Translated by elcreto
Xangle’s Take on the Market This Week
- Another harrowing week has slammed crypto prices down—as the Fed continues to sound hawkish, Silvergate Bank decides to voluntarily liquidate its assets, the New York Attorney General sues KuCoin and alleges Ethereum is a security, and Huobi token takes a nosedive.
- Bitcoin plunged 9%, trading below the $20,000 psychological support at one point.
- Amid lingering fears of Silvergate meltdown resulting in liquidity drain, volatility may spread even further with a series of reports to come on jobs (10th) CPI (14th), and retail sales (15th).
Top Stories & Takeaways
Silvergate Announces Intent to Voluntarily Liquidate and Cease Operations
- Once a California-based community bank focused on real estate deals, Silvergate has come to prominence with massive asset growth since it began providing services to crypto businesses, including Paxos and Coinbase.
- Launched in 2017, the Silvergate Exchange Network (SEN) was particularly instrumental to the bank’s meteoric rise as the network became a popular choice for crypto companies seeking arbitrage opportunities.
- FTX’s downfall resulted in the loss of $8.1B in deposits and a barrage of withdrawal requests from customers.
- The bank has failed to cover the requests for withdrawal despite its efforts to sell long-dated bonds at a loss.
Xangle’s Take: Silvergate’s descent may become a major drag on the inflow of capital in the crypto universe as one of the gateways for institutional investors is now shut. A raft of concerns is raised over Signature Bank, which used to offer similar services to Silvergate’s, as Signature pares back its crypto exposure and cuts ties with two of its biggest customers, Binance and Kraken. Fundamentally, the root cause of this crisis was the size of the bank’s crypto exposure that spiraled out of control for a bank of this size to support fiat currency transfers. Remedying the fallout may require involvement of big banks.
Link: Bloomberg Report
NY Attorney General Alleges Ethereum Is a Security
- New York State Attorney General Letitia James sued KuCoin for selling unregistered securities and called Ethereum a security on the 10th.
- The petition argues that ETH is a speculative asset that relies on the efforts of third-party developers in order to provide profit to the holders of ETH, according to a statement released by the NYAG’s office. Because of that, it added, KuCoin was required to register before selling those assets.
- The lawsuit states that Ethereum is a security because: 1) the Ethereum Foundation had raised funding in ETH’s ICO and used it to fund the development of the network 2) the shift to PoS has allowed ETH holders to profit merely by participating in staking 3) the developers of ETH promoted it as an investment that was contingent on the growth of the Ethereum network.
Xangle’s Take: The news of NYAG calling Ethereum a security came on the heels of SEC’s February crackdown on Kraken’s staking service for selling unregistered securities. The move appears to be part of its attempt to keep pace with SEC’s regulatory initiatives to bring staking services under the regulatory purview as securities. Pinched from all sides, it needs to be watched closely whether other tokens will further be brought under the definition of a security as well as the morphing of regulatory landscape.
Link: CoinDesk Report
Cosmos V9 Lambda Upgrade Passed
The V9 Lambda upgrade will introduce the Replicated Security, allowing consumer chains to have their blocks produced by the validator set of the provider chain.
Link: #187 v9-Upgrade Proposal
Lido’s $wstETH Comes to Polygon
Lido expands support for $wstETH, allowing it to be bridged to Polygon.
The “Gitcoin Presents” NFT Collection Shoots Up
The FP of the Gitcoin Presents NFT collection has ripped higher amid the rumors of a link between the project and Vitalik Buterin.
Yuga Labs to Launch “Second Trip” to Otherside
Yuga Labs is set to open the "Second Trip" to its Otherside metaverse on March 25 to 10,000 voyagers, including Otherdeed NFT holders.
CFTC Chair Again Calls Ethereum a Commodity
CFTC Chair Rostin Behnam reiterated ETH is a commodity, which contradicts the view of SEC Chair Gary Gensler.
Link: Cointelegraph Report
Biden Proposes a 30% Tax on Electricity Used in Crypto Mining
According to the Greenbook, a provision that would impose a 30% tax on the costs of electricity used in crypto mining is included in the Biden administration’s 2024 budget proposal.
Link: CoinDesk Report
Big Step Increasingly Likely in March FOMC
Fed Chairman Jerome Powell’s testimony to Congress on the 7th, which hinted at bigger rate hikes, has increased the likelihood of a 50-basis-point rate hike.
Link: CME FedWatch Tool
Silvergate Announces Voluntary Liquidation
Silvergate Bank is set to wind down operations and enter voluntary liquidation.
SVB Shares Crater on Capital Raise Announcement
Shares of Silicon Valley Bank Financial Group took a nosedive after it announced plans to raise an additional $2.25B to cover the losses from a haircut on sales of securities.
Link: CNBC Report
Huobi Token (HT) Price Plunges
The Huobi Token plummeted 93% in a flash crash on the 10th.
Mt. Gox Pushes Back Repayment Deadline Again
Mt. Gox has extended BTC repayment and rehabilitation deadlines to April 6.
Link: The Block’s Report
Coinbase Rolls Out WaaS
Coinbase has released B2B wallet service WaaS following the release of Base.
Meta Mulls a Decentralized Social Network
Meta is reportedly working on a decentralized social media platform.
Link: Reuters Report
Previous Xangle Weekly Reports
- [Weekly Xangle] Ethereum ERC-4337, Derby Stars Early Access, Silvergate Woes, Yuga Labs Twelvefold and More
- [NFT Weekly] Yuga Labs TwelveFold, Polygon-Daehong Partnership & Owls 9000% Moonshot
- [Weekly Xangle] Klaytn Burns Reserve Supply, Coinbase Launches Base, OpenSea Cuts Fee, TON Tokenomics Optimization
- [Weekly Xangle] WEMIX Relisted on Coinone, SEC Suing Terraform Labs, Blur Launching Native Token, and More
- [NFT Weekly] $BLUR Listing and DigiDaigaku’s Super Bowl Ad