Market returns despite Binance’s investigation 

Changpeng Zhao steps down as head of Binance amid a multi-billion-dollar settlement with the U.S. Department of Justice. 

It’s been a rocky few weeks for Binance, the world’s largest cryptocurrency exchange. First, the Securities and Exchange Commission (SEC) announced an investigation into the platform due to an alleged mishandling of customer funds and a breach of the nation’s securities laws. This proved to be just the tip of the iceberg, as a multi-year investigation by the Department of Justice concluded with significant ramifications. Binance was charged with money laundering and facilitating the transaction of assets between terrorist organisations and other sanctioned parties. 

The company ultimately settled to the tune of $4 billion dollars (AUD $6 billion) with the DOJ, marking one of the largest corporate settlements in United States history. Binance’s CEO and founder, Changpeng Zhao, was heavily implicated in the suit and has independently been ordered to pay $50 million (AUD $75 million) in penalties. As part of his guilty plea bargain, CZ was forced to resign from his position at Binance and its partner company, Binance.US. 

However, what could’ve been an FTX-scale disaster for the crypto industry has been averted amid the Binance crisis. Binance is responsible for a significant portion of trading, blockchain innovation and DeFi. Its collapse may have spelled an extension of the crypto winter for the foreseeable future. However, the settlement agreement between authorities and Binance has avoided the loss of customers’ funds and a potential contagion. Thanks to this, the community has largely rallied around CZ and Binance. 

Ultimately, the outcome of the Binance news may be positive for the crypto world. It shows that the industry is finally maturing and that businesses can take responsibility for their actions while growing and better serving their communities. The market has responded similarly, with the price of Bitcoin up 9% on the month as investor confidence continues to grow. 

Grayscale and BlackRock meet with the SEC over Bitcoin ETF filing 

The meeting has intensified speculation that a spot Bitcoin ETF may be approved soon.  

There are two words on the tip of every Bitcoin holder’s tongue at the moment: Spot ETF. Speculation has surrounded the potential release of a spot Bitcoin ETF since September this year, when reports emerged the SEC was strongly considering approving the first-ever spot crypto funds. The conjecture has recently intensified, with the price of BTC rocketing upward 48% in anticipation of an official announcement. The hype only strengthened amid a false tweet from prominent media outlet Cointelegraph suggesting the SEC had officially approved a spot Bitcoin ETF. Even though the news was inaccurate, it triggered a BTC run past USD $30k, from which it hasn’t looked back.   

To make matters even more pressing, two financial institutions with pending Bitcoin ETF applications – Grayscale and BlackRock – recently met with the SEC to hammer out some details. To understand the premise of these meetings, we must first interrogate what exactly a spot ETF is. 

Other tradeable Bitcoin indexes currently use BTC futures to track the price of Bitcoin. While this provides some exposure to Bitcoin’s price, it often lags and isn’t a clear representation of BTC’s value. On the other hand, a spot ETF directly follows the price of BTC with a portfolio comprising actual Bitcoin, among other assets. 

The meeting revolved around switching up the ETF model. Instead of offering “in-kind” ETFs – an asset that can be redeemed directly for Bitcoin – companies may switch to an “in-cash” offer where they use a third-party custodian to manage BTC holdings while selling their product to customers in cash. Only a few businesses are considering switching to an “in-cash” model, which may provide quicker ETF approval than others entering the market. Either way, a spot Bitcoin ETF appears just around the corner, and the community eagerly awaits. 

Cardano debuts AI chatbot, CardanoGPT, for testing 

Cardano’s new CardanoGPT model has officially been released for testing, with the bot able to perform both visual and text-based generations.  

Artificial intelligence and blockchain technology are a match made in heaven. Several businesses in the sector have already partnered up to deliver new AI solutions to the world – but the popular DeFi project Cardano has taken things to the next level with its new chatbot powered by CardanoGPT. 

The chatbot, named Girolamo, pays homage to the Italian mathematician Girolamo Cardano and will perform all the basic functions of a language-learning model also has a few tricks up its sleeve. The Cardano community can use the bot for simple, real-time queries and generative responses, such as writing an email or distilling information from a website into a summary. 

However, what sets Girolamo apart from its competition is that the bot also has a visual element. Users can harness CardanoGPT’s power to generate powerful images akin to Midjourney or Dall-E. Perhaps even more impressively, Girolamo can analyse pictures and condense visual details into a text-based format. This will be a great coup for artists trying to uncover hidden meanings in various pieces, among other useful functions. 

Those interested in participating in CardanoGPT’s testing phase can access a private key from the Cardano community Discord. Users must link their wallet to Discord to prove ownership of 5,000+ CardanoGPT (CGI) tokens, currently valued at approximately $4,000 (AUD $6,000). While it is undoubtedly a hefty price to pay, the full release of the chatbot will likely significantly reduce the entry barrier to continue evolving the AI/blockchain sector. 

Football Megastar Cristiano Ronaldo sued for promoting Binance 

Ronaldo promoted his CR7 NFT collection on social media on November 2022, causing a spike in Binance user activity.  

Cristiano Ronaldo might just be the most famous soccer (sorry…football…) player of all time. But this time, he’s in the news for the wrong reasons. The superstar is facing a class action lawsuit seeking damages of over USD $1 billion for promoting Binance. The situation began in November last year when Ronaldo released his limited edition of NFT collectibles, CR7. The floor price of an NFT was $77 upon release, but has since dropped to $1 amid worsening conditions for digital collectibles.  

Ronaldo took to social media to announce the partnership late last year, stating that “we are going to change the NFT game and take football to the next level.” The release was dropped exclusively on Binance, causing a 500% spike in user activity. The lawsuit alleges that, due to this increased traffic, Ronaldo was directly responsible for leading investors to purchase “unregistered securities”, such as Binance’s native token, BNB. 

According to the Securities and Exchange Commission (SEC) head Gary Gensler, celebrities like Ronaldo must always disclose who is sponsoring them and how much they are being paid for promotions related to “investment in securities.” The plaintiffs have also accused Ronaldo of “aiding and abetting Binance’s fraud,” albeit indirectly. 

Many in the crypto community quickly dismissed the lawsuit as oversimplifying the current regulatory grey area and questioned some claims. Twitter user X_Anderson asked if “anyone promoting a legacy bank should get sued as well if the bank has a history of illegal conduct?” 

This isn’t the first time celebrities have been targeted over an exchange’s shoddy behaviour, with stars like Larry David, Stephen Curry and Shaquille O’Neill sued last year due to their involvement with FTX.  

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