The Scenius Sync (Issue #38)

The Fall of Silvergate, Gensler Warns Exchanges Likely Are Not Qualified Custodians, Coinbase Acquires One River in Institutional Play & Wen Kraken Bank?

Scenius: The intelligence and the intuition of a whole cultural scene. The communal form of the concept of genius.

Welcome to The Scenius Sync.

Our mission with this concise publication is twofold:

1. Share the essential stories driving the crypto industry and markets.

2. Highlight innovative applications and mainstream adoption of crypto and blockchain technology.

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Essential News 🗞

1. The Rise and Fall of Silvergate’s Crypto Business

   • Silvergate Bank lost more than $8 billion in deposits from its crypto customers in the final months of 2022 as its core block of business crumbled under the industry’s implosion. The company has also faced pressures from U.S. banking watchdogs that have been insisting that banks shouldn’t concentrate on crypto, and its disclosures this week revealed investigations from regulators and the U.S. Department of Justice, plus a suggestion that ongoing audits may require a restating of its financials.

2. Coinbase Buys Crypto Asset Manager One River in Bet on Institutional Demand

   • Unlike most of the prominent funds in crypto, One River Digital, founded by macro trader Eric Peters has built a business to serve only the needs of institutional clients. That focus on long-term capital and money management over trading has left it less exposed to the kinds of wild swings in token prices and crypto exchange activity. The firm is being renamed Coinbase Asset Management with Peters serving as its chief executive officer and chief investment officer.

3. Tether Used Fake Documents to Open Bank Accounts

   • According to a Friday WSJ report, companies backing the world’s biggest stablecoin used fake documents and shell companies to help its parent company get into the banking system. Tether said in a Friday statement that the WSJ report was “wholly inaccurate and misleading.” The company added, “Bitfinex and Tether have world-class compliance programs and adhere to applicable Anti-Money Laundering, Know Your Customer, and Counter-Terrorist Financing legal requirements.”

4. SEC Chair Gensler Says Crypto Exchanges May Not Be 'Qualified Custodians'

   • Speaking at an Investor Advisory Committee meeting Thursday, Gensler said a recently proposed rule directing investment advisers to look to qualified custodians for storage of assets – including cryptocurrencies – makes "important enhancements" to existing protection rules. He also said crypto exchanges should not be considered safe under those guidelines.

5. Bankrupt Crypto Lender Celsius Reopens Withdrawals for Certain Custody Accounts

   • Bankrupt crypto lender Celsius Network is allowing withdrawals of assets in certain custody accounts, up to a certain limit. Eligibility for withdrawals was dependent on certain criteria such as that transfers had to be less than $7,575 when they were originally made and users had to have enough assets on the platform to cover any withdrawal fees.

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Innovation & Adoption 💡📈

1. PancakeSwap V3 Upgrade Set to go Live on BNB Chain in First Week of April

   • Decentralized exchange PancakeSwap is set to upgrade to its third iteration in the first week of April. V3 will offer new features such as improved liquidity provisioning, competitive trading fees and trading incentives along with a touch-up to its yield farming experience. The new version will be available on BNB Smart Chain where PancakeSwap is currently the dominant DEX. Uniswap V3 is set to deploy on BNB after its DAO voted in favor of the move and may target as much as half of PancakeSwap’s share. 

2. Kraken is on Track to Launch Bank 'Very Soon' Despite Regulatory 'Weird Place'

   • "Kraken Bank” is very much on track to launch, very soon," Kraken's chief legal officer Marco Santori told The Block’s Frank Chaparro. This is despite a challenging regulatory environment and the recent shuttering of its on-chain staking services for U.S. clients. 

3. Uniswap Launches a Self-Custodial Mobile Wallet

   • A completely self-custodial, open-sourced mobile app from the most trusted name in DeFi. Uniswap commented on the relationship with Apple saying, “To ensure the highest security standard, we worked with Trail of Bits for our audit. Imported and newly created wallets will have their seed phrases and private keys encrypted and stored on devices using Apple's secure enclave, which is excluded from device backups. You can store your seed phrase manually with a paper copy or encrypt and store it on Apple iCloud so that if you lose your phone, your seed phrase is backed up and protected.”

4. Amazon NFTs Will Be Tied to Real-world Assets, Token Possible

   • Amazon is laying the groundwork to give its customers the ability to purchase NFTs tied to real-world assets that are delivered to their doorstep, according to three sources familiar with the matter. The move is a significant upgrade from the e-commerce giant’s earlier steps in developing its NFT platform, and the company is planning to notify every Amazon Prime customer — at least in the US — of its digital collectibles initiative once it goes live.

5. Ethereum L2 Scroll Reaches $1.8 Billion Valuation in New Funding Round

   • Scroll, an Ethereum Layer 2 network that uses zk-rollups technology, raised $50 million in a new funding round. Investors in the round included Polychain Capital, Sequoia China, and Bain Capital Crypto. A source with direct knowledge of the matter told The Block that the round brings Scroll's valuation to $1.8 billion.