Crypto News Roundup: August 1, 2023 👀

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1 Aug 2023

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Welcome to Crypto News Roundup, where I bring you the latest and most important news from the world of cryptocurrencies.

Today, I have some exciting stories to share with you, ranging from a mysterious rug pull to a legal battle between the SEC and crypto projects. Let’s dive in!

🧐 Blockchain Sleuths Link BALD Liquidity Rug Pull to Sam Bankman-Fried

One of the biggest stories of the week was the sudden disappearance of all the liquidity from the BALD meme coin on the layer-2 network ‘Base’. The coin, which was launched by an anonymous developer, promised to reward holders with a share of the fees generated by the network. However, on Monday, the developer pulled the plug and drained all the funds from the BALD liquidity pool, leaving investors with worthless tokens.

The crypto community was outraged by this blatant scam and started to investigate the identity of the mysterious developer. Some on-chain analysts claimed to have found evidence that linked the developer to none other than Sam Bankman-Fried, the founder of FTX and Alameda Research.

They pointed out that the same wallet address that deployed the BALD contract was also involved in the SushiSwap saga back in 2020, when SushiSwap creator Chef Nomi had bailed with millions of dollars worth of SUSHI tokens. At that time, Bankman-Fried had stepped in and taken over the project, restoring trust and value to SushiSwap.

However, Bankman-Fried has denied any involvement in the BALD rug pull and said that he had nothing to do with the wallet address in question. He also said that he had never heard of Base or BALD before and that he was not interested in meme coins. He suggested that someone might have used his name or address to create confusion or divert attention from themselves.

The truth behind this mystery is still unclear, but one thing is certain: investors should always do their own research and be careful when investing in unverified projects, especially those that promise unrealistic returns or have anonymous developers.

Source: Decrypt

❗️ Ripple Ruling on Crypto Rejected by Federal Judge in Terra Case

Another major story that caught our attention was the rejection of a previous ruling on Ripple by a federal judge in a different case involving Terraform Labs. Terraform Labs is a blockchain company that operates Terra, a stablecoin platform that aims to create a global payment system. The SEC has sued Terraform Labs for allegedly offering unregistered securities through its LUNA, UST and MIR tokens.

Terraform Labs tried to use a recent decision in the SEC’s case against Ripple as a defense, arguing that its tokens were not securities and that it did not violate any laws by selling them on public exchanges. The decision, which was made by District Judge Analisa Torres in July 2023, stated that Ripple did not violate Section 5 of the Securities Act by selling its XRP token on public exchanges.

However, Judge Jed Rakoff, who is overseeing the Terra case, disagreed with Judge Torres’ position and rejected her ruling as irrelevant. He said that he did not find her reasoning persuasive and that he would apply his own analysis to determine whether Terra’s tokens were securities or not. He also said that he did not see any similarity between Ripple and Terra’s cases, as they involved different facts and circumstances.

This difference in opinion between two federal judges in the same district court shows how uncertain and inconsistent the regulation and legal treatment of crypto assets are in the US. It also raises questions about the future of Ripple’s case, which is still ongoing and has not reached a final verdict yet.

Source: Bloomberg

⚖️ SEC Files Complaint Against Hex Founder for Allegedly Offering Unregistered Securities

The SEC has also filed a lawsuit against Richard Schueler (aka Richard Heart), the founder of Hex, PulseChain and PulseX, for allegedly offering unregistered securities through his three crypto projects. Hex is a high-interest blockchain certificate of deposit that claims to be designed to increase in value faster than anything else in history.

PulseChain is a fork of Ethereum that aims to be faster, cheaper and greener than its parent chain. PulseX is a decentralized exchange that runs on PulseChain and allows users to swap tokens.

According to the SEC’s complaint, Heart raised more than $1 billion from investors through his unregistered offerings of Hex, PulseChain and PulseX tokens. He allegedly promoted these tokens as a way to achieve massive wealth for investors, claiming that Hex was “built to be the highest appreciating asset that has ever existed in the history of man”. He also allegedly used millions of dollars of PulseChain investor funds to buy luxury goods for himself, such as cars, watches and jewelry.

The SEC accuses Heart of violating Section 5 of the Securities Act by offering and selling securities without registering them or qualifying for an exemption. It also accuses him of violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act by making false and misleading statements and engaging in fraud. The SEC seeks to enjoin Heart from further violations, disgorgement of ill-gotten gains, civil penalties and other relief.

Source: CoinTelegraph

🔎 Tether Reports $3.3B in Excess Reserves in Q2, up $850M for the Quarter

Finally, we have some positive news from the stablecoin sector, as Tether published its Q2 attestation report on Monday. The report, which is signed by accounting firm BDO Italy, states that the firm held $3.3 billion of reserve assets in excess to back the value of its stablecoins. This means that Tether had more than enough funds to redeem all of its USDT, EURT and CNHT tokens in circulation at any given time.

The report also reveals that Tether has an exposure of $72.5 billion to U.S. Treasuries, including direct T-bill investments, repurchase agreements and deposits in money market funds. This shows that Tether has diversified its portfolio and reduced its reliance on commercial paper, which had raised some concerns among regulators and critics in the past. Tether’s operational profits are reportedly at $1 billion from April to June 2023, which accounts for a 30% increase from Q1 2023.

The Q2 attestation report is part of Tether’s ongoing efforts to provide more transparency and accountability to its users and stakeholders. The firm has been under scrutiny from various authorities and lawsuits over its reserve backing and business practices. By publishing regular reports and audits, Tether hopes to dispel any doubts and fears about its solvency and legitimacy.

Source: CoinDesk

❌ LeetSwap, Base’s Leading DEX, Halts Trading Amid Reports of An Exploit

LeetSwap, the largest decentralized exchange (DEX) built on Coinbase’s Layer 2 blockchain Base, has announced a pause on trading due to fears of an exploit. The team said that they noticed that “some pool liquidity might have been compromised” and that they were working to resolve the issue as soon as possible.

According to crypto security firm PeckShield, one of its community contributors estimates that liquidity pairs on Base have been exploited for approximately 340 ETH (roughly $630,000). The exploit involved manipulating the price of the BALD token, which was recently rug pulled by its anonymous developer, and draining funds from other pools.

The LeetSwap team has tweeted that it is working with on-chain security experts to try to recover the locked liquidity and that it will provide more updates soon. They also advised users not to deposit or withdraw any funds until further notice.

This incident highlights the risks and challenges of building and using DEXs on Layer 2 solutions, which are supposed to offer faster and cheaper transactions than the main Ethereum network. Users should always exercise caution and do their own research before investing in any new project or platform.

Source: The Block

💸 IRS: Crypto Staking Rewards Taxable Once Investor Gets Hands on Tokens

The United States Internal Revenue Service (IRS) has issued new tax guidance for crypto investors, stating that the staking rewards received by them for their validation activity on a proof-of-stake network will be treated as gross income in the year the investor gets control of those tokens. This rule applies to both when staking cryptocurrency directly and when staking through a centralized crypto exchange.

The IRS explained that staking rewards are similar to interest income or dividends, which are taxable when they are paid or made available to the taxpayer. The IRS also clarified that the fair market value of the staked tokens will be determined at the time the taxpayer receives them, and that any subsequent increase or decrease in value will be subject to capital gains or losses tax.

The new guidance is part of the IRS’s efforts to provide more clarity and consistency on the tax treatment of crypto assets, which have been growing in popularity and complexity in recent years. The IRS also reminded taxpayers that they are required to report their crypto transactions and income on their tax returns and that failure to do so could result in penalties and interest.

Source: CoinDesk

🤝 Yuga Labs to Acquire Roar Studios for AI Expertise

Yuga Labs, the creator of Bored Ape Yacht Club (BAYC), one of the most successful NFT projects in the crypto space, is reportedly acquiring Los Angeles-based gaming and music firm Roar Studios. The acquisition, which is expected to close in Q3 2023, is part of Yuga Labs’ efforts to expand its Otherside metaverse, a virtual world where BAYC holders can explore, socialize and create.

Roar Studios is a company that specializes in developing immersive and interactive experiences using artificial intelligence (AI) and blockchain technology. Its founder and CEO Eric Reid will join Yuga Labs as the general manager of Otherside. Reid has over 20 years of experience in the gaming and entertainment industry, having worked with companies like Electronic Arts, Activision Blizzard and Sony Music.

Yuga Labs stated that the acquisition will help speed up its ambitious plans for Otherside and that Roar has “deep technology and AI roots”, though it did not disclose how it plans to use it for Otherside. Yuga Labs also said that it will continue to support Roar’s existing projects and partnerships, such as its collaboration with Grammy-nominated artist ZHU.

Source: Decrypt

Conclusion 🙏

That’s all for today’s Crypto News Roundup. I hope you enjoyed this episode and learned something new. Stay tuned for more updates and insights from the crypto world. Until next time, stay safe and happy trading!

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