Daily Digest - 24th May 2023

Headlines

▌US Treasury sanctions crypto wallets linked to North Korean government

US officials sanctioned a group of crypto wallets allegedly linked to the North Korean government, according to a statement from the US Treasury Department’s Office of Foreign Assets Control (OFAC). OFAC said the blacklisted wallet contained bitcoin, ethereum, TUSDT, and USDC and belonged to a 58-year-old North Korean citizen named Sang Man Kim. These wallets are automatically generated wallet addresses hosted by the Binance exchange, and any user can register to use them. According to blockchain data, there have been no transactions between these addresses in the past year.

Policies

▌EU may make it easier for banks to hold stablecoins

The European Commission wants to make it easier for commercial lenders to hold stablecoins and tokenised assets, following a push by lawmakers to block cryptocurrency holdings as part of broader banking reforms. The leaked document seeks to moderate a tough stance taken by the European Parliament after EU lawmakers said they wanted to see prohibitive restrictions to stop turmoil in cryptocurrencies from spreading to the commercial banking system. Their plans include giving cryptocurrencies a 1,250% risk weight, which means imposing the greatest possible capital requirements on banks wishing to hold digital assets.

But under the latest proposal, the risk weight for any stablecoin whose value is pegged to a non-physical asset such as gold is reduced to 250%. Tokenised assets and stablecoins based on fiat currencies (such as the US dollar) will be treated the same as the underlying instrument, unless there is additional credit or market risk. The proposal is in line with the upcoming Markets in Cryptoassets Regulation (MiCA), which will come into force in July 2024, and will regulate stablecoin issuers and require them to hold appropriate reserves.

Cryptocurrency

▌SEC reached $35 million settlement with encryption hedge fund EmpiresX

The US Securities and Exchange Commission (SEC) has reached a settlement with crypto hedge fund EmpiresX, with the defunct firm agreeing to pay $34,839,951 in fines on charges of defrauding investors and violating securities laws. In June last year, the SEC announced fraud charges against EmpiresX and its co-founders Emerson Sousa Pires, Flavio Mendes Goncalves, and chief trader Joshua David Nicholas. The four defendants were accused of luring investors with a daily 1% profit false report and misappropriating investment. A large sum of funds of the investor is taken for himself.

▌Reuters: Binance accused of mixing client funds with company income, no lost or stolen client funds found

Cryptocurrency exchange Binance has been accused of violating US financial regulations by mixing customer funds with its own company revenue, three unnamed sources said, Reuters reported. The breach reportedly occurred in 2020 and 2021. Binance’s accounts at Silvergate Bank, a cryptocurrency-focused bank that shut down after the March crash, saw mixed transactions on an almost daily basis, the source said. Reuters added that it found no evidence that Binance customer funds were lost or stolen. In response, Binance’s Chief Communications Officer, Patrick Hillmann, slammed the report, which we’ve addressed several times. We keep our user and company funds on completely separate ledgers.

▌Dubai developer unveils world's first bitcoin tower hotel

Dubai developers unveil world's first Bitcoin Tower hotel, with a developer announcing plans to build a unique hotel shaped like a bitcoin in the United Arab Emirates city. This new initiative aims to demonstrate the importance of digital assets and cryptocurrencies. It is reported that guests will have the opportunity to use NFT during their stay, and guests will also have the opportunity to invest in cryptocurrencies.