Daily Digest - 20th September 2022

Headlines

▌Ethereum May Be Scrutinized by SEC After “Merger”

According to the "Wall Street Journal" report, Ethereum has recently switched from the previous PoW to the PoS model. This practice of classifying the world's second largest cryptocurrency could be securities. SEC Chairman Gensler, who shared his comments hours after the Ethereum “merger” succeeded, spoke about the Howey test, a test used by courts to determine whether an asset is a security. He said cryptocurrencies and intermediaries may have to pass this test to recognize assets as securities. The Howey test will also examine whether investors expect returns from the work of third parties. From a cryptocurrency perspective, this is another measure of the Howey test, Gensler said. But Gensler did not provide further clarification, saying that he did not explicitly point to any specific cryptocurrency.

Policies

▌U.S. SEC Accuses Ian Balina of Promoting Unregistered Crypto Token SPRK

Blockworks tweeted that the U.S. SEC accused cryptocurrency investor Ian Balina of participating in the promotion of SPRK, an unregistered encrypted asset in 2018. The SEC noted that software development company Sparkster raised $30 million in funding by offering unregistered securities SPRK between April and July 2018, according to the filing. Balina contracted Sparkster at the time and promoted the SPRK token on YouTube, Telegram and other social media platforms. In May, “no-code” software platform Sparkster traded over $22 million worth of Ethereum for USDC, as previously reported. Sparkster raised more than $30 million through ICO in 2018. After that, SPRK tokens were not distributed to investors, and progress in project development and other aspects has been stagnant. The last event on its Github was in March 2019, and it happened over the weekend. The last activity on the wallet for transfers occurred in August 2018.

Cryptocurrency

▌Data: The Number of Bitcoin Active Addresses Decreased by More Than 120,000 in the past 24 Hours, a Drop of 14%

Data shows that there are currently 774,768 active bitcoin addresses, and the number of addresses has decreased by 126,574 compared with 24 hours ago, a drop of 14.04%. During the period, the number of Ethereum active addresses decreased by 17.61% (about 128,900), the largest single-day decrease since August 6. This may indicate that the market demand for BTC and ETH on-chain transactions and value settlement has decreased.

▌Data: Market Sentiment Has Been in Fear or Extreme Fear Territory for a Month

Data shows that the Fear and Greed Index is 21 today, and the market fear has intensified compared with yesterday (27), and the level has turned to extreme fear. Notably, the index has remained in fear or extreme fear territory since August 16.

▌GMX Allegedly Exploited For Over $565,000 On Avalanche

Decentralized exchange (DEX) GMX has reportedly suffered a price manipulation exploit from an exploiter who managed to make off with around $565,000 from the Avalanche (AVAX)/USD market. GMX confirmed the price manipulation exploit but stated that the trading pair would remain open despite imposing a $2 million cap on long positions and a $1 million cap on short positions. Joshua Lim, the Head of Derivatives at Genesis Trading, stating that the exploiter “successfully extracted profits from GMX’s AVAX/USD market by opening large positions at 0 slippage” before transferring the AVAX/USD to centralized exchanges at a slightly higher price. Lim however noted that this wasn’t an “exploit” in that it was “GMX working as designed.”

▌South Korean Prosecutors Asked Interpol To Issue A Red Notice For Do Kwon

South Korean prosecutors have refuted Do Kwon’s claim from over the weekend that he is not on the run and asked Interpol to issue a red notice against the Terraform Labs’ co-founder. An Interpol red notice, which is a call to law enforcement worldwide, can prevent individuals from being issued visas, can restrict their cross border travels and can allow law enforcement to “provisionally arrest a person pending extradition, surrender or similar legal action.” The Seoul Southern District Prosecutor’s Office said that Kwon was not cooperating with the investigation and had told them (through his lawyer last month) that he had no intention to appear for questioning. The prosecutors have also asked Seoul’s foreign ministry to revoke Kwon’s passport and said they have “circumstantial evidence” that Kwon is attempting to escape.