Vesper Finance

Casey Wagner

A federal judge thinks attorneys from the US Securities and Exchange Commission lied to receive a temporary restraining order, and he’s ordered them to explain why.&nbsp;



In an order to show cause filed in Ohio Thursday, judge Robert Shelby has demanded the SEC make a case for why its lawyers shouldn’t be sanctioned by the court after conflicting stories led him to believe the agency presented false and misleading evidence in order to freeze Digital Licensing and DEBT Box’s assets in July 2023.&nbsp;



After accusing Digital Licensing, which operates under the name DEBT Box, of offering an unregistered security and defrauding investors of “at least $49 million,” the SEC’s legal team claimed the defendants were attempting to move assets and investor funds overseas. 



The SEC cited bank statements and account closures as evidence the funds were moved internationally in its attempt to get a temporary restraining order, or TRO. It intended to use this to freeze the company’s assets, among other things.



“Just as we were on break I was reminded by investigative staff with respect to the investigation which remains ongoing that even in the last 48 hours defendants have closed additional bank accounts, and I believe the number, I don’t have it in front of me, was around 33 bank accounts have been closed,” Welsh told the court in July during the TRO hearing.&nbsp;



These comments, Shelby wrote, were understood at the time to mean that defendants had closed 33 bank accounts in 48 hours. This, coupled with the accusations that DEBT Box and its team had tried to block the SEC from viewing its social media sites, was enough to grant the ten-day TRO. It was subsequently renewed “several times,” the judge wrote.&nbsp;



Two groups of defendants and relief defendants moved to dissolve the TRO in September. Each group claimed the SEC had misled the court in their initial application.&nbsp;



The SEC then “tacitly acknowledged” that no bank accounts were closed in July 2023 and the accounts that were closed were shut down by the banks, not the defendants, Shelby wrote. The TRO was dissolved in October 2023.&nbsp;



At the hearing to dissolve, Welsh told the court that the SEC did not actually know why the bank accounts had been closed and the commission had no evidence that any money had been moved overseas since January 2023. As for his apparent comments about 33 bank accounts closing within 2 days, neither Welsh nor the SEC addressed this specifically, Shelby said. 



“The court was further troubled by Welsh’s apparent misrepresentation because another attorney from the Commission was on-screen at the ex parte TRO hearing, and there were two investigative staff off-screen,” Shelby wrote. “Yet nobody clarified or corrected Welsh’s statement.”&nbsp;



Industry members say Thursday’s development is part of a “troubling pattern” displayed by the SEC recently.&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">A troubling pattern emerges: &#8211; Court finds the SEC demonstrated “hypocrisy” by making inconsistent arguments to the Court and not acting out of a “faithful allegiance to the law.” SEC v Ripple, 7/12/22 &#8211; Court agrees that the SEC defaulted on its duty to respond in good faith to…&mdash; Stuart Alderoty (@s_alderoty) <a href="https://twitter.com/s_alderoty/status/1730649158367973799?ref_src=twsrc%5Etfw">December 1, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“The good news for the crypto community is that this sort of conduct is exceptionally bad, even by SEC standards, and I’m going to suspect the fact that the SEC is being sanctioned for misrepresentations might be of interest to people like [Binance, Kraken and co-founder Jesse Powell],” Austin Campbell, founder and managing partner of Zero Knowledge Consulting, added.&nbsp;



The SEC has received the order “and will respond to the Court as directed,” a spokesperson from the SEC told Blockworks.&nbsp;



Members of the defense team declined to comment.



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A federal judge says SEC lawyers lied to freeze a crypto company’s assets

Ben Strack

The Ethereum network’s greenhouse gas emissions have dropped by an estimated 99.97% since its shift to proof-of-stake, despite a big rise in node count.



That’s according to new research by the Cambridge Centre for Alternative Finance. The organization has upped its crypto research effort after in April launching the Cambridge Blockchain Network Sustainability Index (CBNSI) — a measure that detailed Ethereum’s electricity consumption pre- and post-Merge.&nbsp;



The Ethereum network currently is responsible for 2.8 kilotonnes of carbon dioxide equivalent (KtCO2e) on an annualized basis, the CCAF said in a Friday report.&nbsp;



“To contextualize, this would equate to the emissions from five round-trip airplane flights from London to New York, the annual energy consumption-related emissions of 450 UK households, or the annual carbon sequestration capacity of 270 acres of forest,” the <a href="https://www.jbs.cam.ac.uk/2023/ethereums-climate-impact-a-contemporary-and-historical-perspective/#:~:text=This%20novel%20update%20released%20by,impact%20of%20The%20Merge%20from">report</a> states. &nbsp;



Ethereum switched to a proof-of-stake consensus model in September 2022. The Ethereum Foundation had <a href="https://ethereum.org/en/energy-consumption/">estimated</a> the Merge would reduce the blockchain’s power consumption by 99.95%.&nbsp;



Read more: <a href="https://blockworks.co/news/ethereum-switches-to-proof-of-stake-after-7-years-of-work#">Ethereum switches to proof-of-stake after 7 years of work</a>



But electricity usage is only one piece of an environmental impact assessment, according to the Friday report.&nbsp;



Additional data was required to convert electricity consumption to greenhouse gas emissions. The CCAF used off-chain data from the peer-to-peer communication of Ethereum nodes to gather both electricity usage and the geolocational distribution of nodes.



The number of Ethereum validators has grown 57% since April 1, reaching 880,822. Ethereum nodes have grown to 14,072, reflecting a 23.2% increase over that span.



The network’s annual electricity consumption increased by 21.2% in those eight months, from 6.19 GWh to 7.50 GWh — roughly the annual electricity use of 2,000 English households, the Cambridge data shows.&nbsp;



As for where the nodes are, Europe and North America are home to 43.3% and 40.5% of them, respectively, following the Merge.&nbsp;



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="2100" height="868" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=1024&amp;h=1024" alt="" class="wp-image-74836" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=2100 2100w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/12/Cambridge-research-CHART-1.jpg?w=80 80w" sizes="(max-width: 2100px) 100vw, 2100px" /><figcaption class="wp-element-caption">Source: Cambridge Centre for Alternative Finance (CCAF)</figcaption></figure>



The CCAF estimates pre-Merge greenhouse gas emissions were about 10.3 MCO2e. The latest post-Merge figure of 2.8 KtCO2e reflects a 99.97% drop despite a substantial increase in the number of Ethereum nodes, the report notes.&nbsp;&nbsp;



The network is now powered by nearly 48% sustainable energy — including 32% renewables and 16% nuclear — the CCAF estimates, with the remaining 52% coming from natural gas, coal-fired power, and oil.&nbsp;



The CCAF said it next looks to enhance its Cambridge Bitcoin Electricity Consumption Index (CBECI). Despite Ethereum’s shift to proof-of-stake, bitcoin’s proof-of-work consensus model is a cornerstone of its identity, the report acknowledges — making a similar transition “not as straightforward as it might appear at first glance.”



The research institute adds: “The narrative of Ethereum and Bitcoin’s different paths is not just a tale of technological advancements but also reflects different ideologies and priorities of their communities, highlighting the multifaceted complexity inherent in the evolution of leading blockchain networks.”



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Ethereum validator and node growth leads to emissions decline: Report

Macauley Peterson

Yeeting ETH into the void is nothing new for Ethereans.



By the time the Beacon Chain officially launched on Dec. 1, 2020, the staking contract — referred to as “ETH 2.0” back then — had already seen around 880,000 ETH in deposits.



So perhaps it’s no surprise that <a href="https://blockworks.co/news/blast-tvl-ethereum">multisig-with-a-plan project</a> Blast now sports $650 million in staked ether and stablecoins under its control.



Blast’s explicit promise is that deposited tokens will earn an on-chain yield, plus rewards of unknown value. Ether staking yield comes via Lido’s <a href="https://blockworks.co/price/steth">stETH</a> tokens, while stablecoins are converted to <a href="https://blockworks.co/price/dai">dai</a> deposited in Maker, or <a href="https://blockworks.co/news/maker-endgame-sub-dao-governance-gnosis-dai">savings dai</a> (sDAI).



On Thursday it <a href="https://twitter.com/0xSEM/status/1730291178229186586?s=20">emerged</a> that the Blast deposit interface set its slippage tolerance to an inordinately high 10%, resulting in one user losing about $100,000 in value. The Blast team <a href="https://x.com/Blast_L2/status/1730294341447331973?s=20">says</a> they’ve fixed it.



But, <a href="https://blockworks.co/news/sandwich-attack-mev-ethereum">sandwich attack</a> surprises aside, most depositors at least know that all assets will be locked until the proposed <a href="https://blockworks.co/news/ethereum-optimistic-rollups">optimistic rollup</a> launches in February.



Depositors to the Beacon Chain, too, knew that their ether would be locked up for at least a couple of years — though it wasn’t clear when exactly <a href="https://blockworks.co/tag/ethereum-merge">The Merge</a> and subsequent enabling of <a href="https://blockworks.co/tag/shanghai-upgrade">staking withdrawals</a> would happen when many aped in.



Ultimately it took until April 2023, by which time about 18 million ETH (about $33 billion at the time) were deposited.



In the interim, there was a rapid <a href="https://dune.com/hildobby/eth2-staking">growth</a> in liquid staking, with <a href="https://blockworks.co/tag/lido">Lido</a> becoming the dominant player in early 2022, and already nearing a third of all staked ether by May 2022. It has remained between 29% and 33% ever since, keeping the project at the <a href="https://blockworks.co/news/lido-centralization-debate-ethereum">center of a debate</a> about centralizing market forces on Ethereum.



The total percentage staked through Lido currently <a href="https://dune.com/hildobby/eth2-staking">stands</a> at 32.28%, and Blast — which uses Lido exclusively — isn’t helping.



How much of a problem that is, depends on who you ask.



Some will analogize the concentration of ether stake to the preponderance of the Go Ethereum (Geth) execution client for Ethereum node operators. A great deal of social coordination was needed to bring down the market share of <a href="https://blockworks.co/news/ethereum-devs-finality-issue">Prysm on the consensus layer</a>, which reduces risks to the network as a whole. Geth is <a href="https://clientdiversity.org/#distribution">currently</a> at 84%.



Client diversity is widely seen as one of Ethereum’s strengths, a hallmark of its resilience through decentralization, which is unmatched in crypto. Indeed, decentralization and resilience are often seen as synonymous.



<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">We learned a BIG lesson during consensus client diversity: The usual activity is for the ~10% of home stakers to bust their asses trying to change the distribution, but the REAL value is in getting large providers to switch. Don&#39;t focus on home stakers, focus on large entities.&mdash; superphiz.eth 🦇🔊🛡️ (@superphiz) <a href="https://twitter.com/superphiz/status/1730566752285638709?ref_src=twsrc%5Etfw">December 1, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



That’s why <a href="https://twitter.com/evan_van_ness/status/1727753087941542109?s=20">some</a> are concerned about the Blast-fueled tick up in Lido’s stake share.



But for others, it’s a feature, not a bug. Blur and Blast investor <a href="https://debank.com/profile/0xaa7577a7A27aa7FcF6d0eC481B87Df3aD0F6a88E">Izebel.eth</a> stated the “3 line pitch” for Blast is that “[Ethereum] would be better if everyone used stETH…so we use the bridge as a forcing function.”



<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 line pitch: eth would be better if everyone used steth &amp; rebasing stables natively but its an impossible coordination problem so we use the bridge as a forcing function&mdash; jez (blast era) (@izebel_eth) <a href="https://twitter.com/izebel_eth/status/1726783944836751800?ref_src=twsrc%5Etfw">November 21, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Of course, the “bridge” is not really a bridge, while it can only be <a href="https://blockworks.co/news/blast-layer2-ethereum-yield">crossed one way</a>. And forcing people into a harmful position isn’t doing them any favors.



<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">lmao @ ppl saying &quot;why didn&#39;t L2s research a mechanism like blast before?&quot; we did it sucks&mdash; pseudo 📜🇺🇦 (@pseudotheos) <a href="https://twitter.com/pseudotheos/status/1727679237455306878?ref_src=twsrc%5Etfw">November 23, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



It’s generally good advice to be wary of promises from <a href="https://twitter.com/naniXBT/status/1727427129824969037?s=20">backers</a> that something can “reshape the fabric of society.” That’s not just “ambitious” — it’s hubris.



None of the more academic discussions ultimately matter, though, when you have gamification as your <a href="https://x.com/Brentsketit/status/1727097507895988650?s=20">selling</a> point. And, maybe there are <a href="https://x.com/Fiskantes/status/1730522904918462602?s=20">bigger fish</a> to fry.



In any case, Lido has more TVL — <a href="https://defillama.com/protocol/lido">approaching</a> $20 billion — than any other DeFi protocol by a country mile. And Blast is bigger than <a href="https://blockworks.co/tag/base">Base</a> — in third place behind Arbitrum and Optimism <a href="https://l2beat.com/scaling/summary#active">according to</a> L2Beat — while now <a href="https://twitter.com/Blast_L2/status/1730362088583835913">hiring</a> software engineers, much to the <a href="https://x.com/MeltedMindz/status/1730628148893806762?s=20">amusement</a> of crypto Twitter.



Plenty of folks in this industry idolize the free market; so if that’s your modus operandi, then the market has spoken, for now.



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Blast from the past: 3 years on from the launch of ETH staking

David Canellis

Crypto is full of divisive figures, but Binance CEO Changpeng Zhao is right up there.&nbsp;



He’s <a href="https://fortune.com/crypto/2019/11/27/crypto-needs-journalists-more-than-it-wants-to-admit/">threatened</a> to sue journalists, airdropped crypto to earthquake victims in <a href="https://www.ft.com/content/62aa9940-89ae-4f7d-9e62-380a11de8a68">lieu</a> of food or aid, and even once <a href="https://www.coindesk.com/markets/2019/05/08/binance-considered-pushing-for-bitcoin-rollback-following-40-million-hack/">suggested</a> rolling back the Bitcoin blockchain to undo a $40 million hack on his exchange.&nbsp;



Or should I say, was right up there. The <a href="https://blockworks.co/news/doj-indictment-binance-changpeng-zhao">US muzzled Zhao</a> with money laundering and sanctions violations last week.&nbsp;



But like a monk shedding himself of worldly possessions before attaining enlightenment, crypto as an “industry” could probably do without quite as many cults of personality.&nbsp;



And what better way than to remove one of the largest personalities than with a court order?



The Department of Justic’s <a href="https://blockworks.co/news/binance-changpeng-zhao-deal-unpacked">case against Binance and CZ</a> in particular is ironclad. Last week’s plea deal forced Zhao to resign as Binance CEO —&nbsp;a position he has with an iron grip held since founding the company in 2017— and he now could face up to 18 months in prison. <a href="https://blockworks.co/news/binance-changpeng-zhao-us">CZ also has to stay in the US</a>, rather than return to his home in Dubai until his sentencing hearing early next year.



Read more: <a href="https://blockworks.co/news/binance-changpeng-zhao-deal-unpacked">Here are the details of Binance and Changpeng Zhao’s plea deal</a>



Part of the deal was that Zhao and Binance agreed to never even hint that they weren’t responsible for their crimes — a shame, as that would’ve played incredibly well on X, a platform that CZ cares so much about he even invested in it with Elon Musk.



A much tamer successor in traditional finance veteran, Richard Teng, has<a href="https://blockworks.co/news/changpeng-zhao-announces-resignation-binance"> taken over as Binance CEO</a>. Teng has never threatened to sue journalists on a social media platform.



That’s not to say that Teng isn’t qualified to run a crypto exchange. Even before Binance Singapore, Teng spent 13 years at the nation’s central bank and another six as head honcho at Abu Dhabi’s financial center.&nbsp;



Binance has more hoops ahead of it than a Border Collie at Crufts, and Teng is exactly the kind of agility instructor required to navigate that mess. But Zhao had represented a very particular breed of crypto entrepreneur, one that drives critics up the wall.&nbsp;



Big Tech has characters like Mark Zuckerberg, Jeff Bezos and Elon Musk: They relentlessly believe that what they and their companies do makes the world a better place. The spin makes them easy targets, as their salesmanship resembles out-of-touch naivete.&nbsp;



Meta isn’t exploiting our brain chemistry to undermine social discourse — it&#8217;s a bastion of free speech that brings us all together.&nbsp;



Amazon fulfillment centers aren’t soulless symptoms of late-stage capitalism — they’re fun <a href="https://www.theguardian.com/technology/2015/aug/17/jeff-bezos-amazon-working-practices">places</a> full of people “helping invent the future.”&nbsp;



And Elon Musk’s Neuralink isn’t a grisly horror show ripped from the Twilight Zone — it’s a <a href="https://fortune.com/2023/11/30/elon-musk-neuralink-paradise-never-caused-death-monkeyall-terminal-conditions/">paradise</a> for terminally-ill monkeys complete with playground equipment and TVs.



Zhao was just as painfully stubborn about <a href="https://blockworks.co/tag/binance'">Binance</a>. The platform isn’t an opportunistic hotbed of low quality cryptocurrencies with illiquid markets prone to manipulation — it’s a charitable smorgasbord of blockchain innovation totally free of shitcoins (and securities).



<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">We don&#39;t list shitcoins even if they pay 400 or 4,000 BTC. ETH/NEO/XRP/EOS/XMR/LTC/more listed with no fee. Question is not “how much does Binance charge to list?” but “is my coin good enough?” It’s not the fee, it&#39;s your project! Focus on your own project!&mdash; CZ 🔶 BNB (@cz_binance) <a href="https://twitter.com/cz_binance/status/1028190371719786496?ref_src=twsrc%5Etfw">August 11, 2018</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Toeing the company line seemed easy for Zhao. Like most entrepreneur influencers, much of his online persona revolves around the toxic positivity typical of founders and venture capitalists, alongside dog whistles for crypto diehards: Dips are when diamond hands are tested, and when in doubt, zoom out on the chart. And then there’s the whole “4” <a href="https://twitter.com/cz_binance/status/1610018096122851328">thing</a>.&nbsp;



Where spiritual gurus would light some sage or chant a mantra to cleanse their chakras of negative energy, Zhao zealots would shoo away bad vibes with a very special brand of shitposting. Just the number “4,” representing the fourth of Zhao’s 2023 resolutions: “Ignore FUD (fear uncertainty and doubt), fake news, attacks, etc.”&nbsp;



(Education, compliance and product and service were the first three).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/gTKZakhxNqh68PWJxTWFlMRVwh1hqAQeq3g-XyrJVfWWEWlHq5s9gGwciMlnlGtLERbClslD3B0E6BA3FlbmJ-H8NxScJzOHul4M0tCSaegL0R2edfQYFbGjMbOzdzUyqr5j8WSzbGktLPARNB7PtLI" alt=""/><figcaption class="wp-element-caption">Six years at Binance vs. <a href="https://twitter.com/_RichardTeng/status/1730557791822086607">first week</a> as Binance CEO </figcaption></figure>



Teng’s incredibly formal demeanor as compared to Zhao is so noticeable that he was asked about it on a recent Twitter Spaces, his first as CEO.



“Yes and no. I do think that certain things do require certain seriousness in terms of level of communication, because you’re talking about serious matters, especially on matters relating to protection of users, for example, security of users when you talk to the regulators,” Teng said.



He continued: “So I adopt a slightly different mode of communication for different channels. And they&#8217;ll be very informal channels of communication as well. So I think, keep [those posts coming].”



So, Teng will very likely be far less interesting to follow, or cheer for, or even hate-follow from afar. It hasn’t been long, and it’s doubtful he’ll attract a cult following like Zhao. But that’s okay.



Maybe crypto needs less cartoonish ringmasters and more sensible suits who show real discomfort for <a href="https://ofac.treasury.gov/system/files/2023-11/20231121_binance.pdf">servicing</a> the worst of the worst for the sake of profits.



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<div class="wp-block-post-author-biography">David is an Editor based in The Netherlands focused on data-driven journalism. Previously, he wrote for TheNextWeb&#8217;s crypto vertical before launching Protos in 2021. He&#8217;s a reformed hardline Bitcoiner passionate about permissionless and decentralized networks. Contact David at david@blockworks.co</div>


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The US watered down crypto when it ousted Binance’s Zhao — and that’s okay

Katherine Ross

A light at the end of the tunnel?



Grayscale said Friday that there’s a number of positive catalysts for bitcoin on the horizon from potential spot bitcoin ETF approvals, the halving and even the upcoming presidential election.



In a note summarizing November’s price action, the research team said that it wasn’t just bitcoin that saw a positive November. The team stated that “crypto recovery broadened to a wider array of market segments.”



So far, bitcoin has rebounded a whopping 130% in 2023 after a rough 2022.



“Grayscale Research sees gradually improving crypto fundamentals and a relatively tight supply picture in major tokens (due to Bitcoin’s current ownership structure, for example). This may be consistent with rising crypto valuations in the year ahead, especially if the Federal Reserve has finished tightening and the US economy can avoid [a recession.]”



Read more: <a href="https://blockworks.co/news/bitcoin-price-november-december">Bitcoin price went up in November — will it go up in December?</a>



The macro environment has been focused on whether or not the Federal Reserve and Chair Jerome Powell will be able ensure a soft landing for the US economy, which would ultimately avoid a recession. A hard landing, on the other hand, would most likely force the US into a recession.&nbsp;



Researchers are concerned about the negative impact that a hard landing could have on crypto recovery.&nbsp;



“That being said, the central scenario for financial markets and the economy are likely to be positive for Bitcoin and other crypto assets, in our view. Bitcoin’s supply is relatively ‘tight’ ahead of potential investor inflows into <a href="https://blockworks.co/news/ark-invest-21shares-gain-edge-bitcoin-etfs">spot ETF products</a> in the US. For example, according to Glassnode data, the share of Bitcoin’s supply held by short-term speculators reached a record low,” the <a href="https://www.grayscale.com/research/market-commentary/november-2023-bitcoins-bull-run-continues?ite=1160&amp;ito=1346&amp;itq=9cca29f4-a54c-49e8-aad3-c209da32e82c&amp;itx%5Bidio%5D=1240465">note</a> said.



Additionally, the presidential election next year is “expected” to bring some attention to “excessive government borrowing,” and other issues — such as the Fed’s independence — which would impact the US dollar.&nbsp;



If this plays out, then Grayscale “expects that this combination would be positive for demand for physical and digital gold, and may be consistent with rising Bitcoin valuations.”



Read more: <a href="https://blockworks.co/news/bitcoin-price-mirrors-2012-halving">Bitcoin flirts with breakout, price mirrors lead-up to 2012 halving</a>



TheBlock’s research director Lars Hoffmann <a href="https://twitter.com/lars0x/status/1730594981369233655">found</a> that adjusted on-chain volume increased by nearly 30%, with ethereum increasing 43% and bitcoin up 21%.&nbsp;



Bitcoin’s hash rate hit an all-time high in November, which Grayscale believes is due to miners upgrading ahead of the 2024 halving. Open interest for bitcoin futures listed by CME also hit a high, “possibly pointing to rising institutional activity in the market.”



Grayscale estimates that global crypto ETP net inflows hit $2.2 billion for the year, with November inflows totalling $1.3 billion.



Stablecoins are also getting a boost from a more positive outlook.&nbsp;



“​​Over the last month, aggregate stablecoin market capitalization increased by $4bn and the amount of gas used on stablecoin transactions moved higher,” Grayscale wrote.&nbsp;



Hoffmann, in a <a href="https://twitter.com/lars0x/status/1730594988788973602">post</a> on X, said the issued supply of stablecoins increased by 3.7%. USDT and USDC were the frontrunners, with nearly 75% and nearly 19% of market share respectively.&nbsp;



JPMorgan, in a note on Thursday, found that the spot bitcoin ETF hype has led to “tentative signs of revival” in both the DeFi and NFT spaces, with NFT volumes spiking and a “gentle” recovery in DeFi activity.&nbsp;



JPM credits the resurgence in DeFi, in part, to liquid staking initiatives spearheaded by Lido; a trend that started prior to the widespread attention on spot bitcoin ETFs.



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Grayscale sees positive catalysts on the horizon for bitcoin

Tiger Global reportedly marked down stakes in Bored Ape Yacht Club and OpenSea by 69% and 94% respectively, according to Bloomberg.&nbsp;



Tiger Global manages around $50 billion. It recorded an 18% paper loss in its largest fund at the end of September, the <a href="https://www.bloomberg.com/news/articles/2023-11-30/tiger-global-s-biggest-venture-fund-has-18-loss-after-markdowns">report</a> states.&nbsp;



Both OpenSea and BAYC parent company Yuga Labs cut jobs as part of restructuring earlier this fall. Yuga’s cuts impacted US teams, leaving over 120 employees at the company. Yuga, in March 2022, was <a href="https://blockworks.co/news/bored-ape-yacht-club-creator-secures-whopping-450m-seed">valued at $4 billion</a>.&nbsp;&nbsp;



OpenSea cut around <a href="https://blockworks.co/news/layoffs-opensea-nfts-lido">50% of its workforce</a>, a spokesperson confirmed to Blockworks at the time. The cuts came after a round of layoffs last year which saw the NFT marketplace slash 20% of its workforce.&nbsp;



OpenSea CEO Devin Finzer said that the platform would be “shifting to a smaller team with a direct connection to users.” At its peak in 2022, <a href="https://blockworks.co/news/layoffs-opensea-nfts-lido#:~:text=The%20company%20was%20valued%20at,to%20rival%20NFT%20platform%20Blur.">OpenSea was valued at $13 billion</a>.&nbsp;



Both companies have been impacted by the slump in the NFT market, which <a href="https://blockworks.co/news/layoffs-opensea-nfts-lido#:~:text=The%20company%20was%20valued%20at,to%20rival%20NFT%20platform%20Blur.">has not bounced back</a> following its 2022 peak.&nbsp;



A JPMorgan report from Nov. 30 found that there has been a “positive impact” on both the NFT and DeFi spaces following the speculation around potential spot bitcoin ETF approvals.&nbsp;



However, as analyst Nikolaos Panigirtzoglou notes, “While we do not doubt this recent revival in DeFi/NFT activity is a positive sign, we believe it is too early to be getting excited about it.”



Panigirtzoglou also attributed the launch of marketplaces such as Blur — a <a href="https://blockworks.co/news/blur-nft-volume-opensea">direct competitor to OpenSea</a> — as part of the pick up in interest.&nbsp;



Tiger Global isn’t the only one marking down its stake in the NFT marketplace either. As <a href="https://www.theinformation.com/articles/coatue-cuts-value-of-opensea-stake-by-90-as-funds-returns-sag">reported</a> by The Information, Coatue cut the value of its stake by roughly 90% at the beginning of November. The marketplace’s value sits a little over $1 billion.&nbsp;



Tiger Global did not immediately return a request for comment.



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Tiger Global marks down stakes in BAYC, OpenSea: Bloomberg

Some industry watchers argue that the approval of spot bitcoin ETFs may occur within a three-day period in January, based on recent moves by the US Securities and Exchange Commission.



Bloomberg Intelligence analyst James Seyffart said in a Friday X post the approval of spot bitcoin ETFs — should the SEC choose to change its decade-long stance by greenlighting such products — could come between Jan. 8 and Jan. 10.&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">Window is officially Jan 5th to Jan 10th. Really this means that any potential approval orders are going to come on either Monday Jan 8, Tuesday Jan 9, or Wednesday Jan 10. Mark your calendars people. <a href="https://t.co/8ob8Y6pgU5">https://t.co/8ob8Y6pgU5</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1730606890319532389?ref_src=twsrc%5Etfw">December 1, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Those following <a href="https://blockworks.co/tag/bitcoin-etf">spot bitcoin ETF</a> developments have looked ahead to Jan. 10 — the <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf">deadline for the SEC to rule on a proposal by Ark Invest and 21Shares</a>.&nbsp;



An approval order could come before this date. But some believe the SEC would allow a bunch of bitcoin ETFs to launch at once, meaning the regulator could wait for the comment periods for other competing proposals to conclude.&nbsp;



The <a href="https://blockworks.co/tag/sec">SEC</a> is collecting public feedback for the proposed spot bitcoin ETFs by Franklin Templeton and Hashdex until Jan. 5, filings show.&nbsp;



The regulator said in a Tuesday <a href="https://www.sec.gov/files/rules/sro/cboebzx/2023/34-99030.pdf">disclosure</a> it had <a href="https://blockworks.co/news/sec-frank-templeton-bitcoin-etf">chosen to “institute proceedings”</a> to determine whether to approve or deny the Franklin Bitcoin ETF. It filed a separate order seeking comments on the Hashdex product the same day.&nbsp;



These filings to move along the proposal process for these ETFs came earlier than expected.



The SEC’s “quicker turnaround than usual” indicates it might be looking to line up a bunch of approvals at once, after that period ends on Jan. 5, Van Buren Capital general partner Scott Johnsson said in a Thursday X <a href="https://twitter.com/SGJohnsson/status/1730324392238809533">post</a>.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/sec-stop-picking-winners#">SEC should ‘stop picking winners’: VanEck exec</a>



Because the regulator would not file spot bitcoin ETF approvals on the weekend, Johnsson noted, the timeframe between Jan. 8 and Jan. 10 would make sense.&nbsp;



“[Five] days not a lot of time to review comments,” Johnsson added in a separate post. “There&#8217;s a good chance there won&#8217;t be any unique comments to work through anyway. And worst case they just get the approval shortly after the first cohort.”



The SEC could still choose to deny the current swathe of spot bitcoin ETF proposals, which include planned products by BlackRock, Fidelity, Invesco and others.



A spokesperson for the regulator has declined to comment on this matter.    



Bloomberg Intelligence analysts have said they believe <a href="https://twitter.com/EricBalchunas/status/1729860124817125600">there is a 90% chance</a> the SEC will approve these funds by Jan. 10, citing <a href="https://blockworks.co/news/grayscale-sec-spot-bitcoin-etf#">Grayscale Investments’ August court win</a> against the regulator and <a href="https://blockworks.co/news/21shares-bitcoin-etf-approval-incoming">issuers’ ongoing dialogue with the agency</a>.



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Industry watchers pin down possible bitcoin ETF approval dates

Binance reportedly held a dinner for its biggest market makers ahead of the $4 billion settlement announcement with the Department of Justice.&nbsp;



The topic at hand? According to <a href="https://www.bloomberg.com/news/articles/2023-12-01/binance-vip-traders-got-sneak-peek-of-record-us-crypto-penalty">Bloomberg</a>: the settlement. The dinner was held in a Singapore night club and took place back in September; months before the $4 billion figure was made publicly reported and the settlement was officially announced.&nbsp;



“After conversations with company representatives present at the dinner, some VIP guests were left convinced that the firm would pay that sum — an amount Binance could easily afford,” the Bloomberg report claimed.



Former CEO Changpeng Zhao was also, according to the report, absent from the gathering of VIPs. Richard Teng, Binance’s new CEO, was present however.



Zhao <a href="https://blockworks.co/news/doj-indictment-binance-changpeng-zhao">reached a plea agreement</a> with the US government in late November. As part of the agreement, he resigned from his position as CEO and pleaded guilty to anti-money laundering violations.&nbsp;



While Magistrate Judge Brian Tsuchida originally found that Zhao was at “no risk of flight,” US District Judge Richard Jones <a href="https://blockworks.co/news/binance-changpeng-zhao-us">disagreed, and plans to keep Zhao in the US</a> “until such time as this court resolves the government’s motion for review.”&nbsp;



Zhao — a citizen of Canada and the United Arab Emirates — resides in the UAE with his partner and children. He faces sentencing in February of next year.



Binance had long been under investigation by the Department of Justice. In late October, lawmakers penned a letter to Attorney General Merrick Garland — who announced the charges and settlement with Binance — to “<a href="https://blockworks.co/news/doj-binance-tether-terror-funding">expeditiously conclude</a>” the DOJ’s investigation into the crypto exchange.&nbsp;



As part of its deal, <a href="https://blockworks.co/news/binance-changpeng-zhao-deal-unpacked">Binance pleaded guilty</a> to operating as an unlicensed money transmitting business and failing to comply with registration requirements as well as violating sanctions laws.&nbsp;



Zhao is barred from operating or managing Binance for a period of three years “from the date a monitor is appointed.”



Binance’s legal woes are not over, however, as it still faces a <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">legal battle against the Securities and Exchange Commission</a>, which alleges that it commingled customer funds and both offered and sold unregistered securities.&nbsp;



Binance did not immediately return a request for comment, though it told Bloomberg that the “depiction of the event was inaccurate.”



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Binance gave VIP traders a heads up on $4B settlement: Bloomberg

On-chain debt capital markets platform Obligate has launched on Coinbase&#8217;s layer-2 network.



This new deployment aligns with the protocol&#8217;s strategy to increase institutional engagement with blockchain-native assets. It comes just after the Switzerland-based firm made its initial entry into on-chain investment products; a decision that aligns with a larger trend across the industry.



Obligate lets companies issue on-chain bonds and other debt securities to receive funding from investors. These bonds, initially issued via smart contracts on Polygon, have now expanded to another venue.&nbsp;



The deployment on Base — a Coinbase-incubated layer-2 built on the Optimism stack <a href="https://blockworks.co/news/inside-coinbase-base-launch">and launched in July</a> — “represents a paradigm shift in the integration of blockchain technology into institutional finance,” according to Matthias Wyss, Obligate’s head of strategic partnerships.



Read more: <a href="https://blockworks.co/news/coinbase-base-home-degens">The ‘crypto degen crowd’ has settled in on Coinbase layer-2, Base</a>



“Our capabilities are especially relevant in the current macro environment as they allow small- and medium-sized enterprises cheap and efficient access to debt capital, which is crucial in the rising interest rate environment,” Wyss told Blockworks.



Obligate issued its first bond on the <a href="https://blockworks.co/tag/polygon">Polygon</a> blockchain in March. Investors in the protocol include Blockchange Ventures, Circle Ventures, Earlybird and SIX Fintech Ventures.



Investors fund their orders into escrow before capital and bonds are exchanged, according to the company’s <a href="https://docs.obligate.com/obligate/enote-protocol">site</a>. From issuance to maturity, investors hold ERC20 bond tokens in their wallets and — unless transfer limitations are set by the issuers — can move or sell them to other wallets.&nbsp;



Users receive payment redemption tokens at maturity, at which time the investors can burn their tokens for the final payments. Issuers can also secure their bonds with collateral, leading to the liquidation of that collateral in the case of default.&nbsp;



The deployment to <a href="https://blockworks.co/tag/base">Base</a> comes a couple weeks after STS Digital issued a structured investment product — a barrier reverse convertible linked to bitcoin — on Polygon as an Obligate eNote.



Obligate said in a Nov. 15 blog <a href="https://obligate.medium.com/obligate-launches-first-usdc-denominated-structured-investment-product-on-polygon-e0404e774b8b">post</a> that it intends to build “an extensive product suite alongside a broad spectrum of digital asset services” — including products with “bespoke payoff profiles.”



<a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">Moving real-world assets</a> onto the blockchain via tokenization has gained steam in recent months as financial players and investors seek to boost efficiency and lower costs.



Read more: <a href="https://blockworks.co/news/blackrock-ceo-us-lagging-innovation-tokenization">BlackRock CEO touts tokenization, warns US ‘lagging’ in innovation</a>



Various projects have sought to offer <a href="https://blockworks.co/news/on-chain-investors-us-treasury">on-chain access to US Treasury securities</a>, for example — the largest and most liquid government bond market globally.



Traditional finance giants, such as <a href="https://blockworks.co/tag/jpmorgan">JPMorgan</a>, continue exploring ways to use blockchain technology. The company most recently carried out tests designed <a href="https://blockworks.co/news/jpmorgan-tokenized-blockchain-portfolio-avalanche">to let fund managers tokenize their portfolios</a> on chosen blockchains.&nbsp;



Wyss said all institutional blockchain applications reaffirm the path to a future where all capital market transactions are issued and settled on-chain.



“We already see an expansion of blockchain native assets along the risk curve from payment to debt to equity and, as pioneered by Obligate recently, to structured investment products,” he added. “This will continue to grow with the…institutional adoption of Tier1 [traditional finance] players.”



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Protocol Obligate ramps up push to boost institutional blockchain use

Bitcoin is again inching closer to a potential price breakout, even as it hovers at its highest point in 18 months.



Markets priced bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) above $38,600 on Friday morning — up 9% over the past month and more than double since this time last year.



Number-two crypto ether (<a href="https://blockworks.co/price/eth">ETH</a>) is meanwhile playing catch-up. It’s also at its highest point since mid-last year, but trails bitcoin’s returns by nearly half.



The ETH/BTC ratio (the bitcoin cost of ether) has fallen by one-fifth over the past six months. It’s showing signs of closing the gap, however, having regained almost 4.5% in November.



Bitcoin bulls may explain the crypto’s strength with hype around <a href="https://blockworks.co/bitcoin-etf">spot bitcoin ETFs</a> — like the one BlackRock wants to launch — which could be approved any day now.



Those ETFs will be forced to buy BTC to meet investor demand, representing perhaps billions in upward pressure. They might even reason that the DOJ’s <a href="https://blockworks.co/news/binance-changpeng-zhao-deal-unpacked">indictment of Binance and CEO Changpeng Zhao</a> gives a certain clarity to the crypto market that can only be good for prices.



Crypto investors could even feel a little floaty due to arrests of hombres like <a href="https://blockworks.co/news/sbf-guilty-verdict-sentencing">FTX fraudster Sam Bankman-Fried</a>, Terra <a href="https://www.reuters.com/world/europe/montenegro-court-approves-extradition-cryptocurrency-king-do-kwon-2023-11-24/">ringleader</a> Do Kwon and Celsius <a href="https://blockworks.co/news/celsius-founder-alex-mashinsky-freed-on-bail-pleads-not-guilty">rabble-rouser Alex Mashinsky</a>.&nbsp;



So, the tide went out, took the bad actors with it and now billions in fresh ETF money might wash ashore, bringing the bull market back along with it, some might say.



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Caption: The ETH/BTC ratio has even underperformed BNB over the past year



Bears would say it&#8217;s <a href="https://www.ft.com/content/298aed3a-d855-4e01-8e6c-7bae5dd87bc5">unclear</a> whether ETFs would actually move the needle, considering the relatively small interest in the three spot funds already available to North American investors via Canadian markets.&nbsp;



A fresh wave of spot ETFs could even be bad for bitcoin’s price, especially if Grayscale Bitcoin Trust (GBTC) loses ground to Wall Street operators like BlackRock and Fidelity.&nbsp;



JPMorgan analyst Nikolaos Panigirtzoglou <a href="https://www.linkedin.com/feed/update/urn:li:activity:7133832125031567361/">reckons</a> up to $2.7 billion might flow out of GBTC and potentially be dumped on the market.



Still, by some definitions, the <a href="https://blockworks.co/news/longest-bitcoin-bear-market-survival">bear market is squarely over</a>. That doesn’t explicitly mean the start of a new bull market.



Although momentum does count for something, and if Bitcoin went up in November, could it do the same in December?



It turns out Bitcoin’s price direction in December has matched November 10 times in its 13 years of existence, with only 2011, 2013, and 2014 not aligning — a 77% strike rate, per TradingView data.



That’s more common than with months overall: 94 of the 170 months on record, or 56%, have aligned with the previous month’s candle.&nbsp;



All this is probably statistically insignificant, on par with <a href="https://theconversation.com/can-maths-help-you-win-at-roulette-69440">roulette </a>math, given the small sample size.&nbsp;



But considering the crypto winter we’ve had, markets will take what they can get.



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Bitcoin price went up in November — will it go up in December?

Circle, in a public letter addressed to Senator Elizabeth Warren, D-Mass., and Chairman Sherrod Brown, D-OH, on Thursday to push back against claims that it banked Justin Sun and, separately, had financed Hamas.&nbsp;



The letter — penned by Circle’s Chief Strategy Officer Dante Disparte — was written in response to a Nov. 9 letter from the Campaign for Accountability which claimed that Circle does not prevent illicit finance activities.&nbsp;



The letter from the Campaign for Accountability executive director Michelle Kuppersmith <a href="https://campaignforaccountability.org/watchdog-asks-senators-to-include-tron-circle-in-crypto-terror-financing-probe/">claimed</a> that there were ties from Circle to Sun, based on “recently published studies and reports of law enforcement operations.”



<a href="https://blockworks.co/tag/circle">Circle</a>, in its Nov. 30 <a href="https://www.circle.com/blog/circle-refutes-false-claims-on-illicit-financing">letter</a>, said, “neither Mr. Sun nor any entity owned or controlled by Mr. Sun, including the TRON Foundation or Huobi Global, currently have accounts with Circle.”



Read more: <a href="https://blockworks.co/news/htx-hack-ethereum-crypto-assets">Huobi’s ‘Heco’ chain bridge drained of $87M in crypto assets</a>



“To date, the US government has not specifically designated Mr. Sun or his entities as Specially Designated Nationals.&nbsp; Nonetheless, Circle terminated all accounts held by Mr. Sun and his affiliated companies in February 2023,” the letter continued.&nbsp;



In March, the <a href="https://blockworks.co/news/sec-sues-justin-sun">US Securities and Exchange Commission sued Sun</a> for allegedly selling securities.&nbsp;



&nbsp;“As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities,” Gurbir Grewal, director of the <a href="https://blockworks.co/tag/sec">SEC’s</a> Division of Enforcement, said in a March statement.



Both Warren and Brown <a href="https://blockworks.co/news/crypto-financing-terrorism-biden">signed off on a letter back in October</a> pushing the Biden Administration to “address crypto-financed terrorism.” The basis of the letter stemmed from a report in the Wall Street Journal which claimed that Hamas used crypto to fund its attacks on Israel.&nbsp;



Elliptic, which provided the data used by the Journal report, <a href="https://blockworks.co/news/wsj-elliptic-crypto-fundraising">refuted the conclusion</a> saying that there was “no evidence” that Hamas raised millions in crypto.



Circle said that it “would be happy to discuss any of the above” with both Warren and Brown.



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Circle denies alleged ties to Justin Sun and Hamas in letter to lawmakers

If US regulators approve spot bitcoin ETFs, Ark Invest and 21Shares are well-positioned to rapidly accumulate assets, according to Bloomberg Intelligence analysts.



The Grayscale Bitcoin Trust (GBTC) could also have a leg up — if allowed to launch at the same time — given its current asset base of roughly $23 billion assets under management, according to Bloomberg Intelligence’s James Seyffart and Eric Balchunas.



The US Securities and Exchange Commission is <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf">set to rule on the Ark 21Shares Bitcoin ETF (ARKB) by Jan. 10</a>, and industry watchers expect the regulator could greenlight a bunch of other similar offerings at that time.&nbsp;



The regulator could also choose to deny these applications.&nbsp;&nbsp;&nbsp;



Segment observers have said a bitcoin ETF, or multiple, could be <a href="https://blockworks.co/news/approved-spot-bitcoin-etf-launch-size">one of the biggest ETF launches of all-time</a>. A fight for assets between traditional finance giants such as BlackRock, Fidelity and Invesco — not to mention more specialized firms like Grayscale, VanEck, Bitwise and WisdomTree — is set to be fierce.



Flows and volumes are “crucial” to marketing an <a href="https://blockworks.co/tag/etfs">ETF</a>, Seyffart and Balchunas said in a Wednesday research note. Capital flowing into a fund gives the appearance of success and interest, they added, which can spur other traders and investors to follow.&nbsp;



With that in mind, the analysts argued that Ark Invest might choose to sell its current positions in the Grayscale Bitcoin Trust (<a href="https://blockworks.co/tag/gbtc">GBTC</a>) and port those assets over to ARKB.



The discount to net asset value at which GBTC’s shares trade <a href="https://blockworks.co/news/grayscale-gbtc-shrinking-discount">has recently shrunk to a two-year low</a>, and Grayscale executives have said such a discount would essentially disappear if it is allowed to convert to an ETF.&nbsp;



The Ark Next Generation Internet ETF (ARKW) currently holds nearly 4.3 million shares of GBTC — worth roughly $133 million.



“This influx of flows and volumes might come in chunks, which could even be better for ARKB, since it would help make it look as though the ETF was attracting consistent interest in the first week,” Seyffart and Balchunas wrote.



An <a href="https://blockworks.co/tag/ark-invest">Ark Invest</a> spokesperson did not immediately return a request for comment.&nbsp;



The capital injection would be especially important given the size of its largest competitors. While Ark Invest’s US ETFs manage roughly $13 billion in assets, BlackRock ETFs, including those under its iShares brand, hold about 2.4 trillion.



Dave Nadig, financial futurist at data firm VettaFi, previously said capital markets depth and institutional volume would play a key role, noting BlackRock’s institutional relationships could help its bitcoin trust become a quick asset leader.



“[BlackRock and] Fidelity will add their bitcoin ETFs to their modeled/managed funds&#8230;possibly immediately to get a head start,” Michael Nasser, co-founder of digital currency brokerage Satstreet, said in an X <a href="https://twitter.com/MikeNasser91/status/1730243523595624848">post</a>.



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Agree, this is why they are the favorites! But BlackRock model port only moves into stuff when they have tactical motive, so not guaranteed early&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1730243871236325744?ref_src=twsrc%5Etfw">November 30, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Seyffart and Balchunas added that GBTC will also have an advantage if allowed to convert into an ETF when other firms launch bitcoin ETFs. The trust, which launched in 2013 and has eligible shares trading on OTC Markets Group, is <a href="https://blockworks.co/news/grayscale-bitcoin-etf-milestone">set to become an ETF with regulatory approval</a>, executives have said.



Read more: <a href="https://blockworks.co/news/grayscale-sec-advantage">Grayscale to SEC: Don’t grant ‘prejudicial first-mover advantage’ for bitcoin ETFs</a>



<a href="https://blockworks.co/news/grayscale-bitcoin-etf-sec">Grayscale Chief Legal Officer Craig Salm noted</a> in an Aug. 31 <a href="https://www.bnnbloomberg.ca/video/grayscale-s-top-reasons-why-the-sec-should-approve-their-bitcoin-spot-etf~2756421">interview</a> with Bloomberg: &nbsp; ​​”We’re the only ones with an actual fund today with [assets under management], trading volume and investors.”



The emphasis on marketing is especially pronounced given the rather <a href="https://twitter.com/EricBalchunas/status/1730239437743759505">unprecedented</a> possibility that a bunch of bitcoin ETFs are allowed to launch on the same day.&nbsp;



A dozen fund issuers had filed for spot bitcoin ETFs this year before <a href="https://blockworks.co/news/pando-joins-spot-bitcoin-etf-hopefuls">Switzerland-based Pando Asset entered the race</a> on Wednesday.&nbsp;The asset managers <a href="https://blockworks.co/news/21shares-bitcoin-etf-approval-incoming">have filed amendments to their applications</a> in recent weeks as they continue to meet with SEC officials.



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Ark Invest, 21Shares could jump to bitcoin ETF assets lead: Analysts

A recent initiative by Binance introduces what it describes as “the world&#8217;s first cryptocurrency triparty arrangement with a third party banking partner.” This project aims to attract institutional clients who prefer not having their capital solely under the control of the exchange.



Ever since the FTX fraud, crypto traders have been leery of assurances by exchanges that they always have all the assets they say they do, backing deposited capital. The concept of proof-of-reserves got a big boost in response as one approach to addressing the longstanding issue of counterparty risk.



That’s a risk retail investors became well acquainted with in 2022, when multiple centralized crypto firms crashed into <a href="https://blockworks.co/tag/bankruptcy">bankruptcy</a>.



But as Catherine Chen, Binance’s head of VIP and institutional said in a statement, it’s also a major concern in the realm of institutional investment.



Read more: <a href="https://blockworks.co/news/ftx-meltdown-timeline">FTX began to unravel one year ago today: A timeline</a>



“Our team of crypto natives and traditional finance professionals has been exploring a banking triparty agreement for more than a year to address their concern,” Chen said.



This new arrangement would allow institutional investors to access <a href="https://blockworks.co/tag/binance">Binance’s</a> trading liquidity while placing their trading collateral off the exchange entirely, under the custody of a third-party banking entity.&nbsp;



But, exactly which bank or banks is not yet clear.



&#8220;We are not sharing any additional information regarding our banking partners at this time,” a spokesperson told Blockworks. Binance would only say they “are in discussion with an array of banking partners.”



Binance has been the biggest player in worldwide cryptocurrency exchange for some time, but following its <a href="https://blockworks.co/news/binance-settlement-message-to-crypto-industry">record-breaking $4.3 billion settlement</a> with the US Department of Justice, trading volumes may be <a href="https://coinpaprika.com/exchanges/binance/">waning</a>, even as <a href="https://blockworks.co/news/binance-outflows-stabilize">net outflows remain muted</a>.



While Binance&#8217;s initiative to replicate a traditional financial framework in the crypto sphere seems promising, it’s also not alone in offering custody options. Fireblocks <a href="https://blockworks.co/news/fireblocks-crypto-counterparty-risk">just released a similar system</a> in partnership with derivatives exchange Deribit.



And the newly launched Cube Exchange <a href="https://blockworks.co/news/cube-exchange-crypto-mpc">takes itself out of the custody equation</a> altogether.



For those able to handle self-custody, removing counterparty risk entirely is a major selling point of <a href="https://blockworks.co/tag/dexs">decentralized exchanges</a>, which are designed to facilitate peer-to-pool trading.



As Binance forges ahead with its solution, one perk the company points to is that customer collateral can include fiat equivalents like Treasury bills. These assets not only secure trading activities, but also yield returns simultaneously.



As we await further details on how this feature will work in practice, one thing’s for sure: Binance’s competitors are smelling an opportunity.



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Binance embraces counterparty risk reduction

Elon Musk is going through it. Crypto might just be the answer.



First, he paid way too much to take Twitter private last year. Now, he’s mugging off the biggest companies in the world — specifically Disney and CEO Bob Iger — for pulling advertising from X after Musk’s <a href="https://www.wsj.com/business/media/disney-lions-gate-pause-ads-on-x-after-musk-agrees-with-antisemitic-tweet-641c3ea4?ns=prod/accounts-wsj">comments</a> about Israel and Palestine and <a href="https://apnews.com/article/elon-musk-x-antisemitism-twitter-ads-83e68f03e9bf1d261c1a8c55066c4e59">concerns</a> about pro-Nazi content.



X, formerly known as Twitter, will go bankrupt over a sustained advertising boycott, the world’s richest man told New York Times DealBook’s Aaron Sorkin at an event overnight.&nbsp;



“You’re going to blackmail me with advertising money? Go fuck youself,” Musk said.



Okay, Elon Musk, you’ve previously <a href="https://twitter.com/elonmusk/status/1687662311010631680">said</a> that X would never launch its own token. And you’ve already dabbled in bitcoin, dogecoin and ether — with Tesla still owning 9,720 BTC ($337 million) as of October.



But if the goal is to pay off your financiers and plug a measly $75 million hole in your advertising revenue, there’s no faster solution than crypto.



<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 is one of the most extraordinary 5-minute clips I’ve ever seen on this app. An epoch-making exchange. <a href="https://t.co/DbAFF5MkWD">pic.twitter.com/DbAFF5MkWD</a>&mdash; Joel Berry (@JoelWBerry) <a href="https://twitter.com/JoelWBerry/status/1730058223271485595?ref_src=twsrc%5Etfw">November 30, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Joel Berry is the managing editor of the Babylon Bee, a satirical outlet previously <a href="https://www.forbes.com/sites/petersuciu/2022/03/21/the-babylon-bees-twitter-account-was-suspended-but-that-made-its-story-go-viral/">banned</a> from Twitter</figcaption></figure>



Musk was already Twitter’s biggest shareholder when he first offered to buy Twitter in April 2022 for $44 billion. At $54.20 per share, Musk <a href="https://www.sec.gov/Archives/edgar/data/1418091/000110465922045641/tm2212748d1_sc13da.htm">told</a> the SEC his bid represented a 54% premium on the stock’s valuation before he’d bought his first shares.



Despite initially fighting to renege — on grounds that Twitter hadn’t proved its claim that 95% of daily active users were actual humans and not bots — Musk eventually was <a href="https://www.cnbc.com/2022/10/06/musk-seeks-to-stop-oct-17-trial-date-to-close-twitter-deal-on-original-terms.html">forced</a> to follow through as his offer was legally binding.



A raft of executives were immediately fired, including CEO Parag Agrawal, who took over from founder Jack Dorsey in 2021, and Chief Financial Officer Ned Segal, who’d been at the company since 2017.&nbsp;



Musk later <a href="https://edition.cnn.com/2023/04/12/tech/elon-musk-bbc-interview-twitter-intl-hnk/index.html">said</a> he had cut 80% of Twitter staff after the buyout, upwards of 6,000 skulls.



A massively reduced headcount has not been enough to counteract advertiser exodus. Musk’s buyout was confirmed in October and reports indicated Twitter revenues had sunk 40% by December.&nbsp;



Meanwhile, Twitter had unbanned a <a href="https://www.theverge.com/2022/11/24/23476655/elon-musk-general-amnesty-mass-unban-twitter">cavalcade</a> of agent provocateurs including Andrew Tate, Marjorie Taylor Greene, Jordan Peterson, Kanye West and Donald Trump (although the latter has so far <a href="https://www.theguardian.com/us-news/live/2022/nov/21/trump-twitter-elon-musk-joe-biden-politics-latest">snubbed</a> the platform in favor of his own Truth Social).



Apple, IBM, Paramount, Airbnb, Warner Bros. and Comcast — alongside Disney — have since <a href="https://edition.cnn.com/2023/11/17/tech/lionsgate-suspends-advertising-x-musk/index.html">reportedly</a> pulled ads and Twitter, now X, is bleeding cash. The New York Times <a href="https://www.nytimes.com/2023/11/24/business/x-elon-musk-advertisers.html">estimated</a> Twitter could stand to lose $75 million in ad revenue by the end of the year, with more brands expected to leave after Musk’s DealBook appearance.



But there&#8217;s X’s heavy debt load. Musk borrowed $13 billion with the <a href="https://edition.cnn.com/2022/04/26/investing/morgan-stanley-elon-musk-twitter/index.html">help</a> of Morgan Stanley, a loan collateralized by Tesla stock (of which Musk owns $100 billion). 



One estimate suggested Musk’s financiers would’ve made between 1% and 3% on the value of the $44 billion deal. X would owe Morgan Stanley up to $1.3 billion if that’s true (although there&#8217;s some <a href="https://fortune.com/2023/10/04/elon-musk-x-debt-twitter-financials-wall-street-upper-hand/">argument</a> to be made that Musk now has the upper hand against the banks due to rising interest rates).



Read more from our opinion section: <a href="https://blockworks.co/news/michael-saylor-bitcoin-chair">Let Michael Saylor cook</a>



There’s also the suite of equity co-investors that Musk now has to <a href="https://www.theguardian.com/technology/2022/nov/03/saudi-twitter-investment-us-national-security-risk">appease</a>, including former CEO Dorsey, Oracle chief executive Larry Ellison, <a href="https://blockworks.co/news/changpeng-zhao-binance-steps-down">embattled crypto exchange Binance</a> and Prince Al Waleed of Saudi Arabia, among others, who together reportedly contributed more than $8 billion. Musk even borrowed $1 billion from his other company, SpaceX.



All this is, apparently, enough to make a man curse at Disney billionaires. But I’m here to tell Musk there’s another way: Launch your own cryptocurrency.



Projects have found great success in launching tokens over the past 18 months. Arbitrum (<a href="https://blockworks.co/price/arb">ARB</a>), Optimism (<a href="https://blockworks.co/price/op">OP</a>) and Celestia (<a href="https://blockworks.co/price/tia">TIA</a>) are all now valued at more than $1 billion with a tiny fraction of the 300 million-plus monetizable users on X.



Even <a href="https://blockworks.co/price/blur">BLUR</a>, the governance token for the NFT marketplace of the same name, is worth more than half-a-billion, even though the platform has only 50,000 active weekly traders.&nbsp;



Hell, a one-way bridge to a <a href="https://blockworks.co/news/blast-tvl-ethereum">network that doesn’t yet exist</a> has now attracted more than $600 million with nothing but a website and a plan.



An X cryptocurrency could do all sorts of things: Membership and perks through Twitter Blue, tipping or even betting on sports events live-streamed directly on the app.&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">Origin of Doge Day Afternoon: The ancient Romans sacrificed a Dogecoin at the beginning of the Doge Days to appease the rage of Sirius, believing that the star was the cause of the hot, sultry weather.&mdash; Elon Musk (@elonmusk) <a href="https://twitter.com/elonmusk/status/1370883943143251968?ref_src=twsrc%5Etfw">March 13, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Would launching an X cryptocurrency really be cringier than this?</figcaption></figure>



X could even pay <a href="https://techcrunch.com/2023/09/29/x-twitter-has-paid-almost-20m-to-creators-ceo-says/">creators</a> their cut of advertising revenue in the token, saving the company real US dollars it needs to pay back its backers.



I could probably understand the hesitancy to mint a cryptocurrency in cycles past. Selling a token seemed cheap in 2018 and 2019 — even cheaper than <a href="https://protos.com/elon-musk-dogecoin-cryptocurrency-bitcoin-ethereum-tweets/">peddling</a> dogecoin — but cycles of influencer NFT drops and DAO launches have since freed crypto of all its shame.&nbsp;



Dragging your feet any longer makes little sense. You’re already on record <a href="https://www.youtube.com/watch?v=cRNypdYQoWk">stating</a> you have no respect for the SEC, which means you’ll fit in perfectly round here.



And besides, what better way to stick it to the SEC, who, coincidentally has a <a href="https://blockworks.co/news/hester-pierce-dont-regulate-courtroom">bonafide bone to pick</a> with crypto?&nbsp;



Go on, use crypto for its number-one use case: Attracting pseudonymous liquidity with few questions asked. At this point, there’s nothing left to lose.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">David is an Editor based in The Netherlands focused on data-driven journalism. Previously, he wrote for TheNextWeb&#8217;s crypto vertical before launching Protos in 2021. He&#8217;s a reformed hardline Bitcoiner passionate about permissionless and decentralized networks. Contact David at david@blockworks.co</div>


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Hey, Elon, forget about Disney. Save X by launching your own crypto.

Hester Peirce, commissioner at the US Securities and Exchange Commission, isn’t quite sure what her agency’s endgame appears to be. 



“There doesn’t seem to be a rhyme or reason for a lot of cases we bring,” Peirce said Thursday during a fireside discussion at the Blockchain Association Policy Summit in Washington, DC.&nbsp;



Peirce’s agency brought a total of 784 enforcement actions during the 2023 fiscal year, a 3% increase from 2022, largely thanks to SEC Chair Gary Gensler’s escalating interest in the cryptocurrency space.&nbsp;



The SEC increased its enforcement actions involving securities offerings by 48% in 2023, one of which was the agency’s case against NFT issuer Stoner Cats 2 LLC.



“I don’t really view it as my primary objective” to stop people from purchasing Stoner Cats, Pierce quipped.&nbsp;



“We need to just also remember that there&#8217;s a lot of traditional securities fraud going on, and resources that were spent going after Stoner Cats are not being spent to go after [other actors.],” she added.&nbsp;



The trend of taking its battles to the courts is not new for the SEC, and Peirce has made her criticism of the strategy known.&nbsp;



“I will say that litigation is not the most effective way to carry out regulations,” Peirce said during an <a href="https://www.bloomberg.com/live/us">appearance</a> on Bloomberg TV last week.&nbsp;



The SEC’s case against LBRY, a saga that eventually ended in the content sharing platform shutting its doors last month, was a particularly troubling instance, Peirce said.&nbsp;



“I was really heartbroken that we were bringing the case,” she said Thursday. “Here was a project that had actually built a functioning blockchain that was being used…and there had been efforts made to try to launch in a way that was consistent with the securities laws.”&nbsp;



The SEC has a difficult job determining which enforcement actions to pursue, Peirce said, making the entire process somewhat arbitrary.&nbsp;



“We have to make resource allocation decisions; where does it make sense to spend our resources?” she said. “[LBRY] is just a case where I would have made a different call.”&nbsp;



Looking ahead, when asked what she envisioned the SEC’s ‘endgame’ in terms of crypto to be, Peirce didn’t have an answer, but she did have an opinion. 



“I really can&#8217;t tell you definitively,” she said. “We need to stick to the mandate Congress gave us and not extend beyond that.”



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SEC’s Hester Peirce doesn’t know what her agency is trying to accomplish

MicroStrategy continues to buy bitcoin. The company announced in an 8K filing on Thursday that it had bought roughly $593 million worth of bitcoin throughout the month of November.&nbsp;



From Nov. 1 to Nov. 29, the company bought 16,130 bitcoin along with its subsidiaries. The average price works out to be nearly $36,000.&nbsp;



The company now holds roughly 174,530 bitcoin, worth roughly $5.2 billion at a purchase price of $30,000.



Prior to the November buys, <a href="https://blockworks.co/news/microstrategy-largest-btc-buy-2-years">MicroStrategy disclosed a huge buy</a> back in June when it bought 12,000 bitcoin over a span of two months at an average price of $28,136 per bitcoin.&nbsp;



The price of bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) took a dip following the 8K disclosure, though the price is still above $37,000 at the time of publication.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-price-mirrors-2012-halving">Bitcoin flirts with breakout, price mirrors lead-up to 2012 halving</a>



Back in early November, <a href="https://blockworks.co/news/microstrategy-q3-earnings-results">during the company’s earnings call</a>, MicroStrategy founder Michael Saylor said that the approval — then launch — of spot bitcoin <a href="https://blockworks.co/tag/etfs">ETFs</a> would be a “catalytic event” that would benefit both his company and other entities with bitcoin exposure.&nbsp;



“I think we’ll see more and more analyst coverage from traditional Wall Street banks as these ETPs make bitcoin exposure available,” Saylor said on the earnings call. “More coverage means more education, means more awareness, and that results in more interest.”&nbsp;



<a href="https://blockworks.co/tag/microstrategy">MicroStrategy</a> would continue to allow investors to gain exposure to bitcoin through its holdings, and that’s — Saylor believes — is not something that would go away if the world’s largest asset manager BlackRock or any of the other <a href="https://blockworks.co/news/pando-joins-spot-bitcoin-etf-hopefuls">entities vying for a spot bitcoin ETF</a> get the green light from the US Securities and Exchange Commission.&nbsp;



While it’s unclear what exactly made MicroStrategy so bullish on bitcoin in the month of November, <a href="https://blockworks.co/news/crypto-etf-updates-thanksgiving">there have been a slew of bitcoin ETF-related headlines</a>. Additionally, the next bitcoin halving is roughly five months away — both of which have been identified as potential catalysts for positive price action.



As MicroStrategy prepared its 8K filing on Nov. 28, the <a href="https://blockworks.co/news/sec-frank-templeton-bitcoin-etf">SEC initiated the comment period for the Franklin Templeton</a> spot bitcoin ETF proposal, a move that surprised some since it began earlier than expected.



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