SBF Risks 115 Years in Prison, Binance's FUD, and Auditors Quit Crypto: Hodler's Digest Dec. 11-17

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Prime tales of this week

FTX founder Sam Bankman-Fried arrested, faces extradition to US

Sam Bankman-Fried was taken into custody by the Royal Bahamas Police Force and is expected to remain there until February after his request for bail was denied in a Bahamas court. A second request for bail was reportedly filed by SBF in the Bahamas Supreme Court. His arrest comes after the United States government formally filed criminal charges against him, including eight counts of fraud. If convicted, Bankman-Fried could face 115 years in prison, but legal commentators have told Cointelegraph that there is "work to do" in the case. The domino effect of the FTX meltdown has also impacted the professional lives of Bankman-Fried's parents, resulting in the cancellation of their Stanford Law School classes. In other recent developments regarding FTX, a class action lawsuit was filed in California against Silvergate Bank, aimed at holding the bank accountable for its alleged role in placing FTX user deposits into Alameda Research bank accounts.

Binance has taken FTX out of business - Kevin O'Leary

Venture capitalist Kevin O'Leary claimed at a US Senate committee hearing that Binance and FTX were "waging war on each other and one was intentionally putting the other out of business." The hearing was part of a larger lawmaker investigation into the collapse of FTX, in which Binance played a significant role, O'Leary claimed. Fear, Uncertainty, and Doubt (FUD) has hit Binance for the past few days, causing the exchange's liquidity to drop. Crypto analytics firm Nansen reports that Binance had more than $3.6 billion in net withdrawals from Dec. 7-13.

Rep. Tom Emmer is considering bringing back legislation aimed at reducing crypto red tape

United States legislators are under pressure to enact crypto regulations amid the collapse of FTX, and Congressman Tom Emmer believes this is “probably a good time” to reintroduce bipartisan legislation outlining requirements for specific crypto companies and projects would register as Virtual Asset Service Providers (VASPs). The bill, titled Blockchain Regulatory Certainty Act, aims to remove some hurdles and requirements for "blockchain developers and service providers" such as miners, multi-signature service providers, and decentralized finance platforms.

No more reserve verification checks? Accountants are quietly removing crypto projects from portfolios

Two of the most well-known accountants have suddenly stopped offering crypto auditing services. In a critical moment for the crypto industry, Mazars Group removed Binance's proof-of-reserve audits just days after confirming that the crypto exchange controlled 575,742 Bitcoin. The decision affected other crypto exchanges that use Mazars' services, such as Crypto.com and KuCoin. Mazars later explained the hiatus was due to "concerns about the public's understanding of these reports." Accounting firm Armanino has also suspended its crypto auditing services. Armanino has partnered with multiple crypto trading platforms such as OKX, Gate.io, and the embattled FTX exchange.

MetaMask to allow users to buy and transfer Ethereum via PayPal

In a further move into the crypto space, PayPal has partnered with MetaMask parent company ConsenSys to enable the purchase and transfer of Ether (ETH) through its platform. By logging into the MetaMask app, users can access their PayPal account and complete transactions. Initially, only selected PayPal users in the US can test the service. Other traditional payment companies are trying to integrate crypto into their services. In October, Western Union also filed three brands for digital wallet management and digital asset exchange.

Winner and Loser

Bitcoin at the end of the week (Bitcoin) is at $16,826ether (ETH) at $1,194 and XRP at $0.35. The total market capitalization is at $817.82 Billion, according to to CoinMarketCap.

Among the many high 100 cryptocurrencies, the highest three altcoin gainers of the week are Toncoin (TON) at 30.36% Bitcoin SV (BSV) at 10.11% and OKB (U.N) at 9.77%.

The three greatest altcoin losers of the week are Neutrino USD (USDN) at -33.77% Belief Pockets Tokens (TWT) at -27.43% and chain (XCN) at -23.42%.
For extra data on crypto costs, see Cointelegraph's Market Evaluation.

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Most Memorable Quotes

“Binance is now a large unregulated world monopoly and so they have put FTX out of enterprise.”

Kevin O'Leary, venture capital investor

"I thought it made sense. The child was young, the principles were revolutionary, the ideas were golden. […] Who was I to challenge that?”

Danielle cloudformer FTX employee

“Our previous experience of [crypto] Platforms, whether FTX or otherwise, is that they are intentionally evasive, they are a method by which money laundering happens on a large scale.”

Ashley Alder, appointed Chairman of the UK Financial Conduct Authority

"Just as we protect our physical assets, we must ensure that people protect their digital assets and personal information within the metaverse."

Andreas Neumann, Chief Technology Officer and co-founder of ReasonLabs

"Looking ahead, pretty much everyone who could go bankrupt has gone bankrupt."

Arthur Hayes, former CEO of BitMEX

forecast of the week

Bitcoin falls below $17,000 as 'craziest rumours' on Binance send BTC price plummeting

Bitcoin fell below $17,000 as traders remained concerned about Binance's FUD, which sparked excessive BTC bearish price action. On Bitstamp, BTC/USD hit multi-day lows of $16,928 on Dec. 16, according to data from Cointelegraph Markets Pro and TradingView. The pair has retraced its entire run to a monthly high on the back of the latest macroeconomic data and policy updates from the United States.

“Interesting to see that everyone is suddenly so pessimistic about BTC like it's just behaving so weakly. SPX does exactly the same thing, maybe even weaker,” noted Michaël van de Poppe, founder and CEO of trading company Eight, asking if the Binance FUD really has a role to play in the markets.

FUD of the week

Microsoft bans cryptocurrency mining for cloud services

According to a report, Microsoft has quietly banned crypto mining from its online services to increase the stability of its cloud services and better protect customers from risks such as cyber fraud, attacks and unauthorized access to resources. The new restrictions were introduced in Microsoft's universal license terms, noting that "cryptocurrency mining without Microsoft's prior approval is prohibited." With the move, Microsoft joins other cloud computing providers, including Google, in also prohibiting customers from mining cryptocurrency without prior written consent.

5.7 million leaked emails were affected by a "third-party incident".

Gemini appears to have suffered a data breach from a third party. Hackers gained access to 5,701,649 lines of information related to Gemini customers' email addresses and partial phone numbers obtained from Cointelegraph. According to Gemini, the breach was caused by a third party, but it also warned about ongoing phishing campaigns. The leaked database did not contain sensitive personal information such as names, addresses and other know-your-customer information.

The SEC is suing Atlas Trading over a $100 million stock manipulation scheme

The United States Securities and Exchange Commission (SEC) filed a lawsuit against eight people associated with Discord-based forum Atlas Trading over alleged stock manipulation. The SEC reported that bloggers made at least $100 million by taking sizable positions in securities, recommending them to their followers, and then selling their stocks to capitalize on the demand they generated through their "deceptive promotions." Cryptocurrencies and other digital assets were not mentioned in the complaint.