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Is Binance Hiding From The Regulators?

👋 Happy Wednesday, crew!

Here's what I have for you today:

🍿 Quick Snack

  • 👨‍⚖️ Will Binance be able to navigate industry turmoil and deal with regulators in the U.S.?

  • 🤑 Maverick Protocol launches a decentralized exchange on Ethereum with an automated market maker to generate 10x more income for liquidity providers than Uniswap.

  • ⚖️ MakerDAO considers investing $750 million in US Treasuries to stabilize its DAI stablecoin.

  • 📈 Yuga Labs generated $16.5 million from its first Bitcoin NFT auction, sparking significant interest in Bitcoin NFTs.

  • 👩‍🎨 Claire Silver, an AI artist, is set to debut her new NFT collection at the Louvre Museum in Paris later this month.

  • 🖼️ Code Canvas, a new NFT platform on Solana, rewards creators and collectors and enforces royalties. The first two collections will be released on March 8 and 22.

🍔 The Full Meal

Binance’s Secret Plan to Avoid U.S. Regulators and the Future of Crypto

  • Background:

    • In February 2019, Mr. Zhou established BAM Trading Services Inc., a Delaware-based company.

    • Subsequently, in June 2019, Binance created Binance.US with BAM Trading in June 2022, which licensed Binance’s technology and brand. Binance.US registered with the U.S. Treasury as a money services business.

    • Binance’s founder and CEO, Changpeng Zhao, controls the BAM companies through a layer of entities incorporated in the Cayman Islands and the British Virgin Islands.

  • Binance’s relationship with Binance.US is being examined by the Securities and Exchange Commission and the Justice Department.

  • U.S. regulators have been investigating the relationship between Binance and Binance.US since 2020.

  • The company built a separate, seemingly independent U.S. platform, Binance.US, to shield its main platform, Binance.com, from U.S. regulators’ scrutiny.

  • However, Binance and Binance.US appear to be much more intertwined than the companies have cared to disclose, mixing staff and finances and sharing an affiliated entity that bought and sold cryptocurrencies.

  • Binance developers in China maintained the software code supporting Binance.US users’ digital wallets, potentially giving Binance access to U.S. customer data.

  • The U.S. regulators could claim the power to police Binance’s entire business if they conclude that these links mean Binance has control over a U.S. company, putting Binance’s finances and CEO, Changpeng Zhao, under closer scrutiny

  • Binance’s ability to navigate industry turmoil and deal with regulators in the U.S. will be a strong test case for the future of crypto.

Yuga Labs’ $16.5 Million Bitcoin NFT Auction Sparks Interest in Ordinals Protocol

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  • Yuga Labs, a $4 billion NFT company, recently generated $16.5 million from its first NFT auction, TwelveFold, on Bitcoin’s blockchain utilizing the Ordinals protocol.

  • The Ordinals project took advantage of a Bitcoin upgrade, Taproot, and allows for digital artifacts to be inscribed on the actual blockchain, making storing NFTs more secure.

  • Yuga Labs’ interest in Bitcoin NFTs is significant because it has not created any NFTs on any other blockchains other than Ethereum.

  • Bitcoin NFTs differ from Ethereum NFTs in that their settlement remains on Bitcoin’s chain permanently, making them more secure. Ethereum NFTs, on the other hand, often require data to be stored on external servers, such as IPFS.

  • It’s possible many other popular NFT series could follow Yuga’s footsteps and deploy projects on Bitcoin and help drive the next wave of onboarded users onto the bitcoin ecosystem.

Louvre Museum to Host AI Artist Claire Silver’s New NFT Collection

https://twitter.com/ClaireSilver12/status/1625165438555508736?s=20

Maverick Protocol Launches Decentralized Exchange on Ethereum Blockchain with Novel Automated Market Maker

  • DeFi platform Maverick Protocol has launched its own decentralized exchange (DEX) on the Ethereum blockchain.

  • Decentralized exchanges are built around liquidity pools, where traders can exchange assets while investors — also called liquidity providers — earn rewards from transaction fees for providing liquidity to make a market.

  • The Materick DEX features an automated market maker (AMM) engine aimed at generating higher revenue for liquidity providers, by allowing investors to capitalize when the price of the pool’s assets deviates.

  • The DEX offers six liquidity pools at launch, including trading pools for Lido’s liquid staking ether derivative, Liquity’s LUSD stablecoin, and Galxe’s GAL token.

  • Investors can customize their liquidity distribution range, which helps maximize their revenue from providing liquidity.

  • Maverick claims its AMM strategy resulted in 10 times more potential income for liquidity providers compared to Uniswap, based on a backtesting exercise run last month.

  • During a torrid last year for centralized crypto trading platforms, highlighted by the spectacular collapse of FTX, the resiliency of decentralized alternatives spurred interest in DEXs.

    “Our goal is to be among the top five decentralized exchanges by volume within the next six months.”

    Bob Baxley, CTO @ Maverick

MakerDAO Proposes $750M Treasury Purchase to Stabilize DAI Stablecoin

  • MakerDAO, the DAO behind the DAI stablecoin, is considering investing an additional $750 million in U.S. Treasuries to stabilize its DAI stablecoin.

  • If passed, the resolution would add to the $500 million approved in October, bringing the ceiling to $1.25 billion.

  • The DAO would invest in six-month U.S. Treasuries using a ladder strategy with a biweekly rollover, which could be adjusted if necessary.

  • This asset strategy will be handled by Sygnum Bank.

  • MakerDAO’s first U.S. Treasuries investment was intended to help further stabilize its DAI stablecoin, which was already overcollateralized at the time.

  • Allan Pederson, CEO of decentralized finance (DeFi) asset manager Monetails, noted the advantages of the strategy include the low cost, tax efficiency, and inherent liquidity as the Treasuries mature on the ladder.

Code Canvas Brings Generative Art NFTs to Solana Blockchain

  • Exchange.Art is launching a new generative art NFT platform called Code Canvas on the Solana blockchain.

  • The platform will allow creators and collectors to mint and trade generative art NFTs, curated by primary drops and secondary sales.

  • Code Canvas aims to reward creators and their loyal fans through CoCa passes, which grant holders lifetime access to NFT drops and minting services.

  • The platform plans to enforce royalties on Solana, standing with creators and their earnings.

  • The first two collections will be released by Tezos-native generative artists Leander Herzog on March 8, followed by a drop from StudioYorktown on March 22.

🍟 Extra Fries

  • 👎 The party is over. India has introduced anti-money laundering provisions for the cryptocurrency sector, requiring digital-asset platforms to follow similar standards as other regulated entities. Last year, India implemented more stringent tax rules on the crypto sector, causing a plunge in domestic trading volumes. (Read More)

  • 👀 Ouch. FTX, the failed cryptocurrency exchange, has confirmed that it is still unable to locate around $9 billion in customer funds. The company has released a preliminary analysis of the shortfall, which it says is partly due to former CEO Sam Bankman-Fried’s alleged scheme to move customer funds to his hedge fund Alameda Research. (Read More)

  • 💔 Break up. JP Morgan is ending its banking relationship with Gemini, the cryptocurrency exchange owned by Cameron and Tyler Winklevoss due to increased regulatory scrutiny in the cryptocurrency industry. (Read More)

  • 💸 Leave NFTs alone. German financial regulator BaFin stated that no NFTs are currently classified as securities, which would require licenses and money laundering supervision. However, some NFTs may be subject to financial regulations in the future if they offer the same interest payments. (Read More)

  • 👊 Give it back. Luxury brand Hermès has requested a New York court to prevent NFT artist Mason Rothschild from selling or promoting his MetaBirkin NFTs. Hermès is also seeking control of any MetaBirkin NFTs, smart contracts, domain names, and social media handles in Rothschild’s possession, and for him to transfer royalties received from the project to them. (Read More)

  • 👏 Not bad. Coinbase has launched a “wallet as a service” offering that will allow companies to create their own blockchain wallets for their customers. The service could be useful for gaming apps featuring tokens or NFTs or for firms that want to incorporate wallets into their own apps. (Read More)

💸 Funding Rounds

  • Scroll.io | $50m: native zkEVM scaling solution for Ethereum (link)

  • Toku | $20m: global solution for token compensation & tax compliance (link)

  • Few and Far | $10.5m: digital collectibles web3 platform (link)

  • Mangrove DAO | $7.5m Series A: order book-based Decentralised exchange that allows liquidity providers to post arbitrary smart contracts as offers (link)

  • Redeem | $2.5m Pre-Seed: simplify the transmission, receipt, and redemption of NFTs via phone numbers (link)

  • Insrt Labs | $2.2m Pre-Seed: protocol that acts as a decentralized financial intermediary for non-fungible digital assets (link)

  • Helika | $2.8m Seed: Web3 technology and analytics platform (link)

What did you think of today’s newsletter?

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