Coinpaprika News Overview (March 3rd)

Voyager customers at risk of clawbacks in bankruptcy proceedings

32,000 Voyager customers may be impacted by bankruptcy clawbacks, according to a warning from the platform's former Chief Innovation Officer, Shingo Lavine. He has urged affected parties to form a community group to oppose the actions under a unified voice, similar to Celsius customers. Voyager filed for Chapter 11 bankruptcy in July 2022. Trustees seek to enact "avoidance actions" under Chapter 11 rules to maximize the pot for redistribution to creditors, potentially forcing customers who withdrew funds between April 6, 2022, and July 5, 2022, to return those funds. Lavine suggests affected customers organize themselves to fight the clawbacks, as the Unsecured Creditors Committee (UCC) appears to have not moved to counter the action. However, Binance U.S. has reportedly agreed to carve out approximately 32,000 parties subject to potential avoidance actions identified by the Committee. According to Babi Legal Group, the clawback process is about seeking fairness for all affected parties. Voyager customers who withdrew funds before the Terra Luna crash on May 7, 2022, would have done so in good faith without awareness of market stress potentially affecting the platform. Lavine said the clawback was yet to be confirmed, "but recent information suggests they intend to pursue it".

Ethereum's Shanghai hard fork is delayed by two weeks

The eagerly awaited Shanghai upgrade for Ethereum has been delayed by two weeks, according to an announcement made at an Ethereum developer meeting on March 2. The upgrade initially set for the end of March, will now likely be rolled out in the first two weeks of April after the Goerli testnet launch on March 14. This testnet will serve as the final rehearsal before the upgrade is implemented on the mainnet. The Shanghai upgrade will allow the phased withdrawal of Ethereum staked on the Beacon Chain, and it has been considered bullish for liquid staking providers. Currently, there are 17.1 million ETH staked on the Beacon Chain, representing just over 14% of the entire supply.

ArbiSwap rugs users days after launch – token down 99%

ArbiSwap, an Arbitrum-based DEX, has experienced a rug pull just days after launching, causing its token to lose over 99% of its value. The developers of the platform controlled the liquidity pools and exploited them, stealing roughly 84 ETH from the project and moving it to Tornado Cash. The DEX had claimed to offer 100% of revenues to ARBI token holders and reached $1 million in total value locked within 30 minutes of launch. The developers were anonymous, and it is unclear if any legal action will be taken. Such scams are common in the crypto industry due to a lack of education and awareness, which makes it fertile ground for scammers.

Coinbase ends partnership with Silvergate Bank, prompting crypto companies to find new banking partners

Five notable crypto firms, including Coinbase, Paxos, Gemini, BitStamp, and Galaxy Digital, ended their partnership with fintech bank Silvergate Bank on March 2 amid a series of investigations and lawsuits. Silvergate's real-time network was popular with crypto companies due to its instant bank transfer services. However, with Coinbase terminating its service, a crypto hedge fund called Digital Asset Capital Management (DACM) is also looking for a new banking partner in Switzerland. Although there are banks in the US that can handle crypto transactions, they are not crypto-focused like Silvergate. SEBA Bank AG is a fully regulated Swiss institution with a banking and securities dealer license from the Swiss Financial Market Supervisory Authority (FINMA) and is among the options considered by DACM. While Signature Bank is currently the next best choice for crypto firms in the US, it announced in December 2022 its intention to withdraw up to $10 billion in deposits from clients who hold digital assets, starting a general exodus from the cryptocurrency sector. The Silvergate has raised the difficulty level of transferring cash to crypto exchanges, making it harder for crypto companies to find a banking partner.

Redeem raises $2.5M to make NFTs accessible through mobile phone numbers

Redeem, a startup that aims to make NFT transfers as easy as using basic mobile technology has raised $2.5M through a consortium of like-minded VCs led by Kenetic Capital. The service allows users to connect any blockchain wallet on any network to their phone number, making it easy to redeem tickets, loyalty points, gaming items, and more by scanning a QR code. Redeem's protocol facilitates the smooth exchange of NFTs through popular messaging services such as iMessage, WhatsApp, or SMS, eliminating the need for complicated crypto interfaces or gas fees. The funding will be used to roll out product launches and aid in further developments. Redeem says it is blockchain agnostic, meaning it allows users to connect NFTs to wallets supported by Polygon and Metamask, but it also supports NFTs on different blockchains like Ethereum and Solana. The startup aims to make NFT technology more accessible to billions of new customers by bringing NFTs directly to mobile phone numbers.

Signature Bank becomes the last resort for crypto companies amid Silvergate's distress

Signature Bank is reportedly servicing several cryptocurrency companies that have been affected by the recent distress of Silvergate Bank and FTX, according to reports. Signature Bank is one of the few US banks that is federally regulated and has been actively courting digital assets. Last December, the bank announced plans to offload up to $10bn in deposits related to the cryptocurrency industry, marking a U-turn for the bank, which had previously achieved rapid growth by aggressively pursuing digital asset clients. However, in the wake of Silvergate's woes, Signature Bank is one of the few remaining banks able to process transactions for crypto companies. Coinbase announced via Twitter that it will be transitioning to Signature Bank on March 2. Signature Bank is also facing challenges of its own, including a class-action lawsuit accusing it of facilitating the co-mingling of funds between FTX and its private trading firm Alameda Research.

Reserve Bank of Australia and others to explore 14 CBDC use cases in the new project

The Australian central bank collaborates with multiple banks and the Digital Finance Cooperative Research Centre to explore 14 different use cases for a central bank digital currency (CBDC) and determine its economic benefits. The project will also involve the use of the Ethereum-based CBDC developed by Australia called the eAUD. The use cases include CBDC distribution, offline payments, cross-border settlement, GST automation, tokenized bills, livestock auctions, construction supply chain payments, and superstream payments, among others. Mastercard will serve as the "use-case provider" for the interoperability pilot, which aims to develop a trusted and reliable form of money on the blockchain and explore how a CBDC can be tokenized on multiple blockchains while ensuring that only authorized parties can hold and redeem it. The project will contribute to hands-on learning by the industry and add to policymakers' understanding of how a CBDC could potentially benefit the Australian financial system and economy.