- Digital asset markets took a dive late yesterday after the SEC announced its $30m settlement with Kraken's staking service and investigation into stablecoin issuer Paxos. BTC and ETH retraced 4.0% and 6.3% in the past day, while SPX and QQQ 0.14% are down 0.30% and 1.3% since yesterday's close. In response to the SEC's crackdown on centralized staking services, liquid staking derivative RocketPool (RPL) performed well relative to the market, up 14.8% over the past day. Zero-knowledge tokens have outperformed as well, in anticipation of Polygon's zkEVM Mainnnet. Loopring (LRC - a zkRollup Layer 2) and Mina Protocol (MINA - an efficiency-focused zk-Layer 1 blockchain) have both gained 1.0% over the past day. Dusk Network (DUSK), a zk-based privacy blockchain for financial applications with a smaller market cap, appreciated 21.3% over the same period.
- Su Zhu, the co-founder of now-defunct hedge fund Three Arrows Capital, tweeted yesterday that a waitlist is open for his new exchange, OPNX. Specifically, those who have trading claims and derivatives of funds stuck on failed exchanges can use it as collaterel and start trading them. The failed exchanges include FTX, Genesis, Celsius, BlockFi, Voyager, 3AC, Hodlnaut, MtGox, Vauld, and ZipMex. He further stated that the future platform will feature 'fully decentralized custody and clearing services with real-time public cryptographic audits confirming every balance, liquidation, withdrawal, deposit, and trade.' Understandably, his tweet garnered much skepticism from the crypto community, given 3AC's untruthful representations leading up to its insolvency. Su sounds like he is trying to build an on-chain CLOB exchange, namely a dYdX competitor, but it is hard to make the case to give a historically deceitful actor a chance at redemption.
- Kraken has reached a $30m settlement with the SEC over its staking services offered to US-based customers. The SEC charged the company for failing to register its staking arm, which it deemed to constitute securities. The regulatory agency further warned other US-based firms to take this as a warning to cease staking operations. In a blog post, Kraken explicitly stated that it will automatically unstake any assets staked by U.S. clients except for staked ether ($stETH), which will not be unstaked until after Ethereum's Shanghai upgrade scheduled for March. Kraken and Coinbase, the two largest American exchanges, constitute ~20% of all current staked ETH. Kraken will continue to offer staking services to non-US users through an off-shore subsidiary.
Su Launches New Crypto Exchange, Kraken Settles with SEC
Feb 10, 2023
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