Ladies and Gentlemen, welcome to the Coinsents Crypto Wire, your regular update of news and events regarding Bitcoin, Ethereum, the other digital assets, and the greater geopolitical scene at large. Today is December 19th 2022.
Auditing firm Mazers, has paused its business with all of its cryptocurrency clients including Binance, Kucoin and Crypto.com, according to an emailed statement from Binance. The Firm recently performed a proof of reserves assessment on binance finding that its bitcoin reserves were over collateralized, but has since removed the report from its website. Mazers has also reportedly discontinued its Mazer's Veritas service which was dedicated to crypto exchange audits, and removed its report on Kucoin's over collateralized reserves. Other auditing firms such as Armanino, which audited FTX, have also halted their work with cryptocurrency exchanges.
Prominent investor Michael Burry has criticized cryptocurrency audits claiming they began learning on the job in the mid-2000s. Burry is known for predicting and profiting from the subprime mortgage crisis of 2007 and 2008, and has previously been publicly critical of cryptocurrencies, describing them as the mother of all scams. He believes that Bitcoin and most other cryptocurrencies are overvalued.
U.S banking committee chairman Senator Sherrod Brown has suggested that the SEC and the CFTC should consider banning cryptocurrencies, but acknowledge that this would be difficult and would likely push the market offshore. In an interview with NBC's Meet the Press, Brown called cryptocurrencies dangerous and a threat to national security citing their use in illicit activity by North Korea and for terrorism financing. In late November, Brown urged treasury secretary Janet Yellen to help reign in cryptocurrency companies following the implosion of the FTX exchange that sent shock waves across the cryptocurrency industry. However, even harsh critics admit that the industry has now become too powerful. Representative Brad Sherman recently said the government refrained from prohibiting Bitcoin in its early days, but crypto promoters are now spending too much money on lobbying efforts for this to happen.
Jay Clayton former chair of the Securities and Exchange Commission has expressed support for the use of distributed ledger technology and traditional finance, despite past skepticism towards the cryptocurrency industry. Clayton, who served as SEC chair from 2017 to 2020, has previously voiced support for the regulation of cryptocurrency intermediaries and the crackdown on platforms that trade securities. He has also expressed concern about the risk of counterparty and credit risk in stable coin compliance.
Sam Bankman-Fried, the founder and former CEO of crypto exchange FTX will no longer contest extradition to the United States from the Bahamas. Bankman-Fried was arrested in the Bahamas in December at the request of the United States following FTX's bankruptcy filing in November. Bankman-Fried was previously set to have an extradition hearing on February 8th and face being held in a jail with known dangerous and overcrowded conditions until that time.
The Democrat Party is planning to return over one million dollars in funding to victims of the now defunct cryptocurrency exchange FTX. The party received the funds and contributions from Sam Bankman-Fried, the former CEO of FTX, who has been arrested following allegations of fraudulent activity that resulted in the exchange losing around $8 billion in investment funds. A spokesperson for the Democrat National Committee said that the party will set aside the funds and return them as soon as it receives proper direction in the legal proceedings.
The mining difficulty for Bitcoin is expected to increase by three percent on December 19th. The mining difficulty is a measure of how difficult it is to solve the cryptographic puzzle required to create a block on the Bitcoin network and adjusts every two weeks. In 2022, there were 26 mining adjustments for Bitcoin with 16 of them being positive and 10 being negative. The mining difficulty reached a record high in 2022 due to its increase in hash rate, which has caused some miners to struggle with profitability due to the decline in Bitcoin's price despite the drop in mining difficulty. In December it's still a four percent below an all-time high and the mean hash rate for Bitcoin is still above 240 exahashes.
A proposed bill in Nigeria could allow local regulators to recognize cryptocurrencies as capital for investment. If it is passed, the bill would also define the supervisory roles of the Central Bank of Nigeria and the Securities and Exchange Commission with respect to digital currencies. Nigeria banned financial institutions from facilitating cryptocurrency transactions in 2017, but the market has grown with crypto transactions in the country accounting for over $400 million by February 2022. The proposed Bill aims to provide a framework for the regulation of cryptocurrency related activities including commodity exchanges derivatives and digital currencies. The amendment bill has passed the second hearing and is under review by the committee on Capital Market and Institutions, after which it will be submitted to the House of Representatives for final approval.
A leading real estate developer in the United Arab Emirates has entered into an agreement with CoinMENA, a Bahrain-based crypto asset service provider regulated by the Central Bank of Bahrain to allow real estate purchases using cryptocurrencies including stable coins like USDC and USDT. The agreement aims to accelerate the growth of Dubai's new economy and allow investors to participate in the digital economy by buying selling storing and receiving digital assets safely and securely, as well as depositing and withdrawing funds in their local currencies.
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