Privacy Pools: Vitalik's Dive into Regulated Anonymity
Legal Freeze on Former Celsius CEO's Assets, ARK Invest Files for Ether ETF, and Coinbase Ventures into Socket Protocol Funding
Welcome to the latest edition of Coinfeeds Daily Digest, your go-to source for the most recent developments in the crypto markets.
We kick off this edition with an insightful research paper co-authored by Ethereum's co-founder, Vitalik Buterin, which proposes a new privacy protocol aimed at achieving a fine balance between regulatory compliance and user privacy.
We'll also delve into the dramatic legal developments surrounding former Celsius CEO Alex Mashinsky, whose assets have been frozen amidst ongoing legal proceedings. On the brighter side of regulation, ARK Invest and 21Shares are pushing forward with an Ether ETF, pending SEC approval.
From hackathons and venture capital to legal drama and technological innovations, this issue offers a comprehensive look at the world of crypto. Read on to stay ahead of the curve. Click here to explore today's trending news on coinfeeds.io.
Market Update
News
Vitalik Buterin Co-Authors Paper on Tornado Cash Alternative
Ethereum co-founder, Vitalik Buterin, has co-authored a research paper on a new privacy protocol named Privacy Pools. This protocol is being proposed as an alternative to Tornado Cash, a privacy tool that has been susceptible to misuse by illicit actors. Privacy Pools aims to use zero-knowledge proofs to verify the legality of user funds without revealing their full transaction history. The goal of this project is to filter out funds linked to criminal activities while striking a balance between privacy and regulatory requirements. The authors argue that financial privacy and regulation can coexist, and this protocol is a step towards achieving that balance.
In the research paper, Buterin and his team propose a "smart contract-based privacy-enhancing protocol" that distinguishes transactions involving criminal activity from those of honest users. The protocol uses zero-knowledge technology to provide users with transaction data privacy while separating it from any criminal activity. By pooling honest transactions together, users can prove their transactions originate from honest deposits. The paper suggests that privacy and regulatory compliance can coexist if the protocol allows users to prove the origin of their funds. This innovative approach to blockchain technology could potentially enhance the privacy of users' transactions while also distinguishing criminal activity from innocent funds.
Legal Troubles for Former Celsius CEO
Former Celsius CEO Alex Mashinsky's home and assets have been ordered frozen by Judge Jed Rakoff for the U.S. District Court for the Southern District of New York. The order includes funds held at Goldman Sachs, Merrill Lynch, and SoFi Bank, as well as a home in Austin, Texas. Mashinsky was arrested in July on charges of defrauding customers and misleading them about Celsius’ profitability. Celsius, which filed for bankruptcy last year, is also facing lawsuits from the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Federal Trade Commission.
ARK Invest and 21Shares File for Spot Ether ETF
ARK Invest and 21Shares have filed with the US Securities and Exchange Commission (SEC) for a spot ether ETF, according to a filing dated September 6. The proposed ETF, named the ARK 21Shares Ethereum ETF, would offer direct exposure to ether and trade on the Cboe BZX Exchange using the CME CF Ether-Dollar Reference Rate – New York Variant. The ETF will not invest in derivatives and is designed to provide investors with a cost-effective and convenient way to invest in ether. The ETF still requires formal approval from the SEC.
Coinbase and Framework Venture Funds Invest in Socket Protocol
Socket, a protocol designed to improve communication between blockchains, has secured $5m in funding from Coinbase Ventures and Framework Ventures. The investment will be used to expand Socket's collaboration with Coinbase, including providing bridging opportunities for developers and users of Coinbase Wallet and Base, Coinbase's new layer-2 network built on Ethereum. Socket aims to connect fragmented blockchain ecosystems, enabling chains to communicate with each other and facilitating easier transactions across multiple networks.
Solana's Hyperdrive Hackathon
Solana is hosting the Hyperdrive Hackathon, an online competition aimed at launching the next big web3 project. The event will allow participants to develop their ideas into products over a six-week period. The winners will have the opportunity to present their projects to leading investors at an exclusive demo day. The hackathon offers various prizes, including a $50K USDC grand prize and the chance to present the winning project at the 2024 Solana Breakpoint Conference. The Solana Foundation has announced a new hackathon, Hyperdrive, which will award up to $1 million in prizes and seed funding.
Riot Platforms Earns Energy Credits from Texas Grid
Riot Platforms, a Bitcoin mining company, earned $31.7 million in energy credits in August from the Texas power grid operator ERCOT by voluntarily reducing its energy consumption during a heatwave. The value of these credits exceeded the 333 Bitcoin the company mined in August, valued at about $8.9 million. The credits significantly lower Riot's cost to mine Bitcoin, making it one of the lowest-cost producers in the industry. This strategy shift comes after the crypto market downturn in 2022 led to a net loss of over $500 million for Riot.
Bitcoin's Ties to the US Economy
Bitcoin's value remains closely tied to the US economy due to factors such as dollar-pegged stablecoins, US regulatory influence, and the involvement of US financial entities. Stablecoins like USDT and USDC have increased crypto's reliance on the US economy, with Bitcoin predominantly trading against the US dollar. The US regulatory landscape also significantly impacts Bitcoin's market sentiment, with any policy changes having ripple effects on the entire crypto market. Furthermore, US institutional adoption has further intertwined Bitcoin with the nation's economy. However, as the crypto realm matures, Bitcoin could evolve into a truly global, uncorrelated asset.
Tornado Cash Developer Pleads Not Guilty
Roman Storm, a developer for Tornado Cash, has pleaded not guilty to charges of conspiring to operate a money transmitter or facilitate money laundering and sanctions evasion. Storm, a dual U.S. and Russian citizen, was released on a $2 million personal recognizance bond and will remain under house arrest at his Washington home. Prosecutors allege that Storm, along with fellow developers and co-founders Roman Semenov and Alexey Pertsev, helped launder over $1 billion in stolen crypto, including "hundreds of millions" for North Korea, through their work building Tornado Cash.
Former FTX CEO's Bail Appeal Denied
Former FTX CEO Sam Bankman-Fried's appeal for immediate release from jail has been denied by a US appellate judge. Bankman-Fried's legal team had requested his release from the Metropolitan Detention Center in Brooklyn, arguing that the current measures were inadequate for him to prepare for his defense due to limited internet access. Bankman-Fried had been free on a $250-million bond but his bail was revoked following allegations of witness intimidation. His trial is scheduled to begin on October 3.
dYdX Launches Powerful Open Trading Platform
dYdX, a powerful trading platform, has launched its v4 mainnet. The platform allows users to trade Perpetual Contracts with low fees, deep liquidity, and up to 20x more buying power. It requires a minimum deposit of $10 to get started. The platform is now available on iOS and will be available on Android early next year. The platform also features Layer 2, which offers low fees, no gas costs, instant trade execution, fast withdrawals, and increased security and privacy.
Grayscale Ready to Launch Bitcoin ETF
Grayscale, a large Bitcoin Trust operator, has announced its readiness to launch a Bitcoin ETF, pending approval from the US SEC. The company had previously applied to the SEC to convert its Bitcoin trust into an ETF, but the application was rejected. Following a court battle, the SEC was ordered to review Grayscale's application again. Despite the court's decision, it remains unclear when the SEC will make its decision. The news has sparked excitement in the Bitcoin community, with many speculating on the potential impact on Bitcoin's price.
As always, stay tuned for more updates in crypto!