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Block 1: Essential news
- Binance leaves Canada
Binance, the world's largest cryptocurrency exchange platform, has announced its withdrawal from the Canadian market due to regulations deemed too restrictive. The decision follows the entry into force of new regulations in Canada, imposing constraints deemed burdensome for Binance's operations. Among other things, the regulations require cryptocurrency platforms to hire third-party custodians to manage at least 80% of customer assets. Binance expresses its disagreement with the regulations, but continues the dialogue with the Canadian regulator.
- Canton, the blockchain dedicated to institutions
BNP Paribas, Goldman Sachs and Microsoft are among the leading players that have launched Canton, a blockchain dedicated to institutions, aimed at making financial systems interoperable. The network uses the Daml programming language to create smart contracts and connect applications. The launch comes amidst a lack of trust in the cryptocurrency market and the expectation of clear regulations for the Web3 ecosystem. Canton could therefore represent an important motivation to convince large groups to become more involved in the blockchain universe.
- United Kingdom: The cryptocurrency market is a casino
The UK Treasury Committee has criticized the cryptocurrency industry, calling it gambling rather than a financial service. It is stated that this attitude comes after a 2022 year marked by bankruptcies and high volatility in the cryptocurrency market. In response, Prime Minister Rishi Sunak is considering a specific regulatory framework for cryptocurrencies.
- Ledger introduces its new "Ledger Recover" service
Ledger has introduced "Ledger Recover," a service that allows users to regain access to their cryptocurrency wallet without their seed phrase (24-word password). This solution splits the wallet's private key into three encrypted parts, accessible via identity verification. This has raised concerns in the community about the security of private keys. However, Ledger says the service is optional and access to the keys remains secure. This service could increase the adoption of cryptocurrencies for those who are less comfortable with managing their seed phrase.
- Coinbase suspends its staking service
Coinbase, the cryptocurrency exchange, has temporarily suspended the withdrawal of ETH staking rewards due to a technical failure. The outage, which will last 72 hours, does not affect the security of staked ETH or the distribution of rewards. This situation comes in a tense context between Coinbase and the American Securities and Exchange Commission (SEC), following conflicts on the regulation of staking. Indeed, the Kraken platform was recently reprimanded by the SEC for its staking offer.
We've temporarily paused ETH staking reward payouts to address a minor technical issue. Rest assured, ETH staking is not impacted and rewards are still being earned and will be paid out. We anticipate to resolve this issue in the next 72 hours. https://t.co/2Cn8K6ZZ1i
- Coinbase Support (@CoinbaseSupport) May 16, 2023
Block 2: Crypto Analysis of the Week
The relationship between Sam Bankman-Fried, the disgraced ex-CEO of defunct cryptocurrency platform FTX, and George Santos, the Long Island congressman with a penchant for fantasy stories, serves as the gateway to a tangled saga of political intrigue and allegations of financial misconduct.
This week, George Santos was arrested and charged with 13 counts of financial fraud. The charges include money laundering, wire fraud, and misappropriating $50,000 in campaign funds, including to buy his own expensive wardrobe. To make matters worse, the congressman seems to have told a series of lies about his biography, including that he is Jewish, a former Broadway producer and both the survivor of an assassination attempt and the son of a 9/11 survivor. The lies are almost as entertaining as they are infuriating.
But what does this have to do with FTX and Sam Bankman-Fried?
According to public documents from January 2023 , Santos' campaign contributors included three figures from the FTX consortium. Clare Watanabe, Ramnik Arora, and Ryan Salame, CEO of the Bahamian subsidiary of FTX Digital Markets, all made substantial donations to Santos' campaign, though on paper they have no clear connection to the congressman or discernible interest in his cryptocurrency concerns.
But a report from Puck News clarifies the facts. The funds were part of a"donor exchange" deal to support Michelle Bond, Ryan Salame's girlfriend and a Republican candidate close to Santos.
In this type of arrangement, common in the American political landscape, donors donate to a partner candidate once they have reached their limit of donations to the candidate they support. In other words, FTX executives gave money to Santos not because they supported him, but as part of their support for Bond. An endorsement that did little good in the end, as she lost her race for the Republican nomination in her New York district last summer, receiving less than 30% of the vote in the election.
But as the investigation has progressed, attention has turned to the role of Ryan Salame, who, while not yet chargedBut as the investigation has progressed, attention has turned to the role of Ryan Salame, who, while not yet indicted, has come under the FBI's microscope, with his and Bond's $4 million home being raided in April.
While the connection between FTX and Santos may seem obscure, it underscores the web of influence woven by Bankman-Fried throughout 2021 and 2022. Since the fall of FTX and the arrest of Bankman-Fried, it has become clear that his political machinations were as tainted as his other business dealings.
The pile of criminal allegations against Bankman-Fried includes violating campaign finance laws by allegedly funneling misappropriated corporate funds through "straw donors," such as Salame and FTX co-founder Nishad Singh, to circumvent regulations. While Bankman-Fried presented himself as a Democratic mega-donor, it appears that he was secretly pouring money stolen from his clients into Republican and Democratic coffers.
This confusing saga involves a myriad of political operators, including Democratic strategist and fundraiser Sean McElwee. Despite betting against candidates he was supposed to support, McElwee, who allegedly steered Bankman-Fried donations, escaped prosecution but was removed from his influential position as head of Data for Progress in December 2022.
Bankman-Fried's controversial political influence strategy was ostensibly intended to bolster his image as a philanthropist. For example, FTX funds were funneled through Sam's younger brother, Gabe Bankman-Fried, who ran a political advocacy nonprofit called Guarding Against Pandemics (GAP). Funded primarily by FTX, GAP's political interventions, while extravagant, were largely inane and failed to gain public favor.
Regardless of displayed incompetence, the ability to hand out millions of dollars carries weight in the halls of Washington. Bankman-Fried's donations may have allowed him to meet with SEC Chairman Gary Gensler and attend congressional hearings related to the cryptocurrency industry.
However, the legislation that Sam Bankman-Fried championed, the DCCPA, has drawn much criticism from crypto purists. Its critics claim that it would have effectively pushed to ban decentralized finance (DeFi) in the United States, repatriating more cryptocurrencies to centralized entities, including potentially saving FTX from collapse.
As Bankman-Fried's trial approaches in October, the alleged theft of customer funds will certainly be the focus. But lurking in the shadows is the darker charge that Bankman-Fried, aided by a plethora of allies, deployed these illicit funds to manipulate the U.S. legislative process to his exclusive benefit.
This disconcerting story involves a large number of political operators and intermediaries, highlighting a complex and seemingly highly unusual set of relationships between a large number of political figures. As these connections are revealed, the story promises to expose the often cryptic and corrupt world of crypto-political finance.
Block 3: Gainers & Losers
Block 4 : Things to read today
BlueSky isn't it (Wired)
From crypto-billionaire to fugitive (Intelligencer)
Andreessen Horowitz saw the future - but did the future leave him behind (The Verge)
