SEC targets Binance USD and sues Terraform Labs as Bitcoin NFTs soar
Data from CryptoCompare shows that the price of Bitcoin surged from around $21,500 at the beginning of the week to test the $25,000 mark a number of times.
The leading cryptocurrency is currently trading at $24,825 as it keeps trying to break out.
Ethereum’s Ether, the second-largest cryptocurrency by market cap, moved similarly to BTC, starting the week at around $1,450 and quickly moving to test $1,700. Ethereum has briefly made it through, however, and is currently at $1,705.
This past week started with stablecoin issuer Paxos Trust being told by the US Securities and Exchange Commission (SEC) the regulator is planning to sue it for violating investor protection laws in a letter known as a Wells notice, which it uses to inform entities of possible enforcement action.
The notice alleged Binance USD (BUSD) is an unregistered security. BUSD is a Binance-branded stablecoin issued by Paxos and listed on several exchanges, including Paxos’ itBit platform. When a company receives a Wells notice, it has the opportunity to respond to the SEC and present reasons why legal action should not be pursued.
It is important to note that the receipt of a Wells notice does not guarantee that the SEC will pursue enforcement measures. Over the week, fintech giant PayPal halted the development of its own stablecoin, after its partner Paxos was reported to be under investigation by the New York Department of Financial Services.
That NYDFS investigation seems to have been sparked by rival stablecoin issuer Circle, the operator of USDC, which sounded the alarm on Binance’s alleged mismanagement of reserves for its own tokens, based on blockchain data that showed Binance didn’t store enough crypto in reserve to support the tokens it had issued
The SEC’s Wells notice had a significant impact on the cryptocurrency market and saw Paxos discontinue the issuance of new BUD tokens, while terminating its collaboration with Binance. BUSD holders’ tokens will remain pegged 1:1 to the US dollar.
The announcement led to a significant surge in the trading volume of the BUSD-USDT pair, with a remarkable increase of 4836.2%, according to CryptoCompare data.
Reacting to the news, leading cryptocurrency exchange Binance said it will keep on supporting the BUSD stablecoin, although it’s ready to potentially move away from it as a main trading pair in the future.
Over the past few months, Binance has actively encouraged the use of BUSD by providing no-fee trading on BUSD trading pairs and converting its users’ USDC, UDP, and TUSD holdings into BUSD to enhance liquidity.
SEC sues Terraform Labs over TerraUSD
The week also saw the SEC charge Singapore-based firm Terraform Labs and its CEO, Do Kwon, with “orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities”.
According to the regulator, from 2018 until UST’s collapse in May 2022, Terraform and Kwon “raised billions of dollars from investors by offering and selling an inter-connected suite of crypto asset securities, many in unregistered transactions”.
The regulator also accused Terraform and Kwon of misleading investors in their promotion of the LUNA token by asserting that a “popular Korean mobile payment app” relied on the Terra blockchain for executing transactions, which would enhance the value of LUNA.
The SEC has also recently proposed toughening cryptocurrency custody rules after the collapse of several high-profile crypto firms revealed users’ funds weren’t as safe as advertised. The regulator agreed to propose rules that would force investment advisers to secure all client assets they manage, including alternative assets such as digital currencies and art, with qualified custodians.
In the Mt. Gox crypto exchange’s ongoing bankruptcy proceedings, the biggest creditor – Mt Gox Investment Fund – has chosen to receive an early pay-out in Bitcoin instead of fiat currency, alleviating certain worries regarding the token’s price prospects.
Bitcoin surpasses 44 million non-zero addresses amid NFT craze
After the recent launch of non-fungible tokens (NFTs) called Ordinals, the number of non-zero addresses on the Bitcoin blockchain has achieved a new all-time high of 44 million. This is the first instance in Bitcoin’s 14-year history where some of its network activity is not solely being utilized for peer-to-peer monetary transactions.
The Ordinal protocol’s technological capabilities were enabled by the Taproot soft fork in November 2021, and Bitcoin Ordinals were launched on January 21. With the aid of its numbering system, Bitcoin users can allocate arbitrary content to satoshis, resulting in over 100,000 Bitcoin-native non-fungible token (NFT) images and videos.
The NFTs have seen the memory usage per BTC block exceed the standard 300 MB capacity by 86 MB, leading to a purge of any transaction of less than 1.74 satoshis per byte as network congestion slowly grows.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
Featured image via Unsplash.