ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 48

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 Time Up for TerraLabs’ Do Kwon

The run seems to have come to an end for the founder of Terraform Labs, Do Kwon, as multiple reports confirmed his arrest last week in Montenegro. He was reportedly detained at the Podgorica airport for the criminal offense of document forgery. His identity has since been confirmed by South Korea's National Police Agency, which issued an arrest warrant for Kwon last September following allegations of capital market rules violation. The agency said it would collaborate with Montenegro as they seek Kwon's extradition. Hours after his arrest, federal prosecutors in New York charged Kwon with fraud, with plans to seek his extradition to the U.S.

 First Major Bank in Australia Pilots Blockchain Transaction  

The National Australia Bank (NAB) last week confirmed it worked with Blockfold and Fireblocks to build and deploy stablecoins on the Ethereum blockchain to complete an intra-bank cross-border transaction.

The two digital asset management firms helped NAB with smart contract creation, managing custody of digital assets, and the minting and burning of its stablecoin as it conducted the pilot transaction for seven major global currencies.

Using a NAB-issued stablecoin, AUDN—which will be fully backed one-for-one with the Australian dollar—it is the first of its kind by a major financial institution in Australia. While the pilot demonstrated the potential for time and cost reduction on cross-border transactions, especially when clients in multiple jurisdictions and different currencies are involved, it also marks the beginning of NAB’s evolution of financial services from Web2 to Web3, according to its CEO, Michael Shaulov.

 SEC Charges Ne-Yo, Akon, Others for ‘Chilling’ Justin Sun’s Crypto Assets

The Securities and Exchange Commission (SEC) last week announced charges against eight celebrities for illegally touting Justin Sun’s Tronix (TRX) and BitTorrent (BTT) tokens without disclosing that they were compensated for doing so. They include Lindsay Lohan, Jake Paul, DeAndre Cortez Way (Soulja Boy), Austin Mahone, and Michele Mason (Kendra Lust). Others are Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo), and Aliaune Thiam (Akon).

The SEC also charged Sun and three of his companies—Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc—for the unregistered offer and sale of TRX and BTT.

Except for Cortez Way and Mahone, the celebrities neither admitted nor denied the SEC’s findings but agreed to pay more than $400,000 in disgorgement, interest, and penalties to settle the charges.

 US Congress Makes Case for PoW Mining

The US House of Representatives last week introduced a document calling for crypto mining based on the Proof of Work (PoW) mechanism to be seen as important to the US’s ability to achieve its energy goals and grow its economy.

Amongst other points, the proponents admit in the document that although PoW mining requires energy consumption for the blockchain validation process, it only uses .14 percent of the global energy supply “which is less than the amount of electricity lost in transmission and distribution each year”.

They argue that many of the concerns about PoW mining’s energy usage are unwarranted because the consumption is transparent and verifiable.

MiCA: Circle Sees EU Banks Competing for Crypto Services in Four Years

With the Markets in Crypto-Assets Regulation (MiCA) set to take effect across the EU in 2024, the Circle EU director, Patrick Hansen, says he expects major European banks to roll out crypto asset services in the next 48 months.

In a published article last week, Hansen notes that MiCA will save companies the hassle of having to “knock at every single national regulator’s door if they wanted to serve the entire EU market”—even if they have only been granted an operational license in one EU member state. He added that MiCA’s binding EU requirements will make it plausible for banks to engage in services such as custody, exchange, or the issuance of e-money tokens or asset-referenced tokens (or stablecoins).

 Hong Kong Working to Regulate Stablecoins

The Hong Kong Monetary Authority is working on a regulatory regime for "stablecoins" with an aim to implementing the relevant regulation in 2024, the Secretary for Financial Services and the Treasury, Christopher Hui, said last week at the Aspen Digital Web 3 Investment Summit. The move forms part of the Hong Kong Government’s strategy to support and promote the development of Web3 technologies and applications.

Hong Kong, which he says attaches great importance to virtual assets (VA) and Web3 and continues to position itself as a leading hub in Asia and beyond, now has over 800 fintech companies serving the public and the business sector.

 The Bitcoin-at-a-Million Dollar Bet: Real, A Scheme, or Marketing?

There have been calls for a million-dollar Bitcoin. In particular, after settling about $100 trillion in value and almost 800 million transactions thus far, Ark Invest’s analysis suggests a Bitcoin price of over $1 million in the next decade. The outlook is based on a projected market value of cryptocurrencies in the $20 trillion range.

Last week, a discussion around the $1m price tag resurfaced, even with a bet worth a million dollars. Or $2 million, as a matter of fact, if it turns out that the intended outcome is achieved. Someone is betting, or at least trying to bet on a million-dollar Bitcoin, and in a short period of time: 90 days.

The person in question is the former Coinbase CTO Balaji Srinivasan, who claimed that hyperinflation will push the price of Bitcoin past $1 million in the next three months. If he wins against his opponent, he will get $1m and 1 BTC (which by then—according to his projection—will be worth a million USDC).

Call it a publicity stunt, or a scheme to pump BTC, it got CryptoTwitter talking. In a series of tweets, he alleges that regulators “like FDIC and the Fed knew that SVB—and hundreds of other banks—had fewer assets than their liabilities”. He adds that this has been the case since 2008, and they keep hiding the fact that “the money is gone.”

Citing a table of 56 episodes of world inflation and hyperinflation put together by Cato, including the case of Hungary in 1945 when prices doubled in 15 hours, Srinivasan thinks the looming hyperinflation situation (a state in which inflation rates are to be at least 50%) would spread even faster in the internet age.

Some interesting developments tend to support the suggestion that a bullish trend is about to happen, but not in the magnitude that Srinivasan is proposing. For instance, crypto analytics firm, Glassnode, shared last week that the Bitcoin price saw one of its best-performing weeks with about a 35.8% rise. Its insights show that there are indicators suggesting that the Bitcoin market is exiting deep bear markets. In another instance, a ​​popular trader and analyst, Rekt Capital, hinted in a tweet that he expects BTC to be on the verge of confirming a 'new bull market’. A similar view is shared by the Head Analyst at BlockwareTeam, Joe Burnett, who theorized that the stage is set for a parabolic bull run, as 67.7% of all BTC has not moved in more than a year despite banks failing.  

Srinivasan’s projection sounds fuzzy, but he is not a crypto newbie. Some take it that he seems to know better for his argument to be discarded. At the same time, looking at it from an opposing perspective, a lot would have to go wrong—and very fast—for Srinivasan’s expected outcome to manifest; like there being a complete societal collapse. There are arguments that hyperinflation is not likely to happen, particularly in the US, since the country has no foreign-denominated debt or production problems at the moment. BTC has not been proven to respond well to inflation, let alone hyperinflation.  

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