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Taking Stock of the US Crypto Raid – Crypto News Aktuell in English

Welcome to the latest installment of this week’s Cryptofinance newsletter, as we take stock of Binance’s rocky start to 2023.

One consequence of the crypto markets collapse over the past year is that the survivors have become larger and more centralized.

As Binance finds out, big scale comes with big test. So let’s review the year to date for the non-headquartered exchange.

In the first week of 2023, the Securities and Exchange Commission intervened on an offer by the exchange’s US subsidiary to buy the assets of bankrupt crypto lender Voyager.

Then, financial crime agency Fincen named Binance as a counterparty to Bitzlato, an obscure crypto exchange allegedly linked to illicit crypto funds and the dark web. The order was the first of its kind under a powerful new section of legislation aimed at combating Russian money laundering. Binance said it was pleased to assist law enforcement in their investigation. A spokesperson added it has a “team of over 750 employees in global compliance roles, as well as a team of former federal law enforcement officers working around the clock to support cases against organizations like Bitzlato.”

At the end of the month, I revealed that Binance tapped into the same Washington lobbyists as its US subsidiary. This, coupled with the fact that CEO Changpeng Zhao is the ultimate beneficial owner of Binance US, undermines the offshore group’s claims that the two trading platforms operate separately.

“The government considers the same beneficial owner of both companies and considers them as a single entity,” said a Washington lobbyist once approached by Binance for a job.

So that was January. Moving on to February, Binance has temporarily halted US dollar bank transfers without giving a reason for the suspension.

In mid-month, New York financial regulators halted issuance of BUSD, one stablecoin of the Binance brand, which just a few months ago accounted for 40 percent of trading volume on the exchange.

Zhao said BUSD has “never been a big deal” for the exchange, but the data is not on his side.

Binance believes that the void left by the token is its market capitalization has dropped is being replaced by other stablecoins. But analysts told me earlier this week that the stock market won’t necessarily come out unscathed.

The exchange has tried hard to polish its image, and over the years has hired notable compliance officers, including Tigran Gambaryan and Greg Monahan, former heavyweights at the IRS and US Treasury Department respectively.

“They literally hired a dream team of illicit finance investigators,” one person familiar with the inner workings of the US government told me last month.

But Binance’s growing list of compliance hiccups should serve as a warning to what’s left of the crypto industry. During its many controversies, the exchange has successfully inflated to a size that dwarfs its competitors. In fact, CryptoCompare data shows that the exchange now controls more than 60 percent of the crypto spot market.

In other words, there is keyman risk at the forefront of the supposedly decentralized crypto industry, which is on a collision course with American regulators who just this year targeted a who’s who list of prominent crypto groups.

“The success of its largest exchange is critical to keeping the markets alive. The industry that preaches the bible of decentralization prays for the survival of its most centralizing force,” Charley Cooper, former chief of staff at Commodity Futures, told me Trading Commission.

What do you think of Binance and its position in the broader crypto market? As always, email me with your thoughts

Weekly Highlights:

  • Another former FTX executive caves in: Nishad Singh, previously technical director at the bankrupt exchange, pleaded guilty to six criminal charges in the US. The SEC was also after Singh, claiming the former FTX high achiever created the code that allows FTX client funds to be diverted to sister trading firm Alameda Research.
  • Marathon Digital Holdings, a Nasdaq-listed crypto mining group, requested an extension of the deadline for its annual report after discovering “certain accounting errors.” In that SEC filing, the company said its financial reports for the year ended December 2021 “should no longer be relied upon.” Chris Brendler, a senior research analyst at DA Davidson, said the SEC is less concerned about miners than it is about crypto exchanges and lenders, but the issue points to a “bigger problem” of crypto regulation.

  • Cybersecurity firm SonicWall released its annual threat report this week, revealing that cryptojacking attacks have increased by more than 40 percent over the past year. Unlike ransomware, cryptojacking – the practice of hijacking someone else’s computer – is flying around cryptocurrencies under the radar, but that doesn’t mean it’s not a cause for concern. “Make no mistake, cryptojacking is a high-stakes game with serious consequences,” SonicWall Chief Executive Bob VanKirk told me.

Soundbite of the week: BoE criticizes crypto as a means of payment

The Bank of England’s focus on creating a digital pound means they’re more Team Britcoin than Team Bitcoin is. Nonetheless, comments by Sir Jon Cunliffe, Deputy Financial Stability Governor at the BoE, were particularly powerful at a parliamentary hearing:

“No one would use it [crypto tokens] as money – well, some people would do that, but they’re probably outside of criminal law and financial regulation.”

Data Mining: Crypto Banking Crisis Bites Silvergate

Shares in crypto-focused bank Silvergate took an absolute hit this week.

Late Wednesday, the bank said it could not file its annual report with the SEC as it evaluated whether declining capitalization would affect its viability. It had to sell assets to support federal loan repayments. Unsurprisingly, Wall Street stocks fell nearly 60 percent the following day.

Silvergate’s flirtation with fate has been a long time coming. The bank relied heavily on offering services like payments to the crypto industry, so much so that it brought in Sam Bankman-Fried’s former FTX empire as a client.

This week, crypto companies like Coinbase and Galaxy Digital severed ties with Silvergate, which has a full suite of licenses from traditional financial regulators.

As with many other crypto (or crypto-exposed) companies, the financial health of the bank correlates with that of the digital asset market. Since the Bitcoin price peak in November 2021, shares of Silvergate have fallen a staggering 97 percent from $219 to $5.

Last year, the bank reported a full-year loss of $949 million, in stark contrast to its 2021 profit of $76 million dealing with crypto. Nothing sums this up better than Silvergate.

Cryptofinance is published by Philip Stafford. Please send any thoughts and feedback to

Your comments are welcome.

Source: Crypto News Deutsch

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