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Cryptogambling / Cryptobuzz Weekly #2 — Signature Bank has a new owner and a new name!

Cryptobuzz Weekly #2 — Signature Bank has a new owner and a new name!

Publish Date: 27/03/2023

Hi guys, guess what… this is the last week of Q1 2023. A lot is bound to happen. Companies and startups will be looking back to take stock of what their start to 2023 has been like. And you should too!

But before we get to that, what better way to start the week than to look at all the interesting headlines from last week?

  • Signature Bank has a new owner and a new name! 
  • A Russian crypto exchange is giving customers access to 50% of their funds despite Europe & US sanctions. How’s that even possible?
  • Paris Blockchain Week has ended. What will the future of Crypto regulations in Europe look like?
  • A DeFillama employee/influencer took to Twitter to spread rumors of a split 
  • Why is Canada kicking out all the crypto exchanges? 

Find out all the juicy details in this week’s edition of Cryptobuzz-Weekly.

Crypto News:

Bitzlato Enables 50% Withdrawals for Users, Despite Sanctions

Sanctioned cryptocurrency exchange, Bitzlato has announced that it would partially restore access to user funds despite existing restrictions by European authorities.

bitzlato Logo

On January 18, the United States Justice Department charged Bitzlato’s co-founder and majority shareholder Anatoly Legkodymov, a Russian national, with operating an unlicensed money exchange business and processing over $700 million in illicit funds.

Despite ongoing sanctions from the United States and Europol, Bitzlato has now enabled its users to withdraw up to 50% of assets stuck on the platform due to enforcement.

A statement released via its official Telegram channel on March 20 read that “Bitzlato users can now restore half of their assets using the Telegram bot — bz_phoenix_bot — which allows users to move assets from the web Bitzlato account to an external wallet or exchange.”

According to the firm, all customer withdrawals from Bitzlato will now be processed in Bitcoin (BTC).  Bitzlato noted that it had to convert user altcoin balances to Bitcoin in a bid to ease technical difficulties associated with the sanctions after the exchange was seized by authorities in January.

Bitzlato’s 50% withdrawal option follows its previous announcement, which outlined plans for a phased resumption of operations.

Several Bizlato users have opted to wait until the exchange restores P2P trading rather than withdraw the allowed limit of 50% of their assets.

However, in a recent statement, a Bitzlato spokesperson warned that users should not expect to recover the remaining 50% of their assets once the P2P exchange is launched, as issues surrounding client funds have not yet been fully resolved.

Paris Blockchain Week 2023: Balancing Act Required for EU Crypto Regulation

At the 2023 edition of the Paris Blockchain Week, Industry experts and regulators weighed in on the proposed MiCA rules to regulate the use of cryptocurrencies in the European Union.

Paris Blockchain Week Logo

At the Paris Blockchain Week 2023, it was highlighted that regulating cryptocurrencies under the European Union’s Markets in Crypto-Assets (MiCA) framework requires a careful balancing act.

The complex nature of the crypto industry, which operates in a rapidly evolving and innovative environment, presents challenges for policymakers seeking to strike a balance between protecting consumers and promoting innovation.

Regulators and industry players highlighted at the event highlighted the need for a nuanced approach to regulation considering the crypto industry’s unique features.

A panel titled “MiCA: How is the EU Regulating Crypto?” delved into the proposed 400-page MiCA regulatory guidelines, which are expected to take effect in 2024.

European Commission Team Leader on Digital Finance and Data Policy, Gundars Ostrovskis gave professional insights into developing the MiCA documentation.

Having worked alongside colleagues to draft the MiCA regulations document, Ostrovskis addressed the panel on how the legislation would be of benefit to companies and users in the cryptocurrency ecosystem

“We clearly expect it to be helpful in terms of strengthening the industry by giving regulatory certainty, this is one of the things that is important for businesses strategic planning, and protecting customers of the industry while ensuring market integrity.”, said Ostrovskis

Industry players and stakeholders also had the chance to offer opinions on how specific sections of the MiCA document could impact the nascent crypto industry.

Janet Ho, head of EU policy at Chainalysis, a prominent blockchain data intelligence platform, stated that the success of MiCA would depend on how the regulator can communicate and incorporate robust feedback from industry participants and rework certain parts of the documentation, among other factors.

“Legislation is not a static process. There’s not always a perfect piece of regulation. We know there will be reviews and improvements.”, said Janet Ho.

Similarly, Hubert de Vauplane, a partner at law firm Kramer Levin Naftalis & Frankel and adviser to European and French lawmakers on fintech, economics, and digital payments, also provided some insights.

De Vauplane was particularly concerned about excluding newer industry phenomena like nonfungible tokens (NFTs) and decentralized finance (DeFi) products and platforms from the MiCA documentation.

After being postponed in January 2023 due to technical issues relating to the translation of the document into its 24 official languages, the European Union is set to conduct a final vote on the MiCA regulation in April 2023.

Government & Regulations:

OKX is Set to End Canada Operations by June 2023.

On March 20, the world’s sixth-largest cryptocurrency exchange, OKX, announced the decision to halt service to Canadian users due to stringent regulatory directives.

In a recent email circulated to users, OKX announced that it would cease offering its cryptocurrency trading services to residents of Canada by June 22.

On Feb. 22, the Canadian Securities Administrators (CSA) published a notice requiring crypto exchanges operating within the Canadian jurisdiction to sign new, legally binding undertakings while they await robust registration and regulatory framework.

Among the list of items outlined in the new undertaking,  the CSA currently prohibits “buying or depositing Value Referenced Crypto Assets (or stablecoins) through smart contracts without its prior written consent of the CSA,”

Citing the new regulations, the OKX stated that it “will no longer provide services or allow users to open new accounts in Canada starting on Mar. 24, 2023, 12:00 AM EST,”

However, the company allayed the fears of customers who initially panicked that their funds could be frozen.

“Your funds will remain safe in your account until you withdraw them. You will be able to withdraw dollars to your linked bank account and cryptocurrency to yourself-custody wallet or your cryptocurrency account on another exchange. “, the statement read.

Despite the abrupt nature of the announcement, OKX noted that it would work with regulators with a view to resuming operations in Canada in the future.  “We hope to see you again in the future. Stay tuned,” an OKX staff member wrote.

The news further highlighted the established trend of Crypto companies sanctioned by Canada in the past year. In June 2022,  Ontario Securities Commission slammed cryptocurrency exchanges KuCoin and ByBit, with millions of dollars in fines after it was determined that both were operating as “non-compliant platforms”’ in the country.

Similarly, on July 29, 2022, cryptocurrency exchange Bittrex Global gave a similar notice to its Canadian users before off-boarding them, also citing regulatory concerns as reasons for leaving the largest geographical jurisdiction in North America.

Canadian authorities appear to have taken a hard stance against crypto exchanges operating within its jurisdiction following the collapse of the ill-fated Quadriga Exchange in 2019.

Currently, all cryptocurrency exchanges operating in Canada must obtain approval from the Canadian Securities Administrators before onboarding users in the country.

According to the email, OKX intends to halt its Canadian operations in phases over the next 3 months.  “All existing Canadian customers must close open options, margins, perpetual and futures positions by June 22, 2023. Fiat or tokens must also be withdrawn by that date.”

Signature Bank Acquired by Flagstar Bank, Crypto not included.

On March 12, the New York Department of Financial Services shut down Signature bank after a bank run that saw customers withdraw deposits of nearly $10 billion within an eventful 24 hours.

Sorry We Are Closed Sign

Only a week after the New York Fed appointed the FDIC to oversee a timely sale of its assets, all 40 branches of the defunct bank will resume activity under the new name “Flagstar Bank” from March 20.

The announcement did not go unnoticed in the cryptocurrency industry as some top exchanges, including Coinbase and Paxos, had confirmed having significant exposure to Signature Bank at the time of the collapse.

While all the deposits continue to be insured until the $250,000 insurance limit, the FDIC excluded all cryptocurrency-related deposits, totaling $4 billion, from the acquisition deal with Flagstar bank. Instead, the FDIC said it would “provide these deposits directly to customers whose accounts are associated with the digital banking business.”

This announcement came after a Reuters report from March 17 had suggested that the FDIC would compel bidders to divest from all crypto activities as part of its requirement for the potential Signature Bank acquisition.

The deal was confirmed after the Federal Deposit Insurance Corporation (FDIC) released an official statement on March 19. According to the statement, the deal will now see Flagstar bank acquire $38.4 billion worth of deposits and assume the liabilities of nearly $12.9 billion in loans.

Although an FDIC spokesperson had previously denied that the agency had included crypto divestment as part of the sale requirements, the official statement now appears to confirm the speculations.

Crypto Influencers

DeFillama Employee Spills on Twitter

On March 19, the core team of the popular blockchain analytics firm announced a split after a disagreement over the proposed launch of a native LLAMA token.

Charlie Watkins and Ben Hauser came under the spotlight on Saturday when user “0xngmi”, a popular pseudonymous developer at DefiLlama, accused the DefiLlama founders of launching a cryptocurrency without employee support. In another tweet, he announced the launch of a new “LLami.fi” domain as a response to an ongoing “hostile takeover.”

The purported dispute, according to 0xngmi, centers around the company’s plans to fundraise through a token launch “despite everybody in the team not wanting it.” The developer added that “the DefiLlama team who have built the site […] for the past three years have decided to fork Defillama and start fresh on llama.fi.”

Another pseudonymous Twitter user affiliated with the Defllama team also alluded to the claim.   “Long story short, someone was planning to launch a LLAMA token without approval of a single person on the Defillama team,” tweeted Tendeeno, who appears to be a contributor on several projects of Llama Corp., the parent company of DefiLlama.

In a Telegram channel, Llama Corp. said: “0xngmi and a few team members have gone rogue, they are actively looking to seize DefiLlama IP and community while inaccurately claiming the rightful owner to be doing a hostile takeover.”

Prominent personalities in the cryptocurrency and Decentralized finance industry also took to Twitter to express their support for the DeFillama founders over the employee revolt.

DeFi architect and Yearn.finance founder Andre Cronje narrated how Charlie has been funding the DeFilamma operations “out of pocket” since inception.

“Easy to be ideological when you aren’t paying the bills. Charlie has been out of pocket funding all of Defillama’s expenses for years, it isn’t cheap. Watching everyone turn on everything he has done is disgusting. Him trying to stop the bleeding isn’t greed, it’s sustainability. Let’s see how long they last without his ‘free money’. They’ll be raising or adding ads or a token soon enough.”, Cronje tweeted.

The team has since quashed the dispute after DefiLlama’s official Twitter account released a statement apologizing to users and confirming that the token release plans have now been laid to rest.

“We would like to put what happened behind us. There is no LLAMA token currently planned, and any airdrop will be discussed with the community, as every important decision is. We will take steps to operate in a more transparent manner to ensure this doesn’t happen again”, the statement read.

__________________________________

Here’s where we end this week’s edition. Next week will even be juicier and better… We’ll look at some of the biggest stories that shaped the crypto world in Q1 2023.

Don’t miss it!

 

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