Happy New Year! It is a tradition at Inside.com to look back on the year's biggest headlines for the final edition of the year. Below are the 10 biggest headlines from the crypto industry this year (in my opinion, of course). Enjoy! Happy Holidays. | |  Aaron |  |
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 AUGUST BLOG POST BY ARTHUR HAYES, NOW A CHARGED CRIMINAL AT LARGE First up, the #1 headline of the year: BitMEX. What's happened since? In a sentence: the whereabouts of Arthur Hayes and most co-founders are still unknown. The following text is the original story, as published on Oct. 1 and 2. The CFTC charges Arthur Hayes and others at BitMEX with illegally operating a derivatives trading platform and violating anti-money laundering (AML) regulations. We have been following Hayes' curious behavior and BitMEX's problems for months at Inside Cryptocurrency. BitMEX claims to process over $1.7B in daily derivatives transactions. - The CFTC has filed its civil enforcement action in the U.S. District Court for the Southern District of New York, charging five entities and three individuals from BitMEX with operating an unregistered trading platform and violating multiple CFTC regulations.
- Among those charged are company owners Arthur Hayes, Ben Delo, and Samuel Reed, as well as "a maze of corporate entities" including HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX).
- Hayes remains at large.
- The CFTC alleges that BitMEX has earned at least $1B in fees while conducting "significant aspects of its business" from U.S. residents.
- A related criminal action by the U.S. Attorney for the District of New York indicts Hayes and three others on federal charges of violating the Bank Secrecy Act.
- HDR Global Trading Limited, a defendant and the parent company of BitMEX, has vowed to fight the charges.
Crypto's biggest headline of the year: BitMEX and Arthur Hayes' indictment. Below are some additional notes from the fallout. - Hayes claimed to process $1T in transactions during 2019. Even today, BitMEX reports $2.4B in 24hr volume.
- Among many actions, the Department of Justice arrested Samuel Reed and filed criminal charges against him, CEO Hayes, and others.
- Bitcoin crashed $450 intraday when the news broke. Fear and uncertainty always impact markets, and BitMEX held approximately 160,000 bitcoin (worth $1.7B) as of the time of the announcement, according to Chainalysis Chief Economist Philip Gradwell. Bitcoin has fallen 5% since yesterday.
- Indeed, BitMEX claims to hold 36,569 bitcoin worth $387M in its insurance fund alone.
- Gradwell expects BitMEX customers to withdraw "tens of thousands of bitcoin" today. (Over 32,000 have already been withdrawn.)
- Mainstream news and TV outlets have interviewed Hayes' in the past, allowing him to talk about his "invention" of perpetual bitcoin futures, and stratospheric price predictions like $50,000 bitcoin by December 2018, and $100,000 for a DeFi token called yearn.finance (YFI).
- Bloomberg interviewed Hayes, who claimed that he processed $1T in transactions within one year. RealVision gave Hayes a glowing review.
- Whether futures or swaps actually traded on BitMEX, or were simply rendered on internal servers, might never be known. The lawsuit alleges that BitMEX was tantamount to "a casino with loaded dice, manipulating both its systems and the market its customers use for its own substantial financial gain."
- BitMEX proudly offered risky leverage to retail investors, amplifying gains and losses by up to a factor of 100.
- The DoJ claims that BitMEX actively sought U.S. customers, even after purportedly withdrawing service from the country.
- The complaint quotes Hayes saying that the price to bribe officials in the Seychelles, where BitMEX was registered but never actually conducted business, was just "a coconut."
- In June, SaaS providers Twilio and Intercom possessed tens of thousands of emails for U.S. BitMEX customers.
- In May, BMA LLC alleged that 15% of BitMEX's 2019 trading volume, or about $138B worth of transactions, was attributable to traders located in the U.S. It also described the "sheer magnitude" of BitMEX's unlawful activity as "truly staggering."
U.S. DEPT. OF JUSTICE 
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 OKEX'S INCREDIBLE EXPLANATION Next up, the second most important headline of the year: The detainment of OKEx's co-founder and the exchange's indefinite suspension of withdrawals, freezing over $3B worth of customers' bitcoin plus untold altcoins. OKEx has Chinese ties to the world's largest cryptocurrency exchange, Binance. OKEx began allowing some withdrawals approximately one month later. Below is the original text of the story, as published on Oct. 16. China's cryptocurrency giant OKEx has suspended withdrawals indefinitely. As of yesterday, OKEx possessed at least 276,000 bitcoin, worth over USD$3B, plus untold values of altcoins. - OKEx is among China's two largest cryptocurrency exchanges, claiming to process half as much as the world's largest exchange, Binance.
- Yesterday alone, OKEx reported daily cryptocurrency transactions of $3.3B in spot plus $2.1B in derivatives. Those figures annualize to ostensibly $2T of transactions per year.
- According to reports from China's Caixin, police have apprehended OKEx co-founder Mingxing "Star" Xu.
- Police are still detaining Xu.
- Hours before OKEx's announcement, significant quantities of bitcoin (BTC), Ethereum (ETH), and Tron (TRX) were withdrawn from known, OKEx-affiliated addresses.
- OKEx CEO Jay Hao has confirmed Xu's "cooperation" with police due to a "personal issue," claiming that the investigation would not affect the safety of OKEx deposits.
- OKEx's indiscriminate denial of all withdrawals is available here. Their statement justifies the indefinite suspension of customers' assets by appealing to website terms of service, "OKEx may change the service and/or may also interrupt, suspend or terminate the service at any time with or without prior notice."
Decrypt
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 BRAD GARLINGHOUSE The third biggest headline of 2020: the SEC sues Ripple (XRP) co-founders for enriching themselves with hundreds of millions of dollars personally by selling unregistered securities. Below is the original text of the story, as published on Dec. 22. Ripple's CEO pre-announced an SEC lawsuit against Ripple, his co-founder, and himself regarding their XRP (XRP) sales. Fortune was first to break the story. We previously published an in-depth Ripple edition here at Inside Cryptocurrency, and have followed the "never-ending" ICO of XRP for years. Pre-announcing the SEC: - Ripple CEO Brad Garlinghouse said that yesterday the SEC "voted to attack crypto" and is preparing a lawsuit against Ripple, co-founder Chris Larsen (a billionaire due to his personal XRP liquidations), and himself.
- The SEC announced the lawsuit moments before publication.
- The SEC's lawsuit claims that XRP are unregistered securities. Moreover, it claims that Ripple and its executives failed over a period of years to satisfy "core investor protection provisions, and as a result investors lacked information to which they were entitled."
- Garlinghouse oddly chose to pre-announce the suit, likely due to his knowledge of non-public, discovery processes that started long ago.
- From its high last week of $0.65, XRP has declined over 25% to $0.46 today.
The opinion of a centimillionaire: - Garlinghouse, whose personal fortune increased hundreds of millions of dollars from XRP on the backs of retail investors, lashed out at the SEC yesterday, calling the unannounced lawsuit an "attack" on the crypto industry and "out of step with other G20 countries."
- XRP has declined 85% from its all-time high.
- Garlinghouse also said that outgoing Chairman Jay Clayton is "trying to limit U.S. innovation."
- Garlinghouse tweeted that, in his opinion, Japan, Singapore, and Switzerland agree that XRP is not a security. (Writer's note: I regret the lack of time to fact-check these three claims.)
Context: - A plaintiff in an earlier Ripple lawsuit, Ryan Coffey, called Ripple's ICO "never-ending" because of Ripple's continuous XRP liquidations.
- In 2012, Larsen and others created 100 billion XRP tokens, giving XRP a fully diluted market capitalization of $46B today. Over half of that value is locked within escrow accounts; XRP's current market cap is $21B.
- In 2018 and on various occasions, Ripple's CEO gave false assurances that by the end of 2019, "dozens" of banks would integrate XRP tokens, among numerous other forecasts that failed to materialize.
- Despite calling itself a separate entity from XRP, Ripple Labs has historically controlled a significant amount of XRP. It also earns income by selling XRP under its control.
- Apart from ongoing lawsuits, the Financial Times has also reported that Ripple Labs has long struggled to find meaningful use-cases for XRP.
- Brave New Coin investigated the extensive use of bots that artificially aggrandize the size of XRP's community.
The Block Crypto
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Headline four: the deposition of Gavin Andresen, Satoshi Nakamoto's personally named successor. This is the first testimony under oath of Satoshi's known successor, making it invaluable for anyone involved in bitcoin. The following is the original text of the story, as published on Sept. 2. An invaluable, 300-page, first-ever court deposition is now available to view with testimony by Satoshi Nakamoto's named successor. Nakamoto personally turned over administrative privileges to Bitcoin's source code repository to Gavin A. Andresen in 2010. - The full deposition by Andresen is now available to view online. Andresen is Nakamoto's named successor. Andresen's testimony was taken under oath in Massachusetts on Wednesday, February 26, 2020, and is accessible here.
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The fifth most important headline: 80% of central bankers are working on central bank digital currencies (CBDCs). In May, the Bank of International Settlements ("the central bank of central banks") confirmed that 80% of its member banks were actively working on CBDCs. With hundreds of trillions of dollars worth of fiat currency in the world, CBDCs will remain the largest cryptocurrency asset class for decades to come. The following is the original text of the story, as published on May 11. Yves Mersch, an executive at the European Central Bank (ECB), said that it is looking into a central bank digital currency (CBDC). However, there is a "lack of a concrete business case" to launch a retail CBDC right now. He went on to note that when the times come for such a step to be taken, the ECB wants to be ready. Despite pressure from China with its state-backed digital currency and Facebook's Libra, Yves said that demand for money isn't receding despite the bad press it sometimes gets. More:
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The sixth most important headline of 2020: the largest cryptocurrency lawsuit in history. Lawsuits take time and transpire with hundreds of discreet events. This lawsuit started in early 2019 and still continues today. The following is the original text of the story, as published on Oct. 19. Regarding the trillion-dollar Bitfinex-Tether lawsuit. The relationship between Bitfinex, the USD-backed stablecoin Tether (USDT), and the price of bitcoin is at the heart of the largest cryptocurrency lawsuit ever. - Over the years, plaintiffs have accused cryptocurrency exchange Bitfinex of manipulating markets and the price of bitcoin through its related stablecoin, Tether (USDT).
- One plaintiff is New York Attorney General (NYAG) Letitia James. For background on her ongoing lawsuit, see this edition of Inside Cryptocurrency.
- Writer's note: As with any legal matter, only counsel to the parties are authorized to speak for their clients. No one involved in this story has conducted any primary research nor is a legal expert whatsoever. This lawsuit deals with the largest amount of money ever contested in a U.S. cryptocurrency lawsuit, and its full details could fill a library of books. The following is an abbreviated, woefully incomplete summary of some relevant updates from third-party publications, but is not a complete retelling of the matter, and is certainly not the opinion of either of the parties. Although I have attempted to avoid errors, I apologize for any that remain.
Reginald Fowler: - Reginald Fowler is a 61-year-old Arizona businessman who once had a small stake in the NFL's Minnesota Vikings.
- Background on Fowler's various investments and football ventures can be found here.
- A few years ago, Fowler and his associates opened accounts at Crypto Capital, a Panamanian bank with direct ties to Bitfinex, Tether, and other cryptocurrency exchanges.
- In early 2020, plaintiffs charged Fowler in the United States District Court in the Southern District of New York with bank fraud, illegal money transfers, and wire fraud. Authorities have seized Fowler's assets and indicted him.
- According to the indictment, Fowler and an Israeli woman, Ravid Yosef, lied to banks while laundering hundreds of millions of dollars through the U.S. financial system on behalf of cryptocurrency exchanges.
- The judge had offered a plea deal to Reginald, but according to assistant U.S. attorney Jessica Fender, Fowler rejected that deal.
- Fowler's attornies have pushed back a trial until Jan. 11, 2021.
- The plaintiffs explained Fowler's connections with Crypto Capital, as well as Crypto Capital's banking relationships with other cryptocurrency exchanges like QuadrigaCX, Binance, Cex.io, and iFinex Inc. (Bitfinex).
- Another group of investors charged Bitfinex, Tether, Fowler, and others with bitcoin market manipulation that affected up to $1.4T.
- Defendants filed a joint dismissal. One of Fowler's defenses pertains to jurisdiction, claiming no ties with the State of New York.
Crypto Capital: Bitfinex's Panamanian bank. - Panama-based Crypto Capital was a bank and payment processor for Bitfinex/iFinex.
- During 2018, it blocked access to over $800M of the exchange's funds during a time when governments were freezing the exchange's other bank accounts in Poland, Portugal, and the U.K.
- iFinex requested a judge in a California court to help unlock its funds.
- Specifically, iFinex filed a request in October asking a judge in the U.S. District Court of the Central District of California to order discovery from Rondell "Rhon" Clyde Monroe, ex-VP of TCA Investment Bancorp and Trust.
- A legal discovery process would have allowed iFinex to access documents from Monroe that would have (in iFinex's opinion) revealed that Monroe had custodial authority over its locked funds at Crypto Capital.
- iFinex additionally sought information regarding any correspondence with Reginald Fowler, due to his ties with Crypto Capital.
NYAG's investigation continues: - NYAG Leticia James is currently probing Bitfinex/iFinex and its relationship with the Tether (USDT) stablecoin.
- She claims that the pair illegally moved substantial funds, including some amounts from New York, to Crypto Capital.
- Justice Joel M. Cohen ruled that the NYAG office had submitted sufficient evidence to suggest that Bitfinex and Tether conducted business in New York and that the court had jurisdiction over certain matters.
- John D. Castiglione, Brian M. Whitehurst, and Johanna Skrzypczyk are leading the investigation.
- NYAG attempted freezing Bitfinex and Tether's credit lines until the defendants produced documents related to the subpoena.
- NYAG said that the crypto exchange hid the loss of $850M, replenished by taking a Tether (USDT) loan.
- A lawsuit by other investors holds Bitfinex and Tether responsible for issuing billions of Tether (USDT) tokens and occasionally flooding markets of trading pairs denominated in USDT, such as BTC/USDT, which affects the price of cryptocurrencies worldwide.
- Plaintiffs allege that Bitfinex and Tether manipulated prices that have affected over $1.4T.
- Tether maintains its defense by pointing to the relatively stable price of USDT over time, and claiming that all tokenholders have ultimately been able to redeem their USDT for U.S. dollars (USD).
- NY Judge Cohen called for a video conference between the exchange's legal representatives and the NYAG office last month, during which he again asked iFinex representatives to submit documents.
- Bitfinex remains adamant that many charges are baseless.
- Tether and Bitfinex enjoy centralized powers that allow them to freeze blockchain addresses and effectively reverse transactions.
How Tether issuances affect the price of bitcoin. Tether claims that its USD-backed stablecoin is 100% backed by USD deposits on a 1:1 basis. - Wells Fargo revealed a major red flag in a California lawsuit after Wells Fargo had severed its banking relationship in Taiwan in 2017. iFinex and Tether blamed Wells Fargo for blocking access to its USD deposits at that time, which prevented customers from redeeming USDT for USD.
- At that time, Tether announced a temporary suspension of USDT redemptions.
- That year, Tether experienced a hacking incident and lost approximately $30M. Tether also froze USDT redemptions at that time.
- Tether issuances affected the bitcoin market and caused temporary changes to bitcoin's price, according to various studies.
- Whenever Tether prints or revokes USDT into the market, the price of trading pairs denominated in USDT change rapidly, and affect global prices.
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 PAYPAL CEO DAN SCHULMAN Crypto's seventh biggest headline of 2020: Paypal lists four cryptocurrencies using a conditional BitLicense, including Bitcoin Cash (BCH) just days prior to its highly contentious hard-fork. The following is the original text of the story, as published on Oct. 21. (Wow, October was a big month in crypto news!) Paypal will allow customers to buy, sell, and shop using cryptocurrencies. PayPal has 346 million active customer accounts and 26 million active merchants in its network. - Bitcoin is now 6% higher than before Paypal's announcement.
- Paypal (NASDAQ:PYPL) has rallied 5% today.
- The global payment processor announced that its customers may use bitcoin (BTC), Ether/Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) for buying, selling, and shopping.
- Venmo, PayPal's social payment platform, will enable cryptocurrencies on its network starting next year, according to a Reuters report dated Oct. 21.
- In an interview, President CEO Dan Schulman said that the new services would likely boost the usage of virtual currencies on a global scale, and prepare the PayPal network for any upcoming central bank digital currencies (CBDCs).
- The San Jose-based company processed approximately $222B in payments during Q2 2020. Paypal's trailing 12 months (TTM) gross profit is $8.6B.
- PayPal secured a conditional license from the office of the New York Department of Financial Services (NYDFS), allowing it to partner with Paxos in its new cryptocurrency offering.
- PayPal is collaborating with central banks in preparation for different forms of digital assets, including potential CBDCs.
- Bloomberg reports that Paypal customers will not be able to transfer cryptocurrencies purchased outside of Paypal into their account, nor vice versa.
Reuters
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The eighth most important headline of 2020: the SEC orders Telegram to return $1.2B. The following is the original text of the story, as published on June 25. The U.S. Securities and Exchange Commission (SEC) has requested that Telegram return $1.2B of its $1.7B initial coin offering (ICO) sale. According to a document filed today, the SEC has asked the New York Southern District Court to order the penalty regarding the company's canceled Telegram Open Network (TON) project and its Gram token. The document states, among other things, that the defendants, Telegram Group Inc. and TON Issuer Inc., are "severally liable for disgorgement of $1,224,000,000." It also notes that Telegram Group Inc. is liable for a civil penalty amounting to $18.5M. More: Coin Telegraph
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 DEFI AND UNICORNS Headline nine of 2020: DeFi darling Uniswap mints a voting token. It wouldn't be a Top 10 list of the year's biggest crypto headlines without an honorary mention of DeFi and its innumerable exit scams. To stay positive, I've chosen the industry's shining star which, despite many questions, remarkably still survives. Hopefully the industry cleans up next year ⏤ it has been brutal ⏤ but there is something exciting happening in this nascent industry. The following is the original text of the story, as published on Sept. 17. A cryptocurrency that didn't exist 48 hours ago — advertised as a voting token for an exchange that has operated without voting for two years — now has a $3.5B fully diluted market capitalization. Within hours of its creation yesterday, Binance and Coinbase Pro (excluding New York) announced their listing of Uniswap's new UNI token. Its 1 billion newly-minted tokens are now worth over $3.5B. It raises many questions. Most importantly, what are the actual listing standards of the exchanges? - The fastest listing ever, UNI received exchange trading approvals within minutes of launching its token on the Ethereum mainnet.
- Launched in 2018 and still ranked 4th by Total Value Locked (TVL), Uniswap is a popular stablecoin exchanges in the decentralized finance (DeFi) industry. Uniswap is responsible for over 20% of Ethereum gas usage within the last 24 hours.
- Uniswap has operated its exchange for over a year with no need for its own token. It decided to issue one anyway.
- Binance paired UNI with bitcoin (BTC), Binance Coin (BNB), Binance USD (BUSD), and Tether (USDT). Trading volume on those pairs within the last 24 hours already exceeds $250M.
- Uniswap will issue one billion UNI tokens to founders, team and community members over the next four years. At today's UNI price, that is an award worth over $3.5B.
- Uniswap appeased concerns about its massive cryptocurrency issuance by unabashedly giving away free money (49M UNI, worth over $150M) to historical liquidity providers and users. By completing a few simple steps, former users of Uniswap can redeem free UNI tokens, often worth over $1,000 per address.
- Coinbase's parent company claims to adhere to over 45 checklist points when evaluating new tokens. Included among these are dozens of technical requirements, "stringent security protocols," as well as team members setting a "reasonable budget." (Just last night, Uniswap printed $3.5B in value from nothing, and founders will be able to sell their first tranche of tokens within 30 days.)
- Just last evening, Uniswap announced the launch of UNI token. Nevertheless, Coinbase Pro listed UNI at 2:20 a.m. EDT. It is unclear what review Coinbase engineers could have completed within a few minutes of the token's launch. What is clear, indeed, is the booming popularity of DeFi.
- Binance's less organized listing criteria are available simply as Changpeng Zhao's personal blog post, and a Google Form.
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Last but not least, the tenth biggest headline of the year: investigations. Is minting a cryptocurrency the most profitable activity in the world? It certainly was in 2018. Thankfully, investigators have had another year to uncover more answers. Links to some of the year's major investigations since August appear below, as published to Inside Cryptocurrency since I joined the team. Parenthetical symbols indicate the primary cryptocurrency associated with the story. And yes, I admit that this helps me pack in all the other contenders for this Top 10 list, but it isn't cheating if it's topical!
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- The SEC published a statement for the custody of digital asset securities by special purpose broker-dealers on Dec. 23, asking for comments on specific questions, such as how the SEC should regulate such broker-dealers to keep up with evolving standards.
- Executive VP at PIMCO, Anthony Crescenzi, called bitcoin "a form of exchange, not money" during an interview on Bloomberg on Dec. 23.
- Russian cryptocurrency exchange Livecoin lost control of backend servers and nodes on Dec. 24, 2020, due to a "carefully planned" security breach that printed bitcoin exchange prices as high as $500,000. Hackers exchanged their coins at favorable exchange rates, cashing out large profits in altcoins.
- Bitcoin node repository Bitcoin.org, which hosts a canonical copy of bitcoin's open-source code, experienced a DDoS attack on Dec. 19.
- Jay Clayton has left the SEC, as expected, and he issued a public statement.
- Former White House Director of Communications, Anthony Scaramucci, filed for a private securities offering of his new bitcoin fund, SkyBridge Bitcoin Fund L.P.
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 |  | Curated by Associated Press fanboy, eye-strained news terminal watcher, and bitcoin follower since $1, Aaron Wise. Temporarily listening to news squawk boxes in Florida while awaiting the construction of cryptopia. | | | | Editor | Jonathan Harris is a writer for Inside.com. Previously, he wrote for The Huffington Post, TakePart.com, and the YouTube channel What’s Trending. | |
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