CFTC Sues CZ, Polygon zkEVM Launches, MSTR Buys More Bitcoin

• Major equity indices opened higher on Monday morning, initially responding well to the announced acquisition of SVB by First Citizens Bank, which brought some life to bank stocks. However, the indices have since retraced their gains, with the S&P 500 trading 20 basis points higher and the Nasdaq turning negative, down 70 basis points since market open. The market continues to face rate volatility, with the U.S. 2Y and U.S. 10Y moving substantially higher. As a result, bond volatility, as reflected in the MOVE index, continues to rise, surpassing 170. Meanwhile, the crypto market is digesting the news of a CFTC lawsuit against crypto exchange Binance and its CEO CZ for willful evasion of U.S. laws (more on this below). Despite a sharp drop following the announcement, $BTC is holding above the $27k level, down 2.3% since yesterday, while $ETH is trading above $1.7k with a 2.4% decrease. Most altcoins are also trading lower in line with large-cap assets. On-chain derivatives names such as $GMX and $DYDX appear to be catching a bid in the wake of the Binance news.  
• The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Binance, the world's largest crypto exchange. The regulator alleges that the exchange has offered illegal leveraged trading services to U.S. customers without registering as a futures commission merchant. The CFTC seeks to impose penalties, enjoin the company from further violations, and require Binance to disgorge any gains it obtained from the alleged misconduct. Binance has not yet commented on the lawsuit. Among the interesting takeaways from the filing, the CFTC names ETH (in addition to $BTC, $LTC, $BUSD, and $USDT) as commodities just weeks after the DOJ alleged the opposite. As we have discussed in our notes this year, continued regulatory actions against centralized entities in the space should continue to be expected. However, they should not necessarily preclude digital asset prices, particularly bitcoin, from performing well. 
• Polygon Labs has introduced its innovative zero-knowledge-based rollup network, Polygon zkEVM ($MATIC), designed to enhance compatibility with Ethereum apps while boosting transaction speed and reducing costs. Ethereum founder, Vitalik Buterin, is set to initiate the first symbolic transaction on the network. The zkEVM, which aligns with Ethereum Virtual Machine (EVM), allows developers to utilize existing tools and infrastructure efficiently. Over 50 projects across crypto, web3, and gaming sectors, including notable platforms Uniswap and Aave, are keen to deploy on this advanced network. Although Polygon Labs has thoroughly conducted several independent and internal audits to strengthen zkEVM's security, users are advised to exercise caution since the network remains in its beta phase. Polygon zkEVM is among a few pioneering ZK-rollup networks, such as ZkSync's Era, that have successfully launched on the mainnet.

Polygon Daily Active Users Since Inception (Token Terminal)