Is This Time Different for Bitcoin?
Weekly News Recap: 💰 Gemini's $1.1B Earn customer refund promise, ⚖️ SBF's plea for reduced prison time, 🚫 Avalanche's brief network outage, 🌐 Do Kwon's extradition challenges, and more!
You are reading the Unchained Weekly newsletter, where we cover all the major news in the crypto space, providing insights into the market's latest trends, regulatory shifts, and technological advancements. Stay informed. Your no-hype resource.
This past week, Bitcoin flirted with record-breaking prices, rising from $51,000 to $64,000 at one point on Wednesday.
In this episode of Unchained, Alex Thorn from Galaxy shared insights into how the introduction of ETFs has played a crucial role in the digital currency's price movements. He explored the contrast between the behaviors of long-term investors and those looking for short-term gains, alongside discussing the anticipated impact of Bitcoin's halving events and the increasing involvement of institutional investors. Thorn offered a detailed explanation of the significance of the MVRV Z-score in evaluating Bitcoin's market position.
The episode also touched upon the progressive steps taken by financial giants Merrill and Wells Fargo in offering Bitcoin ETFs, highlighting a growing institutional interest in cryptocurrency. Reflecting on the market's recent trends, Thorn highlighted, "February will close as probably the largest monthly candle in Bitcoin history at almost a $20,000 candle," emphasizing the exceptional volatility and excitement surrounding Bitcoin in recent weeks.
Listen to the episode on Apple Podcasts, Spotify, Fountain, Overcast, Podcast Addict, Pocket Casts, Pandora, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform. Or watch it on YouTube.
Weekly News Recap
Sam Bankman-Fried's Legal Team Seeks Reduced Sentence
In a court filing, attorneys for Sam Bankman-Fried, the former CEO of the collapsed cryptocurrency exchange FTX, proposed a prison sentence ranging from 63 to 78 months. The defense argued that this recommendation considers his moral character and philanthropic efforts, contrasting sharply with the 100-year sentence suggested by the pre-sentence report, which they labeled as "grotesque."
Bankman-Fried's lawyers criticized the report's estimate of a $10 billion loss in the bankruptcy as unreasonable, emphasizing that their client's actions were not driven by "greed or status." They contend that a lengthy sentence would unjustly terminate Bankman-Fried's potential to contribute positively to society, highlighting his upbringing and dedication to philanthropy.
This plea comes in the wake of Bankman-Fried's conviction on charges of defrauding investors through FTX and Alameda Research, in a case that prosecutors have described as one of the largest financial frauds in U.S. history. The court's decision on his sentencing is anticipated next month, amid a backdrop of public and familial support for a lenient approach, citing his moral character and the unfair portrayal of him as a villain in the media.
Supporters, including his family and former colleagues, have also raised concerns about Bankman-Fried's safety in prison, pointing to his non-violent nature and vulnerability due to his inability to interpret social cues accurately. They argue that a harsh sentence would expose him to undue risk and hardship, urging for a sentence that reflects his first-time, non-violent offender status and the potential for victim restitution.
Gemini Settles for $1.1 Billion Customer Repayment and $37 Million Fine
Crypto exchange Gemini reached a settlement with the New York State Department of Financial Services (DFS), committing to return at least $1.1 billion to customers of its Gemini Earn program. This move comes after the program's third-party partner Genesis declared bankruptcy, leaving many unable to access their assets.
James Seyffart from Bloomberg posted on X:
Superintendent Adrienne A. Harris highlighted Gemini's “negligence” in conducting due diligence on Genesis, which was not regulated or licensed by DFS, leading to “substantial harm” for Earn customers. The settlement aims to ensure that affected customers recover their assets fully.
Launched in 2021, the Gemini Earn program allowed users to loan their crypto at attractive interest rates, but the initiative faltered when Genesis experienced a financial meltdown.
Terraform Labs Co-Founder Do Kwon's Extradition Saga Delays US Trial
Do Kwon, the embattled co-founder of Terraform Labs, may not be able to attend the start of his fraud trial in the United States, scheduled for March 25. Despite his legal team's efforts, extradition complications from Montenegro have introduced uncertainties that could delay his trial appearance.
Kwon, who is at the center of allegations surrounding the dramatic collapse of TerraUSD and Luna cryptocurrencies in May 2022, is charged by the US Securities and Exchange Commission (SEC) with wire fraud, commodities fraud, securities fraud, and conspiracy charges. The collapse resulted in an estimated $40 billion loss across cryptocurrency markets.
The extradition process has encountered several delays, partly due to appeals and the Montenegrin court system's procedural challenges. Kwon's preference for extradition to South Korea, where he also faces charges, has been overridden by a Montenegrin High Court ruling in favor of extradition to the US. This decision has been contested by Kwon's legal team, citing procedural errors and the prioritization of extradition requests.
David Patton, Kwon's lawyer, has indicated that despite the extradition delays, Kwon does not intend to seek a postponement of the trial date, emphasizing his desire for an in-person appearance. The legal entanglements in Montenegro, including Kwon's arrest for traveling with forged documents, add complexity to the case, highlighting the broader implications for the crypto industry's regulatory landscape and investor trust.
Uniswap's UNI Token Price Skyrockets Following Fee Distribution Proposal
The Uniswap Foundation's long-awaited proposal to reward UNI token holders with protocol fees led to a sharp 62% increase in the token's value last Friday. The initiative would introduce smart contracts to distribute fees to stakeholders.
If implemented, annual revenues for UNI holders could range between $61 million and $153 million. The move addresses issues of low participation and apathy in governance, with less than 10% of UNI used in voting. The proposal is now under community review, with an upcoming Snapshot to measure support before potentially proceeding to an onchain vote.
Meanwhile, Frax Finance is considering a proposal similar to Uniswap's, aiming to share protocol revenue with veFXS token stakers, pending community approval.
In related news, Lido Finance's LDO token spiked 10% following a fake revenue-sharing proposal posted in the governance forum, suggesting increased interest in such initiatives among DeFi protocols.
Avalanche Goes Through Five-Hour Technical Outage
Avalanche experienced a technical outage that halted block finalization for approximately five hours due to a code-related bug. The issue, initially attributed to a new wave of inscriptions, was later identified as a "gossip-related mempool management bug," according to a post on X by Kevin Sekniqi, co-founder of Avalanche developer Ava Labs. This bug prevented the network's validators from processing transactions efficiently, leading to a stall in consensus mechanisms.
The problem was resolved after validators updated their nodes, which addressed the bug and allowed consensus to return to normal. By noon ET, the Avalanche team confirmed the network had resumed its normal operations, marking an end to the outage.
Texas Judge Halts Department of Energy's Crypto Mining Survey
The Texas Blockchain Council and Riot Platforms, a major bitcoin mining company, successfully obtained a temporary restraining order against the U.S. Department of Energy's emergency survey on electricity consumption from crypto mining. District Judge Alan Albright of Texas ruled the survey, described as a result of a "sloppy government process," must pause until further legal examination. The Department aimed to collect proprietary information about energy usage from crypto mining operations, citing concerns over the potential impact on the U.S. electric power industry amid bitcoin's price surge and a cold weather forecast.
This legal challenge argues that the Energy Information Administration (EIA), acting on behalf of the Department of Energy, overstepped its bounds by not adhering to the Paperwork Reduction Act, which mandates a 60-day notice for such information requests. The companies involved contend that compliance would force them to reveal sensitive data under the threat of penalties, causing "immediate and irreparable harm."
MicroStrategy's Adds 3,000 Bitcoin to Portfolio
MicroStrategy has further increased its bitcoin reserves by purchasing 3,000 bitcoins for $155.4 million, signaling continued confidence in the digital asset's value. This acquisition boosts the company's total bitcoin holdings to approximately 193,000, worth over $1.17 billion at the current market price, revealing an impressive unrealized profit margin. This strategy, initiated in August 2020, has not only augmented MicroStrategy's asset base but also attracted significant investor interest.
Amid this aggressive acquisition strategy, MicroStrategy received a 'buy' rating from investment banking firm Benchmark, with a price target of $990. The optimism is partly based on the expectation that bitcoin's value will surge to $125,000 by the end of 2025, propelled by the crypto market dynamics, including the impact of spot bitcoin ETFs and the anticipated bitcoin halving event, which typically reduces the supply of bitcoin, potentially driving up its price.
Yuga Labs Prioritizes Royalty Enforcement in NFT Marketplaces
Yuga Labs, the creator behind notable NFT collections, declared it will only support trading platforms that enforce royalty payments for creators, effective from Tuesday. This policy will apply to eighteen of its collections, including the Otherside Koda and Moonbirds Mythics. However, its most recognized collections, CryptoPunks and Bored Ape Yacht Club, will not fall under this new mandate due to the absence of a royalty filter in these collections.
This decision comes amid declining royalty payments—a percentage of sales paid by buyers on secondary markets– to NFT creators and precedes NFT marketplace Magic Eden's launch on the Ethereum blockchain.
BitForex Suspends Withdrawals Sparking Exit Scam Concerns
Hong Kong-based cryptocurrency exchange BitForex abruptly halted user withdrawals without prior notice, following an outflow of approximately $56.5 million from its hot wallets. The cessation of withdrawals raised significant concerns among its users, who have encountered challenges in accessing their accounts and reported a lack of communication from BitForex's team.
On-chain sleuth ZachXBT highlighted the exchange's “suspicious activity,” noting the substantial withdrawals just before the transaction processing was stopped. This incident occurs shortly after the resignation of BitForex CEO Jason Luo, adding to the uncertainty and speculation among the crypto community.
FUN BITS: Sam Bankman-Fried Turns Crypto Advisor in Prison
In a twist that reads more like a sitcom plot than real life, Sam Bankman-Fried, the former crypto mogul turned inmate, is reportedly spending his time behind bars dishing out cryptocurrency investment advice. Known for his former high-flying days at the helm of FTX, Bankman-Fried has found a new audience for his insights: the prison guards.
Despite his predicament, it seems Bankman-Fried hasn't lost his passion for the crypto market, recommending Solana’s token SOL to those keeping watch over him.
While the courtroom drama unfolds, with legal maneuvers aimed at securing a lenient sentence, Bankman-Fried's casual crypto consultations serve as a light-hearted footnote to the saga. Whether his tips will lead to massive gains for the guards remains to be seen, but for now, Bankman-Fried's pivot from CEO to prison crypto advisor is the talk of the cell block.
