🚨Feds Turn Up the Heat with Insider Trading Case

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Crypto Crime

🚨Feds Turn Up the Heat on Crypto with Insider Trading Case Against ex-Coinbase Employee

SEC Defines 'Digital Assets' as Securities in Complaint

By Jason Levin

INSIDER TRADING The U.S. Justice Department’s crackdown on crypto just ratcheted up a notch. On Thursday, Federal prosecutors accused a former Coinbase employee and two others in the first-ever case of insider trading involving cryptocurrencies.

CONNECTIONS In a 22-page indictment, prosecutors in New York allege former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and his friend Sameer Ramani, used Ishan’s connections to learn which crypto assets were scheduled to be listed on Coinbase’s exchanges. The group then allegedly purchased the tokens and sold them after the information became public and typically boosted the value of the tokens.

ILLICIT PROFITS The three men traded over 25 different crypto assets on at least 14 occasions and walked away with $1.5M in illicit profits, according to the indictment. Using confidential information to profit from trading securities is illegal.

TIPPING OFF The U.S. Securities and Exchange Commission also sued the three defendants and accused Ishan of tipping off Nikhil Wahi and Ramani about the imminent listings of tokens, including lightly traded names POWR, LCX and AMP.

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AMMs

🍣 SushiSwap Triggers Dustup During Launch of Market Making Feature

Users Challenge SushiSwap's Claims It has First Cross-Chain AMM

By Samuel Haig

CLOUDED SushiSwap is trying to reverse its declining market share by enabling cross-chain swaps across seven major chains. Yet the protocol’s launch of its new XSwap feature on July 21 was clouded by its claim that it’s the “first ever” automated market maker (AMM) exchange enabling cross-chain swaps.

CHALLENGE Some users on social media immediately challenged SushiSwap’s assertion. A community moderator at multi-chain exchange THORChain, told The Defiant that THORChain entered into a guarded launch supporting swaps between the Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Binance Chain networks in April 2021.

ANY CHAIN THORChain user, unchained.eth, said, “I only see ETH clones on their ‘first ever cross-chain AMM’… THORChain can support almost any chain, not just EVM-based.” SushiSwap members did not respond to requests for comment made through its social media channels.

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The Merge

🧐 With The Merge on the Verge Buterin Previews The Surge

Ethereum's Chief Scientist Says Network Will Be Halfway Complete After Shift to PoS

By Samuel Haig

RALLY The Merge is on the verge of becoming reality. And mounting expectations of a new, more powerful and cleaner Ethereum have sparked a most welcome rally across DeFi in the last week.

SURGE But even after The Merge is done, Ethereum will only be halfway home. For starters, the network will next undertake a process called The Surge. That was the key message delivered by Vitalik Buterin, Ethereum’s chief scientist and co-founder, at a conference in Paris on July 21.

INSIGHTS Speaking before an audience of Ethereum developers, entrepreneurs, and users, Buterin said the network’s transition to Proof-of-Stake from Proof-of-Work will be “complicated.” He shared a raft of insights and details on what’s to come.

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Stablecoins

👀 Curve Finance Has a Stablecoin in the Works

By Owen Fernau

NEWS A stablecoin from leading automated market maker (AMM) Curve Finance may be around the corner. The news comes right after DeFi lender Aave announced plans for its GHO stablecoin earlier this month.

CURVE TEAM Information is limited so far, but a post from Twitter user mrblocktw, who lists Curve Finance in his bio and also holds the “Curve Team” role in the project’s Discord, indicates that a stablecoin from the protocol is imminent.

MECHANISM Curve founder Michael Egorov reportedly confirmed that the stablecoin will be overcollateralized at a web3 summit. It stands to reason that the basic mechanism for a Curve stablecoin would be to mint it against liquidity provider (LP) positions. At a high level, this would be similar to MakerDAO’s collateralized debt position model.

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Market Action

🤔 Ether On Exchanges Plummets To 4-Year Low Ahead Of The Merge

By Aleksandar Gilbert

FOUR-YEAR LOW Ether held on cryptocurrency exchanges such as Coinbase hit a four-year low on Thursday. Centralized exchanges held 19M ETH early Thursday, down from an all-time high of almost 32M ETH in the summer of 2020, according to data from Glassnode. The last time CeFi exchanges held less than 20M ETH was in July 2018.

Source: Glassnode

DROP Among exchanges tracked by Glassnode, Huobi accounted for the most significant drop over the past four years. In the summer of 2018, it held 5M ETH. This week, it was down to less than 40,000 ETH.

DECLINE Coinbase also saw a steep decline, from 8M in custody four years ago to 5M this week. Meanwhile, outflows from exchanges tracked by Glassnode hit a 13-month high.

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NFT Roundup

💣 Minecraft Torpedoes NFTs While Final Fantasy Forges Ahead

By yyctrader

BANNED NFTs It’s no secret that gamers have it in for NFTs. But yesterday, Microsoft-owned Minecraft gave the NFT space a reason to fire back. The team behind the game released a statement that essentially bans NFTs from integrating with its platform, going on to say that it has “no plans of implementing blockchain technology into Minecraft right now.”

WORLDS A variety of NFT projects have been developing virtual worlds and accessories that are compatible with Minecraft, with plans to integrate with the actual game in the future. Chief among them is NFT Worlds, a collection of 10,000 metaverse lands.

TOKEN Minted for free in October 2021, the NFTs surged to a floor price of nearly 18 ETH in February at the height of GameFi fever. Following the news, prices crashed by over 80% from 3 ETH to 0.5 ETH. The project’s WRLD token dived more than 60%.

World #5080

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DeFi Research

⚙️ IntoTheBlock: Stablecoin Yields Reveal the Inner Workings of DeFi

Stablecoin Yields Mirror Speculative and Deleveraging Cycles

On-Chain Markets Report by Pedro Negron, IntoTheBlock

BANKRUPT PROJECTS The crypto market plunge of 2022 is littered with bankrupt projects. Coupled with challenging macro conditions crypto investors are confronting a tough period. DeFi has been hit equally as bad, although its key protocols performed surprisingly well in contrast with the performance seen in the last market shock when the Covid pandemic struck in March 2020.

DELEVERAGE There is a third endogenous factor that has made the fall even worse — a massive deleveraging of the system. If this is truly happening, how do we measure it?

TVL The most direct metric to measure the capital allocated in DeFi is usually total value locked (TVL). Both the Ethereum price as well as the in DeFi have decreased in dollar terms by around 75% from their all-time highs. It makes sense considering that if the assets that are locked in DeFi decrease in price, equally the TVL metric decreases. DeFi decrease in price, equally the TVL metric decreases:

ETH price and TVL in dollars. Sources: IntoTheBlock and Defi Llama

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The Tube

📺 The Open Metaverse Show: Mom! We bought a sports team... with crypto!

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Elsewhere

🔗 Blockchain.com Cuts 25% of Its Workforce Amid Crypto Bear Market: CoinDesk

The digital assets trading firm said it will shutter its Argentina-based offices and halt its expansion plans in several countries.

🔗 LinkedIn Founder Reid Hoffman Turns DALL-E AI Art Into Solana NFTs: Decrypt

Billionaire tech entrepreneur Reid Hoffman, best known for co-founding business networking platform LinkedIn, is releasing a series of Solana-based NFTs based on images he creates using OpenAI's DALL-E 2 artificial intelligence software.

🔗 OpenSea Debuts Solana NFT Launchpad to Lackluster Demand: Decrypt

OpenSea now has its own minting platform to rival Magic Eden, but launch partner Zoonies appears to be stumbling out the gate.

Deva the Devcon Unicorn @EFDevcon🎟️🎟️🎟️Finally the great day has come. The first wave of General Admission tickets to Devcon Bogotá will be dropping today!!! 🥳 There will be two sets of drops to accommodate different timezones: 1⃣ 1600 UTC 2⃣ 2300 UTC Get yourselves ready!

12:00 PM ∙ Jul 18, 2022156Likes62Retweets

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🧑‍💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Claire Gu, Samuel Haig, Jason Levin, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.

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