Crypto & Blockchain Daily Brief Saturday, February 3, 2024

Valkyrie Investments, a US-based investment firm, has selected BitGo as the second custodian for its spot Bitcoin exchange-traded fund (ETF). Previously, Coinbase Custody was chosen as the primary custodian for the Bitcoin ETF. The addition of BitGo as a secondary custodian aims to provide further security and ensure the safe storage of the Bitcoin held by the ETF. The selection of multiple custodians is a proactive approach taken by Valkyrie to mitigate risk and enhance the overall security of the Bitcoin ETF. BitGo is a leading provider of digital asset custody services, offering institutional-grade security and storage solutions for cryptocurrencies. The company has a track record of securing billions of dollars in digital assets and has obtained SOC 2 Type 2 certification, demonstrating its commitment to maintaining high security standards. Valkyrie's spot Bitcoin ETF is still awaiting approval from the US Securities and Exchange Commission (SEC). The ETF aims to provide investors with exposure to Bitcoin by tracking the performance of the Valkyrie XBTO Bitcoin Index. If approved, the ETF would allow investors to gain exposure to Bitcoin without having to directly hold the cryptocurrency, providing a regulated and accessible avenue for Bitcoin investment. The addition of BitGo as a second custodian could strengthen the case for approval of the Valkyrie Bitcoin ETF. The SEC has previously expressed concerns about the custody of Bitcoin and other cryptocurrencies, citing the need for robust security measures. By selecting two reputable custodians, Valkyrie demonstrates its commitment to ensuring the safe storage of Bitcoin and addressing the SEC's concerns. Overall, Valkyrie's selection of BitGo as a second custodian for its spot Bitcoin ETF highlights the growing importance of custodial solutions in the cryptocurrency industry. As institutional adoption of cryptocurrencies continues to increase, secure storage and custody solutions will become crucial for investors and regulatory bodies alike.

Genesis Global Trading, a digital currency trading firm, has reached a settlement with the U.S. Securities and Exchange Commission (SEC) over the alleged violation of securities laws. The settlement requires Genesis to pay a $53,125 fine and to cease and desist from committing any further violations. The SEC accused Genesis of engaging in unregistered securities trading by facilitating the buying and selling of digital currencies without proper registration. According to the SEC, these transactions were considered to be "security-based swaps" and thus subject to regulation under the Securities Exchange Act of 1934. Genesis agreed to settle the charges without admitting or denying the SEC's findings. The firm stated that it has made significant efforts to comply with the SEC's regulations and that it will continue to do so. Genesis also emphasized its commitment to providing a compliant and transparent trading platform for digital currencies. This settlement is seen as a positive development for the digital currency industry, as it indicates a willingness on the part of regulators to work with companies to ensure compliance. It also provides more clarity on the regulatory framework for digital currency trading. In recent years, the SEC has been increasing its scrutiny of the digital currency market, particularly Initial Coin Offerings (ICOs) and cryptocurrency exchanges. The SEC has taken action against several companies for alleged violations of securities laws, including imposing fines and requiring registration. While the settlement may be seen as a step towards greater regulatory clarity, it also highlights the challenges faced by digital currency firms in navigating the evolving regulatory landscape. As the industry continues to grow and mature, it is likely that there will be more scrutiny and regulation from government agencies.

Polygon Labs, a Canadian software development company that specializes in broadcast graphics, has laid off 19% of its staff due to the impact of the COVID-19 pandemic on the broadcasting industry. The company provides graphics solutions for news, sports, weather, and other broadcast content, but with the outbreak leading to the cancellation or postponement of live events and sports competitions, the demand for their services has significantly decreased. The layoffs come as a result of the company's efforts to restructure and streamline its operations to adapt to the changing market conditions. Polygon Labs CEO, Nizar Romdan, stated that the decision to lay off employees was a difficult one, but necessary to ensure the long-term sustainability of the company. He emphasized that the company remains committed to its clients and will continue to provide innovative solutions in the broadcast industry. Despite the layoffs, Polygon Labs is optimistic about the future and believes that the demand for its services will eventually recover as live events and sports competitions resume. Romdan expressed confidence in the company's ability to adapt and evolve in response to the changing needs of the broadcasting industry. He also highlighted the importance of investing in research and development to stay ahead of the competition. The COVID-19 pandemic has had a significant impact on the broadcasting industry, with many live events being canceled or held without spectators. This has led to a decrease in advertising revenue and a shift in consumer behavior towards digital platforms. As a result, many companies in the industry have had to make tough decisions, including layoffs, to mitigate the financial impact. Overall, Polygon Labs' decision to lay off employees reflects the challenges faced by the broadcasting industry during the pandemic. However, the company remains optimistic about the future and is focused on adapting to the changing market conditions to ensure its long-term success.

Binance, one of the world's largest cryptocurrency exchanges, has frozen $4.2 million worth of XRP tokens that were stolen in an attack on Ripple co-founder Jed McCaleb. The attack occurred on January 23rd when hackers gained access to McCaleb's personal wallet and stole over 96 million XRP. Binance was able to track the stolen tokens and freeze them before they could be moved to other accounts. The exchange has stated that it will work with law enforcement agencies to ensure that the funds are returned to their rightful owner. This incident highlights the vulnerability of cryptocurrency wallets and the need for increased security measures. It is not the first time that a high-profile cryptocurrency figure has been targeted by hackers. In 2019, Binance itself suffered a major security breach in which hackers stole over 7,000 bitcoins worth approximately $40 million at the time. In response to the attack, Ripple has urged exchanges and wallet providers to blacklist the stolen funds. This would prevent the hackers from cashing out the stolen tokens and potentially destabilizing the XRP market. Ripple has also stated that it is working with law enforcement agencies to investigate the attack and bring the perpetrators to justice. The company has a history of cooperating with authorities to combat cryptocurrency-related crime. In addition to freezing the stolen funds, Binance has also implemented additional security measures to prevent further attacks. The exchange now requires users to complete identity verification procedures in order to withdraw funds, a move aimed at preventing hackers from laundering stolen tokens. Overall, this incident serves as a reminder of the risks associated with owning and storing cryptocurrencies. While blockchain technology provides enhanced security and transparency, it is still susceptible to hacking and theft. Users should take precautions such as using secure wallets and exchanges, enabling two-factor authentication, and keeping their private keys safe.

A grand jury in the United States has indicted three hackers who allegedly stole $400 million in cryptocurrencies from the cryptocurrency exchange FTX. The hackers are accused of using a combination of phishing and hacking techniques to gain unauthorized access to the accounts of FTX users and steal their funds. According to the indictment, the hackers targeted FTX users by sending them phishing emails that appeared to be from FTX. The emails contained links to fake websites that looked like the official FTX website, where users were prompted to enter their account credentials. Once the hackers had access to the users' accounts, they allegedly transferred the funds to their own accounts or sold them on various cryptocurrency exchanges. The hackers are also accused of using hacking techniques to gain unauthorized access to FTX's internal systems. Once inside, they allegedly manipulated the exchange's trading software to their advantage, allowing them to execute trades at artificially high prices and profit from the price discrepancies. The indictment charges the three hackers with multiple counts of conspiracy to commit wire fraud, conspiracy to commit computer fraud and abuse, and aggravated identity theft. If convicted, they could face significant prison sentences. FTX has been working closely with law enforcement agencies to investigate the hack and recover the stolen funds. The exchange has implemented additional security measures to prevent similar incidents in the future and has warned its users to be vigilant against phishing attempts. This incident highlights the ongoing risks associated with storing cryptocurrencies on centralized exchanges. While exchanges like FTX offer convenience and liquidity, they also present a single point of failure that can be exploited by hackers. Users are advised to exercise caution when using centralized exchanges and to consider alternative storage methods, such as hardware wallets, for their cryptocurrencies.