CBDC report published; Launch of Crypto and NFT initiatives; OFAC redesignates Tornado Cash; SEC and CFTC Target Crypto Fraud; FTX Files for Bankruptcy | BakerHotelier



Release of CBDC Report, Launch of Blockchain Settlement and Payment Initiatives

By Robert A. Musiala Jr.

This week, the New York branch of the U.S. central bank released a report on the results of Phase I of Project Cedar, “a multi-phase research effort to develop a technical framework for a theoretical wholesale digital currency of central bank (wCBDC)”. According to a press release, it currently takes two days for most spot foreign exchange (FX) transactions to settle, exposing senders and receivers of payments to “settlement, counterparty and credit risk that , among other things, can hamper an institution’s ability to easily convert its assets into cash. In Phase I of Project Cedar, “the experiment simulated spot foreign exchange (FX) trading and introduced a prototype wholesale central bank digital currency to test whether using blockchain technology could improve the speed , cost and access to cross-border wholesale payments”. In this test environment, the experiment would have revealed three key results:

  • Faster payments: In the test environment, transactions on the blockchain-enabled system settled in less than 15 seconds on average.
  • Atomic regulation: The simulated ledger network enabled atomic settlement, meaning that both sides of the simulated transactions settled simultaneously or not at all, reducing exchange rate risks.
  • Safer and more accessible transactions: The design of the distributed ledger system enabled 24/7/365 payments and supported goals related to interoperability between financial institutions, including central banks and banks of the private sector.

Separately, this week, a major global bank issued a press release announcing “the world’s first digital bond that is publicly listed and settled on blockchain-based and traditional exchanges.” According to the press release, “[t]The CHF375 ​​million bond is digital only and will be issued on the blockchain-based platform of SIX Digital Exchange (SDX) while being dual listed and traded on SDX and SIX Swiss Exchange (SIX).

In a recent notable post, a major South African grocery chain reportedly announced plans to start allowing customers to pay for groceries with bitcoin at 39 stores in South Africa using any lightning-enabled app. bitcoins. According to reports, customers will scan a QR code from the app and accept the conversion rate on their smartphone at the time of the transaction.

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NFT World Cup Initiative Launched, Market Players Launch NFT Royalty Solutions

By Veronique Reynolds

According to a recent press release, a major US financial services company has teamed up with a major cryptocurrency exchange to launch an NFT auction for fans of the FIFA World Cup Qatar 2022. initiative would feature digital art designed using an algorithm and “inspired by iconic goals from five legendary footballers. The experience will become immersive later this month, when fans can create their own “inspired digital art of their own signature moves” and print the art on their own NFT.

This week, the OpenSea NFT Marketplace reportedly unveiled a new on-chain tool that will make royalty enforcement easier. The tool, described in an OpenSea blog post as a “simple code snippet”, is intended to allow NFT creators to apply fees online on an opt-in basis and prevent their NFTs from being listed on marketplaces that do not support creator fees. The tool is only available for new NFT collections that don’t yet exist, a move that reportedly left some users feeling like there was “no plan and [there are] no clear answers [regarding] existing collection and artist’s copyright.

Last week, Solana-based NFT marketplace Exchange.Art announced a “Royalty Protection Standard” that “will enforce creator royalties on secondary sales of NFTs that were originally created on its platform. “. According to reports, the new standard is an opt-in program that the marketplace has designed to allow NFT creators to choose secondary NFT platforms that can showcase their NFTs and prevent “the work of creators from being” force-listed “” in markets that do not. ‘t apply NFT royalties.

In a related development, an Ethereum Layer 2 NFT platform recently announced the release of its “community-governed whitelist and blacklist for royalty-honoring smart contracts.” The feature would allow NFT creators to use the lists to control which smart contracts deploy their NFTs without the help of a third-party exchange, and can be used to limit the transferability of NFTs through the smart contracts that meet the company’s royalties. ‘tool.

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OFAC redesignates Tornado Cash, Mixer receives hacked crypto

By Amos Kim

This week, the US Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it had delisted and renamed Tornado Cash to record other reasons for the designation, including its role in covering up ” of the movement of over $455 million stolen in March 2022 by the DPRK-controlled OFAC-designated Lazarus Group in the largest known virtual currency heist to date. OFAC also issued new guidance “to provide additional compliance guidance regarding the nature of the Tornado Cash entity, and updated three existing FAQs with additional guidance.” According to reports, earlier this week, based on data from Etherscan, the hacker responsible for hacking $28 million from Deribit, a major bitcoin and ether options exchange, transferred over 1,600 ether ( ~$2.5 million) to Tornado Cash.

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SEC and CFTC Take Enforcement Actions Involving Fraudulent Crypto Trading Bots

By Joanna F. Wasick

Last week, the U.S. Securities and Exchange Commission (SEC) announced charges against four people for their roles in the Trade Coin Club (TCC), which the SEC describes as “a fraudulent crypto Ponzi scheme that raised over 82,000 bitcoins, worth $295 million. at the time, with more than 100,000 investors worldwide. According to the complaint, TCC was a multi-level marketing program that ran from 2016 to 2018 and promised profits from the trading activities of an alleged crypto asset trading bot. The defendants told investors that the bot performed “millions of microtransactions” every second and that investors would receive a minimum return of 0.35% per day. However, according to the SEC, instead of investor funds being deployed for the alleged bot, they went into the pockets of defendants and other TCC promoters.

In a similar action, last week the Commodity Futures Trading Commission (CFTC) issued an order stating that Jeremy Rounsville had defrauded investors through his company, Arbitraging.co, which also claimed to have an “arbitrage bot very advanced” who was running the company complex. digital asset trading strategies. However, according to the CFTC, the bot never executed any trades; customers were unable to make withdrawals and lost all their funds. The order compels Rounsville to pay a civil penalty of $177,000, permanently prohibits him from soliciting or trading interest on commodities and virtual currencies or registering with the CFTC in any capacity , and binds him to cease and desist from any further violation of the law on the exchange of goods. and CFTC regulations.

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FTX Files for Bankruptcy Amid Binance’s FTT Sale and Incoming DOJ Investigation

By Christopher W. Lamb

On November 11, 2022, the former third-largest cryptocurrency exchange, FTX, announced that it had filed for bankruptcy with approximately 130 additional affiliates. Reportedly, CEO and founder Sam Bankman-Fried has resigned and will be replaced by John Ray III, a turnaround veteran who was involved in Enron’s bankruptcy.

This week, several reports emerged highlighting FTX’s attempts to secure a more than $1 billion bailout before receiving a non-binding letter of intent from fellow cryptocurrency exchange Binance. Binance reportedly neglected to move forward after an initial review of FTX’s books and amid fears that FTX may be subject to government investigations. A report explained that the problems started when Binance started offloading hundreds of millions of dollars of FTT, a token created by FTX, on Sunday. According to the report, FTX’s legal and compliance staff resigned soon after. Another report said that FTX was already under investigation by state and federal regulators, and that the US Department of Justice (DOJ) may have opened an investigation into FTX due to its recent liquidity issues. .

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