SBF Faces 115 Years in Jail, Binance FUD, and Auditors Abandon Cryptocurrencies: Hodler’s Digest Dec 11-17

Top news this week

FTX founder Sam Bankman-Fried arrested, ready to be extradited to the United States

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 denied in the Bahamian court. A second bail request was allegedly 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 115 years in prison, but legal commentators told Cointelegraph there is “a lot to play for” in the case. The ripple effect from the collapse of FTX also impacted the professional lives of Bankman-Fried’s parents, resulting in the cancellation of their courses at Stanford Law School. In other recent developments involving FTX, a class action lawsuit was filed in California against Silvergate Bank, seeking to hold the bank liable for its alleged roles in placing FTX users’ deposits into Alameda Research bank accounts.

Binance “Taken FTX Out of Service” — Kevin O’Leary

Venture investor Kevin O’Leary said in a US Senate committee hearing that Binance and FTX “were at war with each other and one intentionally knocked the other out.” The hearing was part of a larger investigation by lawmakers into the collapse of FTX, in which Binance played a significant role, O’Leary said. The last few days have seen Binance beset by fear, uncertainty and doubt (FUD), resulting in a decline in the exchange’s liquidity. Cryptocurrency analyst firm Nansen reports that Binance recorded net withdrawals of more than $3.6 billion from Dec. 7 to Dec. 13.

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Rep. Tom Emmer plans to bring back the bill aimed at cutting cryptocurrency red tape

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

No more reserve checks? Reviewers silently purge crypto projects from wallets

Two major auditors have suddenly stopped offering crypto auditing services. In a critical time for the cryptocurrency industry, Mazars Group removed evidence of Binance reserve from its website days after confirming that the cryptocurrency exchange controlled 575,742 Bitcoins. The decision affected other cryptocurrency exchanges that use Mazars’ services, such as Crypto.com and KuCoin. Later, Mazars explained that the hiatus was due to “concerns about how these reports are being understood by the public.” Accounting firm Armanino has also terminated its crypto audit services. Armanino has worked with several cryptocurrency trading platforms such as OKX, Gate.io and the FTX exchange.

MetaMask to allow users to buy and transfer Ethereum via PayPal

In another move into the crypto space, PayPal has partnered with MetaMask parent company ConsenSys to enable the purchase and transfer of Ether (ETH) through its platform. By accessing the MetaMask app, users will be able to access their PayPal account and complete transactions. Initially, only select PayPal users in the US will be able to test the service. Other traditional payment companies are looking to integrate encryption into their services. In October, Western Union also filed three trademarks for digital wallet management and digital asset trading.

Winners and losers

At the end of the week, Bitcoin (bitcoins) it’s at $16,826Ether (ETH) to $1,194 And XRP to $0.35. The total market capitalization is a $817.82 billion, according to CoinMarketCap.

Among the 100 largest cryptocurrencies, the top three altcoin gainers of the week are Toncoin (TONNE) to 30.36%, Bitcoin SV (BSV) at 10.11% and OKB (OK) at 9.77%.

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

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The most memorable quotes

“Binance is now a huge unregulated global monopoly and has put FTX out of business.”

Kevin O’Leary, venture capital investor

“I suppose that makes sense. The boy was young, the principles were revolutionary, the ideas were golden. […] Who was I to dispute that?

Daniel Cloudformer FTX employee

“Our experience to date of [crypto] platforms, be it FTX or others, is that they are deliberately evasive, they are a method by which money laundering occurs in dimensions.

Ashley Alder, appointed chairman of the UK Financial Conduct Authority

“Just as we protect our physical assets, we need to make sure people protect their digital assets and personal information within the metaverse.”

Andrew Newman, Chief Technology Officer and co-founder of ReasonLabs

“Looking forward, virtually everyone who could go bankrupt has gone bankrupt.”

Arthur Hayes, former CEO of BitMEX

Prediction of the week

Bitcoin Drops Below $17,000 as “Craziest Rumors” About Binance Send BTC Price Plunging

Bitcoin fell below $17,000 as traders remained wary of Binance’s FUD, triggering excessively bearish BTC price action. On Bitstamp, BTC/USD hit a multi-day low of $16,928 on Dec. 16, according to data from Cointelegraph Markets Pro and TradingView. The pair has retraced its entire run 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 is only performing so weakly. SPX is doing exactly the same, perhaps even weaker,” noted Michaël van de Poppe, founder and CEO of trading firm Eight, wondering if Binance FUD really had a role to play in the markets.

FUD of the week

Microsoft bans cryptocurrency mining on cloud services

Microsoft has quietly banned cryptocurrency mining from its online services to increase the stability of its cloud services and better protect customers from risks such as cyber fraud, attacks and unauthorized access to resources, according to a report. The new restrictions were introduced in 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, who are also prohibiting customers from mining cryptocurrency without prior written consent.

‘Third-party incident’ impacted Gemini with 5.7 million leaked emails

Gemini appears to have suffered a data breach from a third-party vendor. The hackers gained access to 5,701,649 lines of information relating to email addresses and partial phone numbers of Gemini customers, according to 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 did not contain sensitive personal information such as names, addresses and other Know Your Customer information.

SEC sues Atlas Trading over $100 million stock manipulation scheme

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

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Editorial staff

Cointelegraph Magazine writers and reporters contributed to this article.

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