Binance woes, difficult Bitcoin, legal Tornado, USDC game, friend.tech drama, and more

Crypto News

As bitcoin (BTC) struggled to recover this week, the crypto market was abuzz with its new hyped project, and law enforcement made several announcements as well. Additionally, there were several negative reports impacting the market’s largest exchange Binance. Below, we’ve highlighted these stories and others for you, allowing you to catch up on the entire week in just a few minutes.

Market Overview

Despite a failed attempt to rally above $26,600, the price of BTC remained relatively unchanged this week, hovering near $26,000. At the time of writing, it has dropped by approximately 11% over the month. The price primarily responded to macro events and traditional markets, as the market was preoccupied with speculations regarding the monetary policies of central banks and the rise in bond yields. While the short-term prospects for BTC appear grim, there was another bullish forecast from a multibillion-dollar fund suggesting that BTC could reach $148,000 by 2025. We covered this topic in detail here.

BTC price chart:

Mining

Bitcoin miners are in for a challenging week as this activity has become more costly at the time when BTC’s price has dropped by 11% over the month and returned to a level last seen at the end of June. This might encourage some miners to sell more BTC, further adding pressure to the price. The Bitcoin mining difficulty has increased by over 6% this week, reaching around 55.6 T (terahashes, or 55.6 trillion calculations per second). We covered this topic here.
Another example of BTC’s benefits in energy and environmental contexts is Nodal Power, which raised $13 million for utilizing landfill gases, including methane, that is more potent than carbon dioxide in terms of contributing to climate change, for electricity production. This electricity is also used by Nodal to mine Bitcoin.
Dropbox announced the discontinuation of their unlimited data storage service, as some clients have begun using it to mine crypto or use it in other ways not favored by the company.
Yet another potential sign of how competition is evolving among nations in the Bitcoin mining business is exemplified by the startup Exahertz in Oman. They claim to have secured government support for their BTC mining project, valued at $1.1 billion. This has already been pursued on a national scale by the Kingdom of Bhutan.

Exchanges

This week, Binance had its fair share of unfavorable media attention. Firstly, there was some confusion for Binance clients in Europe. The company acknowledged mistakenly announcing that SEPA transfers were no longer operational, even though it had previously been stated that the partnership with the current service provider would end on September 25. This date remains unchanged, and the exchange promises to find a solution by then.
Furthermore, The Wall Street Journal brought to light a new batch of allegations against Binance – indicating fresh evidence that the exchange is offering services in Russia. Simultaneously, Russian media claims that although Binance has banned $ and EUR peer-to-peer crypto trading in this market, RUB trading remains available.
Adding to the woes, Binance which is facing multiple charges in the US, and payments giant Mastercard are terminating payment card services in Argentina, Brazil, Colombia, and Bahrain.
Meanwhile, payment company Checkout.com reportedly ended its partnership with Binance, citing regulatory and money laundering-related concerns.
In the meantime, signs of stricter regulations continue to emerge in the landscape of centralized exchanges. This time, it was Bitget that announced stricter KYC (know your customer) procedures.
One of the top 10 decentralized crypto exchanges, Balancer, urged its clients to swiftly withdraw their crypto from certain pools due to a potential vulnerability that could lead to fund theft. On Thursday, the team added, “Over 98.7% of liquidity initially deemed vulnerable is now SAFE. As of writing, the vulnerability has not been exploited. However, 0.42% of total TVL [total value locked] ($2.8 million) remains at risk, with users advised to withdraw ASAP using the UI.”

Stablecoins

While it was somewhat evident before, it’s now even clearer why Coinbase has been actively promoting payments using the second most popular stablecoin, USD Coin (USDC). The exchange announced an investment in USDC issuer Circle, with whom they had collaborated on this stablecoin before. Simultaneously, it was revealed that USDC is set to be launched on six more blockchains by October.
Furthermore, USDC has been integrated as a payment method on the Shopify platform. The latter has teamed up with the Solana (SOL) blockchain payment solution Solana Pay, which was the first to introduce USDC.

Privacy

The hottest crypto project is the social network friend.tech, which allows the tokenization of its users’ social profiles that can be traded as “shares”, had to address reports claiming that data from over 100,000 of its users had allegedly leaked. The team asserts that this is untrue, but it doesn’t change the fact that these users’ crypto wallets and Twitter (now X) accounts were ex posed (though the list has seemingly been removed). In either case, usage metrics for this network have declined since August 21.

BTC and crypto hardware wallet manufacturer Trezor, in collaboration with privacy-focused Wasabi Wallet, has introduced the so-called coinjoin feature into the Trezor Model One device (previously only available on Trezor Model T). Coinjoin enhances the privacy of BTC users by making transactions highly untraceable. Simultaneously, another team has launched an educational project about Coinjoin.

Blockchains

Bitcoin developer Luke Dashjr seems to have shifted his stance from “negative” to “neutral” regarding the much-discussed Bitcoin scaling technology drivechain this year. He submitted a pull request for drivechain on GitHub, which has taken the discussions about this technology to a new level. However, it’s worth noting that he was compensated by drivechain advocates from the Layer Two Labs team. Supporters argue that drivechain, which is a layer 2 technology, will offer numerous new possibilities for Bitcoin and might even render altcoins obsolete, as all the same functions could be achieved through the Bitcoin blockchain. Opponents, on the other hand, have reservations and warn about centralization and threats to Bitcoin’s security.
The crypto giant Coinbase announced its steps necessary to decentralize its newly launched Base blockchain, although the specific timeline for this transformation remains unspecified. Simultaneously, the company shared its vision for a “Superchain,” envisioning a network of blockchains that would help Ethereum (ETH) scale. According to Coinbase, chains that are part of the “Superchain will allow builders and users to transact and move across chains easily and affordably.”

Taxes

If tax authorities are keeping an eye on crypto news, they might find inspiration in the city of Cheongju in South Korea. The city plans to seize crypto holdings from investors who haven’t paid taxes and has already reached out to seven exchanges.

Regulation

The Bank for International Settlements (BIS), a central bank organization, issued a recent report warning about threats to financial stability related to the crypto market. However, it also urges caution against excessive regulation that might stifle innovation, even though, according to BIS, crypto has not yet fulfilled its promises. Furthermore, strict regulations could lead to an increase in the shadow market, making it harder to oversee, according to BIS.
In combating fraud, the UK government has begun seeking public input regarding the ban on cold calls, which offer financial services, including those related to crypto.

Companies

The troubled BTC and crypto custody company, Prime Trust, has admitted that it lost around $8 million due to an investment in the collapsed Terra$ (T$) stablecoin last year. $6 million of the lost money belonged to their clients.
BTC financial services company Unchained stated that in the second quarter of this year, compared to the first, its managed portfolio of loans collateralized by BTC increased by 170%. The company saw an 88% growth in business clients, a 67% increase in private clients, and a 260% surge in clients using BTC-related inheritance services. Although the company didn’t provide exact figures, it announced in April that it has originated over $500 million in BTC-collateralized loans since 2017, and its BTC custody platform held $2 billion worth of BTC at that time.
Crypto wallet Exodus has revealed its results for the second quarter and first half of the year: monthly active users decreased by 6% in the second quarter compared to the same period in 2022, totaling 777,839. The net profit for the first half of the year amounted to $2.7 million, in contrast to a loss of $18 million last year (even with decreased revenues). The company reduced its staff by 33%.

Adoption

World Mobile, which claims to be a provider of a decentralized mobile internet, has announced the launch of its app for Android phones, but so far it’s available only in a few countries: the USA, the United Kingdom, Canada, Australia, and Tanzania.
Web3 domain company Unstoppable Domains has introduced a new encrypted communication service. They state that now, for example, you can send a message from Coinbase Wallet to Lens, a decentralized social network application, using the recipient’s wallet address or their existing Web3 domain.
The Central African Republic has confirmed its plans for the tokenization of natural resources.

DeFi

While the total value locked (TVL) in DeFi protocols still remains at the two-year low, the DeFi platform EigenLayer, launched in June and controversial due to potential negative impact on Ethereum’s security, managed to increase its TVL by over 200% in less than a day, surpassing $241 million and hovering near $238 million at the time of writing.

Total value locked in DeFi

Legal Matters and Crimes

The US has sent yet another unsettling signal to the crypto market and privacy advocates, a move that could impact legal enforcement in other countries as well. Developers of the privacy-focused crypto mixer Tornado Cash are facing charges of money laundering, sanctions violations, and illegal money transmission business. Meanwhile, crypto market lobbyists Coin Center point out that the charges brought, such as illegal money transmission business, contradict the stance of other regulators that developers of software like Tornado aren’t considered money transmitters.

I’m struggling to think of something, anything useful to say about the tragic mistake that is the DOJ’s decision to treat privacy and speech as crimes.

I’m blank.

— Jake Chervinsky (@jchervinsky) August 23, 2023

The former product lead of one of the largest centralized NFT platforms, OpenSea, Nate Chastain, has been sentenced to 3 months in jail in the US for NFT insider trading. He has also been fined $50,000.

The FBI has warned that the notorious North Korean hacking group Lazarus, linked to the country, might attempt to sell BTC worth $40 million.
It is reported that a group of 50 Russian and CIS crypto enthusiasts are preparing a class-action lawsuit against the Estonia-registered Atomic Wallet, from which more than $100 million was stolen in June.
Meanwhile, the Israeli police have accused a prominent crypto investor, Moshe Hogeg, and his business partners, of being involved in a $290 million crypto fraud scheme.

NFTs

Yet another NFT platform, RECUR, known for its partnerships with prominent figures, is shutting down. Additionally, Nifty’s has also declared its withdrawal from the market earlier in August.
At the time of writing, in the past month, among the top 10 NFT collections (based on market capitalization), only four collections saw an increase in their floor price, which is the lowest price for an item from the collection at that time. Meanwhile, Donald Trump‘s NFTs appreciated in value following his interview with Tucker Carlson on Wednesday.