Dear country without banks
If you thought the crypto company bombing was over, this week offered a different take. Big exchanges and lenders have run out of banking options and regulators are still swarming.
Each week’s recap delves into:
Silver Gate Shoe Drop
Crypto Lands on Denver
Solana suffers another outage
Oasis Fights Hackers
“Everything But Bitcoin”
– bankless team
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Here’s a recap of the biggest crypto news of the first week of March.
Crypto companies are not licensed financial institutions, so they need a licensed bank to serve their customers’ on-ramp and off-ramp needs.
Shares of Silvergate, one of the largest crypto-friendly banks, fell 55% on Thursday. This comes amid market concerns over its financial sustainability after his FTX collapsed last November. Silvergate has also faced an investigation by his DoJ over his FTX and Alameda deals since early February. The bank previously reported a loss of about $1 billion in the fourth quarter of 2022 and cut staff by 40%.
As a result, Silvergate’s clients are flying ships en masse. Coinbase, Circle, Paxos, Crypto.com, Bitstamp, Cboe Digital Markets, Galaxy Gemini, and LedgerX have each announced they are severing ties with Silvergate.
This week, Coinbase announced that it will be switching to another crypto-friendly bank, Signature, to serve Coinbase Prime account holders.
Meanwhile, Kraken is exiting from using Signature bank to serve its retail customers. On January 22nd, Binance reduced its exposure to retail customers through Signature, setting a new policy to only serve customers with transactions of $100,000 or more.
On Friday, Silvergate announced it was suspending cryptocurrency payments.
“Silvergate Bank has taken a risk-based decision to discontinue the Silvergate Exchange Network (SEN) with immediate effect. All other deposit-related services will continue to operate,” Silvergate told media. wrote in a statement.
It’s ETH Denver Week.
Here’s a rundown of the products announced so far this week:
Solana goes outside… again.
If the network is “Significant performance degradation”, the network has entered safe mode, which suspends the processing of transactions. Solana was then restarted by a validator and recovered after 19 hours.
Developers still don’t know why the network went down.
Apart from that, Solana retail store closures in New York and Miami.
Jito Labs, an MEV-focused research institute, says more than 30% of all Solana transactions are MEV spam attempts.
The Wormhole Bridge was attacked in February 2022 and 120,000 wells ($321 million) were stolen. Since then, the hacker has been constantly shuffling stolen cryptos through his various Ethereum dapps.
according to Official Oasis blog posta white hat hacker contacted the Oasis team on February 16th, showing them how to get their money back from the hackers, thanks to a “previously unknown vulnerability in the design of managed multisig access.” Oasis is a DeFi aggregator spun off from Maker DAO as its own entity in mid-2021.
Five days later, Oasis received an order last week from the High Courts of England and Wales to recover stolen property.
As such, Oasis has taken its multisig and implemented a “counter exploit.” Upgradable “proxy” smart contracts, recovered $225 million from hackers and sent it to an “authorized third party,” most likely Jump Crypto, the trading firm that recovered the funds last year.look Dan Smith’s article on the technical breakdown.
Good news: some funds have recovered. Bad news: Oasis has a multisig backdoor and I’ve been upgrading the code all along.
What precedent does this set for DeFi?
To the joy of Bitcoin enthusiasts and everyone else’s chagrin, Gary Gensler declared last week that all things crypto are safe for Bitcoin.
The immediate reaction from Twitter was that Gensler’s opinion is just that. That crypto tokens are securities is a legal issue that has yet to be resolved in American courts.
Also, Gensler’s opinion does not reflect members of parliament. The Digital Assets Subcommittee, a parliamentary body, Scrutinizing the SEC’s Growing Aggression A style of “regulation by enforcement” for the crypto sector.
Brian Armstrong on CNBC this week:
The UK, Japan and the EU have all made great strides in closing gaps in existing EU financial services legislation by establishing a harmonized set of rules for crypto-assets. No other country in the world has spent so much time and energy convincing its public that cryptocurrencies are securities. The United States is losing forests for the trees.
to be continued…
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