Из жизни альткоинов

Changpeng Zhao, also known as CZ, the founder and former CEO of Binance, one of the largest cryptocurrency exchanges, is awaiting sentencing in a highly-anticipated court hearing in Seattle set to begin on Tuesday. 

In November, Zhao pleaded guilty to enabling money laundering on the Binance platform, marking a significant development in a case that has drawn attention due to the alleged violations of US law and the implications for the cryptocurrency industry.

As previously reported by Bitcoinist, prosecutors have filed a sentencing memorandum requesting that Zhao be sentenced to three years in prison, twice the top end of the recommended guidelines. They argue that his crimes violated US law on an unprecedented scale. 

In contrast, Zhao’s defense team has requested a more lenient probation sentence of five months. They highlight Zhao’s acceptance of responsibility, his history of philanthropy and community service, and the significant time he has already spent away from his family since pleading guilty.

Legal experts have offered differing opinions on the likely outcome of the sentencing. Neama Rahmani, a former federal prosecutor, told CNBC that he expects a sentence of one to two years, given the case’s high-profile nature. 

Braden Perry, a former senior trial lawyer for the Commodity Futures Trading Commission (CFTC), suggests the advisory range of 10 to 16 months per sentencing guidelines but believes Zhao’s guilty plea and settlement with multiple agencies might influence the judge’s decision. 

Yesha Yadav, a law professor at Vanderbilt University, predicts a sentence in the low single digits, potentially including minimal prison time and extended probation.

Other legal experts, such as Tre Lovell, a corporate law attorney, anticipate a shorter sentence of five to seven months, citing Zhao’s lack of fraud charges and his apologetic letter to the judge. 

Paul Tuchmann, a former federal and state prosecutor, emphasizes the need for general deterrence in the crypto industry and expects the DOJ to advocate for a sentence that conveys the consequences of violating financial rules.

Jail time is an important deterrent, said David Weinstein, a former federal and state prosecutor who now practices corporate compliance and white-collar defense at Jones Walker. He added that the sentence would be over in less than a year. 

Prosecutors argue that Zhao operated Binance with a “Wild West” model, demonstrating a “deliberate disregard” for the exchange’s legal responsibilities. 

Zhao’s plea agreement with the Department of Justice (DOJ) required him to admit his involvement in facilitating money laundering activities on Binance. As part of the agreement, he agreed to step down as CEO, leading to the appointment of Richard Teng as the exchange’s new CEO. 

In addition to his guilty plea, Zhao has agreed to pay a $50 million fine. Binance was ordered to pay $4.3 billion in fines and forfeiture for violating the US Bank Secrecy Act and sanctions on Iran. 

The case involved a joint effort by the DOJ, the Commodity Futures Trading Commission, and the Treasury Department. The Securities and Exchange Commission (SEC) pursued a separate case against Binance. It remains to be seen what the outcome will be for CZ and what other implications may be for the exchange.

As the market experiences a sharp correction, the exchange’s native token, Binance Coin (BNB), is trading at $565, down nearly 4% in the last 24 hours alone and over 6% in the previous 7 days. 

Featured image from NBC, chart from TradingView.com 

Hong Kong’s financial market witnessed a subdued start for its newly launched spot Bitcoin and Ethereum exchange-traded funds (ETFs), which did not meet initial trading volume expectations. Despite substantial initial issuance sizes, market interest appeared restrained, as evidenced by the trading data for the first day.

The ChinaAMC Bitcoin ETF, denominated in HKD (tickers: 3042.HK and 3046.HK) and its USD equivalent, the Harvest BitcoinSpot ETF (tickers: 3439.HK and 3179.HK), alongside the Bosera HashKey BTC ETF in USD (tickers: 3008.HK and 3009.HK), were among the several ETFs that began trading.

The ChinaAMC Bitcoin ETF reported a significant initial issuance size of $121 million (HK$ 950 million), with its Ether equivalent launching at $20 million (HK$ 160 million). However, the trading volumes recorded were modest: the Bitcoin Spot ETFs accumulated only $8.8 million, while Ether Spot ETFs recorded a mere $2.6 million.

Trader T (@pivfund2100), a noted figure in the investment community, commented on X (formerly Twitter) regarding the day’s activities, stating, “Trivial volume comparing to US Spot ETF, seem initial issuance size is over-prepared on liquidity wise; Retail investors are major participants for today.”

This observation underscores the discrepancy between the anticipated and actual market participation, suggesting that the issuers may have overestimated initial market demand. He added, “saw some familiar names on Broker/Dealer. In-kind creation/redemption hasn’t performed as it supposed to, should see how it goes in a month or two.”

The lack of participation from Mainland Chinese investors, as pointed out by Trader T, possibly played a role in the dampened trading volumes. “Investors from Mainland China can’t access these ETFs,” he noted, highlighting a significant market limitation.

Despite these geographical restrictions, the ETFs represent an important development for the region by offering a regulated mechanism for large-scale transactions between cryptocurrencies like Bitcoin and Ether and fiat currencies.

Notably, the performance of Hong Kong’s spot ETFs starkly contrasts with their US counterparts. On their inaugural trading day in January, US-based spot Bitcoin ETFs saw a volume of $655 million. In contrast, the combined $11 million trading volume of Hong Kong’s six ETFs fell far short of the expected $100 million. This discrepancy shows that some analysts have probably overestimated the potential of Hong Kong, certainly at the start.

The broader cryptocurrency market reacted negatively to the lukewarm reception of Hong Kong’s ETFs. Bitcoin dropped nearly 5% from $64,700 to just under $61,250 within three hours during European trading hours. Similarly, Ether fell by more than 7.0 % from $3,250 to $3,015. These movements could be attributed to the market’s interpretation of the ETFs’ underperformance as a lack of confidence or a smaller-than-expected investor base.

At press time, BTC traded at $61,235.

Hong Kong rolled out the red carpet for cryptocurrency enthusiasts this week with the launch of Asia’s first spot Bitcoin and Ether Exchange Traded Funds (ETFs). The debut marks a significant step for the city, aiming to solidify its position as a global digital asset hub and attract a slice of the booming crypto market. However, challenges remain as Hong Kong grapples with establishing itself against the dominance of US offerings.

The launch comes amidst a surge in investor interest in cryptocurrencies. Bitcoin, the world’s most popular digital currency, has skyrocketed nearly 50% this year, reaching an all-time high in March.

This enthusiasm is clearly present in Asia, with the Hong Kong Stock Exchange witnessing strong early gains in the newly launched ETFs. The three Bitcoin ETFs climbed more than 3% on their debut, reflecting a positive reception from regional investors.

While the launch signifies a progressive stance towards cryptocurrencies, Hong Kong regulators are taking a measured approach. The Securities and Futures Commission (SFC) hailed the milestone but emphasized the inherent risks associated with crypto assets.

“Virtual assets are quite speculative and very volatile,” cautioned Christina Choi, an executive director at the SFC. This highlights a key concern – the suitability of these ETFs for all investor profiles.

The Hong Kong ETFs face stiff competition from established players in the US. The US market has witnessed a significant influx of capital into its Bitcoin ETFs, contributing to the recent price surge. However, US regulators haven’t yet approved ETFs tracking Ether, giving Hong Kong a potential edge.

One differentiating factor for Hong Kong’s offerings is the “in-kind” transaction mechanism. This allows investors to directly buy and sell ETF shares using their crypto tokens instead of converting them to cash first. This feature could be particularly appealing to existing crypto holders, potentially reducing transaction costs and simplifying the investment process.

Despite its innovative features, the initial enthusiasm for Hong Kong’s ETFs might be dampened by cost considerations. The management fees for these ETFs are significantly higher compared to their US counterparts.

This is attributed to the limited number of regulated service providers currently operating under Hong Kong’s strict legal framework. Analysts predict that the initial wave of investors will likely be local retail participants who are more cost-sensitive.

The success of Hong Kong’s crypto ETFs will hinge on their ability to address these challenges. If the SFC approves more trading platforms, fostering competition and potentially driving down fees, the market could become more attractive to larger investors. Close attention will be paid to whether these ETFs can trigger a significant shift in crypto flows from the US to Asia.

Featured image from Pexels, chart from TradingView

In a significant move that underscores Ripple Labs‘ global expansion strategy, the popular American-based payment firm and Hashkey DX – a subsidiary of Hashkey Group have formed a strategic alliance to launch enterprise solutions powered by XRP Ledger (XRPL) in Japan.

On Monday, Ripple announced the strategic collaboration with Hashkey DX- a leading player in the Japanese fintech space, to bring XRP Ledger capabilities to enterprises in Japan. Ripple affirmed that SBI Ripple Asia and HashKey DX’s partnership will aid in the introduction of enterprise solutions to the Japanese market.

The three companies plan to investigate potential future cooperation on a range of enterprise blockchain use cases that will make use of the XRPL’s vigorous features. Ripple Vice President of Strategic Initiatives Emi Yoshikawa stated that this alliance underscores both parties’ dedication to developing blockchain technology and providing real benefits to companies.

Over time, Hashkey Group has found tremendous success with its blockchain-powered supply chain financing solution, and mainland China has adopted them widely. Since its July 2019 introduction, the solution has registered over 4,000 businesses, including 23 banks and 4,300 suppliers, with overall trade value and financing transactions surpassing $7 billion and $3 billion, respectively.

Given the widespread adoption in China, Ripple’s partnership with the Hashkey Group subsidiary will now bring these solutions to the Japanese market. With the alliance, SBI Group enterprises will become the first in Japan to use this supply chain finance solution.

The XRPL, a decentralized layer 1 blockchain that powers XRP, will be used to facilitate these solutions, eyeing tokenization and exchange of both real-world assets and crypto-native.

According to Andy Dan from Hashkey DX, for the company to provide a reliable supply chain financing solution, the XRP Ledger was the perfect blockchain infrastructure.

“With its proven enterprise track record and unmatched performance metrics, including rapid settlement speeds, low costs, and scalability, we are confident in our ability to drive meaningful transformation and introduce innovative, cutting-edge solutions for businesses in Japan,” he added.

This union comes two weeks after Ripple revealed its proposal labeled 0066 XLS—66d for a native leading protocol on the XRPL. The proposal is to create a DeFi ecosystem inside the network that is immune to censorship.

Introduced by Aanchal Malhotra and Vito Tumas, the protocol is intended to give the XRP Ledger blockchain the capacity to support on-chain borrowing and lending pools. Additionally, it enables users to add fungible tokens, including wBTC, wETH, and XRP, to a lending pool in order to earn interest.

According to the firm, two new entities, Pseudo-Account and Single-Asset Tokenized Pool must be implemented within XRPL in order to activate the protocol.