The latest moves in crypto markets, in context By Jamie Crawley, CoinDesk reporter Was this newsletter forwarded to you? Sign up here. |
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Welcome to Thursday! Here's what's happening in crypto today: |
- The SEC is suing Terra founder Do Kwon for fraud
- Stablecoin USP falls to $0.48 following $8.5 million attack on Platypus Finance
- BlockFi is looking to strike down bankruptcy filing of SBF shell company
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CoinDesk Market Index (CMI): 1,130 −2.1%
Bitcoin (BTC): $23,811 −2.7%
Ether (ETC): $1,667 −0.8%
S&P 500 futures: 4,071.00 −0.7%
FTSE 100: 7,985.26 −0.3%
Treasury Yield 10 Years: 3.84% +0.0 |
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The U.S. Securities and Exchange Commission (SEC) is suing Terraform Labs, the company behind failed stablecoin Terra USD, and its co-founder Do Kwon for fraud and the sale of unregistered securities, among other claims. The SEC alleged that investors were misled about the stability of the algorithmic stablecoin UST, the depegging of which from the U.S. dollar "spelled doom for the entire Terra ecosystem." The collapse of TerraUSD last year sent shockwaves throughout the cryptocurrency industry and was followed by a wave of bankruptcies of prominent firms, and ultimately the meltdown of crypto exchange FTX in November. |
Do Kwon (Terra, modified by CoinDesk) |
DeFi protocol Platypus Finance suffered a flash-loan attack worth over $8.5 million resulting in its stablecoin USP losing its dollar peg, and falling to 48 cents. The hacker had exploited a flaw in the USP solvency check mechanism, making Platypus smart contracts think USP was fully backed. "They used a flash loan to exploit a logic error in the USP solvency check mechanism in the contract holding the collateral," Platypus tweeted. A flash loan is a form of unbacked borrowing used on DeFi lending protocols to make quick profits when opportunities arise. Hackers make use of them to destabilize and drain tokens from such protocols.
Bankrupt crypto lender BlockFi is looking to dismiss the bankruptcy case of Emergent Fidelity Technologies, a shell company 90% owned by FTX founder Sam Bankman-Fried. Emergent is the owner of 56 million shares of Robinhood (HOOD) and little else. BlockFi is claiming legal access to the stock, worth nearly $600 million at HOOD's current price, as security for a loan made in November. By filing for bankruptcy in the U.S., Emergent liquidators are making things more complex, according to BlockFi, describing it as a "futile act," given that the company has no employees, income or business. The Robinhood shares were seized by the U.S. Department of Justice in January as part of its investigation of fraud against Bankman-Fried.
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Market Insight: Shanghai Upgrade to Bring ETH Price Volatility? |
The forthcoming Shanghai upgrade of the Ethereum network, which will see around 16.5 million ETH become available for withdrawal, could bring about volatility in the world's second largest crypto that did not occur during September's Merge. While the Merge, in which Ethereum switched from a proof-of-work mechanism to proof-of-stake, had no direct economic effect, Shanghai will change the supply and demand of ETH, according to a spokesperson for institutional digital asset liquidity provider OrBit Markets. "Some $25 billion worth of ETH will become available for withdrawals and sale," OrBit said. "With the staking yields expected to decrease following the upgrade, investors who previously staked may un-stake and move to other assets offering better yields. This would create large selling pressures on the ETH price." Furthermore, volatility could emerge in the days leading up to the upgrade (scheduled in March) in a sign of traders pre-empting turbulence to come thereafter. |
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Source: Glassnode, Decentral Park Capital |
- The chart shows bitcoin's STH-SOPR indicator, which shows the degree of realized profit and loss for all coins moved on-chain that have a lifespan of less than 155-days
- The indicator has bounced from 1.00. Values greater than one suggest coins moved are, on average, selling at a profit (the price sold is greater than the price paid).
- "BTC STH-SOPR bouncing off 1. A good signal that the asset has entered a more prolonged bullish period as short-term traders become more constructive," Decentral Park Capital's portfolio manager Lewis Harland, said in a market update.
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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