Year in Review: BlockchainReporter’s 2023 Crypto Bulletin

In 2023, the cryptocurrency landscape witnessed a dynamic interplay of regulatory developments, legal battles, and market dynamics. Since the SEC has repeatedly postponed Bitcoin ETF approval, the year began with optimism and worry. Binance founder Changpeng Zhao’s lawsuit revealed the company’s challenges and intensified regulatory scrutiny. Ripple’s recent court victory challenged the SEC’s classifications, raising hopes for industry-wide legal precedents. Coinbase’s fight with the SEC highlighted the cryptocurrency industry’s regulatory issues, which reflect industry tensions. The FTX founder Sam Bankman-Fried’s case showed the complexity of crypto corporate governance. The rise of meme coin Bonk and altcoins has shown the industry’s ability to adapt to changing legal settings. Read the detailed crypto news recap below.

Bitcoin ETF Hope and Skepticism: Bloomberg Predicts 90% Approval, but SEC History Raises Caution

Many crypto enthusiasts are hopeful about a Bitcoin exchange-traded fund (ETF). Bloomberg analysts expect a 90% chance of approval by January 10, but industry insiders are wary due to the SEC’s history of delaying cryptocurrency judgments, including Bitcoin and Ethereum ETFs.

Bitcoin rose 169% this year from $16,548 to $44,488, a huge increase. Despite this rapid growth, analysts are skeptical of a $100,000 price. But they forecast a more cautious approach, with BTC first testing the 0.702 Fibonacci level at $52,000. Note that this level matches a trillion-dollar market cap. Based on the historical pattern of major corrections, which can approach 60%, being a crucial part of bullish cryptocurrency cycles, Bitcoin may decrease below $30-32,000. Bitcoin often mimics the DOW Jones Index’s movements, emphasizing its importance.

BlackRock Asset Management, VanEck, Valkyrie Investments, Bitwise Investment Advisers, Invesco Ltd., Fidelity, and WisdomTree Investments recently updated their SEC disclosures. Market maker agreements to guarantee liquidity and optimize trading efficiency are detailed in the papers. The roster also includes Ark Investments and 21Shares’ collaboration. The companies want regulatory authority to launch Bitcoin-linked ETFs.

Sources estimate that issuers that submit revisions by the end of the year may launch by January 10. On this date, the SEC must approve or deny the Ark/21Shares ETF. According to filing insiders, the Securities and Exchange Commission (SEC) may notify issuers on Tuesday or Wednesday of their approval to begin operations the following week. Private conversations raise expectations concerning regulatory changes.

Binance Founder’s Legal Saga Unfolds

Binance, a major cryptocurrency exchange, is stuck in a complex legal web, worsening its problems. The company is involved in two US civil proceedings brought by the CFTC and SEC. Misconduct includes mixing customer assets, violating anti-money laundering laws, and deliberately increasing trading volumes, according to accusations.

The Binance founder Changpeng Zhao case has exacerbated legal issues. A $175 million personal recognizance bail released Zhao from custody. He received this discharge after admitting to Bank Secrecy Act violations. However, this release has restrictions. Zhao must not engage in criminal activities, interfere with witnesses or victims, or use unprescribed banned substances.

As part of his legal process, Changpeng Zhao must return to the US 14 days before his February 23, 2024, sentence at 9 a.m. Pacific Time. The plea and release reveal Binance’s significant legal issues as regulatory agencies scrutinize its operations.

The legal issues hurt Binance, a leading crypto platform. The charges and legal actions have tarnished its operations, worrying users and the crypto community. The cryptocurrency sector closely monitors the judicial processes, aware of the possible effects on the regulatory framework and precedents for other cryptocurrency platforms.

Ripple’s Legal Win Challenges SEC’s Token Classification

After Gensler’s congressional appearance, Ripple’s CLO, Stuart Alderoty, expressed reservations about his recent comments. Gensler suggested classifying crypto tokens as securities in the Senate Appropriations Committee hearing. Alderoty strongly disagreed with Gensler’s claim that tokens automatically fit investment contract conditions, arguing that he misread the law, notably the Howey test. He questioned the SEC’s myth-mongering.

On July 13, Ripple succeeded in proving that cryptocurrency exchange-automated XRP token sales are not securities. Alderoty argued that XRP is not a security, disputing the SEC’s classification of most tokens as securities. Ripple CEO Brad Garlinghouse expressed hope that this ruling could set favorable legal precedents for other US cryptocurrencies.

Gensler said that entrepreneurial teams are crucial to most cryptocurrency initiatives during the Senate Appropriations Committee’s review of the SEC’s proposed 2024 budget, suggesting Securities Act monitoring. Gensler discussed the SEC’s regulatory power to protect American customers against crypto risks. He noted that only a few cryptocurrencies are outside its authority. Due to its lack of investment contract features, Bitcoin falls under the CFTC’s jurisdiction, he said.

After Ripple’s court victory, its price rose 68% in 24 hours to $0.79, approaching $0.93 for a brief time. Ripple’s trading volume rose 1688% to 12.8 billion. As Bollinger bands separate, RSI approaches the overbought zone, and MACD predicts a bullish market in Ripple, instability increases.

SEC Rejects Coinbase’s Plea for New Crypto Rules

The SEC strongly opposes Coinbase Global’s request for new digital asset industry rules. Coinbase claims that the current regulatory framework is insufficient for the fast-growing crypto sector, but the Securities and Exchange Commission (SEC) voted 3-2 to affirm that the current regulations are appropriate and effective. This verdict shows that crypto regulation continues.

Coinbase, the largest US crypto exchange, expressed dissatisfaction with the SEC’s verdict. Coinbase Chief Legal Officer Paul Grewal stressed the need for collaboration in creating clear and beneficial policies for customers and fostering innovation in the US. Despite the decision, Coinbase informed a Philadelphia federal appeals court of its intent to challenge the regulatory framework.

The dispute highlights the cryptocurrency industry’s ongoing conflict with the Securities and Exchange Commission (SEC), which classifies most cryptocurrency tokens as securities. The SEC’s aggressive plan includes suing crypto companies like Coinbase for trading tokens it considers securities. SEC Chairman Gary Gensler has openly supported the present limits, saying they are relevant and efficient for the crypto securities market. His comment strengthens the SEC’s position on digital asset regulation.

Coinbase began seeking regulatory clarity in 2022 by creating cryptocurrency-specific regulations. The business tried to get a judge to order the SEC to respond to its petition. The court did not order the SEC to act, but it noted the agency’s commitment to examining Coinbase’s appeal, signalling that the regulatory issue remains unresolved. Republicans Hester Peirce and Mark Uyeda dissented from the SEC’s ruling. The Commission stressed the importance of addressing growing technology and innovation issues, notwithstanding its diverse views.

FTX Founder Sam Bankman-Fried Faces Trial Over Deleted Emails and Alleged Fraud

FTX founder Sam Bankman-Fried (SBF) was on trial on October 26th for destroying company emails while testifying secretly. Communications related to seven “counterfeit” financial statements masterminded by his accomplice, Caroline Ellison, started the investigation.

SBF claimed there was no requirement to document vocal communications which justified removing messages. According to FTX’s data preservation regulations, he stated that the attorneys had not received the message about an alleged $13 billion balance sheet mismatch. The SBF is worried about misinterpretations. The prosecution questioned SBF about using Signal for workplace conversations, intensifying the issue. SBF claimed FTX’s legal counsel, Daniel Friedberg, authorized the action. However, the prosecution stressed that Signal’s auto-delete option was not permitted.

SBF revealed that he had enabled “one-week auto-delete” mode in his settings since 2021 throughout the trial. When queried about this move’s authorization, SBF said “No.” SBF then addressed FTX’s document retention policy, saying it only applied to emails. He claimed that his legal counsel did not authorize him to stop interacting with Ellison, Gary Wang, and Nishad Singh.

SBF’s interference with witnesses led the Second Circuit to deny his bail during the trial. He is in prison for defrauding FTX customers, lenders, and investors on seven counts. At his March 28 sentencing, SBF could face 20 years in prison for each major indictment. The trial showed how a former cryptocurrency leader collapsed and how the legal fight unfolded. However, the situation seems to be cooling down after the US government has announced to drop 6 charges against SBF.

Altcoin Dominance Hits 13.5% in December 2023

Altcoin market dominance peaked at 13.5% in December 2023. Market capitalization rose to $815 billion, a 1.5-year high. In anticipation of the January ETF ruling, investors are pouring into highly volatile alternative cryptocurrencies to profit.

ETH, which performed well in 2023, has surpassed $2,000 and is reaching its 52-week high. Despite the U.S. Securities and Exchange Commission (SEC) crackdown, economists say more detailed cryptocurrency laws could attract more investors and funds. BTC is the most influential cryptocurrency, while Ethereum remains the largest alternative coin, accounting for 66% of the global cryptocurrency market total. Investors are eagerly awaiting SEC approval of the first spot Bitcoin ETF and an Ethereum spot ETF.

The SEC’s legal actions against everyone including claims that Solana was a security, reduced its value by 40%. The introduction of the JTO token with Jito liquid staking technology helped $SOL recover in 2023. Solana should do well in 2023, with market changes. Bonk (BONK), a 2023 cryptocurrency meme, was the highest-performing asset in the fourth quarter. BONK rose approximately 800% to $0.0000141 in 2023. Its market cap exceeded $857 million.