Crypto BLOG

The U.S. District Court for the Southern District of New York has finalized the dismissal of a class action lawsuit against Tether and Bitfinex. This lawsuit, initially filed by plaintiffs Shawn Dolifka and Matthew Anderson in 2021, targeted the stablecoin issuer Tether and its affiliated company Bitfinex. The primary allegation centered on the claim that Tether’s USDT stablecoin was not backed one-to-one with U.S. dollars as the company had stated. The plaintiffs argued that Tether and Bitfinex did not maintain adequate reserves for the USDT in circulation, thereby misleading investors and the market​​​​.

Judicial Proceedings and Outcome

The case saw a decisive turn when Chief Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York issued a comprehensive 6-page decision. This decision included an order dismissing the class action lawsuit in its entirety, citing the meritless nature of the claims. Following the denial of Dolifka’s motion to amend his complaint, the plaintiffs chose not to appeal the judgment, effectively bringing the legal battle to a close. This outcome has been viewed as a significant legal victory for Tether and Bitfinex, as it upholds the dismissal of what was deemed a baseless lawsuit​​​​​​.

Implications and Future Considerations

Despite this legal victory for Tether and Bitfinex, the lawsuit highlighted ongoing concerns and controversies surrounding Tether’s claims about its USDT reserves. The case has brought to light the critical need for transparency and accurate disclosure in the cryptocurrency industry, particularly for stablecoins, which play a vital role in the market. This dismissal, while affirming Tether and Bitfinex’s position, also serves as a reminder of the legal and regulatory scrutiny that crypto entities can face​​​​.

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Bitcoin (BTC) saw a classic pullback after the Nov. 16 Wall Street open as deja vu BTC price action continued.

Analysis: Door open to deeper BTC price correction

Data from Cointelegraph Markets Pro and TradingView followed Bitcoin as it descended to $36,470 — down over $1,000 on the day.

The landscape closely followed events from earlier in the week, where bulls failed to flip new highs to support and endured long liquidations.

These were less present on the day, with around $21 million of BTC longs wiped out at the time of writing, per data from monitoring resource CoinGlass. On Nov. 14, the tally reached $120 million.

Commenting on the status quo, market participants noted the repetitive nature of BTC price action, which left the possibility for both new highs and a deeper retracement open.

“While I maintain my view that the market is due for a correction, we still can’t rule out the possibility of another attempt at the $38k – $40k range,” on-chain monitoring resource Material Indicators wrote in part of its latest X post.

It added that news on the first United States Bitcoin spot price exchange-traded fund (ETF) “would be a likely catalyst for such a move,” but that time was running out for this thanks to regulatory time constraints.

An accompanying snapshot of BTC/USDT order book liquidity showed sellside liquidity building at $38,000, with complementary bid volume only present at $33,000.

“The path of least resistance is down for $BTC if we are going by the amount of resting orders waiting to get filled,” popular pseudonymous trader Horse continued on the topic.

“My thinking is that this recent spike up was easy due to an empty pocket left by liquidations and that anyone waiting for the dip passively added long at market.”

Dollar weakness bolsters crypto outlook

The macro picture was cool on the day as U.S. dollar weakness reentered, cancelling out a recovery from a precipitous drop on Nov. 14.

Related: $48K is now ‘reasonable’ BTC price target — DecenTrader’s Filbfilb

This came at the hands of U.S. inflation data, which came in more positive than expected in a complimentary surprise for risk assets.

The U.S. dollar index (DXY) was back near 104 — near its lowest levels since the start of September.

“DXY got slaughtered today, would say im surprised, but im not really, going much lower,” popular trader Bluntz reacted to the previous move.

“Don’t underestimate how GOOD this is for crypto.”

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

A recent video from blockchain security firm CertiK has made a series of “inaccurate” claims about a potential security vulnerability in Solana’s crypto-enabled Saga phone, Solana Labs said.

In a Nov. 15 post on X (formerly Twitter), CertiK claimed the Saga phone contained a “critical vulnerability” known as a “bootloader unlock” attack, which would supposedly allow a malicious actor to install a hidden backdoor in the phone.

Ever wondered about the security of your Web3 devices?

Our newest exploration reveals a significant bootloader vulnerability in the Solana Phone, a challenge not just for this device but for the entire industry. Our commitment to enhancing security standards is unwavering. … pic.twitter.com/lHZ5W7hXzy

— CertiK (@CertiK) November 15, 2023

In a report sent to Cointelegraph, CertiK claimed the bootloader unlock would “allow an attacker with physical access to a phone to load custom firmware containing a root backdoor.”

“We demonstrate that this can compromise the most sensitive data stored on the phone, including cryptocurrency private keys,” CertiK’s report said.

However, a Solana Labs spokesperson told Cointelegraph that CertiK’s claims are inaccurate, and its video did not reveal any legitimate threat to the Saga device.

“The CertiK video does not reveal any known vulnerability or security threat to Saga holders.”

Android’s internal Open Source Project documentation shows unlocking a bootloader can be performed across a wide range of Android devices.

Solana Labs said that, to unlock the bootloader and install custom firmware, an attacker would have to go through multiple steps, which can only be performed after unlocking the device with the user’s passcode or fingerprint.

“Unlocking the bootloader wipes the device, which users are alerted about multiple times when unlocking the bootloader, so it’s not a process that can take place without users’ active participation or awareness,” Solana Labs said.

Related: Making real-world blockchain solutions possible — Solana co-founder Raj Gokal

Additionally, if anyone proceeds to unlock the bootloader on an Android device, they’re subjected to a series of warnings about the implications of the process.

If they ignore these warnings, the device will be wiped along with their private keys.

The Solana Saga phone was released in April 2022 with a price tag of $1,099. The phone offers a Web3-native decentralized application store in a bid to integrate crypto apps into tech hardware.

In April, we introduced Saga with a clear vision: to put web3 at your fingertips. We continue to work to bring more people into the ecosystem and drive web3’s mobile future. Today, we are reducing the price of Saga to $599.

Over the past four months, Saga users embraced the… pic.twitter.com/qpC1BHiqZ7

— Solana Mobile (@solanamobile) August 9, 2023

Four months after launch, however, Solana slashed its price to $599, following a steep decline in sales.

CertiK did not immediately respond to a request for comment on Solana Labs’ rebuttal.

Magazine: I spent a week working in VR. It was mostly terrible, however…

Google LLC has initiated legal proceedings against three anonymous individuals, accusing them of orchestrating a sophisticated malware distribution scheme under the guise of offering upgrades to Google’s AI chatbot, Bard. The lawsuit, filed on November 13, 2023, in the Northern District of California, San Jose Division, identifies the defendants as “Does 1-3,” reflecting Google’s current lack of specific identification.

Google alleges that the perpetrators have been exploiting the company’s trademarks, particularly those related to its AI products like “Google, Google AI, and Bard.” By creating misleading social media profiles and pages that mimic Google’s branding, these individuals have reportedly been luring victims into downloading malware. The fraud involves invitations to download free copies of Bard and other AI tools, purportedly from Google.

One striking example provided by Google includes a screenshot of a bogus “Google AI” social media profile used by the con artists. These profiles and pages are designed to deceive users into believing they are interacting with legitimate Google products.

Upon following the provided links, users unwittingly download malware, which is particularly engineered to hijack social media login credentials. This scheme is said to target businesses and advertisers primarily, exploiting their reliance on social media for marketing and communications.

In response to these fraudulent activities, Google has requested the court to grant a comprehensive restraining order and award damages, including attorneys’ costs. The tech giant is also seeking permanent injunctive relief for the harms caused by the defendants, any profits gained from the fraud, and other equitable relief deemed appropriate by the court.

This lawsuit emerges at a time when AI services, especially chatbot services, are experiencing a significant increase in global users. Recent data reveals Google’s Bard bot attracting 49.7 million individual visits each month, while OpenAI’s ChatGPT records over 100 million monthly logins and approximately 1.5 billion unique website visits.

Over the past year, major tech companies like Google, OpenAI, and Meta have been embroiled in various legal disputes. In July, Google faced a class-action lawsuit, underscoring the legal complexities in the rapidly evolving AI and digital services sector.

This case underscores the critical need for heightened digital security measures as AI technology becomes more integrated into everyday digital interactions. Google’s lawsuit not only seeks to safeguard its own intellectual property but also aims to protect unsuspecting users from malicious cyber activities disguised as legitimate AI offerings.

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On Nov. 15, several altcoins continued to show strength alongside Bitcoin (BTC), which notched an intra-day high at $37,400. Leading into the week, DYDX, Solana’s SOL (SOL) and Avalanche’s AVAX (AVAX) currently reflect double-digit gains, with each chasing after new year-to-date highs. 

The sustained bullish price action from altcoins has led some analysts to declare the arrival of an altcoin season, and at the time of writing, the total market capitalization of the altcoin market has hit a 2023 high at $659.5 billion.

Altcoin price rallies typically involve a slew of factors, some being sentiment-based and others based on project fundamentals. Let’s look at a few of this week’s top market performers to see what catalysts underlie their growth.

dYdX fee switch boosts price

The platform behind the DYDX token is dYdX, a decentralized exchange that offers futures contracts on Ethereum Virtual Machine blockchain tokens like Ether (ETH). On Oct. 27, dYdX launched its layer-1 blockchain with the creation of its genesis block, which operates using native DYDX tokens. The launch allowed for the on-chain distribution of all fees received to validators and stakers. The protocol update has been fantastic for DYDX’s price, sending it up over 110% in the past 30 days.

Related: Exclusive: 2 years after John McAfee’s death, widow Janice is broke and needs answers

In addition to token price appreciation, the dYdX platform is posting substantial user numbers, including increased fees and revenues. Both metrics have witnessed 77.5% increases to $8.67 million in 30 days. Annualized, this could mean $105.5 million in fees for validators and stakers.

SOL price hits another 2023 high

Solana’s SOL token has had an impressive 30-day return profile, gaining over 166%. Despite reaching a 2023 high on Nov. 10, Solana’s price is still over 4x below its all-time high of $259.96.

Solana’s price growth has been powered by an uptick in users, which is led by the top-performing decentralized application on the blockchain, Jito, a liquidity staking platform. Solana’s daily active users also hit a 2023 high on Nov. 10, reaching 200,000. Coinciding with the increase in users, Solana’s revenue has eclipsed $1 million in 30 days, recording a 78.2% increase.

Avalanche’s AVAX token picks up steam

Avalanche is a layer-1 blockchain similar to Solana, where validators process transactions and receive tokens. Compared with Solana and dYdX, Avalanche brings in less revenue, but that hasn’t stopped its token from going on a double-digit run this week.

Despite being relatively smaller, AVAX has been performing well. In the past seven days, AVAX reached above 59% in gains, and it hit an impressive 118% growth in 30 days. AVAX’s price is still more than 7x below its all-time high.

Related: Is it altseason? Altcoin 30-day performance and total market cap flash bullish

While these three altcoins are performing well, Bitcoin continues to dominate the overall market, with its dominance rate hovering above 50% since Oct. 16. When Bitcoin dominance decreases, those funds typically flow into altcoins, which is generally the start of an altseason.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The German bank Commerzbank has been granted a crypto custody license by local regulators, according to a Nov. 15 announcement by the lender. 

Commerzbank says it is the first “full-service” German bank to be granted this license in the country under the legal framework of the German Banking Act. This allows it to offer custody of crypto assets and will enable it to offer “further digital asset services.”

Jörg Oliveri del Castillo-Schulz, chief operating officer of Commerzbank, said that acquiring the license is an “important milestone.”

“This highlights our ongoing commitment to applying the latest technologies and innovations, and it forms the foundation for supporting our customers in the areas of digital assets.”

The bank said its first step now is to establish a platform that is both “secure and reliable” and fully complies with local regulations while supporting its institutional clients through crypto custody services via blockchain.

Cointelegraph reached out to Commerzbank for further information on the development. 

Related: Crypto banking app Bitwala relaunches via new partnership with Striga

The development from Commerzbank follows similar news out of Germany, where the country’s third-largest bank, DZ Bank, revealed its crypto custody offerings for institutional investors on Nov. 6. 

DZ Bank announced a new platform for processing and storing digital financial instruments. It also said it applied for a crypto custody license in June 2023 to allow institutional investors and private customers to buy cryptocurrencies.

In September, United States crypto custody firm BitGo received a license from the German Federal Financial Supervisory Authority to expand its compliance with local regulations after three years of operating its dedicated local subsidiary.

The crypto landscape in Germany has gained significant momentum over the last year. In March, Deutsche WertpapierServiceBank launched its wpNex crypto trading platform, offering 1,200 banks and savings banks in Germany access to the digital asset industry.

Magazine: Ethereum restaking: Blockchain innovation or dangerous house of cards?

The Australian Taxation Office (ATO) has provided pivotal guidance on the capital gains tax (CGT) treatment concerning decentralized finance (DeFi) and the process of wrapping crypto tokens. This move is part of the ATO’s ongoing efforts to clarify tax obligations in the evolving domain of digital assets and blockchain-based finance.

DeFi, a form of finance leveraging blockchain technology to operate without traditional financial intermediaries, predominantly runs on the Ethereum blockchain. In DeFi, capital gains can occur, and the ATO has highlighted several CGT events (A1, E2, C2, H2) that might be relevant, depending on the specific arrangement’s nature.

A critical factor in determining CGT events is whether a trust relationship is established within the DeFi arrangement. This becomes significant in scenarios where the legal person holds the same type of asset for other beneficiaries, impacting the sole beneficiary status.

The ATO’s guidance clarifies that many DeFi lending and borrowing arrangements could trigger a CGT event, primarily when beneficial ownership of a crypto asset changes. This can occur through either asset exchange or a future rights exchange.

In DeFi, liquidity pools are mechanisms for pooling crypto assets to facilitate lending and add liquidity to trading. Providers who contribute to these pools receive new assets or rights, representing their pool share. The ATO clarifies that depositing into and withdrawing from these pools can constitute CGT events, determined by the market value of the assets involved.

Rewards or returns from DeFi platforms are treated similarly to interest income for tax purposes. The market value of any crypto asset reward at the time of receipt must be reported as assessable income.

Wrapped tokens, representing another crypto asset, are subject to CGT upon wrapping or unwrapping. This is based on the market value of the wrapped token at the exchange time.

Following the ATO’s clarification, there’s been notable industry response. Chloe White from Genesis Block and Blockchain Australia criticized the ATO’s stance for violating the principle of technological neutrality, potentially impacting the financial future of young Australians.

Adding to the complexities, CoinSpot, a local cryptocurrency exchange, reportedly experienced a security issue leading to a significant financial loss. This incident adds another layer of concern for Australian crypto users in the current regulatory landscape.

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Plasma, a once-prominent Ethereum layer 2 scaling solution, should be revisited by teams currently working on zero-knowledge Ethereum Virtual Machines (EVMs), says Ethereum co-founder Vitalik Buterin.

Invented in 2017, Plasma diverts data and computation — except deposits, withdrawals and Merkle roots — to an off-chain environment.

It was superseded by optimistic and zero-knowledge (ZK)-rollups as the two solutions offered cheaper client-side data storage costs and security properties that “cannot be matched,” Buterin explained in a Nov. 14 X (Twitter) post.

Exit games for EVM validiums: the return of Plasmahttps://t.co/QgyzXAl0wv

— vitalik.eth (@VitalikButerin) November 14, 2023

Buterin said rollups remain the “gold standard,” but Plasma is an “underrated design space” that shouldn’t be forgotten.

“Plasma can be a significant security upgrade for chains that would otherwise be validiums.” Buterin added.

“The fact that ZK-EVMs are finally coming to fruition this year makes it an excellent opportunity to re-explore this design space, and come up with even more effective constructions to simplify the developer experience and protect users’ funds.”

Like Plasma, validums move data and computation off-chain but implement ZK-proofs to validate transactions. Plasma, on the other hand, uses fraud proofs — which are much slower.

Buterin argued improvements in ZK-proofs, such as validity proofs, address the past limitations of Plasma, making it more viable as a scaling solution.

Adapting Plasma for applications beyond payments has also proven to be an Achilles heel for Plasma before ZK-proofs entered the mainstream, Buterin acknowledged.

Buterin expects the Ethereum layer 2 ecosystem to evolve with diverse technological approaches.

Babe wake up Vitalik just revived Plasma

— sassal.eth (@sassal0x) November 14, 2023

Related: Did Ethereum Silently Give Up on Plasma?

Minimal Viable Plasma, Plasma Cash and Plasma Cashflow are among the iterations that have stemmed from Plasma.

Ethereum layer 2 scaling-focused firm Polygon Labs implemented Plasma in 2019 but has implemented several other solutions since.

The movement away from Plasma was partially attributed to Plasma Group, a nonprofit research firm announcing that they would cease working on Ethereum-based scalability in January 2020.

OMG, the token of OMG Network — which uses Plasma — spiked 28.6% to $0.78 in a three-hour window following Buterin’s post, according to CoinGecko. However, it has since fallen 14.3% to $0.67.

Magazine: ZK-rollups are ‘the endgame’ for scaling blockchains: Polygon Miden founder

Zubin Koticha and Alexis Gauba, two founders of the Opyn decentralized finance (DeFi) protocol, are stepping down from the project and “leaving crypto,” according to a statement from Koticha posted to social media on Nov. 14. The statement comes approximately two months after Opyn settled an enforcement action against it from the United States Commodity and Futures Trading Commission (CFTC).

Hey Crypto Twitter,

It’s been a while

This one’s a tough one…

After the regulatory action against Opyn, @alexisgauba and I have made the decision that we are leaving crypto.

This is honestly really emotional for me and Alexis.

— zubin koticha (@snarkyzk) November 14, 2023

In his statement, Koticha claimed that the decision was “really emotional” for them. “We thought we were going to be in crypto for the rest of our lives,” Koticha explained. “But unfortunately and unexpectedly, this is the end of the road.” According to him, Opyn will continue under the leadership of its head of research, Andrew Leone, who is being promoted to CEO.

Koticha hinted that the two executives will be working on a new project, stating, “As for me and Alexis – we got something new for y’all very soon.” However, this new project will not be crypto-related, as the two “have made the decision that we are leaving crypto.”

Gauba shared Koticha’s post from her own account, commenting, “Always thought I’d be building in crypto for the rest of my life, so it’s really sad to be leaving.”

Related: Opyn removes liquidity from Uniswap after $370K stolen in DeFi exploit

Opyn is an options trading platform that runs on the Ethereum network. Its development team is headquartered in San Francisco, California. On Sept. 7, the CFTC announced that it was simultaneously issuing and settling an enforcement action against Opyn and two other DeFi teams for allegedly operating an unregistered derivatives exchange. Opyn was ordered to pay a civil monetary penalty of $250,000 and “cease and desist” from violating U.S. commodities trading laws. Attempting to open the Opyn interface from a U.S. IP address now produces a “blocked” error page, and this redirection persists even when using many offshore VPN addresses.

The CFTC action against Opyn was controversial even within the commission itself, as Commissioner Summer Mersinger wrote a dissenting opinion claiming that the enforcement action should not have been taken.

Crypto Coinbase has challenged the decision of the United States Treasury Department to include Tornado Cash, a decentralized software project, on the list of Specially Designated Nationals and Blocked Persons (SDN). This action, which was brought up in the Western District of Texas, marks a serious clash between the rapidly expanding cryptocurrency industry and the federal regulatory authorities.

Tornado Cash is a platform that runs on the Ethereum blockchain that offers immutable smart contracts that permit anonymous cryptocurrency transactions. This protects the users of Tornado Cash from having their privacy compromised. This piece of software has emerged as a central issue in the ongoing discussion on the appropriate level of government oversight of the digital space.

According to the allegations made in the complaint filed by Coinbase, the action taken by the Treasury Department to penalize Tornado Cash goes beyond the scope of the legal power granted to it under the International Emergency Economic Powers Act (IEEPA) and the North Korea Sanctions and Policy Enhancement Act. The plaintiffs contend that the usual definitions of a “national” or “person” do not apply to Tornado Cash since it is a decentralized organization, and these activities are governed by those definitions. In addition, they argue that the smart contracts in issue do not qualify as “property” in the legal sense since they cannot be changed and no one owns them. Furthermore, they claim that Tornado Cash does not have any legal, equitable, or beneficial stake in the smart contracts in question.

The judicial procedures shed light on the difficulty of governing blockchain technology and the ramifications it has for individual privacy and rights. The plaintiffs contend that the inclusion of Tornado Cash on the SDN List by the Treasury unfairly criminalizes the use of a privacy-focused software application, which impacts law-abiding persons. The plaintiffs have filed a lawsuit to challenge this designation.

As the case moves forward, it exemplifies the rising contradictions between the essential need for regulatory control in the bitcoin industry and the basic rights of free speech and privacy. The verdict in this case has the potential to establish an important precedent for the future regulation of cryptocurrencies as well as the wider use of economic penalties in the era of digital technology.

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