Cryptocurrency exchange Binance is working with accounting firm Mazars as part of its proof-of-reserve (PoR) audits triggered by the fall of FTX.Mazars, the accounting firm that worked for former United States President Donald Trump’s company, was appointed as an official auditor to conduct a “third party financial verification” as part of Binance’s PoR updates, the Wall Street Journal reported on Nov. 30.The accounting firm is reportedly already reviewing all of Binance’s publicly shared information on Bitcoin (BTC) PoR and will also be verifying future updates and tokens, a spokesperson for Binance reportedly said. “The first verification update for BTC will be completed this week,” the representative added.Mazars is an international accounting firm headquartered in Paris. Its United States division, Mazars USA, was the longtime accounting firm for Trump and had been involved in a controversy with a House Oversight and Reform Committee’s request for some of Trump’s financial records since 2019. The firm reportedly eventually cut ties with Trump and his family in 2022.The news comes amid Binance moving large amounts of cryptocurrency as part of its PoR audits. On Nov. 28, Binance sent 127,351 BTC, or about $2 billion, to an unknown wallet, with CEO Changpeng “CZ” Zhao subsequently announcing that the transaction was part of the ongoing PoR process.The action has triggered some concerns in the community, as previously, CZ argued that it’s bad news when exchanges have to move large amounts of crypto to prove their wallet address.As previously reported, Binance launched a PoR process and mechanism in response to the crash and bankruptcy of the FTX crypto exchange. On Nov. 25, the firm also published Merkle Tree-backed proof of funds for Bitcoin, which was just one of many Binance’s measures to prove its transparency.Related: OKX releases proof-of-reserves page, along with instructions on how to self-audit its reservesBinance is not alone in putting major efforts to maintain the trust of its customers in the aftermath of the FTX collapse, with many other exchanges like OKX and KuCoin rushing to release their PoR reports as well. In the meantime, some industry observers believe that the existing PoR process by exchanges is largely useless unless they also provide liabilities, which are very hard to fake.Binance did not immediately respond to Cointelegraph’s request for comment.Čítaj viac
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Cryptocurrency exchange Binance plans to reenter the Japanese market after acquiring a 100% stake in a licensed crypto service provider in the country, Cointelegraph Japan reported.In an official public announcement on Nov. 30, Binance CEO Changpeng Zhao said the crypto exchange was committed to re-entering the Japanese market under regulatory compliance. The acquisition of Sakura Exchange BitCoin (SEBC), a Japan Financial Services Agency-licensed business, would mark the re-entry of global exchange in the Japanese market after four years.#Binance Acquires JFSA Registered Sakura Exchange BitCoin, Committed to Enter Japan Under Regulatory Compliancehttps://t.co/xfdnaY2hiO— CZ Binance (@cz_binance) November 30, 2022Talking about the importance of the latest acquisition, a Binance spokesperson told Cointelegraph:“We can say that the acquisition of SEBC marks Binance’s first license in East Asia, and as Asia is a market with potential, we hope to expand in other regions.”Binance had to shut its operations and plans to open a headquarter in Japan in 2018 after an FSA notice for operating without a license. The Japanese government warned the crypto exchange again in 2021 on similar grounds. Binance’s acquisition of a regulated entity to enter a crypto market where it has found it difficult to acquire a license independently is nothing new. Earlier, Binance managed to reenter the Malaysian market after acquiring a stake in a regulated entity. Similarly, the exchange reentered the Singapore market with an 18% stake in a regulated stock exchange. The crypto exchange also managed to access United Kingdom’s sterling payment network with a partnership with Paysafe after the regulators declined it access to the same.Related: Bank of Japan to trial digital yen with three megabanksCointelegraph reached out to Binance to enquire whether the exchange had applied for an independent license in Japan as well, but a spokesperson declined to comment.Japan is considered one of the first crypto nations to introduce some form of regulation on trading crypto assets. While strict, the Japanese approach to cryptocurrency regulations was widely appreciated, and G20 nations even consulted the nation over global crypto parameters.Recently, Japan has eased up its regulatory policy further to encourage more crypto startups and allow them to flourish and has made coin listings easier.Čítaj viac
Crypto collectibles and nonfungible token (NFT) marketplace OpenSea announced plans to integrate BNB Chain on Seaport Protocol by the end of Q4 2022. The integration will allow users to buy, list and trade BNB Chain NFTs on the OpenSea marketplace.BNB Chain was built by Binance to operate as a Web3-focused blockchain network powered by the exchange’s in-house token, Binance Coin (BNB). BNB Chain’s integration into OpenSea’s Seaport Protocol aims to provide BNB Chain creators with multiple creator payouts, real-time payouts and collection management, among others.Sharing insights into the move, Gwendolyn Regina, Investment Director at BNB Chain, revealed her intent to deliver better experiences to NFT creators and users. She added:“The integration will bring a large number of creators into the wider system, as well as empower the creators and NFT initiatives inside the BNB Chain ecosystem.”The integration aims to lower gas fees, provide easier signature confirmation actions and eliminate setup fees. In addition to BNB Chain, OpenSea plans to leverage Seaport across multiple blockchains to reach more users. Related: Binance sees record 138K BTC inflows as opinions differ on what Bitcoin price will do nextOpenSea recently confirmed to continue enforcing royalties across all collections after receiving significant public backlash for considering otherwise.The community pushback came after OpenSea announced the launch of an on-chain tool that would allow creators to enforce royalties for any new collections on the platform but stopped short of offering the same to existing collections.The on-chain tool, as described by OpenSea CEO Devin Finzer as a “simple code snippet,” was aimed at taking over the existing system of voluntary creator fee payment. The code would also restrict NFT sales to only marketplaces that enforce creator fees criteria.Well… For instance, I committed myself to a 100 piece collection. I’m currently at 96 out of the 100… And now I’m stuck with this message and I can’t complete it. Ever. Thanks! pic.twitter.com/DdLRNpiucI— Hammy.eth (@HamsterNFT) January 27, 2022In January 2022, OpenSea had to backtrack its attempt to impose hard limits on minting NFTs after the community retaliated. The platform had temporarily changed its policy to only allow five NFT collections with 50 items per collection, which was previously unlimited.While reversing the decision, OpenSea had argued that smart contracts were being misused and that “over 80% of the items created with this tool were plagiarized works, fake collections, and spam.”Čítaj viac
Crypto executives and politicians are becoming louder in their calls for crypto regulation as the aftermath of the FTX collapse continues to reverberate through the industry. In just the last 24 hours, the European Central Bank (ECB) president Christine Lagarde called regulation and supervision of crypto an “absolute necessity” for the European Union, while United States House Financial Services Committee Chair Maxine Waters announced that lawmakers will explore the collapse of FTX in a Dec. 13 inquiry. On Nov. 28, United States Senator and crypto supporter Cynthia Lummis described the collapse of FTX as a wake-up call for congress, according to The Financial Times. During an interview at the Financial Times’ Crypto and Digital Assets Summit, Lummis said the bipartisan bill she introduced this year would have prevented the FTX collapse as regulators would be able to see if an exchange fell below the threshold “Immediately.” “Those are things that had they been in place for FTX, would have set off alarm bells, that would have created regulatory enforcement actions and reviews by federal regulatory agencies,” she explained.Meanwhile, in an on-stage talk at the University of Nicosia as part of a Binance Meetup Nicosia, Binance CEO Changpeng Zhao said he believes regulation is a way to help the industry develop, “protect consumers” and apply consequences to those caught breaking the law.Stephanie Link a Chief Investment Strategist and Portfolio Manager at investment advisor Hightower Advisors, has called for more regulation as well, stating crypto is “Broken and irrelevant” until there is regulation. Why do we continue to discuss crypto? Broken and Irrelevant. Until there is regulation.— Stephanie Link (@Stephanie_Link) November 27, 2022Tom Dunleavy, a senior research analyst from crypto analytics firm Messari gave similar pro-regulation sentiment in a Nov. 28 post on Twitter, noting that clearer regulation around crypto will pave the way “for massive flows” of new investors.The biggest concern institutional investors have with investing in crypto is the uncertain regulatory environment Clearer regulation paves the way for massive flows pic.twitter.com/2zBsi4AAXA— Tom Dunleavy (@dunleavy89) November 28, 2022
“The biggest concern institutional investors have with investing in crypto is the uncertain regulatory environment,” Dunleavy said.The crypto analyst cited the Coinbase-sponsored 2022 Institutional Investor Digital Assets Outlook Survey which found just over half of the respondents considering investing in crypto were concerned about the uncertain regulatory environment.Related: FTX collapse put the Singapore government in a parliamentary hot seatLast week, banking and financial services JP Morgan in a Nov. 24 note said that it expects there to be more urgency to get a consistent framework in place in the wake of FTX’s collapse. According to the firm, regulations are likely to be imported from the traditional finance system, “Thus causing a convergence of the crypto ecosystem towards the traditional finance system.”Čítaj viac
Bitcoin (BTC) bears have been in control since Nov. 11, subduing BTC price below $17,000 on every 12-hour candle. On Nov. 28, a drop to $16,000 shattered bulls’ hope that the 7% gains between Nov. 21 and Nov. 24 were enough to mark a cycle low at $15,500.The most likely culprit was an unexpected transfer of 127,000 BTC from a Binance cold wallet on Nov. 28. The huge Bitcoin transaction immediately triggered fear, uncertainty and doubt, but the Binance CEO, Changpeng Zhao, subsequently announced it was part of an auditing process.Regulatory pressure has also been limiting BTC’s upside after reports on Nov. 25 showed that cryptocurrency lending firm Genesis Global Capital and other crypto firms were under investigation by securities regulators in the United States. Joseph Borg, director of the Alabama Securities Commission, confirmed that its state and several other states are investigating Genesis’ alleged ties to securities laws violation.On Nov. 16, Genesis announced it had temporarily suspended withdrawals, citing “unprecedented market turmoil.” Genesis also hired restructuring advisers to explore all possible options, including but not limited to a potential bankruptcy, as reported by Cointelegraph on Nov. 23.Let’s look at derivatives metrics to better understand how professional traders are positioned in the current market conditions.Margin markets show leverage longs at a 3-month high Margin markets provide insight into how professional traders are positioned because it allows investors to borrow cryptocurrency to leverage their positions.For instance, one can increase exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price declining. Unlike futures contracts, the balance between margin longs and shorts isn’t always matched.OKX stablecoin/BTC margin lending ratio. Source: OKXThe above chart shows that OKX traders’ margin lending ratio increased from Nov. 20 to Nov. 27, signaling that professional traders increased their leverage longs during the 6% dip toward $15,500. Presently at 34, the metric favors stablecoin borrowing by a wide margin — the highest in three months — indicating traders have kept their bullish positions.Leverage buyers ignored the recent dip to $15,500The long-to-short metric excludes externalities that might have solely impacted the margin markets. In addition, it gathers data from exchange clients’ positions on the spot, perpetual and quarterly futures contracts, thus offering better information on how professional traders are positioned.There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.Exchanges’ top traders Bitcoin long-to-short ratio. Source: CoinglassEven though Bitcoin failed to break above the $16,700 resistance, professional traders have kept their leverage long positions, according to the long-to-short indicator.For instance, the ratio for Binance traders improved somewhat from 1.00 on Nov. 21, but ended the period at 1.05. Meanwhile, Huobi displayed a more substantial increase in its long-to-short ratio, with the indicator moving from 1.01 to 1.08 in the seven days until Nov. 28.At crypto exchange OKX, the metric slightly decreased from 0.99 on Nov. 21 to 0.96 on Nov. 28. Consequently, on average, traders are confident enough to keep adding leverage to bullish positions.Related: US House committee sets Dec. 13 date for FTX hearingThe $16,200 support showed strength, suggesting that traders are turning bullishThese two derivatives metrics — margin and top trader’s long-to-short — suggest that size leverage sellers did not back the Bitcoin price correction to $16,000 on Nov. 28.A bearish sentiment would have caused the margin lending ratio to go below 15, pushing the long-to-short ratio much lower. It is important to note that even pro traders can misinterpret the market, but the present reading from the derivatives market favors a strong $16,000 support.Still, even if the price revisits $15,500, bulls should not be concerned as the derivatives indicators withheld neutral-to-bullish on Nov. 21 and further improved during the week.The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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.
Cryptocurrency exchange Binance is moving large amounts of cryptocurrency as part of its proof-of-reserve (PoR) audits, according to the CEO.Binance sent 127,351 Bitcoin (BTC), or more than $2 billion, to an unknown wallet on Nov. 28, Whale Alert reported on Monday. According to on-chain data, the transaction occurred at 10:00 am UTC, costing Binance just a 0.000026 BTC ($0.42) fee.The huge Bitcoin transaction has immediately triggered some FUD in the community, with many noting that Binance has moved an amount that is an entire fortune in one single transaction.Binance CEO Changpeng Zhao subsequently took to Twitter to announce that the massive transaction is part of Binance’s PoR audit process. He also called the community to keep calm and ignore the FUD, stating:“The auditor requires us to send a specific amount to ourselves to show we control the wallet. And the rest goes to a change address, which is a new address. In this case, the input tx is big, and so is the change.”The CEO also referred to an old post on Twitter that he posted four years ago, calling on the crypto community to “learn about blockchain transactions” and “change addresses.”“We will be moving some funds between our cold wallets. A tell tale sign of a new cold wallet on Binance is two small transfers from and back an existing wallet, then a large transaction. No need to be alarmed,” Zhao wrote in a tweet in October 2018.In response to growing FUD in his comments, Binance CEO posted another tweet, arguing that investors that “believe FUD all the time,” are also “likely to be poor.”I know it’s hard. If you thought a fraudster is legit, you probably are already poor.But…If you believe FUD all the time, you will also likely to be poor.Life is not easy.— CZ Binance (@cz_binance) November 28, 2022The latest Binance transaction has apparently raised eyebrows of investors as Zhao himself declared that exchanges moving large amounts of crypto to prove their wallet address is not good news. On Nov. 13, Zhao wrote on Twitter the following statement: “If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay #SAFU.”The news comes shortly after former Kraken CEO and co-founder Jesse Powell argued Binance’s PoR approach was “pointless” without liabilities.Related: CoinMarketCap launches proof-of-reserve tracker for crypto exchangesA number of industry experts, including DAO Maker Hassan Sheikh and JAN3 CEO Samson Mow, are also confident that exchanges’ PoR practice is useless without liabilities because it’s very difficult for exchanges to fake liabilities.Čítaj viac
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The collapse of the crypto exchange FTX revealed the importance of proof-of-reserves in avoiding situations involving the misappropriation of users’ funds. While exchanges have proactively started sharing wallet addresses to prove the existence of users’ funds, several entrepreneurs, including Kraken CEO and co-founder Jesse Powell, called the practice “pointless” as exchanges fail to include liabilities.According to Powell, a complete proof-of-reserve audit must include the sum of client liabilities, user-verifiable cryptographic proof that each account was included in the sum and signatures proving the custodian’s control over the wallets. While Kraken’s proof-of-reserve does allow verification of assets against the company’s liabilities, Powell continues to call out other players that have missed out on including accounts with negative balances.I’m sorry but no. This is not PoR. This is either ignorance or intentional misrepresentation.The merkle tree is just hand wavey bullshit without an auditor to make sure you didn’t include accounts with negative balances. The statement of assets is pointless without liabilities. https://t.co/b5KSr2XKLB— Jesse Powell (@jespow) November 25, 2022Powell called out CoinMarketCap in the past for sharing an incomplete proof-of-reserves as it lacked “cryptographic proof of client balances and wallet control.” He reiterated that reserves are not the list of wallets but assets minus liabilities. Binance’s recently released proof-of-reserves system allows users to verify their assets using a Merkle tree. However, Powell shared his displeasure as the system failed to include accounts with negative balances, stating that:“The whole point of this is to understand whether an exchange has more crypto in its custody than it owes to clients. Putting a hash on a row ID is worthless without everything else.”Moreover, he asked the media and journalists to refrain from “overselling it and misleading consumers.” Instead, he recommended they take the time to understand the motive behind proof-of-reserves.On the other hand, few community members refuted Powell’s need for a trusted auditor.Related: Crypto exchange Kraken freezes accounts related to FTX and AlamedaOn Nov. 19, Binance CEO Changpeng Zhao confirmed to have started working on building a safe centralized exchange (CEX), idea put forth by Ethereum co-founder Vitalik Buterin.In this instance, the best-case scenario would be building a system that does not allow crypto exchanges to withdraw a depositor’s funds without consent.Čítaj viac
Bitcoin (BTC) has been trading near $16,500 since Nov. 23, recovering from a dip to $15,500 as investors feared the imminent insolvency of Genesis Global, a cryptocurrency lending and trending company. Genesis stated on Nov. 16 that it would “temporarily suspend redemptions and new loan originations in the lending business.” After causing initial mayhem in the markets, the firm refuted speculation of “imminent” bankruptcy on Nov. 22, although it confirmed difficulties in raising money. More importantly, Genesis’ parent company Digital Currency Group (DCG) owns Grayscale — the asset manager behind Grayscale Bitcoin Trust, which holds some 633,360 BTC. Contagion risks from the FTX-Alameda Research implosion continue to exert negative pressure on the markets, but the industry is working to improve transparency and insolvency risks. For example, on Nov. 24, crypto derivatives exchange Bybit launched a $100 million fund to help market makers and high-frequency trading institutions struggling with financial or operational difficulties.More recently, on Nov. 25, Binance published a Merkle Tree-backed proof of funds for its Bitcoin deposits. Moreover, the exchange outlined how users can use the mechanism to verify their holdings. There’s no doubt that centralized institutions must embrace transparency and insurance mechanisms to regain investors’ trust. First, however, one must analyze Bitcoin derivatives markets to fully understand how professional traders are digesting such news.Futures market discount improved slightly but remains far from bullishFixed-month futures contracts usually trade at a slight premium to regular spot markets because sellers demand more money to withhold settlement for longer. Technically known as contango, this situation is not exclusive to crypto assets.In healthy markets, futures should trade at a 4% to 8% annualized premium, which is enough to compensate for the risks plus the cost of capital. The opposite, when the demand for bearish bets is exceptionally high, causes a discount on futures markets — known as backwardation.Bitcoin 2-month futures annualized premium. Source: Laevitas.chConsidering the data above, it becomes evident that derivatives traders flipped bearish on Nov. 9, as the Bitcoin futures premium flipped negative. Yet, according to futures markets, the $15,500 dip on Nov. 21 was not enough to instill additional demand for leveraged short positions. Option markets confirm the bearishnessTraders should analyze options markets to understand whether Bitcoin will likely retest the $15,500 support. The 25% delta skew is a telling sign whenever arbitrage desks and market makers are overcharging for upside or downside protection.The indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put options premium is higher than risk call options.In a nutshell, the skew metric will move above 10% if traders fear a Bitcoin price crash. On the other hand, generalized excitement reflects a negative 10% skew.Bitcoin 60-day options 25% delta skew: Source: LaevitasAs displayed above, the 25% delta skew has been above the 10% threshold since Nov. 9, indicating options traders are pricing a higher risk of unexpected price dumps. Currently at 18%, it signals investors are fearful and reflects a lack of interest in offering downside protection.Related: How bad is the current state of crypto? On-chain analyst explainsA surprise pump will likely cause more impactConsidering that both Bitcoin futures and options markets are currently pricing higher odds of a downside, there is no reason to believe that an eventual retest of the $15,500 bottom would cause massive liquidations.Furthermore, the slight reduction in the futures discount shows bears lack the confidence to open leverage shorts at current price levels. Even though Bitcoin derivatives data remains bearish, the surprise of an eventual bull run to $18,000 is likely to cause more havoc. But, for now, bears remain in control according to BTC futures and options data.The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Čítaj viac
Two weeks after Binance initially pledged to develop a proof-of-reserve (PoR) mechanism in response to the FTX liquidity and bankruptcy fiasco, it published its official response.In an announcement on the Binance website, the exchange outlined how users can use the mechanism to verify its holdings. Currently, the only token available to verify through the Merkle Tree-based system is Bitcoin (BTC), though the announcement says additional coins will be added in the coming weeks. It also highlighted upcoming transparency updates, which include the involvement of third-party auditors to audit its PoR results and the implementation of ZK-SNARKs in its PoR methods, among others.Days after Binance announced its intention for PoR, it released the public details of its wallet addresses and on-chain activity.Binance CEO Changpeng “CZ” Zhao tweeted about the latest update. Naturally, the Twitter community responded and many with positive comments toward the transparency efforts. This is a great initiative. Perhaps a stand-alone page for Proof of Reserves where users can see all the exchange holdings (updated daily) could be on the roadmap for the future.— Chief (@satn) November 25, 2022Related: Proof-of-reserves: Can reserve audits avoid another FTX-like moment?Binance was one of the first following the FTX to start a trend of releasing proof of funds. Bybit released its reserve wallet addresses on Nov. 16, a week after the initial incident, along with other major exchanges, such as Bitfinex, OKX, KuCoin and Crypto.com.Both Huobi and Gate.io came under fire after publicizing their information, which included loaned funds. Cryptocurrency investment product provider Grayscale Investments said it ws hesitant to release wallet addresses due to security concerns.On Nov. 10 Chainlink Labs offered PoR auditing services to exchanges across the space as a solution to trust issues starting to pop up for centralized exchanges. Market tracker CoinMarketCap shared on Nov. 22 that it had added a new feature, which is a PoR tracker for exchanges that have publicized the information.Čítaj viac
Binance intends to allocate $1 billion for a proposed industry recovery fund, while its CEO revealed intent in a new bid for assets of bankrupt cryptocurrency lending firm Voyager by its United States-based business.Speaking to BloombergTV on Nov. 24, Binance CEO Changpeng Zhao touched on a number of topics in what has been a tumultuous month for the cryptocurrency ecosystem.Chief among them was Binance’s proposed industry recovery fund, which is aimed at providing financial support to promising projects in financial distress. The exchange’s founder introduced the idea in the wake of FTX’s now-infamous collapse.Related: Binance CEO denies report firm met with Abu Dhabi investors for crypto recovery fundZhao said that details of the fund were due to be published on the exchange’s blog in the coming days, adopting a fairly “loose” structure with contributions from other members of the cryptocurrency ecosystem:“There’s been back and forth on how to structure that — do we make it a loose fund or an actual fund? I think we’re kind of going with a loose approach where different industry players will contribute as they wish.”The fund will be publicly viewable according to the Binance CEO, with contributors set to send funds to a central, transparent blockchain address. Zhao also noted that the fund is expected to go live before the end of 2022 while touting a six-month road map within which he expects to see the industry recover. The report also noted that Binance.US is interested in a new bid for assets belonging to the now-bankrupt Voyager Digital. The lending firm was one of a handful to go bust in the wake of the Terra collapse in May 2022. The Binance CEO also said that the exchange would consider a second look at some assets or businesses belonging to FTX. Binance considered a deal to buy out Sam Bankman-Fried’s exchange before its spectacular collapse in November 2022.Zhao said that FTX had invested in a number of projects, some of which may “be salvageable” and of interest if and when they become available.Čítaj viac
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