News Updates November 13, 2922
1. FTX Hack Sparks Revolution at Serum DEX as Solana Devs Plot Alameda's Ouster
Developers are scrambling to create a new version of the on-chain liquidity hub that has no ties to Sam Bankman-Fried’s burning empire. Sam Bankman-Fried once called Project Serum, an on-chain crypto exchange that he created, the “truly, fully trustless” backbone of decentralized finance (DeFi) on the Solana blockchain. But trust in the fallen FTX chief’s once-mighty crypto liquidity engine has suddenly run dry.
On Saturday, DeFi protocols across the Solana ecosystem began unplugging from Serum for fear that they didn’t know who wielded control – a concern fueled by the late-Friday hack at FTX. The developers once associated with Serum have gone silent. Meanwhile, the protocol’s dependence on Bankman-Fried and his bankrupt companies Alameda and FTX loomed large. The true power over Serum rested with FTX Group, which continues to hold the program update authority keys, people familiar with the matter said.
Spurred by this crisis, DeFi developers are now rushing to create a new version of Serum that they can govern without fear of interference – or influence – from FTX. Across Twitter, Telegram, Github and in private Discords, the Solana community is finding a way to salvage one of their blockchain’s key platforms for trading cryptocurrencies without a centralized exchange.
“The ecosystem is coming together to solve this problem right now,” said Ben Chow of the decentralized exchange aggregator Jupiter.
2. US Treasury Secretary and Indian Finance Minister Discuss Crypto Regulation.
U.S. Treasury Secretary Janet Yellen and Indian Finance Minister Nirmala Sitharaman discussed crypto regulation during the ninth India-U.S. Economic and Financial Partnership meeting. They stressed the importance of international cooperation and setting high regulatory standards globally.
US and India Discuss Issues Surrounding Crypto
Indian Union Minister of Finance & Corporate Affairs Nirmala Sitharaman and U.S. Treasury Secretary Janet L. Yellen discussed cryptocurrency regulation Friday during the ninth meeting of the India-U.S. Economic and Financial Partnership.
U.S. Federal Reserve Chairman Jerome Powell and Reserve Bank of India (RBI) Governor Shaktikanta Das also attended the meeting, which was held in New Delhi. It was Yellen’s first visit to India as treasury secretary.
According to a joint statement issued by Yellen and Sitharaman at the conclusion of the meeting:
The United States and India look forward to sustained engagement through the longstanding U.S.-India Financial Regulatory Dialogue, a platform for discussing emerging financial sector issues and priority areas, including … digital assets.
Following the Economic and Financial Partnership meeting, Yellen participated in a roundtable discussion on India-U.S. Business and Economic Opportunities with business leaders and prominent economists from both countries.
The treasury secretary reportedly called for international collaboration on dealing with cryptocurrencies. “With respect to cryptocurrencies, there are some pools where we have inadequate market consumer and investor protection issues that need to be dealt with,” she said, elaborating:
But this is an area where we had some discussion in our meetings today, where international cooperation is really important among public authorities, the private sector and public stakeholders need high regulatory standards globally.
3. Criminal charges against SBF ‘on the table’ after FTX's epic collapse.
Former FTX CEO Sam Bankman-Fried’s legal woes could go from bad to worse. After his crypto empire filed for bankruptcy protection, Bankman-Fried could face criminal charges — with his own tweets supplementing the evidence — legal experts say.
FTX and more than 100 of its corporate affiliates filed for bankruptcy on Friday, the finale of a shocking collapse for the world’s second-largest crypto exchange. At the same time, Bankman-Fried resigned as CEO of the company he founded three years ago, which was worth $32 billion at its peak in January. By Friday his remaining $16 billion fortune was wiped out.
In a tweet thread yesterday, Bankman-Fried apologized for the collapse and disclosed new details about disparities between his “sense” of the exchange’s liquidity and user margin and the actual numbers.
“Criminal charges are on the table. It's possible,” said Teresa Goody Guillén, a partner in BakerHostetler’s white collar and securities enforcement group. “In his series of tweets, he makes numerous admissions which could be used against him.”
4. Another Crypto Exchange Halts Withdrawals on Heels of FTX Collapse: Details
As reported by Wu Blockchain, a worrisome drama is playing out on the Hong Kong-based crypto exchange, BitCoke. The issue started when its users reported experiencing difficulty with withdrawals. BitCoke issued an announcement saying that the person in charge of finance was cooperating with public security in an investigation and could not provide the private key authorization.
"The exchange BitCoke experienced difficulty in withdrawing coins, many users were unable to withdraw coins for more than 24 hours. At the beginning of 2022, BitCoke issued its own platform coin and received 20 million investment from more than ten capitals including Huobi and LD."
Consequently, BitCoke suspended withdrawals on Nov. 13, 1 p.m. Hong Kong time. The BitCoke exchange case is surprising, as it revealed in May this year that it had raised $20 million in a strategic private round. The financing deal was reached with a group of investors led by the Huobi exchange, which also includes other notable institutions such as Redline DAO, Krypital, LD Capital, Hotbit and several others.
5. $3 billion in Bitcoin left exchanges this week amid FTX contagion fears
It appears that more investors are choosing to self-custody their BTC funds in the wake of the FTX scandal and fallout. Bitcoin BTC $16,479
investors are withdrawing funds from exchanges at a rate not seen since April 2021 with nearly $3 billion in Bitcoin withdrawn over the past seven days.
New data from on-chain analytics firm Glassnode shows the number of wallets receiving BTC from exchange addresses hit almost 90,000 on Nov. 9.
Exchange users wake up to self-custody
Amid ongoing turmoil over the bankruptcy of major exchange FTX, concerns have heightened among exchange users over security of funds.
Commentators have upped advice to avoid custodial wallets and take control of cryptoassets, and regulators are increasing scrutiny of the crypto industry en masse.
On-chain figures suggest that a large number of hodlers have opted for non-custodial wallets over the past week.
The number of withdrawing addresses saw a huge spike on Nov. 9, this surpassing the daily highs for both May and June this year when BTC price action last saw significant downside pressure.
For Nov. 12, the latest date for which data is available, withdrawing addresses still totaled over 70,000.
6. New FTX tokens worth about $380 million appear out of thin air.
The deployer contract of FTX Exchange (FTT) tokens mysteriously printed 192 million new tokens today and sent them to a freshly created wallet, according to on-chain data. The total value of these tokens at current prices is about $380 million.
The release of the new FTT came without any announcement from the exchange and follows a reported FTX hack on Friday.
As new tokens began flooding onto the market, Binance halted FTT deposits. “Binance has stopped FTT deposit, to prevent potential of questionable additional supplies affecting the market. Also encourage other exchanges to do the same,” Binance CEO Changpeng Zhao said.
The number of freshly created tokens eclipsed FTT’s prior circulating supply, which was about 133 million, according to pseudonymous crypto researcher oxfoobar.
The FTT token played a crucial role in the problems that reportedly led to the insolvency of FTX and trading firm Alameda.
FTX first came under pressure following a leaked portion of its sister firm’s balance sheet that showed the large majority of the firm’s assets were denominated in FTT tokens. This triggered a bank run from clients last week, which in a matter of days led to the high-profile implosion of the exchange.
