Weekly News Highlights | Three Arrows Capital Faces Liquidation from Multiple Exchanges; Babel Finance Suspends Product Redemptions and Withdrawals

Organizer: Linqi, Chain Catcher

Important News

1. Zhao Changpeng: The crypto market downturn may last four years, Binance will continue to expand investments and acquisitions
On June 17, Zhao Changpeng stated in an exclusive interview with Fortune magazine that the downturn in the crypto market may last for four years, but this also means opportunities for Binance. Zhao mentioned that Binance has ample funds and does not need to raise capital, confirming that Binance will continue to expand investments and acquisitions this year. (Source link)

2. The Wall Street Journal: Three Arrows Capital considers selling assets and seeking rescue, has hired legal and financial advisors

On June 17, news reported that Kyle Davies, co-founder of the crypto hedge fund Three Arrows Capital, stated in an interview that after suffering significant losses from a widespread market sell-off of digital assets, the company has hired legal and financial advisors to help its investors and lenders devise solutions, including asset sales and rescue by another company. The fund hopes to reach an agreement with creditors to allow more time to formulate a plan. (The Wall Street Journal)

3. Rari Capital co-founder Jai Bhavnani announces exit from the project

On June 13, news reported that Jai Bhavnani, co-founder of the DeFi robo-advisor Rari Capital, announced his exit from the project and departure from the Tribe community. In his farewell letter, Jai mentioned issues currently present in the DeFi space, such as token dumping, a lack of real users and application scenarios, and an overestimation of on-chain governance, stating, "I have never sold a single RGT or TRIBE. I participated in the process from zero to one, and today the development of the ecosystem has exceeded my imagination." (Source link)

4. JPMorgan downgrades Coinbase rating from overweight to neutral

On June 14, news reported that JPMorgan downgraded Coinbase's rating from overweight to neutral and reduced its target price for the stock COIN from $171 to $68.

It is reported that JPMorgan stated in a report on Tuesday that the extreme decline in the cryptocurrency market in the second quarter of this year, coupled with Coinbase's increasing external investments, means that the exchange is unlikely to generate profits in the short term. JPMorgan estimates that after a 40% decline in trading volume in the first quarter, Coinbase's trading volume will drop by more than 30% in the second quarter.

Following the report's release, Coinbase's stock price fell more than 11% in pre-market trading to $52.01. (CoinDesk)

5. Babel Finance suspends product redemptions and withdrawals due to significant liquidity pressure

On June 17, news reported that crypto financial service provider Babel Finance announced that due to recent market volatility and risk events affecting some industry institutions, Babel Finance is facing significant liquidity pressure. To prevent further deterioration of the situation and to protect customers from losses, the company is closely communicating with all related parties for solutions and has suspended product redemptions and withdrawals during this period, with recovery time to be announced later.

Previously, Chain Catcher reported on May 25 that Babel Finance completed a $80 million financing at a valuation of $2 billion, with participation from Dragonfly Capital and others. (Source link)

6. BitMEX confirms liquidation of Three Arrows Capital positions, insiders say the loss is about $6 million

On June 17, news reported that according to The Block, three insiders revealed that after Three Arrows Capital failed to meet margin call requirements, crypto trading platforms FTX, Deribit, and BitMEX have liquidated Three Arrows Capital's positions over the past week. One insider stated that Three Arrows Capital owes BitMEX $6 million.

A BitMEX spokesperson has confirmed this news but declined to comment on the specific amount, stating that BitMEX's legal department is in contact with Three Arrows Capital regarding next steps.

Additionally, a spokesperson for Bitfinex stated that Three Arrows Capital closed positions at a loss without needing liquidation and has withdrawn all funds from the Bitfinex platform, with Bitfinex not suffering any losses. (The Block)

7. MakerDAO takes multiple measures to prevent risks from Celsius bankruptcy

On June 17, news reported that MakerDAO has voted to disable the DAI direct deposit module (D3M) of the lending platform Aave to prevent risks from Celsius's bankruptcy. Additionally, the MakerDAO community has voted to approve a proposal to use rETH as collateral. The proposal was prompted by recent market panic caused by stETH, and community members believe it is necessary to add different ETH staking derivatives to diversify ETH staking pool options.

It is reported that Aave's D3M consists of 200 million DAI, of which 100 million has been borrowed by Celsius. If Celsius goes bankrupt, it will be liquidated on Aave, and Celsius may sell its stETH to fulfill its obligations, which would force stETH to decouple further. At the same time, this would prevent the Maker protocol from reclaiming the DAI borrowed by Celsius. (CoinTelegraph)

8. 8 Blocks Capital trading director: Three Arrows Capital misappropriated about $1 million from the institution for margin calls

On June 16, news reported that Danny, the trading director of 8 Blocks Capital, tweeted that since November 2020, an agreement was signed with Three Arrows Capital to pay fees to use their trading accounts to reduce trading fees, with the agreement allowing withdrawal from the account at any time, and that Three Arrows Capital would never transfer funds without permission.

On June 13, 8 Blocks Capital requested a large withdrawal from Three Arrows Capital due to market conditions. The other party did not respond, and later the institution discovered that $1 million was missing from the trading account. After attempting to contact Three Arrows Capital, there was no response. Danny stated that Three Arrows Capital used these funds for margin calls.

"Losing a bet is one thing, but at least do it with dignity and don’t drag others into your bet. Don’t be sneaky with everyone because they might help you," Danny said. (Source link)

9. Due to the ongoing market downturn, crypto lending company BlockFi will lay off 20% of its workforce

On June 14, news reported that BlockFi CEO Zac Prince tweeted that the company will lay off about 20% of its workforce, stating, "Like many others in the tech industry, we are impacted by the sharp changes in macroeconomic conditions, which have negatively affected our growth rate. Therefore, our top priority is to achieve profitability so that we can extend our runway and control our destiny."

Earlier this February, BlockFi reached a settlement with the SEC and paid a $100 million fine for failing to register its interest-bearing crypto accounts with regulators. (Source link)

10. Coinbase decides to reduce its workforce by about 18%

On June 15, news reported that Coinbase CEO Brian Armstrong announced the decision to reduce the workforce by about 18%. Brian Armstrong stated, "In the past month, I have had multiple conversations with our executive team and board about recent market events and our business situation, including the economic downturn, the need to manage company costs in a declining market, and the rapid expansion of the team. At the beginning of 2021, Coinbase had 1,250 employees, and since then, it has grown by about 200%."

Brian Armstrong stated that within the next hour, each employee would receive an email from HR notifying them whether they are affected by the layoffs. Departing employees will receive at least 14 weeks of severance pay, with an additional 2 weeks for each year of service beyond one year. (Source link)

11. Telegram whistleblower: Previous leaks were fabricated for attention, will no longer release related information

On June 15, news reported that the anonymous Twitter user adyingnobody stated through Ethereum on-chain transaction notes that there would be no release of the previously claimed Telegram chat logs today, stating that there are no secret parties or assassinations, no sexual assaults, and no influencers stealing from users; these were all fabricated for attention. If there are any future messages from this address, it should be assumed that the private key of this address has been leaked and that it is false information sent by others.

Previously, on June 7, adyingnobody tweeted that a vulnerability discovered in Telegram three years ago allowed him to access any group and view any user's messages, and he had downloaded over 100GB of chat information, including conversations from cryptocurrency KOLs and founders of the top 200 projects by market cap, planning to release it on June 15. (Source link)

12. At least 10 browser extension wallets, including MetaMask, have security vulnerabilities, some wallets have fixed the issues

On June 16, news reported that at least 10 browser extension wallets, including MetaMask and Phantom, may have exposed login information due to an issue in the JavaScript language, which could allow attackers to exploit the mnemonic phrases stored in memory for a period. Currently, MetaMask and Phantom have fixed the vulnerability.

MetaMask stated that there is a possibility of being hacked only if all three conditions are met: the hard drive is unencrypted, the mnemonic phrase is imported into an untrusted device or the computer is hacked, and the "show mnemonic phrase" feature was used during import. Additionally, Halborn received a $50,000 bounty for disclosing the vulnerability and advised users to switch to new wallet addresses. Halborn's co-founder Steve Walbroehl stated that the vulnerability has existed for a long time, and it is best to change wallet addresses out of caution. (CoinDesk)

13. Today's Legal Report: A man in Guangxi was robbed of 3 million yuan in an offline Bitcoin transaction
On June 16, news reported by CCTV's Today's Legal Report covered a virtual currency robbery case that occurred last May. Yang and Wang from Hezhou, Guangxi, arranged with a seller to bring 3 million cash to a designated hotel to trade Bitcoin. However, this virtual currency transaction was a trap from the start, as the buyer had arranged a gang to ambush at the scene. After being lured out of the hotel by the other party, a group of masked men suddenly rushed out and stole the 3 million cash. The police in Hezhou, Guangxi, arrested all suspects within 36 hours of the incident. The investigating officer stated that a similar robbery case involving a virtual currency buyer had occurred in Guilin before, but the buyer did not dare to report it. (Source link)

14. DeFi lending protocol Inverse Finance suffers a flash loan attack, losing $1.2 million, and has suspended borrowing

On June 16, news reported that the DeFi lending protocol Inverse Finance was attacked via a flash loan, with hackers stealing approximately $1.2 million. According to on-chain data, the hacker utilized 27,000 bundled Bitcoins (worth about $579 million) for the flash loan around 4:47 AM Eastern Time. The exploited funds included 53 BTC and 100,000 USDT.

Inverse Finance officially stated that this morning, DOLA (a decentralized stablecoin pegged to the US dollar) was removed from the Inverse currency market Frontier, and borrowing has been suspended while the matter is under investigation, with no user funds being compromised or at risk. Previously in April, Inverse Finance was also hacked, resulting in a loss of approximately $15 million. (The Block)

15. AEX exchange announces resumption of withdrawals, with a daily limit of 500 USDT per account

On June 17, news reported that AEX exchange announced the full resumption of withdrawals, with a current daily withdrawal limit of 500 USDT, and it is expected that the restrictions will be lifted within 90 days. Previously, on June 16, AEX announced that the delay in withdrawals was due to the inability to redeem assets in the short term for medium to long-term allocations. (Source link)

16. Merit Circle community votes to end relationship with YGG and repurchase all tokens for $1.75 million

On June 15, news reported that the gaming guild Merit Circle community voted to terminate its relationship with Yield Guild Games, repurchasing the $175,000 seed round investment share for $1.75 million. Previously, the Merit Circle community stated that Yield Guild Games had failed to provide value to the DAO since becoming a seed investor and proposed to cancel YGG's SAFT (Simple Agreement for Future Tokens), refund its initial investment, and remove its MC seed tokens. (Source link)

17. Panama's president vetoes the law regulating Bitcoin, which will return to the National Assembly for debate

On June 17, news reported that according to local media La Prensa, the president of Panama has vetoed the law regulating Bitcoin, stating that "it needs to adapt to the regulations of our financial system." The bill will return to the National Assembly for debate.

Earlier, at the end of April, Panama's legislative body approved a bill regulating the use of cryptocurrencies. The bill would make digital assets such as Bitcoin, Ethereum, Ripple, Litecoin, and Stellar valid payment methods for "any legal civil or commercial operation," including paying taxes, fees, and duties to the government. The bill also formally recognizes DAOs (Decentralized Autonomous Organizations) as legal entities and sets a framework for the country to issue tokenized securities and commodities (such as gold and silver) through Security Token Offerings (STOs). (Decrypt)

Important Financing/Venture Capital News

1. Web3 venture capital firm IOBC Capital establishes a $50 million venture fund, focusing on infrastructure and middleware sectors

On June 13, news reported that Web3 venture capital firm IOBC Capital announced the formal establishment of its first phase venture fund with a scale of $50 million. Alva Xu, founding managing partner of IOBC Capital, stated that the fund will focus on opportunities in the Web3 infrastructure layer, component layer, and middleware layer.

It is reported that IOBC Capital was founded in 2021 and focuses on investments in the Web3 infrastructure sector, with teams located in the United States, Singapore, and other places, and recently participated in DeFi trading acceleration tool bloXroute's Series B $70 million financing.

2. Sequoia Capital launches two new funds totaling $2.85 billion, expanding investments in the Web3 sector

On June 14, news reported that Sequoia Capital's Sequoia India and Southeast Asia announced the launch of two new funds: the Sequoia Capital India Early Stage Venture and Growth Fund (approximately $2 billion) and the Sequoia Capital Southeast Asia Dedicated Fund (approximately $850 million).

It is reported that the two funds will continue to focus on sectors such as SaaS and fintech while further expanding their investment scope to include Web3 and other areas, having previously invested in Web3 startups such as CoinSwitch Kuber and Polygon. (TechCrunch)

3. Amber Group acquires Hong Kong SFC licensed financial group Celera Markets

On June 14, news reported that crypto financial service provider Amber Group announced the acquisition of financial group Celera Markets Limited, which had previously obtained full licensing from the Hong Kong Securities and Futures Commission (SFC).

Through this acquisition, Amber Group obtained five types of SFC licenses, including Type 1, Type 2, Type 4, Type 5, and Type 9, enabling the company to provide a wide range of services, including consulting and trading for securities and futures contracts, as well as asset management services. (Source link)

4. Foresight Ventures launches a $200 million crypto fund "Foresight Secondary Fund I"

On June 15, news reported that Foresight Ventures launched a $200 million crypto fund "Foresight Secondary Fund I," which focuses on investing in crypto assets seeking liquidity in the private market (SAFT). According to official disclosures, crypto exchange Bitget is the largest single LP for this fund.

5. BMAN and Huobi co-founder Du Jun jointly launch a $400 million fund ABCDE

On June 17, news reported that BMAN tweeted that it has jointly established a $400 million fund ABCDE with Huobi co-founder Du Jun, dedicated to investing in builders of Web3. (Source link)

6. Zero-knowledge proof startup zCloak Network completes $5.8 million Pre A round financing, led by Coinbase Ventures

On June 17, news reported that zero-knowledge proof startup zCloak Network completed $5.8 million in Pre A round financing, led by Coinbase Ventures, with participation from Bixin Ventures, Matrixport Ventures, DFG, Sancus Ventures, KuCoin Ventures, Sanctor Capital, Hash Global, and Jump Capital. The funding will be used to expand zCloak Network's partnerships with identity data verifiers, Web3 applications, and other blockchain networks. (The Block)