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October 7, 2020 | Issue #138

 MUST READS 

BitMEX Hit With Criminal Charges


If you haven’t heard the news already, American authorities have come down hard one of the world’s biggest cryptocurrency exchanges, BitMEX. The exchange is well known for allowing users to make highly levered bets with up to 100x leverage.

The exchange has been charged with breaking rules set forth in the Bank Secrecy Act, mainly revolving around KYC/AML compliance of their users. They are being accused of allowing money laundering and other illegal transactions. Prosecutors allege the exchange was being used by hackers to launder stolen money, and by people in countries under sanctions, like Iran.

One of the co-founders, Samuel Reed, has been arrested in Boston while the three other founders named in the indictment remain “at large”.

Market Reverberations:
  • More than 32,000 Bitcoins were withdrawn from the exchange in less than 24 hours after the charges were announced
     
  • Bitcoin balance on exchanges fell to a 23-month low
     
  • Chainalysis, the influential cryptocurrency investigations firm, slapped BitMEX with a new “high risk” label

WBTC Minting Breaks New Record


Wrapped Bitcoin (WBTC) has hit a new record by minting $616 million worth of tokenized Bitcoin in September (a more than 160% increase over the $232 million minted in August).

What is WBTC?

WBTC is an Ethereum-compatible version of Bitcoin. To create WBTC, you simply send BTC to BitGo who custodies it on your behalf and mints corresponding BTC pegged ERC-20 tokens on Ethereum.

The rising interest in converting BTC to WBTC is a reflection of market participants who want to capitalize on the growing number of opportunities in the DeFi ecosystem.
 

Market Resilience

No news story here. Instead, we'd just like to point out the fact that Bitcoin is trading at the same price it was at a week ago.

What happened within the past week?

  • One of the largest exchanges (BitMex) just got hit hard by regulators
     
  • Trump tested positive
     
  • Then he dashed hopes of another market bailout by halting negotiations on additional stimulus relief

In recent years, these headlines would have likely turned the market. In 2020, however, Bitcoin continues to pass these stress tests – showing strong signs of market resiliency.

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 DEEP DIVE 

The Bull Case for Social Tokens


Social tokens are starting to gain traction.

Spencer Dinwiddie, a point guard for the Brooklyn Nets, tokenized his NBA contract earlier this year. And just this week we saw RAC, a Grammy award-winning artist, launch his own community token as well...

But investors are skeptical. How do exits work? How are the tokens valued? What happens if a creator stops?

Despite the batch of concerns, there could be potential in these newfound fan tokens.

Cooper Turley from Bankless makes the case.
 

There’s No Such Thing As a Decentralized Exchange


Consider this one a must-read for Decentralized Exchange (DEX) users. In it, Peter Van Valkenburgh, Director of Research at Coin Center, discusses the intersection of DEX and U.S. regulatory policy.
 

Introducing the CMBI Multi Asset Series


Coinmetrics has released the "CMBI Multi Asset Series," the first industry indexes that weigh cryptoassets by their Free Float Market Capitalization.

The indexes have been designed to provide the cryptoasset market with a formalized, transparent and robust set of benchmarks on which to conduct research, measure performance, or create institutional quality financial products.
 

 REGULATORY FRONT 

Bitcoin Goes to Washington


Earlier this week, the Chamber for Digital Commerce (a U.S.-based trade association that pushes for the acceptance of digital currencies) launched an initiative called Crypto for Congress.

Through this initiative, every member of Congress received a small campaign donation in Bitcoin (worth about $50).

Why? The association figured if Congress learned more about Bitcoin, it could help the blockchain advocacy group push for specific policy proposals.

One aspect that’s particularly interesting is that all of the BTC for the initiative was mined in the US and has a provably clean history. This way, congressmen like Brad Sherman (who has spoken against crypto in the past) can say that his BTC was made in America and never used on the Silk Road!
 

SEC Chair: Perhaps All Stocks Could Become Blockchain Tokens


The chairman of the SEC, Jay Clayton, stated on a webinar earlier this week that he believes there could be a future in which stocks could be tokenized.

“There was the theory that, because it was so efficient because it could have so much promise, we could toss aside some of those principles of responsibility and transparency. I think now three years later, four years later, we are in a much better spot.”
 

John McAfee Sued by SEC and Arrested


Noted cybersecurity eccentric John McAfee is under arrest in Spain awaiting extradition to the US after being indicted on federal tax evasion charges.

The DoJ indicted the software entrepreneur for deliberately evading taxes and hiding property, including a yacht, real estate, and substantial cryptocurrencies.

The SEC also unsealed a document, claiming that McAfee made $23.1m as undisclosed compensation for touting seven ICOs on Twitter.
 

 TWEET OF THE WEEK 

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