities and Exchange Commission, with a limited, ‘essentials-only’ staff. Crypto industry members and legal minds are all but certain this limited staff means zero movement on any digital-asset related agenda matters.&nbsp;



“I seriously doubt any of these agencies are going to be able to carry out any meaningful regulatory action regarding crypto in the event of a government shutdown,” Brian Evans, the CEO and founder of digital asset venture capital firm BDE Ventures, said.&nbsp;



The SEC has already pushed its <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf">decision date for the Ark 21Shares Bitcoin ETF</a> from Nov. 11 to Jan. 10. A shutdown could also result in paused litigation, SEC Chair Gary Gensler said, adding that his staff would be “skeletal.”&nbsp;



“The normal oversight we have on markets will not be possible,” Gensler said during an interview on Bloomberg Television last week.&nbsp;



But having the agency take a step back from crypto might not be the worst thing, Evans said.&nbsp;



“Given the extreme pressure applied by the <a href="https://blockworks.co/tag/sec">SEC</a> and other agencies on the crypto industry of late, a slowdown in such action resulting from a shutdown would be a welcome breather for crypto-industry participants,” Evans added. 



Read more: <a href="https://blockworks.co/news/invesco-spot-ether-etf-galaxy-digital-bitcoin">Invesco, Galaxy float latest spot ether ETF proposal</a>



A shutdown would also pause, or at the very least slow down, crypto legislation’s progress on Capitol Hill, political experts said. Several crypto-related bills have advanced through the markup period, but the odds of a floor vote during a shutdown are next to none.&nbsp;



Plus, a shutdown likely will shake up Congress’ priority list even after operations resume as normal, so crypto issues could face further delays.&nbsp;



<h2 class="wp-block-heading">What about pending legal matters? </h2>



Federal courts have said they are equipped to remain funded until Oct. 13, or about two weeks should a government shutdown last that long.&nbsp;



The US District Court for the Southern District of New York (SDNY), where Sam Bankman-Fried’s criminal trial <a href="https://blockworks.co/news/sam-bankman-fried-trial-starting-soon">is set to begin next week</a>, confirmed with Blockworks that his trial will not stop even if the shutdown extends beyond October 13.&nbsp;



The court will continue operating as their employees will be deemed essential. However, there could be hold-ups with other departments like the Department of Justice and US Attorneys office, a representative from the SDNY said.&nbsp;



Jurors could also be financially impacted, the representative added. If the judiciary runs out of money, jurors’ pay would be delayed until a budget is approved. US district court jurors are paid $40 per day of service, plus reimbursements for travel costs.&nbsp;



Jury selection for Bankman-Fried&#8217;s trial is slated for Oct. 3. Should a government shut down occur before then, attorneys are likely to question potential jurors regarding their feelings about delayed payments during the screening process.



Sam Dibble, partner at Baker Botts, added that criminal trials are protected under the Constitution, and will continue through a shutdown. However, the pace of these trials could be slowed depending on which employees are classified as essential. Bankruptcy cases could be another story, however.



FTX, Celsius, BlockFi and Voyager are just some of the crypto companies engaged in <a href="https://blockworks.co/tag/bankruptcy">bankruptcy</a> proceedings.&nbsp;



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Crypto industry braces for uncertainty as Federal shutdown looms

Andrew Thurman

The price of Open Exchange’s OX token fell as much as 50% on Friday following news of co-founder Su Zhu’s arrest.&nbsp;



Liquidators for Zhu’s fallen Three Arrows Capital (3AC) fund reported on Friday that Zhu was apprehended by Singaporean officials while attempting to leave the country. Zhu will reportedly be imprisoned for four months in an effort to compel him to cooperate with 3AC liquidation efforts.&nbsp;



Shortly following the news, the price of the governance token for Open Exchange (<a href="https://blockworks.co/price/ox">OX</a>), plummeted. At the time of publication, OX sits 43% lower on the daily at $.013, having recovered from lows of $.01035.&nbsp;


<div class="wp-block-image">
<figure class="aligncenter"><img decoding="async" src="https://lh6.googleusercontent.com/uwV7vXmcL_UdwagivZyIbBxSPwPgajvgomcGyTzDMK7hJunGbaZco8wrrscSHN8trO3GYUE8x_HM-v54CsfjRrademW2E5S049lGEM1n24b-gAKe3w-alWKgM6rb1bS37xlqqV1X0VeJlYAFRPrnQrU" alt=""/></figure></div>


Source: Aevo OX Perps chart



Part of the severity of the decline is attributable to limited liquidity for the asset. A single Uniswap v3 pool accounts for nearly 97% of the $5.88 million daily volume, which eclipses the $1.3 million in liquidity in the pool by a factor of four.&nbsp;



Read more: <a href="https://blockworks.co/news/three-arrows-capital-su-zhu-singapore-arrest">Three Arrows co-founder Su Zhu arrested in Singapore, says liquidator firm</a>



OX currently has a $33.2 million market capitalization.&nbsp;



The OX project was founded as an exchange to facilitate trade in crypto bankruptcy claims for entities like Celsius, FTX and 3AC. It was meant to play a crucial role in the public rehabilitation efforts of co-founders Kyle Davis and Zhu.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The way Kyle and I choose to show remorse is to help build a global business <a href="https://twitter.com/OPNX_Official?ref_src=twsrc%5Etfw">@OPNX_Official</a> that makes the business models of 2018-2022 obsolete If we succeed, many creditors will be whole If we fail, we will keep trying again Kyle+I were nearly suicidal last year this same…&mdash; 朱溯 🐂 (@zhusu) <a href="https://twitter.com/zhusu/status/1668187671473295361?ref_src=twsrc%5Etfw">June 12, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Zhu and Davis often implied that the collapse of 3AC was moreso due to misplaced market bets rather than fraud or criminal actions. Open Exchange was part of their broader initiative to reestablish themselves in the crypto industry.



According to a statement from Teneo, Davis is also committed to four months in prison, but his whereabouts are currently unknown.



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OX token plummets after co-founder Zhu’s arrest

James Cirrone

Polygon announced Friday that Google Cloud is officially a validator for the proof-of-stake sidechain.&nbsp;



This comes months after T-Mobile’s parent company, Deutsche Telekom, also became a validator, showing that Polygon is consistently attracting the interest of large technology firms.



Polygon took to X to share the news, saying that the same infrastructure that powers YouTube and Gmail, both products boasting billions of users, will now be helping secure its own network.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This month, <a href="https://twitter.com/googlecloud?ref_src=twsrc%5Etfw">@GoogleCloud</a> became part of the decentralized validator set for Polygon PoS. The same infrastructure used to power <a href="https://twitter.com/YouTube?ref_src=twsrc%5Etfw">@YouTube</a> and <a href="https://twitter.com/gmail?ref_src=twsrc%5Etfw">@gmail</a> is now helping to secure the fast, low-cost, Ethereum-for-all Polygon protocol. With 100+ validators securing the Polygon PoS…&mdash; Polygon (Labs) (@0xPolygonLabs) <a href="https://twitter.com/0xPolygonLabs/status/1707747034973757815?ref_src=twsrc%5Etfw">September 29, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Google Cloud has staked just over $5,300 worth of <a href="https://blockworks.co/price/matic">MATIC</a> on Polygon so far, according to Polygon’s staking <a href="https://staking.polygon.technology/validators/157">dashboard</a>.  



Besides being another big tech name being attached to Polygon, Google’s involvement could have implications for <a href="https://blockworks.co/news/polygon-validum-zk-tech-future">Polygon’s anticipated switch from a PoS chain to a validium</a>.



Read more: <a href="https://blockworks.co/news/deutsche-telekom-polygon-validator">T-Mobile parent joins Polygon blockchain as validator</a>



Validiums are similar to zero-knowledge proofs, but they diverge in how they store data. Instead of storing data on Ethereum, validiums rely on off-chain storage solutions, which makes the blockchain less clogged and more efficient.&nbsp;



Polygon did acknowledge the need for off-chain storage as a decentralization tradeoff in a June <a href="https://polygon.technology/blog/polygon-2-0-polygon-pos-zk-layer-2">blog</a>. Plus, since only the proofs are stored on-chain, rather than the underlying data, validiums don’t benefit from the security of Ethereum.



Still, when the transition to a zkEVM validium goes through, <a href="https://blockworks.co/news/polygon-pos-to-validium">perhaps by early 2024</a> according to Polygon Labs, Google Cloud will be among 100 other validators securing the chain and guaranteeing data availability.



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Google Cloud is now a Polygon validator

Jack Kubinec

CryptoPunks, the pixelated NFT collection that helped drive 2021’s NFT art craze, is now the subject of a documentary five years in the making.&nbsp;



Indie filmmaker Sherone Rabinovitz has been working on a CryptoPunks film since March 2018 when he sat down for an interview with the collection’s founders, John Watkinson and Matt Hall. Rabinovitz released an extended trailer on Thursday for the forthcoming documentary, which contains a four-minute cut from the 2018 interview and previews the film’s other themes. 



In the trailer, Watkinson recounts creating the punks’ accessories over the course of a month before launching the project. According to Watkinson, CryptoPunks weren’t a finished product when they launched.



“I had a few more things [to change] and all of a sudden it was like, ‘Oh wait, we’re kind of through a one-way door here. We deployed the contract already,’” Watkinson says in the 2018 interview.



The <a href="http://vimeo.com/user73645899">trailer</a> goes on to nod to the cultural phenomenon that was to come just a few years later: the conferences, celebrity adoption, spinoff projects and <a href="https://blockworks.co/news/sothebys-cryptopunk-auction-canceled-after-seller-withdraws">auction house intrigue</a> that comprised the rise of CryptoPunks. 



Yuga Labs, the company behind Bored Ape Yacht Club NFTs, acquired CryptoPunks’ intellectual property from Watkinson and Hall in 2022, with the pair <a href="https://www.larvalabs.com/blog/2022-3-11-18-0/yuga-labs-acquires-cryptopunks-and-meebits">writing</a> at the time that they weren’t well-suited to the “day-to-day management that these kinds of projects require and deserve.”&nbsp;



The CryptoPunks floor price has trended sideways since April of this year, sitting at 45.19 ether (<a href="https://blockworks.co/price/eth">ETH</a>) or around $75,000 at the time of writing.&nbsp;



Rabinovitz’ documentary does not yet have an official release date, and it comes as early interest in NFT-inspired films has cooled off: Coinbase’s Bored Apes <a href="https://nftlately.com/coinbase-puts-bored-ape-movie-trilogy-on-hold/#:~:text=It%20has%20yet%20to%20get,the%20team%20behind%20the%20project.">movie</a> is currently on hold, and Reese Witherspoon’s <a href="https://www.protocol.com/bulletins/reese-witherspoon-nfts">partnership</a> with World of Women is yet to yield any releases.&nbsp;



Rabinovitz’ documentary is meant to bring CryptoPunks’ story outside of the cryptosphere.



“[W]hile many of you crypto-natives might know a bit of it, the rest of the “normie” population out there *still* does not,” the filmmaker <a href="https://x.com/Sherone33/status/1707292545204596987?s=20">wrote</a> on X.



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Trailer released for CryptoPunks documentary 

Bessie Liu

The launch of MetaMask Snaps brought expanded functionality to MetaMask wallets, allowing users to access different layer-1 blockchains without needing to install different extensions or wallet applications.&nbsp;



These features enabled the primarily Ethereum-based wallet app to become interoperable with other layer-1 blockchains, such as Bitcoin, Solana and Cosmos chains.&nbsp;



Snaps achieves this by deriving addresses from other blockchains, according to Christian Montoya, the global product lead for MetaMask Snaps.&nbsp;



“We can derive from a Cosmos address, so rather than going to a bridge that allows you to transfer tokens from Ethereum to <a href="https://blockworks.co/tag/cosmos">Cosmos</a>, you can just do that within MetaMask and the Cosmos Snap that you install into MetaMask,” Montoya told Blockworks in an interview. “The addresses you’re using to bridge from one way to another are within MetaMask and fully self-custodial.”



As a result, Snaps could <a href="https://blockworks.co/news/metamask-snaps-interoperable">expand cross-chain traffic by giving users simple access</a> to bridges.&nbsp;



There are currently 36 open Snaps in Open Beta, and the Cosmos MetaMask Snap is one of them that has been made available during this time.&nbsp;



MetaMask is currently one of the most popular crypto wallets today. According to a <a href="https://www.coingecko.com/research/publications/most-popular-crypto-hot-wallets">report</a> by CoinGecko, as of Aug. 1, 2023, a total of 22.66 million users had installed the MetaMask wallet. Making it the most used crypto wallet. Coinbase Wallet, the second largest wallet by installation, only had 11 million users.&nbsp;



Why Agoric’s hardened Javascript for Cosmos Snaps?



Connecting <a href="https://blockworks.co/tag/metamask">MetaMask</a> to Cosmos was no easy feat, and the development team chose Hardened JavaScript for its ability to operate with third-party applications without compromising security.&nbsp;&nbsp;



Agoric CEO and founder Dean Tribble told Blockworks that his team dug into research about how to make JavaScript applications more secure, having previously worked with the founders of MetaMask on extensibility projects.



“Agoric was founded around this: how do you harden JavaScript, how do you safely run confined components written by other people when you don’t trust them,” Tribble said.&nbsp;



Hardened JavaScript, previously referred to as SES, is what Tribble refers to as the “JavaScript you thought you were programming in.”



JavaScript itself is mutable, so different libraries could change the programming language, Tribble explained. Hardened JavaScript locks down the programming language in the way the spec says it is programming in.



“It gets rid of a few things like non-determinism, but it makes it much better suited for blockchain uses, and it was really the hardening in the ability to run third-party components that got [MetaMask co-founders] excited about it,” Tribble said.



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Inside the code choice that connects MetaMask with the Cosmos ecosystem

Ben Strack

Invesco is the latest fund group to pursue an ETF that would hold ether directly.&nbsp;



The fund giant, which manages nearly $1.6 trillion in assets, shared plans for its Invesco Galaxy Ethereum ETF in a Friday filing.&nbsp;



Galaxy Digital Funds is set to to serve as execution agent for the proposed ETF and facilitate the sale of ether by the trust, the <a href="https://www.sec.gov/Archives/edgar/data/1995569/000119312523246762/d470525ds1.htm">disclosure</a> notes.



Unlike various <a href="https://blockworks.co/news/valkyrie-etf-ether-futures-unwind">ether futures ETFs expected to launch</a> in the coming days, the Invesco Galaxy Ethereum ETF would hold ether directly — mirroring other proposals made this month.&nbsp;



<a href="https://blockworks.co/news/21shares-ark-filing-for-spot-ether-etf">Ark Invest and 21Shares revealed plans</a> for a spot ether ETF on Sept. 6. VanEck, which first filed for a spot ether ETF in 2021, also has an active filing in front of the US Securities and Exchange Commission, while Hashdex seeks a fund that would blend ether futures and spot ether exposures.&nbsp;



Read more: <a href="https://blockworks.co/news/ark-invest-etf-battle">Ark anticipates win in US crypto ETF battle with ‘deepest’ suite, COO says</a>



People familiar with the filing by Ark Invest and 21Shares said recent developments suggested it was an opportune moment to start expanding conversations around ether products. That disclosure came about a week after <a href="https://blockworks.co/news/grayscale-sec-spot-bitcoin-etf">Grayscale Investments won a court case against the SEC</a> in what many segment watchers called a victory for the broader crypto space.&nbsp;



Invesco is not new to the digital assets realm.



Perhaps best known for its QQQ ETF that invests in Nasdaq 100 companies, <a href="https://blockworks.co/news/invesco-and-galaxy-team-to-build-suite-of-crypto-etfs">Invesco partnered with Galaxy Digital</a> in September 2021 to create physically backed crypto ETFs.&nbsp;



“We believe the combination of an institutional, crypto native asset management business alongside a global ETF pioneer will drive the entire crypto space forward,” Steve Kurz, Galaxy’s head of asset management, said at the time.&nbsp;



Invesco was <a href="https://blockworks.co/news/bitcoin-etf-invesco-wisdomtree">among the fund groups that filed for a spot bitcoin ETF</a> in June just days after asset management giant <a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval">BlackRock jumped into the race</a>.&nbsp;



<a href="https://blockworks.co/news/us-spot-bitcoin-etf">Though spot crypto ETFs trade in a number of other countries</a>, the SEC has never allowed such funds to launch in the US. The securities regulator on Tuesday <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf?utm_source=CryptoNews&amp;utm_medium=app">extended its deadline to rule on the Ark 21Shares Bitcoin ETF</a> to Jan. 10.&nbsp;



Spokespeople for Invesco and Galaxy declined to comment.&nbsp;



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Invesco, Galaxy float latest spot ether ETF proposal

A day after Valkyrie Investments became the first to offer ether futures exposure in an ETF, the crypto-focused firm is getting rid of those holdings.



At least for now.&nbsp;



The Valkyrie Bitcoin Strategy ETF (BTF) will not purchase ether futures contracts “until the effectiveness of an amendment to the fund’s registration statement contemplat[es] the addition of ether futures contracts to the principal investment strategy of the fund,” Valkyrie said in a Friday filing. 



“Until such time, the fund will unwind any existing positions in ether futures contracts,” the <a href="https://www.sec.gov/Archives/edgar/data/1877493/000138713123011727/valkyrie-497_092923.htm">disclosure</a> adds.&nbsp;



A Valkyrie spokesperson did not immediately return a request for comment.&nbsp;



Valkyrie had filed with the US Securities and Exchange Commission in August <a href="https://blockworks.co/news/valkyrie-eth-futures-etf">to change the investment strategy of its bitcoin futures ETF</a> to one that also allows it to invest in ether futures.&nbsp;



A firm representative told Blockworks Thursday that <a href="https://blockworks.co/news/ether-futures-etfs-launch-soon">BTF began adding exposure to ether futures contracts</a>, noting that the new investment strategy was set to become formally effective on Oct. 3. The fund is set to be renamed the Valkyrie Bitcoin and Ether Strategy ETF that day.



Bloomberg Intelligence analyst James Seyffart said in an X <a href="https://twitter.com/JSeyff/status/1707754634033476073">post</a> Friday that Valkyrie’s latest filing could indicate that the SEC asked the firm to reverse its ETH futures positions until the official effective date as competitors also prepare ETFs with such exposures.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



“The SEC does not want to be a kingmaker via their policies and will do whatever they can to prevent someone from launching on their own like BITO in 2021,” Seyffart added in a separate X post.&nbsp;



The <a href="https://blockworks.co/tag/sec">SEC</a> did not immediately return a request for comment.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">As we&#39;re watching things now: <a href="https://t.co/qQTvrOGX5R">https://t.co/qQTvrOGX5R</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1707763519708369266?ref_src=twsrc%5Etfw">September 29, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Seyffart is referring to the ProShares Bitcoin Strategy ETF (BITO) — the first bitcoin futures fund to launch in the US, which hit the market in October 2021. Though similar products by Valkyrie and VanEck launched in the following days, BITO gained the lion’s share of assets into these types of funds, <a href="https://blockworks.co/news/bito-on-track-to-be-first-fund-in-history-to-hit-1b-in-aum-in-two-days">quickly amassing $1 billion</a> in assets under management.&nbsp;



VanEck, ProShares and Bitwise have submitted updated prospectuses over the last 24 hours for their own ETFs that invest in ether futures contracts — with expense ratios ranging from 66 basis points to 95 basis points. Bloomberg Intelligence analysts said they expect these funds could go live as soon as Monday.&nbsp;



VanEck posted a <a href="https://twitter.com/vaneck_us/status/1707419473337033075?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1707419473337033075%7Ctwgr%5E2944f8bab5605f486fa8429b85307f1b9a9ee0c9%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fblockworks.co%2Fnews%2Fether-futures-etfs-launch-soon">video</a> on its X page Thursday — in tandem with a press release — teasing the “upcoming launch” of the VanEck Ethereum Strategy ETF. The company declined to comment further.&nbsp;



Volatility Shares, which kicked off the latest wave of ether futures ETF filings in July, said last month it planned to launch its Ether Strategy ETF (ETHU) on Oct. 12. Its website continues to show that date. A representative for the firm did not immediately comment.&nbsp;&nbsp;



Spokespeople for Bitwise and ProShares declined to comment.



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Valkyrie ETF to ‘unwind’ ETH futures position — at least for now

CommEX released an open letter early Friday morning addressing concerns raised in the wake of Binance&#8217;s recent exit from Russia.



<a href="https://blockworks.co/news/binance-exits-russia-sale-commex">Binance fully withdrew from Russia</a> earlier this week, stating that it had sold off its business there to local exchange CommEX for an undisclosed amount.



What has alarmed industry watchers, however, is that CommEX seems to have launched only just this week, something that was essentially confirmed in the <a href="https://commex.zendesk.com/hc/en-us/articles/8011097433999-A-Letter-to-the-CommEX-community-">letter</a>. Notably, CommEX only became a member of X in September 2023 and has a modest online presence with just seven posts.



These revelations have stoked suspicions that <a href="https://blockworks.co/tag/binance">Binance</a> or CEO <a href="https://blockworks.co/tag/changpeng-zhao">Changpeng Zhao</a> remain in control of the new exchange.



Zhao denied the swirling claims that he owns CommEX on Thursday, but said a few former Binance-CIS employees may join the CommEX team.&nbsp;



“I am not their [ultimate beneficial owner], nor do I own any shares there. The deal does not have any buy back options,” Zhao wrote on X.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Some answers about Binance/CommEx. There will be crypto transfers between Binance &amp; CommEx as users migrate with their funds. There are also older transactions during the testing phase of the integrations. This is expected. A few ex-Binance CIS team members may join their team,…&mdash; CZ 🔶 Binance (@cz_binance) <a href="https://twitter.com/cz_binance/status/1707293387001307551?ref_src=twsrc%5Etfw">September 28, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Adam Cochran, a partner at Cinneamhain Ventures, expressed skepticism about CommEX&#8217;s independence. In an X thread, he highlighted that CommEX&#8217;s login page still offers an option to log in using Binance credentials.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">3/25 Instead, Commex is a new Seychelles company (so new it doesn&#39;t show up in registers yet) and it seems to run on Binance Cloud. Even letting you login with Binance as the main call to action. <a href="https://t.co/XeLjK3ng8x">pic.twitter.com/XeLjK3ng8x</a>&mdash; Adam Cochran (adamscochran.eth) (@adamscochran) <a href="https://twitter.com/adamscochran/status/1707052164009402718?ref_src=twsrc%5Etfw">September 27, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



CommEX said it&#8217;s been developing its platform for six months and has a team comprising “dozens of passionate individuals.” Some of those individuals are “former Binance veterans,” according to the letter.&nbsp;



What wasn’t disclosed, however, is information detailing CommEX’s owner, despite the fledgling exchange wanting to converse with customers “in the spirit of transparency.”



“Although we do not disclose our [ultimate beneficial owner], we want to make it clear that we are not owned by Binance,” CommEX wrote. “Our leadership may choose to maintain a low profile, but their extensive skills significantly shape our strategic growth and contribute to our achievements within the cryptocurrency industry.”



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CommEX won’t reveal ownership, says Binance isn’t in control

Digital asset infrastructure platform Fireblocks is acquiring smart contract firm BlockFold.



Details on the acquisition were not disclosed, though Fireblocks noted it would be integrating the BlockFold team. Co-founder Terence Signakis will also stay on as head of Tokenization Products.



The deal will expand Fireblocks&#8217; tokenization abilities, allowing it to offer advisory services, customization, and distribution to clients.



Additionally, the company said that tokenization project demand rose 350% between 2022 and 2023. The goal is for BlockFold to allow Fireblocks to expand the tokenization opportunity, which it believes could grow into a multi-billion dollar market.



BlockFold most recently was <a href="https://blockworks.co/news/australian-bank-nab-stablecoin-ethereum">involved with National Australia Bank’s first cross-border intra-bank stablecoin</a> transfer. BlockFold assisted with the smart contracts and direct custody of the tokens.&nbsp;&nbsp;



&nbsp;“We already speak a common language in understanding these customers’ requirements at an architectural level. Bringing BlockFold’s expertise in-house means that we can better serve tier-1 financial institutions to quickly and seamlessly bring tokenization projects into production and new assets onto the blockchain,” Michael Shaulov, <a href="https://blockworks.co/tag/fireblocks">Fireblocks</a> CEO, said in a statement.&nbsp;



“In addition, we can continue to innovate and expand our offerings and tailor our approaches as the market continues to mature and evolve.”



The company has been involved in stablecoin projects, including a tokenization project with the Israeli Ministry of Finance and the Tel Aviv Stock Exchange which plans to tokenize the Israeli debt market over the next few years.



&#8220;Fireblocks’ acquisition of BlockFold stands to strengthen its tokenization capabilities and bridge the gap between [centralized finance] and DeFi by allowing financial institutions like TASE to build robust and scalable infrastructures and support well-governed digital asset ecosystems,” said Orly Grinfeld, EVP, head of clearing at the Tel Aviv Stock Exchange.



At the <a href="https://blockworks.co/tag/permissionless">Permissionless</a> conference, <a href="https://blockworks.co/news/fireblocks-ceo-michael-shaulov-fortune-500-mpc">Shaulov said that institutions are focusing</a> on an audience that has not interacted with crypto or Web3, which adds a complicated layer for any company looking to launch a Web3 venture.



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Fireblocks acquires tokenization firm BlockFold

Teneo, the liquidator of Three Arrows Capital (3AC), said Friday that Su Zhu, the failed crypto hedge fund’s co-founder, has been apprehended by authorities in Singapore.



Teneo, in a statement shared with Blockworks, announced Zhu’s apprehension and stated that the former hedge fund founder faces four months in prison under a committal order.



The arrest is said to have occurred as Zhu sought to leave Singapore by airplane. News of the arrest has yet to be independently corroborated by Singapore authorities.



The order was applied for and obtained by Teneo on Sept. 25 after <a href="https://blockworks.co/tag/su-zhu">Zhu</a> refused to comply with a court order requiring him to cooperate with the liquidators. Teneo added that “a similar committal order was granted against the other co-founder of 3AC, Mr. Kyle Livingston Davies.”



Singapore <a href="https://blockworks.co/news/3ac-zhu-davies-securities-violations-monetary-authority-singapore">recently issued a multi-year market activity ban</a> against both Zhu and Davies, which went into effect on Sept. 13.&nbsp;



The Monetary Authority of Singapore said that 3AC misled the regulator and committed multiple violations between August 2020 and January 2022.



“MAS takes a serious view of Mr. Zhu’s and Mr. Davies’ flagrant disregard of MAS’ regulatory requirements and dereliction of their directors’ duties. MAS will take action to weed out senior managers who commit such misconduct,” Loo Siew Yee, assistant managing director of payments and financial crime at MAS said in a statement at the time.



<a href="https://blockworks.co/tag/3ac">Three Arrows</a> collapsed in the summer of 2022 following the infamous depegging of the <a href="https://blockworks.co/price/ust">UST</a> stablecoin.



Updated Sept. 29, 2023 at 10:48 am ET: Added additional context.



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Three Arrows co-founder Su Zhu arrested in Singapore, says liquidator firm

Paul Dylan-Ennis

It’s a hard and brutal truth to accept, but Sam Bankman-Fried single-handedly nuked the opportunity for crypto. This really hit home for me watching a recent BBC Panorama documentary about the collapse of FTX. I watched it hoping a talking-head might suggest SBF’s actions had undermined the positive potential of crypto. I didn’t expect the majority to mention this, but there’d be at least one advocate in the mix. 



But not once did the idea of crypto as good ever turn up. And while I’ve had this feeling for a while, the <a href="https://www.bbc.com/news/technology-66892685">documentary</a> made it crystal clear: We are cooked, done for, to the mainstream. And if you’re no longer likely to be part of the mainstream culture, then where else can you go, but back to your roots, to subculture. 



Crypto is a subculture that got out of hand — but I also believe that crypto will survive to the extent it accepts its status as a subculture. But to get back to our subculture roots, we need to extricate ourselves from a poisonous dynamic: Our reliance on the social media platform X.



Read more:  <a href="https://blockworks.co/news/sam-bankman-fried-trial-starting-soon">Sam Bankman-Fried’s trial starts Oct. 3: What you need to know</a>



Marshall McLuhan’s famous insight that the medium is the message means that the media we use shapes the content we consume. Or the other way around, the content we consume obscures the media we use. The history of crypto is one shaped by its social media, and today we appear trapped in a toxic relationship with one in particular, X (the artist formerly known as Twitter).&nbsp;



When Bitcoin launched in 2009, the discourse around the first cryptocurrency happened on what was already an ailing platform, the bulletin board discussion forum. Bitcointalk was not Athens, far from it, but the discussion forum format did enforce a slower pace and a more traditional call-and-response dialogue tree.&nbsp;



By around 2015, crypto had mostly transitioned over to Reddit. Reddit’s format enabled crypto projects to establish their own niches. The most overarching subreddit, /cryptocurrency, superficially suggested a cohesive movement, while the posts often saw projects sniping at one another in the comments. Reddit as a medium ramped up the antagonism and rivalry by both enabling segregation into echo chambers and then, to pour oil on the fire, gave us one giant messy Parliament, where everyone could mutter under their voices while representatives from the other side gave their speeches.&nbsp;



The current stage was the move toward X.&nbsp;



X is a medium that has had three main corrosive effects on crypto. First, X brought all the absurdity and drama of crypto culture to the eyes of the mainstream. X is not an isolated discussion forum or relatively obscure subreddit, but a global public square where all our shenanigans are magnified. Silly, over-the-top claims about the metaverse could now be shared for likes by an Average Joe looking for an easy dunk. Second, X algorithmically rewards adversarial content. Influencers hell bent on building a following have turned topics as mundane as what consensus mechanism is best into viable careers. You could spend your time analyzing interesting nuances between mining and staking, but it&#8217;s far more lucrative — quite literally since monetization — to spin a conspiracy theory or two for your audience. Third, X as a platform seems almost entirely indifferent to stemming the relentless flow of fake giveaways, airdrops and shady links polluting everyone’s posts.&nbsp;



For most people, this is all they see of crypto, and it shapes their attitudes, hardening them to the thesis that crypto has failed. Not that crypto has potential if it can just get rid of the scammers, but that whatever crypto was supposed to be, what it actually is is Scam City. The medium is the fake airdrop under your friend’s post.



Read more from our opinion section: <a href="https://blockworks.co/news/web2-data-web3-threads" target="_blank" rel="noreferrer noopener">Dear Web2, we want our data back</a>



Moving away from X, there’s a more subtle point about the mediums we choose to communicate with. If we ourselves insist on using Web2 social media platforms rather than our own, then why would anyone really buy into our ideas around decentralization, permissionlessness, the ownership economy, etc.?&nbsp;



Because these platforms exist. We already have Lens (similar to Meta), Console (similar to Discord) and Farcaster (similar to X) on Ethereum. These <a href="https://blockworks.co/news/web3-social-media-apps-to-watch">exist now as perfectly functional Web3 alternatives</a>. 



These are our mediums and they offer an escape route. However, psychologically, a transition away from “Crypto Twitter” and its millions of users to any one of these much quieter Web3 platforms would be admitting that crypto is a subculture once again.



But this might be exactly what we need for crypto to succeed.



We have to build out our own Web3 platforms, hopefully eliminating the worst excesses of the Web2 platforms we are currently dependent on. Then maybe, just maybe, when people come across us again, they’ll find a group of people living according to their values and be able to see the good in those values for themselves.



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<div class="wp-block-post-author-biography">Dr. Paul Dylan-Ennis is Lecturer/Assistant Professor in the College of Business, University College Dublin. He is the author of the forthcoming book “The Absolute Essentials of Ethereum” with Routledge. </div>


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If we want crypto to succeed, we’ve got to give X the boot

The Interchain Foundation, a non-profit focused on Cosmos adoption, released a 2024 roadmap previewing next year’s goals for the so-called internet of blockchains.



The 50-page <a href="https://docs.google.com/document/d/1j_VnHsM0Hsi2so9gf2oLFKhy3wVa7csCa3lTjlMYCsI/edit">document</a> primarily discusses Cosmos&#8217; focus on blockchain modularity and interoperability. It also makes multiple references to Ethereum rollups. The ecosystem aims to attract developers who are disappointed with the constraints of layer-2 solutions, with the roadmap itself meant as an onboarding tool. By publicizing its vision, the Interchain Foundation hopes to spark greater enthusiasm about the future of <a href="https://blockworks.co/tag/cosmos">Cosmos</a>.



Cosmos is a network of interoperable blockchains, meaning different protocols in the network can communicate and transact with each other without having to wrap tokens. Several infrastructural protocols in the Cosmos network contributed to the Interchain Stack Roadmap — and seem to have their sights set on Ethereum-based developers in 2024.&nbsp;



Cosmos’ Inter-Blockchain Communication protocol, or IBC, said its “main priority […] is to expand the reach of IBC to [zero-knowledge] and optimistic rollup frameworks.”&nbsp;



Cosmos’ Software Developer Kit, or SDK, claims Cosmos presents developers with greater customizability compared to Ethereum and its rollups. This is due to Cosmos’ flexibility, which comes in part from its modularity, or separation of blockchain functions. Still, Cosmos admits that its modularity toolkit has room to grow in 2024.



Cosmos software is currently “modular in theory, but in practice, it is challenging to swap and/or modify items,” Cosmos SDK wrote.



Maria Gomez, the Interchain Foundation’s managing director, told Blockworks that Cosmos has struggled to market itself to developers without a native token to create financial incentive for adoption. But compelling narratives drive adoption too, and Gomez hopes the 2024 roadmap will hit developers’ imaginations like Ethereum roadmaps have.



“In Ethereum, Vitalik comes with a roadmap, and even if that roadmap doesn’t happen, everybody gets excited around those things and conversations start to happen. And that’s what we were missing,” Gomez said.



Cosmos’ foundational blockchain, the Cosmos Hub, has seen 660 <a href="https://tokenterminal.com/terminal/projects/cosmos">changes</a> to its code in September. This marks an increase in developer activity from July and August, according to data compiled by Token Terminal.

2024: The Cosmos year of rollup integration and modularity

Offchain Labs, the research and development team behind Ethereum scaling protocol Arbitrum, has had a busy few months.



Recent milestones include the launch of tools for developers to launch their own Abitrum chains through <a href="https://blockworks.co/news/arbitrum-validation-protocol-permissionless">Arbitrum Orbit</a>, the introduction of a <a href="https://blockworks.co/news/arbitrum-validation-protocol-permissionless">permissionless validation protocol</a> and the release of programming environment <a href="https://blockworks.co/news/arbitrum-stylus-testnet">Abitrum Stylus</a>.



Today, Arbitrum is one of the largest Ethereum scaling platforms. It holds a market share of almost <a href="https://l2beat.com/scaling/summary">55%</a> and has a total value locked of $5.82 billion, <a href="https://l2beat.com/scaling/summary">according</a> to L2beat.



Most recently, the team <a href="https://blockworks.co/news/ethereum-espresso-systems-offchain-labs-transaction-ordering">partnered</a> with Espresso Systems, a decentralized sequencing layer, to further develop Timeboost — a transaction ordering technology optimized for improving first-come-first-serve tendencies in capturing maximum extractable value (MEV).



In an interview with Blockworks at Permissionless II, <a href="https://blockworks.co/tag/offchain-labs">Offchain Labs</a> co-founder Steven Goldfeder said that the decision to work with Espresso Systems was made so that credible, neutral third parties could help drive the scalability of Ethereum.



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Blockworks: Tell me about Timeboost and the decision behind partnering with Espresso Systems to bring the tech to life.



Goldfeder: Timeboost was a proposal that we at Offchain Labs had put out in a few iterations on Arbitrum research forums and elsewhere. The idea comes down to MEV ordering. Historically, there are different schools of thought about how to order transactions. On Arbitrum today, there’s “first come, first serve” ordering, but others say everything should be auctioned — this is the other end of the extreme — which is that you completely pay for ordering transactions in a mempool. Timeboost is sort of an in-between of these two camps, which basically says there are intervals that allow you to bid for placement and have the privacy of transactions built in.&nbsp;



We’re partnering with Espresso. We’re going to provide key research, and they’re going to actually build it out in a way that is compatible with the Espresso sequencer. The reason why we’re not building this out ourselves is because we have to understand the realities of what we build, and how that’s perceived, and the biases that are associated with that. We need something that is more neutral.



When it comes to interoperability, if every different rollup stack is building its own megachain, you don’t really accomplish much. Whether we open source it or not, other chains will not use something we built. I think if you really want to get interoperability, it is by building an Ethereum super chain. The way to do that is to empower credibly neutral third parties, putting our biases down for a second, and I think that’s actually best for the Ethereum community.&nbsp;



Blockworks: There’s a lot of MEV discussion around time-sensitive transactions versus non-time-sensitive transactions. So, with Timeboost’s guaranteed inclusion, how do you determine what transaction should be included? It seems like it would be pretty difficult to choose a good middle ground.



Goldfeder: So even today, before we get Timeboost, there’s this concept of forced inclusion on Abritrum chains. The forced inclusion on Arbitrum chains today is 24 hours, what that means is you can’t censor indefinitely but the sequencer can real-time censor or delay. I think the parameters about transaction inclusion will be up to the different chains that choose to adopt this [technology]. If the Arbitrum DAO adopts it, it can choose to set these parameters.&nbsp;



If you ask me what I think about Timeboost, the parameters we think about are more in the realm of a few seconds. The idea is that what we have today — the chain forcing the sequencer to do something — is very different from Timeboost where a distributed party, the sequencer, has logically agreed to do something. I think that lends itself to much shorter intervals of guarantees.&nbsp;



In a, let&#8217;s say, two-second interval, you can bid for timing, but every user will guarantee that its transactions are being processed quickly. If the Timeboost committee is behaving according to its principles, then that transaction will be included. If this whole time this committee colludes against you, you still can go on-chain and get this other guaranteed inclusion from on-chain.&nbsp;



Blockworks: Do you think shared sequencing is a more pressing issue than permissionless fraud-proof systems?



Goldfeder: No, not really. A lot of people don’t really know what decentralized sequencing means. Say for example with Abirtrum the sequencer has very limited power because there are fraud proofs. Sequencers can’t do anything security-critical. It can’t actually go ahead and steal your money or take it and put it back in a transaction — that’s validators. Validators will challenge one another if they do the wrong thing. Sequencers give you fast confirmations, but those don’t hold any weight on-chain.



In a validation system that doesn’t have any fraud proofs of validators, then the sequencer is basically the dictator. It can submit whatever fraud or whatever state routes it wants In some ecosystems, that is true, but it’s really more about the progress of the sequencer. I think the most important thing here is that decentralizing the security of the system — which Arbitrum does today — among about a dozen different institutions submitting fraud proofs or having the ability to challenge different fraud proofs if necessary. I think that is number one. When we launched Arbitrum, having fraud proofs was non-negotiable.



So, going back to what can a sequencer do? It can’t do anything like include a bad transaction. It can order transactions, but it can’t censor a transaction. It can delay a transaction, but it can’t, as we discussed before, censor indefinitely because there are paths to guarantee a transaction on-chain — and that’s where the decentralizing sequencers come in. 



I think that it’s an important problem, but I think that having live security proofs is more important, and that’s why we prioritize building the security proofs before the decentralization of ordering.&nbsp;



This interview has been edited for brevity and clarity.



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Offchain Labs’ Goldfeder talks Timeboost, transaction ordering and more

Sebastian Sinclair

As the one-year anniversary of FTX’s demise quickly approaches, centralized exchanges continue to fight for a restoration of trust by assuaging customer concerns regarding the legitimacy and purpose of their existence.



They also continue to innovate beyond what has previously been afforded to market participants by ensuring greater transparency around the way in which they conduct their businesses.&nbsp;



At least that’s what’s being promised. To date, no major exchange has yet provided a comprehensive audit of assets held on their platforms, instead opting for a <a href="https://blockworks.co/news/what-are-proof-of-reserves-and-can-they-build-back-trust">proof-of-reserve</a> model.



That model, <a href="https://blockworks.co/news/crypto-proof-of-reserves-solvency-audit">according to some</a>, falls short of canvasing the true happenings behind the scenes at some of the industry’s largest players — which argue they’re getting it right by proving their reserves through a verifiable auditing practice.



In light of past events, OKX President Hong Fang spoke with Blockworks at this year’s Permissionless event on the challenges her exchange continues to grapple with and the innovations taking place, hoping to draw customers back.



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Blockworks: Talking broadly on the vision of OKX, can you describe that? What&#8217;s the vision like and how do you see yourselves moving forward in the next 12 months?



Fang: Ultimately, we all always believe that we are looking at technology. We&#8217;re using technology to really empower individuals and give individuals more control and more transparency. I think that&#8217;s what we&#8217;re here for within crypto and Web3. I think our mission is really to be part of that and really help to build that infrastructure and build toward a different culture that is more trustless.



Blockworks: So how does that align with the crypto industry ethos? And do you think that&#8217;s changed over the years?



Fang: I don&#8217;t think so. I mean, there are many things that change around us. We always say that crypto is fast, crypto is changing all the time. But I do think that there are constant themes.&nbsp;



And those constant themes are actually what matters to us the most, which is one: technology is something that actually really matters. Two, you have to be able to build things that actually matter for the customer — using technology to actually benefit the customer.&nbsp;



And then three is about really what you do, as a platform, as an individual, ultimately decides who you are. We have been around for almost 10 years now. We have always thought about ourselves as a long-term player.&nbsp;



So every decision that we have made in product and business is related to those focused on technology innovation, really focused on doing what&#8217;s right for the customer and focused on building long term.



Blockworks: Can you describe to me some of the largest innovations over a five-year period that OKX is really proud of?



Fang: I think we have made a lot of progress over the last few years. Even over the last year, where there&#8217;s a lot of volatility and uncertainty and unpleasantness out there.&nbsp;



I think our team has been able to really focus and build, we put out our proof-of-reserve program. And I think it&#8217;s probably the only one of the very few who have been very consistently doing it because we actually automate it, we are not manually doing the proof-of-reserve.&nbsp;



We continue to solicit feedback from the community and upgrade the technology behind it and later add the zkSTARK, to really add the layer of privacy and scalability to that program. We&#8217;ve been doing it for 10 months now.&nbsp;



We also have our Web3 wallet. We have been pushing out our wallet and continue to add different features, we added [Multi-party Computation] features to it to make it simple to use without a seed phrase.



We most recently added the <a href="https://www.okx.com/help/okx-wallet-supports-account-abstraction-create-smart-accounts-with-one-click">account abstraction</a> (AA) capability to it as well. You know, if you ask me, is the AA account really usable right now? It&#8217;s probably not to most people, it&#8217;s more talking to special core crypto native people, but still, it&#8217;s part of the infrastructure that we&#8217;re building.



Blockworks: Given that your time in your role as President has been quite limited — nine months — can you highlight any challenges or triumphs that you&#8217;ve experienced over that period?



Fang: I think I&#8217;ve seen our team really put aside the distractions out there in the market. A similar experience I actually had was when I was at Goldman — when I joined Goldman — that was in 2008.&nbsp;



Obviously, it was not a fun time to join the financial industry because everything was falling apart. But the one piece of advice that I&#8217;ve got from my mentor was to really focus on what the customer wants.



When you focus on what customers want and then you actually serve a customer, you forget about those noises and actually keep building and I think that&#8217;s what we have been doing at OKX.



Blockworks: You mentioned Goldman Sachs. How has your traditional finance experience shaped your approach to crypto today?



Fang: I&#8217;ve learned quite a lot there. But related to how I view crypto, there are a few things that I think really matter. One is from my experience there, I&#8217;ve done a lot of stuff at Goldman. I&#8217;ve done, M&amp;A, I&#8217;ve done spin-off, I&#8217;ve done usual IPO follow-up, I&#8217;ve done also more special types of capital pull — warrants offering or convertible — all kinds of stuff.&nbsp;



But what really stands out from those activities is, ultimately, you realize that capital markets are actually a distraction, particularly in the short term. The capital markets figure out long term, if there&#8217;s a substance below the price and price or just signals.



So I think I&#8217;ve learned to just take the price of signals, and no more than that. The signals are useful over a longer period of time. It tells you whether you&#8217;re in the right direction or not. But short term it&#8217;s very distracting.&nbsp;



And for builders, and even investors, you better focus on what&#8217;s actually underlying, whether there’s any substance, whether you are actually working on something that actually makes sense. I think that&#8217;s one of the biggest things I&#8217;ve learned from my experience there.&nbsp;



The second piece that I think I&#8217;ve learned, that&#8217;s kind of also why I later chose to work in this industry, is I realized that we are not in the free markets, ultimately, the money is not free.&nbsp;



We went through so many cycles — obviously 2008 was one of the big cycles — and you see a malicious cycle of bailing out and then the market broke down, and then bailing out again, and then the [financial] gap increased over time.&nbsp;



I think the fundamental reason was that money is not free and price signals in the market [are] distorted. So I think we want to be able to fix money — have honest money, have the right price signals in the market, so that we can more effectively allocate resources.



And I think that’s fundamentally what we are doing here. The Web3 industry is hopefully built on that honest money, and then we facilitate collaboration through a trustless system. I think that’s ultimately what will provide more productivity to the society, and that’s how I approach crypto itself as well.



Blockworks: What&#8217;s OKX’s approach to crypto regulation? Particularly with everything that&#8217;s happening in the US. How is OKX managing this period in crypto?



Fang: We actually believe that regulation is helpful for the industry and we really embrace it. We need more regulatory clarity to provide more ground rules and also prepare for the next stage when more people come in.&nbsp;



So we as a platform, really welcome and embrace that. We have a lot of conversations and productive engagements with various regulators, we have quite a few licenses and applications that [are] either already approved or in process.



We are also committed to building for the US market longer term. I do think that that&#8217;s an important market. There&#8217;s a lot of spirit of innovation and the spirit of the ethos of crypto and of Web3 is very much in line with US culture.



Blockworks: Given that weekly volumes across centralized exchanges are down to some of the lowest levels in two years, how is OKX managing this landscape?&nbsp;



Fang: From a business perspective, we have always been operating with huge discipline. Cash flow has always been at the top of our minds as we innovate on the product side. So for us, we have always focused on the monthly cash flow scale very responsibly.&nbsp;



If you went back to 12 months ago, or 18 months ago, there were a lot of other players in the market who had chosen a shortcut — they focused on short-term profitability. That turned out to be the wrong decision.&nbsp;



For us, we always focused on the long term and we only operate ourselves as a platform instead of trading against customers taking directional bets, taking on big counterparty risk.



There is a fundamental need for trading as well as for facilitating transactions in the market. So we believe that if we actually develop our products right, the market is always there.



Blockworks: How centralized entities restore trust following the collapse of the FTX and how important is OKX’s role in that endeavor?



Fang: We do see, particularly after FTX’s collapse, a lot more uncertainty in the market, both from the customer perspective, as well as from regulators&#8217; perspective.



From the customer side what we want to do is really to address the underlying gap which is lack of transparency. So what we have really emphasized is really to provide that level of transparency on the centralized exchange with Web3 technology. That&#8217;s where we&#8217;re our proof of reserve program was started.&nbsp;



It&#8217;s important as a way to hold ourselves accountable and is an important way for customers to be able to check. It’s also an important way to remind customers that “hey, look, you should verify. Even if we put out stuff, you should actually try our protocol and try to run it yourself and see if there&#8217;s any issue with the program that we have.”



Promoting that sense of personal responsibility is also part of the solution. You cannot just blindly trust any platform, either government or private.&nbsp;



Regulators also ask questions, and I think it&#8217;s actually good. Because of FTX’s collapse, regulators are also seeing the most vulnerable parts of the industry at this point.&nbsp; And they naturally ask questions around customer protection around customer funds around trading. So I think those are all the right questions to ask.&nbsp;



I think that will help the industry to build more frameworks on the centralized part. That’s actually important to have that on the centralized exchange part because there is a level of responsibility for those platforms to disclose and follow certain rules on the ground.



This interview has been edited for brevity and clarity.



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Tech-first, trust-next: OKX’s roadmap for regaining consumer confidence

Legislation, introduced to the House by Rep. Don Beyer D-VA. on Thursday, aims to bolster transparency around digital asset transfers that are not recorded on a public blockchain.



The Off-Chain Digital Commodity Transaction Reporting Act, being touted as a consumer protection bill, would require digital asset trading platforms to record transfers in a repository registered with the CFTC.&nbsp;



Amendments are being sought within “the Commodity Exchange Act with respect to reporting digital commodity transactions.” Transactions would need to be reported within a 24-hour period after they’re executed, a copy of the <a href="https://beyer.house.gov/uploadedfiles/off-chain_digital_commodity_transaction_reporting_act.pdf">bill’s text</a> reads.



Off-chain transactions can encompass a variety of activities, including private peer-to-peer transfers and the movement of funds between different accounts on a centralized exchange.



“As consumers increasingly turn to large digital asset trading platforms to conduct their business, thousands of transactions each day are conducted off the publicly verifiable blockchain,” Beyer said in a statement.&nbsp;



“Unfortunately, internal record keeping among these private entities can vary wildly and this can leave investors and consumers vulnerable to fraud and manipulation.”



Following the collapse of FTX and other centralized entities, <a href="https://blockworks.co/news/binance-shows-proof-it-has-all-your-bitcoin-critics-arent-sold">criticism by industry proponents</a> has been levied at the way in which digital assets are recorded and transparently communicated to the public.



In response, major exchanges including OKX, Binance and Crypto.com, among others, have attempted to assuage customers using a “<a href="https://blockworks.co/news/what-are-proof-of-reserves-and-can-they-build-back-trust">proof-of-reserves</a>” model, soliciting third-party accounting firms to bolster credibility and legitimacy.



This model seeks to provide a verification mechanism to ensure that customer-held assets align with the reserves the institution maintains on its client’s behalf.&nbsp;



Legislation Thursday could potentially add an additional layer of transparency surrounding the health of a given institution.



“Many platforms maintain internal private ledgers that track transactions, but these records can be of varying quality. Discrepancies can lead to disputes, manipulation, or fraud,” per the statement.



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