SBF faces 115 years in prison, Binance’s FUD, and auditors quit crypto: Hodler’s Digest 11-17 December

Top stories this week

FTX founder Sam Bankman-Fried arrested, set to be extradited to the US

Sam Bankman-Fried was taken into custody by the Royal Bahamas Police Force and is likely to remain there until February, after his bail application was refused in a Bahamian court. A new application for bail has reportedly been filed by SBF in the Supreme Court of the Bahamas. His arrest came after the US government officially filed criminal charges against him – including eight counts of fraud. If convicted, Bankman-Fried could face up to 115 years in prison, but legal commentators have told Cointelegraph that there is “a lot at stake” in the case. The domino effect of FTX’s meltdown has also affected the professional lives of Bankman-Fried’s parents, resulting in the cancellation of their courses at Stanford Law School. In other recent developments regarding FTX, a class-action lawsuit was filed against Silvergate Bank in California, seeking to hold the bank accountable for its alleged roles in placing FTX user deposits into Alameda Research’s bank accounts.

Binance ‘put FTX out of business’ — Kevin O’Leary

Venture capital investor Kevin O’Leary claimed during a US Senate committee hearing that Binance and FTX “were at war with each other, and one was putting the other out of business on purpose.” The hearing was part of a larger investigation by lawmakers into FTX’s collapse, in which Binance had a significant role, O’Leary claimed. In recent days, Binance has been characterized by fear, uncertainty and doubt (FUD), which has resulted in a drop in the exchange’s liquidity. Crypto analytics firm Nansen reports that Binance had net withdrawals of more than $3.6 billion from December 7th to December 13th.

Rep. Tom Emmer is considering bringing back the bill aimed at reducing crypto fees

US lawmakers are under pressure to enact crypto regulations in light of the collapse of FTX, and Congressman Tom Emmer believes this is “probably a good time” to reintroduce a bipartisan bill that would lift requirements for certain crypto businesses and projects. register as Virtual Asset Service Providers (VASPs). The bill, titled the Blockchain Regulatory Certainty Act, aims to remove some obstacles and requirements for “blockchain developers and service providers,” such as miners, multi-signature service providers, and decentralized financial platforms.

No more proof-of-reserve checks? Auditors are quietly dropping crypto projects from portfolios

Two of the most prominent auditors have suddenly stopped offering crypto audit services. At a critical time for the crypto industry, Mazars Group removed Binance’s proof-of-reserve audits from its website just days after confirming that the crypto exchange controlled 575,742 Bitcoin. The decision affected other crypto exchanges that use Mazars’ services, such as Crypto.com and KuCoin. Later, Mazars explained that the pause was due to “concerns about the way these reports are understood by the public.” Accountancy firm Armanino has also ended its crypto audit services. Armanino has worked with several crypto trading platforms such as OKX, Gate.io and the controversial FTX exchange.

MetaMask to allow users to buy and transfer Ethereum via PayPal

In another move into the crypto space, PayPal teamed up with MetaMask parent company ConsenSys to allow the purchase and transfer of Ether (ETH) through the platform. By logging into the MetaMask app, users will access their PayPal account and complete transactions. Initially, only selected PayPal users in the US will be able to test the service. Other traditional payment companies are seeking to integrate crypto into their services. In October, Western Union also filed three trademarks for managing digital wallets and exchanging digital assets.

Winners and losers

At the end of the week, Bitcoin (BTC) is at $16,826Ether (ETH) on $1194 and XRP on $0.35. The total market value is at $817.82 billion, according to CoinMarketCap.

Among the top 100 cryptocurrencies, the top three altcoin winners of the week are Toncoin (TON) of 30.36%, Bitcoin SV (BSV) of 10.11%, and OKB (OCD) of 9.77%.

The top three altcoin losers of the week are Neutrino USD (USDN) of -33.77%, Trust Wallet Token (TWT) of -27.43%, and chain (XCN) of -23.42%.
For more info on crypto prices, be sure to read Cointelegraph’s market analysis.

Most memorable quotes

“Binance is a massive unregulated global monopoly now and they are putting FTX out of business.”

Kevin O’Leary, venture capital investor

“I thought it made sense. The kid was young, the principles were revolutionary, the ideas were golden. […] Who was I to challenge that?”

Danielle Cloudformer FTX employee

“Our experience to date of [crypto] platforms, whether it is FTX or others, is that they are deliberately evasive, they are a method that makes money laundering in size.”

Ashley Alder, appointed chairman of the UK’s Financial Conduct Authority

“Just as we protect our physical assets, we must ensure that people protect their digital assets and personal information in the metaverse.”

Andrew Newman, chief technology officer and co-founder of ReasonLabs

“Looking ahead, pretty much everyone who can go bankrupt has gone bankrupt.”

Arthur Hayes, former CEO of BitMEX

Prediction of the week

Bitcoin falls below $17K as ‘craziest rumours’ over Binance drop BTC price

Bitcoin fell below $17,000 as traders were wary of Binance’s FUD triggering an overly bearish BTC price action. On Bitstamp, BTC/USD hit a multi-day low of $16,928 on December 16, according to Cointelegraph Markets Pro and TradingView data. The pair returned to one-month highs thanks to the latest macroeconomic data and policy update from the US.

“Interesting to see everyone suddenly so bearish on BTC as if it’s just behaving so weakly. SPX is doing exactly the same, maybe even weaker,” noted Michaël van de Poppe, founder and CEO of trading firm Eight, questioning whether Binance R&D really had a role to play in the markets.

FUD of the week

Microsoft bans cryptocurrency mining on cloud services

Microsoft has quietly banned crypto-mining from its online services to increase the stability of its cloud services and better protect customers from risks such as online fraud, attacks and unauthorized access to resources, according to a report. The new restrictions were introduced on Microsoft’s Universal License Terms, citing that “cryptocurrency mining is prohibited without prior approval from Microsoft.” With this move, Microsoft joins other cloud computing providers, including Google, which also prohibit customers from mining cryptocurrency without prior written consent.

“Third-party incident” affected Gemini with 5.7 million emails leaked

Gemini appears to have suffered a data breach from a third-party vendor. Hackers accessed 5,701,649 lines of information related to Gemini customers’ email addresses and partial phone numbers, per documents obtained by Cointelegraph. According to Gemini, the breach was caused by a third-party vendor, but it also warned of ongoing phishing campaigns. The leaked database contained no sensitive personal information such as names, addresses and other Know Your Customer information.

SEC Sues Atlas Trading Over $100 Million Stock Manipulation Scheme

The United States Securities and Exchange Commission (SEC) filed a claim against eight people associated with the Discord-based forum Atlas Trading for alleged stock manipulation. The SEC reported that bloggers made at least $100 million by acquiring significant positions in securities, recommending them to their followers and then selling their shares to capitalize on the demand generated by their “deceptive campaigns.” Cryptocurrencies and other digital assets were not mentioned in the complaint.

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Cointelegraph Magazine writers and reporters contributed to this article.