Gryphsis Cryptocurrency Weekly: Binance fined $4.3 billion, CEO Zhao Changpeng resigns, BTC spot ETF approval leads to expected rise
[2023.11.20 - 2023.11.26] On November 22, the world's largest cryptocurrency exchange Binance was criminally charged for violating sanctions and money transmission laws, and agreed to pay $4.3 billion to settle these charges, marking one of the "largest fines" obtained from corporate defendants in the U.S.
Dear Readers,
Welcome to the weekly cryptocurrency summary from Gryphsis Academy. We bring you key market trends, in-depth insights into emerging protocols, and the latest industry dynamics, all aimed at enhancing your expertise in cryptocurrency and Web3.
Happy reading!
Follow us on Twitter and Medium
Get deeper research and insights
Market and Industry Snapshot:
Layer 2 Overview:
Last week, Layer 2 overall showed positive growth, with Optimism surpassing 1B in TVL this week. zkSync Era saw the most significant growth at 39.83%. Protocols like ZKSwap, Steer Protocol, and Popcorn demonstrated notable TVL growth rates.
LSD Sector Overview:
In the LSD sector, Ethereum staking maintained slight growth, but the staking rate saw a minor decline. In terms of market share, all blue-chip LSDs showed growth, with swETH experiencing a significant increase of 16.01% this week.
RWA Sector Overview:
Last week, the total market capitalization of real-world assets rose by 21.07%, with the industry's share increasing by 0.013%. Additionally, RWA active private credit values and tokenized treasuries saw slight growth. Notable growth tokens include $STBU, $DETF, and $CHEX. Tokens like $BRTR, $URQA, and $PENDLE experienced significant losses.
Main Topics
Macro Overview:
- US Stock V.S. Crypto
Major Events This Week:
- Binance Fined $4.3 Billion, CEO Resigns, BTC Spot ETF Expected to Rise.
Weekly Protocol Recommendation:
- Seneca
Weekly VC Investment Focus
AI21 Labs ($155M)
Blast ($20M)
Privy ($18M)
Twitter Alpha:
Aaron.D on weekly governance
Michael Rinko on Consumer Fraud
Teng Yan on Blast and Blur
Joseph A.C. LIoyd ON Shrapnel
@0xTindorr on Gamefi narrative
Macro Overview
This week, both the stock market and the crypto market showed growth trends, with the crypto sector rising more significantly. The S&P 500 and Nasdaq rose by 1.19% and 1.14%, respectively, while $BTC and $ETH increased by 3.3% and 6.4%. In the coming week, keep an eye on consumer information, the PCE price index, the ISM manufacturing index, and other major events.
Major Events This Week
Binance Fined $4.3 Billion, CEO Zhao Changpeng (CZ) Resigns, BTC Spot ETF Expected to Rise
On November 22, the world's largest cryptocurrency exchange, Binance, was criminally charged for violating sanctions and money transmission laws and agreed to pay $4.3 billion to resolve these charges, one of the "largest fines" obtained from corporate defendants in the U.S. Founder Zhao Changpeng "CZ" pleaded guilty in Seattle, agreeing to pay a $50 million fine and resign as CEO. Richard Teng, former head of the Abu Dhabi regulatory authority and later Binance's regional market head, will take over as CEO.
Binance was charged with failing to maintain an adequate anti-money laundering program, operating an unlicensed money transmission business, and violating sanctions laws. The fine will be counted against the amount owed to the Commodity Futures Trading Commission and will be settled with the U.S. Treasury and the Commodity Futures Trading Commission.
Under the plea agreement, Binance must appoint an independent compliance monitor for three years and report its compliance efforts to the U.S. government while paying the fine. Zhao Changpeng is prohibited from participating in Binance's operations or management for the next three years, but this ban will end three years after the monitor's appointment.
https://www.coindesk.com/policy/2023/11/21/binance-to-settle-charges-with-us-doj-source/
Following this news, the price of $BNB fell from 264.54 to 227.95, a drop of 13.8%. According to The Block, Binance experienced over $1 billion in total outflows within 24 hours, with a net outflow of $703 million over the past seven days, indicating a significant negative impact from this incident.
Moreover, BTC also saw a noticeable drop on the 22nd. The primary reason was the waning optimism surrounding the approval of the spot Bitcoin ETF, replaced by the reality of ongoing regulatory crackdowns in the U.S. The U.S. Department of Justice announced it would unveil a "major cryptocurrency enforcement action" later that afternoon, causing Bitcoin (BTC) to drop over 2% to $36,400.
However, some observers noted that Binance's settlement agreement could effectively clear the way for the U.S. Securities and Exchange Commission (SEC) to ultimately approve a spot Bitcoin ETF. They stated that Binance's neutralization and CZ's exit might alleviate the agency's concerns about overseas manipulation of Bitcoin prices.
Crypto service provider Matrixport stated: "With this plea agreement, expectations for a spot Bitcoin ETF may have risen to 100%, as the industry will be forced to comply with the rules that TradFi companies must follow."
Weekly Protocol Recommendation
Welcome to our weekly protocol segment—here, we focus on protocols that are making waves in the crypto space. This week, we have chosen Seneca, a full-chain CDP protocol targeting yield-bearing assets.
Seneca was launched in March this year and has been audited by Sherlock. It currently supports the Arbitrum chain and has three types of tokens: the native token $SEN, the $senUSD collateralized stablecoin, and $sSEN as the governance token that enjoys protocol revenue, still in the testnet phase.
$SEN: Maximum supply of 100M, can be staked to earn $sSEN.
$sSEN: Can be converted back to $SEN, holders can enjoy protocol revenue fees and governance rights.
$senUSD: As a CDP stablecoin, its price is dynamically adjusted to reach $1.
1) If it is below $1, users opening a CDP can buy senUSD at a low price from the market to repay their debts.
2) If it is above $1, users can open a CDP to borrow senUSD, then sell it at a high price in the market, and buy it back when the price drops.
Overall, senUSD aims to achieve a loose peg to USD through user-driven arbitrage and market self-regulation.
However, since it is currently in the testnet phase, users can only stake WETH to borrow senUSD, and arbitrage with senUSD is not yet possible. The official team encourages users to stake $SEN to earn $WETH rewards. They are also actively increasing the types of collateral, including $ARB, $wstETH, and $rETH, but not all have been launched yet.
The protocol has the following features:
Isolation of liabilities and leverage: Debt is independent of collateral, meaning each CDP does not affect one another.
Profit redistribution: $sSEN holders are entitled to enjoy the income composed of the protocol's Trading Tax (in WETH), borrowing fees, interest, and liquidation fees.
Overall, Seneca's mechanism is similar to a clone of MakerDAO, still having profit potential in its early stages. However, building an omnichain CDP platform is currently progressing slowly and will require time.
Our Insights
CDP (Collateralized Debt Positions) is a collateralized debt position, with Maker DAO as its first issuer, currently ranking in the top 5 in the entire DeFi space, with a total TVL of $9.92B. In the entire CDP sector, MakerDAO, JustStables, and Liquidity are the top three protocols.
The general path of a CDP is that users collateralize their assets to obtain (over-collateralized) stablecoins. The CDP locks the assets until the user repays the stablecoins, after which they can reclaim the collateralized assets. If the collateral value falls below the liquidation value, the CDP will be liquidated and forcibly closed.
Unlike Lending, the soft-pegged stablecoins borrowed through CDPs have significant arbitrage opportunities in the early stages when the pool depth is shallow, making them susceptible to manipulation. Although the borrowed tokens in Lending are not stablecoins, most have deep liquidity, and despite fluctuations, they have large market caps, making manipulation costs high.
In the case of Seneca, its mechanism and stage of development present potential arbitrage opportunities. However, its most important token, senUSD, currently has collateral limited to WETH, and senUSD does not have other DEXs available for trading. Therefore, this user-driven excellent asset has not yet officially opened, but it can be kept on the radar, and early participation in SEN incentive activities is encouraged.
Currently, the only support is from Camelot DEX, allowing SEN-ETH swaps and LP (APR 281%), and the official team is providing WETH rewards for staking $SEN (APR 177%). Additionally, the official team will provide LP incentives for the SEN/senUSD pool based on two parts: one is Bribe, and the other is additional $SEN emissions given every Epoch, with the earliest Epoch emitting 90,268 $SEN daily.
In summary, Seneca is worth keeping an eye on, and the current APR data is quite favorable for early participation, waiting for senUSD to go live for arbitrage opportunities.
Weekly VC Investment Focus
Welcome to our weekly investment focus, where we reveal the most significant venture capital dynamics in the crypto space. Each week, we will spotlight the protocols that have received the most funding.
AI21 Labs
AI21 Labs successfully completed a $155 million Series C funding round, bringing the company's total funding to $283 million, with a valuation of $1.4 billion. Investors include Walden Catalyst, Pitango, SCB10X, b2venture, Samsung Next, Google, and NVIDIA. The company aims to bring reliable generative AI to enterprises, providing innovative natural language solutions based on its leading LLMs and neural symbolic systems.
https://x.com/AI21Labs/status/1697211212616843727?s=20
Blast
The Ethereum Layer 2 scaling solution Blast has launched in early access, with its founding team being the original members of the NFT marketplace Blur. It raised $20 million from investors like Paradigm and Standard Crypto. Blast claims to provide native Layer 2 yield generation for Ethereum and stablecoins, attracting over $30 million in assets.
https://x.com/Blast_L2/status/1726747087906464024?s=20
Privy
Privy, a developer tool platform aimed at securely collecting data, has completed an $18 million Series A funding round led by Paradigm. Other participants include Sequoia Capital, Archetype Ventures, and BlueYard Capital. The project will utilize the new funds to expand its team and continue building its library so developers can create engaging on-chain applications for anyone to use.
https://x.com/privy_io/status/1726967584472576157?s=20
Protocol Events
Binance saw $1 billion in net outflows
PancakeSwap proposes veCAKE launch to boost governance influence and liquidity
Ethereum Layer 2 Kinto migrates to the Arbitrum ecosystem
Blast goes live in early access after $20 million raise
KyberSwap offers 10% bounty to hacker following $47 million exploit
Industry Updates
SEC recently met with Grayscale for spot bitcoin ETF listing
Altcoins lead market retrace ahead of release of Fed minutes
Paradigm leads $18 million Series A raise for web3 infrastructure startup Privy
Wintermute Asia executes first options block trade through CME Group
SEC files new lawsuit against Kraken for allegedly operating online trading platform without registering
Twitter Alpha
There is a lot of Alpha in crypto Twitter, but navigating through thousands of tweet threads can be challenging. Each week, we spend hours researching to curate insightful threads and bring you a weekly selection. Let’s dive in!
https://members.delphidigital.io/feed/having-a-blast-with-blur?\&utmsource=link\&utmmedium=portal
https://x.com/0xTindorr/status/1728438340708704398?s=20
Upcoming Events
News Sources:
https://www.theblock.co/post/264579/kyberswap-offers-10-bounty-to-hacker-following-47-million-exploit
https://www.theblock.co/post/264204/binance-saw-1-billion-in-net-outflows-over-the-last-24-hours
https://www.coindesk.com/policy/2023/11/21/binance-to-settle-charges-with-us-doj-source/
That concludes this week's content. Thank you for reading this week's report. We hope you benefit from our insights and observations.
You can follow us on Twitter and Medium for real-time updates. See you next time!
This weekly report is for informational purposes only. It should not be considered investment advice. You should conduct your own research and consult independent financial, tax, or legal advisors before making any investment decisions. Past performance of any asset does not guarantee future results.
