January 2023

The court-appointed examiner found many intentional and unintentional shortcomings at the bankrupt crypto lender dating back to its founding.

Court-appointed examiner Shoba Pillay submitted her final report on select aspects of operations at bankrupt cryptocurrency Celsius on Jan. 31. The document was commissioned on Sept. 29 and is 470 pages long, not counting the 31 appendices.

Pillay is a former federal prosecutor and partner at law firm Jenner & Block. She looked at how customer cryptocurrency was stored at Celsius, the accuracy of the company’s public representations, whether new deposits were used to pay existing customers, the status of the company’s mining business and tax compliance.

“Celsius promoted itself as an altruistic organization,” Pillay wrote. However, “Behind the scenes, Celsius conducted its business in a starkly different manner than how it marketed itself to its customers in every key respect.”

The deception began immediately, Pillay found, when the Celsius initial coin offering in March 2018 failed to raise the hoped-for $50 million, coming in at $32 million. The Celsius community was not told of the shortfall. Nor did founder Alex Mashinsky make good on his promise to buy any unsold tokens.

Further, Pillay documented how the company and Mashinsky personally exerted control over the price of the native CEL token. That effort was not wholly successful, in part due to accounting shortcomings. As a result:

“Celsius did not earn sufficient yield on its crypto asset deployments to fully fund its CEL buybacks. As a result, it began using customer-deposited Bitcoin (BTC) and Ether (ETH) to fund its CEL purchases.”

In early 2021, as Bitcoin (BTC) and Ether (ETH) prices rose and customers withdrew more of the CEL cryptocurrency, Celsius “justified its use of customer deposits to fill this hole in its balance sheet on the basis that it was not selling customer deposits but instead posting them as collateral to borrow the necessary coins.”

1/ The Celsius bankruptcy examiner report is out.

My opinion is that @Mashinsky and other executives will go to jail for a long time.

Celsius propped $CEL token while Mashinsky dumped on retail.

Evidence show willful deception to keep the 'flywheel' going

Highlights

— Ram Ahluwalia, crypto CFA (@ramahluwalia) January 31, 2023

Pillay noted that the Celsius coin deployment specialist described the actions as “very Ponzi-like” in internal communications. In addition, the company’s reward (interest) rates were not tied to yield generated from customer assets but were instead set to beat competitors’ offers. There was no policy for determining rewards until July 2021.

Between 2018 and June 30, 2022, the company paid out $1.36 billion more in rewards than it generated in revenue from customer assets.

When Terra’s UST stablecoin imploded last May, Celsius was no longer able to support the price of CEL. It paused withdrawals on June 13 but continued to pay rewards. At that point, the company was taking questionable measures. Pillay wrote:

“Between June 9 and June 12, Celsius did directly use new customer deposits to fund customer withdrawal requests.”

Celsius declared bankruptcy on July 13.

Related: New ‘Celsius token’ may be used to repay creditors: Report

The examiner found Celsius’ mining business, created as a subsidiary in October 2020, was “generally current” on its bills, with a few exceptions. She summed up the outstanding debt:

“Celsius Mining’s unpaid utility-related bills were $13,982,152. Celsius Mining’s mining hosts, however, hold prepayment balances totaling $46,809,756 that may be available to offset Celsius Mining’s obligations.”

Celsius defaulted on its debt to third-party mining contractor Core Scientific in October.

The tax picture was less rosy. Pillay found “significant tax compliance deficiencies.” This might be unsurprising, since Celsius had no tax professionals on its staff until June 2021. Even then, there was no systems created to pay use taxes and value-added taxes in a timely manner.

Pillay described widespread confusion about how applicable taxes for Celsius Mining were calculated or collected. Consequently, Celsius Mining may face tax bills upward of $20 million in the American states of Texas, Pennsylvania and Georgia, where it has mining operations. That amount may be reduced through retrospectively applied exemptions.

Celsius Network, a United Kingdom-based organization, is facing potential VAT liabilities. It has reserved $3.7 million for their payment.

Celsius’ tax problems were due only to lack of systems, communications and sophistication, Pillay said:

“The Examiner did not uncover any facts suggesting that Celsius or any of its business entities willfully or intentionally failed to pay its tax obligations.”

NOIA is the native token of Syntropy, a distributed routing protocol for the Internet. The token’s price surged 168% from its December lows and one analyst says bulls are likely to aim for more. Sentiment is bullish for Syntropy ahead of its public network launch. Cryptocurrencies are looking to end January on a winning note, […]

The post Syntropy (NOIA) price: Analyst shares outlook after token gains 168% appeared first on CoinJournal.

Definition UTXO Realized Price Distribution (URPD) shows at which prices the current set of Bitcoin UTXOs were created, i.e., each bar shows the number of existing bitcoins that last moved within that specified price bucket.

The post As Bitcoin rallies after FTX collapse, 25% of supply is held between $15.5k and $23k appeared first on CryptoSlate.

Dogecoin shifting to proof-of-stake would be good for the environment, but what impact would it have on miners and ASIC manufacturers?

There are rumors that Dogecoin could switch from proof-of-work to proof-of-stake (PoS). 

Do I know if Dogecoin is switching to PoS?

No.

Do I think it’s going to PoS? Probably not.

But I love the “what if” game.

As a person who works in the crypto mining industry, I do my best to gauge where the market and mining industry are going, along with how that could play out. If Dogecoin makes a change to PoS or some other change to how new blocks are created, it would have massive ramifications for the mining industry.

Here’s a look at a few options and their effects.

Scrypt mining could be devastated

I’m not going to debate whether or not Dogecoin will or should switch to PoS. While it’s hard to determine if the recent rumors about the potential for a switch are true or not, they were enough to have Bitmain supposedly pause Litecoin (LTC) and Dogecoin (DOGE) miner manufacturing.

The larger question in my mind is, What happens to miners if Dogecoin switches to PoS?

First, Scrypt mining would be devastated. DOGE accounts for over 60% of the revenue with Scrypt mining. Take it away, and every L3+, every LT6 and every Mini Doge Pro — literally almost every non-L7 miner not connected to $0.04-per-kilowatt-hour electricity — would need to be unplugged immediately.

Network difficulty would likely bounce all over the place for some time, while miners with older equipment struggle with the decision to keep their ASICSs on or turn them off. The apex Scrypt miner, Bitmain’s Antminer L7, would see its profitability reduced by nearly 75%, reducing profits to a whopping $4.83/day at $0.05/kWh.

What about the miners that don’t have an industrial electric rate? At $0.10/kWh, the L7 9050M, which sold for around $9,000 a few weeks ago, would earn you $0.72/day.

Yikes!

A drastic change like this would result in those who had recently purchased an L7 being very unlikely to ever recover their investment, let alone generate any profits.

ASIC manufacturers would be forced to drop prices, further impacting their bottom line

The vastly reduced profitability would inevitably lead to the price of the L7 dropping quicker than it did during the COVID-19-induced crypto crash. Pricing miners solely by their expected ROI time, at $5 a day profit, miners would be looking at the L7 having a price tag between $1,825 (12-month ROI) and $2,737.50 (18-month ROI). This reflects a minimum price reduction of nearly 70%.

How quickly would Bitmain react? Would they gradually reduce prices week after week, similar to what Goldshell has done with many of its miners over the past few months? This strategy repeatedly left a sour taste in the mouths of customers as they watched the price of the miner they just spent thousands of dollars on being slashed over and over again.

Or would Bitmain come out and continue their recent trend of pricing miners fairly?

ASIC resellers would also bear the brunt of the negative consequences connected to a PoS shift by Dogecoin. Many L7 miners are suppliers, and retailers sitting on that would instantly need to be marked down by a substantial amount. However, based on their recent history of price-gouging customers, like charging $60,000 for a KD6 that is barely worth over $1,000 today, it’s doubtful many tears would be shed for them.

Many home miners would flood eBay and similar platforms with Scrypt miners. It would be a race to the bottom as desperate miners attempt to recoup whatever value is left in the hunk of metal that can now only be used as a doorstop or display piece if one is desperate.

Litecoin mining would survive. Those L7s would stay on because they’d still be somewhat profitable, and there really wouldn’t be another choice. It’s doubtful that the market would see a new Scrypt miner that could challenge the L7 to be developed anytime soon unless there already is a more efficient Scrypt miner in development. There are some rumors that Bitmain is working on a miner that would surpass the L7.

That’s a lot of disruption from the move to PoS, and we’ve only looked at one aspect of the crypto ecosystem. Numerous other questions and scenarios would need to be considered.

What would happen to network security?

Would the yield from staking cause DOGE to eventually be labeled a security?

Would Dogecoin be lauded for the change, or would the masses flee from what is now the second-largest PoW coin by market cap?

Now for my favorite what if. This option is unlikely, maybe even impossible, but there are different ways it could play out.

What if Dogecoin breaks away from merge-mining with LTC and creates its own mining algorithm?

Related: Dogecoin Foundation announces new fund for core developers

Innovation and competition are healthy for every industry

What if there’s a GPU mining renaissance? After the Ethereum Merge event, there’s a ton of really cheap GPUs available on the market. Those would get expensive really quickly. Mining purists would rejoice as they build their own mining rigs while trying to figure out how much DOGE they can stack. It really would be cool to see, but it wouldn’t last. The big three manufacturers — Bitmain, Goldshell and iBelink — would scramble to be the first to market with an ASIC miner.

Eventually, they’d each have at least one ASIC miner on the market, and naturally, they’ll get more powerful and more efficient over time. The jumps and increases in difficulty would be ridiculous, and just like with Bitcoin (BTC), it would eventually no longer be profitable to mine DOGE with GPUs. But it could also open the door to something the ASIC manufacturing market desperately needs: competition.

What if, following the short-lived GPU mining renaissance, a door opens for another manufacturer or manufacturers to enter the market? Currently, Bitmain, Goldshell and iBelink are the “big three,” and it’s really Bitmain that has a total stranglehold on the market. So, while it’s likely Bitmain would come out on top, what if there’s someone out there who can be first to market and maintain that lead and establish itself as a credible and reliable ASIC manufacturer?

What if that company decided to branch out into other miners and offer them fair prices? To be fair, we do have to commend Bitmain again for the pricing on its recent rollout of industry-altering miners. Reseller markups are still an issue, but that’s another topic. Perhaps this “new” competitor would adhere to the mantra that customer service actually matters. If customers could get over the reliability concerns and the company built a good product, that could happen. Admittedly, that’s a lot of what-ifs.

Alternatively, there’s a money-grab scenario for Dogecoin. The project could go directly to Bitmain, Goldshell and iBelink and say, “We’re creating our own mining algorithm, and we’ll give it to you and you alone. How much money will you give us?”

What would Goldshell pay to bring life back to a company that has taken a series of body blows from the recent altcoin miners released by Bitmain? Or would iBelink go all out to win the rights to make the miner? IBelink just released a new BM-K3 Kadena miner that boasts 70 terahashes — a nearly 75% increase over the next closest model — and it can’t celebrate because Bitmain is about to trump that with the new KA3 that brings 166 THs. In the case of a Dogecoin offer to ASIC manufacturers, how much would Bitmain pay to maintain its market dominance?

No change could be a good thing

What if DOGE chooses to simply continue with Scrypt mining?

The status quo is not that exciting, but it seems to be the most likely outcome. Sure, there may be some changes that will pass a vote, but Dogecoin will most likely continue to be merge-mined with LTC on the Scrypt algorithm.

Bitmain is likely to continue pushing out L7 inventory before launching a more efficient Scrypt miner later this year AND Goldshell will launch a Mini Doge Pro 2 for home miners that will essentially be two Mini Doge Pros in one box. The upcoming LTC halving, along with the more efficient miners, will probably push several older models to shut down for good.

Crypto markets will go up, and crypto markets will go down. There will likely be some other crypto scandal that no one sees coming that will look incredibly obvious in hindsight. The sun will come up, and the sun will come down. Of course, most suppliers and especially resellers will continue to mark up miners and squeeze everything they can out of regular customers.

It’s impossible to know what’s going to happen with Dogecoin in the future, but crypto is one of the few industries where anything can happen on any given day.

Regardless of whether Dogecoin switches to PoS, the crypto mining landscape has always changed rapidly, and Scrypt mining is no different.

Change is coming.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Send Globally, a remittance service on Bitcoin Layer 2 scaling solution provider Strike Lighting Network, will be available in the Philippines starting January 31.

The post Lighting network provider Strike expands to Philippines appeared first on CryptoSlate.

In the last year, many have claimed the crypto industry is under attack by U.S. regulators and recent data supports this perception. The agencies in this country shattered all previous records, since 2013, in terms of legal actions against companies in the nascent space.   Related Reading: New Features in Coinbase Crypto Wallet Protects Users […]

LayerZero is the protocol used by Stargate bridge, which has over $382 million locked in its smart contracts.

Summa founder James Prestwich has accused the $382 million LayerZero bridging protocol of hosting a “critical vulnerability.” 

According to a Jan. 30 post by Prestwich, this vulnerability “could result in theft of all user funds.” LayerZero CEO Bryan Pellegrino has called Prestwich’s accusation “absolutely shocking” and “wildly dishonest,” claiming that the vulnerability only applies to applications that don’t modify the default configuration.

Absolutely shocking that a competitor would put out a wildly dishonest post about us. Happy to have @zellic_io @osec_io @ZOKYO_io or any other of the auditing firms come comment and dispel but let me summarize.

If you set up your own config, absolutely none of this is true https://t.co/zXdqkqO4rZ

— Bryan Pellegrino (@PrimordialAA) January 30, 2023

LayerZero is a protocol used to create cross-chain blockchain bridges. Its most notable application is the Stargate Bridge, which can be used to move coins between several different blockchain networks, including Ethereum, BNB Chain (BNB), Avalanche (AVAX), Polygon (MATIC) and others. Stargate has $382 million of total value locked (TVL) in its smart contracts as of Jan. 30, according to DefiLlama.

According to its whitepaper, the LayerZero protocol provides a trustless way of moving cryptocurrencies from one network to another. It does this by using an Oracle and Relayer to verify that coins are locked on one chain before allowing a coin to be minted on a different chain. As long as the Oracle and Relayer are independent and do not collude with each other, it should be impossible for coins to be minted on the destination chain without first being locked on the originating chain.

However, Prestwich claimed in his blog post that Stargate and other bridges that use the “default configuration” for LayerZero suffer from a critical vulnerability. He saithis vulnerability allows the LayerZero team to remotely change “the default Receiving library” or to “arbitrarily modify message payloads,” which can enable the team to bypass the Oracle and Relayer to transmit any message they want across the bridge. This implies that when LayerZero is used with its default configuration, it relies upon trust in the LayerZero team rather than in a decentralized protocol for its security.

Prestwich further claimed that Stargate suffers from this vulnerability since it uses the default configuration. To mitigate against this vulnerability, Prestwich advises app developers who use LayerZero to alter their smart contracts to change the configuration. However, he says that most LayerZero apps still use the default configuration, putting them at risk.

Related: Cross-chain interoperability remains a barrier to crypto mass adoption

LayerZero CEO Bryan Pellegrino vigorously denied Prestwich’s claims, calling them “wildly dishonest” in a Jan. 30 tweet. 

In a conversation with Cointelegraph on Jan. 31, Pellegrino stated that all validation libraries “are immutable forever, period.” The team can add new libraries but “can never change, remove, or do anything to” the ones that already exist. While the team can add new libraries to the registry, if an app has already chosen a particular library or set of libraries to be used, this cannot be changed by the LayerZero team.

Pellegrino admitted that the library an app “points to” can be changed by the LayerZero team if the app developer is using the defaults, but not if it has already moved away from the default configuration.

As for Prestwich’s claim that Stargate is at risk, Pellegrino responded by saying that the StargateDAO voted on Jan. 3 to change its library from the default to a specific one that is more gas-efficient. He expects this library change to be implemented “this week (likely today).” Once this update is made, “that will never be able to change on them unless Stargate votes and changes it themselves.”

Cross-chain bridge security has been a hot topic in the crypto community over the past few years, as millions of dollars have been lost through bridge hacks. In May, the Axie Infinity Ronin Bridge was exploited for $600 million by an attacker who stole keys to the developers’ multisig wallet and used it to mint coins without any backing. A similar attack occurred against the Harmony Horizon Bridge on June 24, with $100 million in crypto stolen. The Harmony team has since relaunched the bridge using the LayerZero protocol.

Due to the prolonged global beer market, lots of crypto traders and investors have had to abandon big projects like Bitcoin (BTC) and Ethereum (ETH) for fear of the unknown. Their fear is simple: they already lost money, so they don't want to continue losing their hard-earned money. Most of these investors and traders are turning to a viable project like OrbeonProtocol (ORBN). Orbeon Protocol (ORBN) has delivered impressive performance in the short period it hits the market.

Cardano (ADA) and Solana (SOL) are great projects that launched with massive potential, but the bear market limited its performance and growth rate.

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Cardano (ADA) price could trigger a 15% correction if ADA bulls fail to take control

Barring any last minute chances, Cardano (ADA) price could trigger a 15% correction if ADA bulls fail to take control. In other words, the price of Cardano (ADA) is struggling to overcome the $0.369 hurdle, even when the RSI continues to tank. Analysts say Cardano (ADA) could slide 15% to retest the $0.303 support level.

Cardano (ADA) aims to resolve the problems of interoperability and scalability, which has bedeviled the crypto space for a long time. Cardano's (ADA) development started way back in 2015 but was later launched by Charles Hopkinson two years later. ADA, the project's native token comes with a wide range of benefits, including for the payment of goods and services when holders are in the Cardano (ADA) ecosystem.

At press time, Cardano (ADA) trades at $0.380707 USD with a 24-hour trading volume of $592,530,582 USD.

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Solana (SOL) Jumps 20%, Here's Possible Reason Behind Rally

Solana (SOL) is up by 20% in the last 24 hours, having gained 12.73% since the past week. Solana (SOL) is outperforming the top 10 coins in weekly and daily gains. SOL, the native token of the Solana (SOL) blockchain, gives holders both governance and voting rights.

Solana (SOL) is a blockchain that provides scalable, secure and fast marketplaces and decentralized apps. At present, Solana (SOL) supports more than 50,000 transactions per second. At press time, Solana (SOL) trades for $24.77 USD with a 24-hour trading volume of $1,182,980,996 USD.

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Orbeon Protocol (ORBN) Rallies 1400% As Presale Phase 4 Rolls On

Orbeon Protocol (ORBN) started its presale campaign at an initial price of $0.004 per token, but has now surged by over 1400% to sell at $0.06 at the ongoing presale stage 4, which is scheduled to end in days. Experts had predicted that with the high demand of a viable crypto project that will beat the prolonged bear market, Orbeon Protocol (ORBN) will grow by 6000%, and that prediction is coming to reality.

Orbeon Protocol (ORBN) is the world's first decentralized launchpad and a crowdfunding platform. The project lets you to fractionally invest in early stage businesses with as low as $1 to earn a decent ROI on your investment. Startups can approach the Orbeon Protocol (ORBN) platform to raise funds to run their businesses and give their marketing campaigns a boost. The Orbeon Protocol (ORBN) team has partnered with social influencers to improve the token price point and also offer more value to token holders.

As Orbeon Protocol (ORBN) is a new project that is making waves, investors are joining the bandwagon in droves. If investors are looking for a viable project to invest in, OrbeonProtocol (ORBN) has got them covered.

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Disclaimer: This is a sponsored press release and is for informational purposes only. It does not reflect the views of Crypto Daily, nor is it intended to be used as legal, tax, investment, or financial advice.

The Kin Foundation, the blockchain development group behind Kin Labs and the Kin Ecosystem, has announced the launch of Kinetic, its flagship middleware (integration ramp/tool) that's built off of the Solana ecosystem.

Kinetic can be described as a "no-code" app that would help developers (yup, even those without prior extensive experience) to "easily integrate cryptocurrency use cases" into apps, effectively creating Web3 experiences across a widening ecosystem. In technical terms, Kinetic is both an SDK (software development kit) and API (application program interface) suite. To date, Kin's ecosystem has integrations across 50 applications for web, mobile, and gaming use cases, among which are notable projects such as Kik, Mimoto, Avana Wallet, Metaforo, Raydium, and Navi.

According to an announcement from Kin, the new suite provided by Kinetic will replace Agora, the previous iteration of its SDK/API offerings. The difference here is that Kinetic is specifically designed to interact with Solana, and is released as open-source (can be self-hosted by any developer), whereas Agora was built to interact with other blockchains but was designed as a proprietary suite.

"With Kinetic, we wanted to create a tool that could benefit any developer in the Solana ecosystem. The magic of Kinetic is that Kinetic SDKs can be seen as a convenience layer on top of the existing Solana SDKs," shares Bram Borggreve, Kin Foundation CTO and lead developer for the Kinetic initiative.

Integrating the Kinetic suite into an app would not require interested developers to have extensive knowledge of blockchain interfaces and ecosystems, ensuring that the packages and libraries would remain useful for all types of app developers, whether they are crypto-native or not. In this sense, Kinetic moves forward by ensuring the implementation of token management and transfers are as easy as possible for all stakeholders, while maintaining backwards compatibility with older token account creation standards as well as the latest standards maintained by current inter-blockchain initiatives.

"It’s great to see that underneath Kinetic, developers have access to the complete underlying Solana SDK supporting any SPL token. This makes it easier for developers to implement functionality outside of Kinetic’s standard offering and also opens-up the possibilities for the Solana ecosystem." shares Chase Barker, Head of Solana Developer Ecosystem.

According to the Kin Foundation's released statement, apps developed on Kinetic will all be eligible for the Kin Ecosystem's rewards and grants. App developers interested in the suite are encouraged to submit through the project's Developer Portal.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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