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FTX Australia’s Financial License Revoked By ASIC, Amidst Executive Resurfacing

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In a major blow to the cryptocurrency industry, the Australian Securities and Investments Commission (ASIC) has taken decisive action by canceling the financial license of FTX Australia Pty Ltd, a local subsidiary of the bankrupt crypto exchange. 

The cancellation, announced on July 19, took effect on July 14, leaving the company with limited options until July 12 next year to conclude its dealings with clients.

The cancellation of FTX Australia’s Australian financial services (AFS) license by ASIC is a response to the company’s financial instability. The cancellation terms stipulate that it may provide limited financial services related to terminating existing derivatives with clients until July 12, 2024. 

However, the cancellation will not affect its obligations to continue as a member of the Australian Financial Complaints Authority or its arrangements to compensate retail clients.

The troubles for the exchange began on November 11, 2022, when voluntary administrators were appointed for both FTX Australia and its subsidiary. ASIC, in response, suspended its AFS license initially until May 15, 2023, which was later extended to July 24, 2023.

Former FTX Executive Joins Sino Global Capital

In the aftermath of the exchange’s collapse, one notable former executive has resurfaced in the cryptocurrency space. Zhe “Constance” Wang, previously associated with the exchange as Chief Operating Officer and Co-Chief Executive Officer of FTX Digital Markets, has joined crypto venture capital firm Sino Global Capital, according to a report.

Matthew Graham, the founder of Sino Global Capital, confirmed that Wang is leading the gaming team at the firm. Her previous responsibilities at the exchange included overseeing token listings, global business expansion, and public relations.

Sino Global Capital had been an early investor in it and, back in 2022, launched a $200 million fund with the exchange as a key investor. Despite its subsequent collapse, no accusations of wrongdoing have been directed at Wang regarding the company’s failure.

Among other former FTX associates, Amy Wu, who previously worked at Lightspeed Venture Partners to lead FTX Ventures, recently joined Menlo Ventures. While Brett Harrison, former President of FTX US, founded a startup with plans to provide a “GPT-4-powered trading algorithm code generator.” 

Nevertheless, FTX’s fate serves as a cautionary tale for crypto investors and stakeholders amid the industry’s ongoing evolution.

Related Reading | Crypto Fraud: US Authorities Seize Millions from Deltec Bank In International Scam

Binance Australia’s Derivatives License Cancelled; Details

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Binance Australia Derivatives, the Australian financial services licensee held by Oztures Trading Pty Ltd, has had its license canceled by the Australia Securities & Investment Commission (ASIC). It comes after a request from Binance to cancel the license, which was received by ASIC on the previous day.

Implications For Binance Clients

As per the press release issued by ASIC, starting April 14, 2023, Binance clients will be prohibited from opening new derivative positions or increasing existing ones. Before April 21, 2023, clients must close all their current derivative positions. Any remaining open positions after April 21, 2023, will be closed by the exchange.

ASIC has been conducting a specific evaluation of Binance’s financial services operation in Australia, particularly its differentiation between retail and wholesale clients. On March 29, 2023, ASIC delivered a hearing notice to deliberate on the possible cancellation or suspension of the AFS license owned by Oztures Trading Pty Ltd.

As per the press statement, “ASIC continues to take action to disrupt and deter harm and misconduct within its jurisdiction.” ASIC Chair Joe Longo has emphasized the importance of classifying retail and wholesale clients according to the law and warned potential crypto users that crypto is risky and complex.

Mr. Longo, said:

As we have said before, ASIC supports a regulatory framework for crypto with a focus on consumer protection and market integrity. The final decision as to the regulatory settings is one for Government.

This is not the first time ASIC has taken action against entities in the crypto space. In the past, ASIC has commenced civil penalty proceedings against Finder Wallet Pty Ltd, BPS Financial, and Block Earner for alleged unlicensed conduct and misleading statements in relation to crypto products.

Overseas regulators have also issued regulatory warnings and taken regulatory action against Binance group entities, including the UK Financial Conduct Authority, the Japan Financial Services Agency, and the Ontario Securities Commission.

Binance’s license cancellation emphasizes the need for crypto regulations to protect consumers and market integrity. In the statement, ASIC also warns of the risky and complex nature of crypto, especially derivatives, and highlights the lack of ASIC regulation in the industry. Users should be prepared to lose their investments.

Related Reading | Binance Under Scrutiny, Dubai Cracks Down On Crypto License Applicants: Report

Bitcoin Mining Firm Hive Blockchain Shares Skyrocket Over 100% YTD

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Hive Blockchain, a Bitcoin mining company, has seen a significant surge in its share value, with an increase of over 100% year-to-date. Specifically, between January 3rd and January 13th, 2023, the company’s shares rose by 104.6%. 

Source: Nasdaq

Starting at $1.53, the value of a single share reached $3.13 just ten days later, reaching a peak of $3.18 on January 12th. This impressive performance is likely due to the company’s recent adoption of Intel’s Blockscale chip for its mining machines, which is expected to increase the efficiency of its mining operations.

Bitcoin Miner deployed Intel’s (INTC) Blockscale chips

HIVE Blockchain announced in a press release on January 13th that it has successfully deployed its commercial version of the HIVE BuzzMiner, powered by the Intel Blockscale ASIC. 

The deployment follows months of planning, engineering development, quality assurance processes, field testing, and global collaboration. 

Frank Holmes, the Executive Chairman of HIVE, stated that the company has always been focused on innovation as a technology company. 

He highlighted that HIVE was the first public crypto miner to be green energy-focused, the first to mine both Bitcoin and Ethereum, and the first to own and build data centers. He added that the company is now the first public crypto miner to deploy its own ASIC mining rig.

He said:

The HIVE BuzzMiner is our testament to Proof-of-Work being the most secure and robust consensus mechanism for digital assets, of which Bitcoin is the most secure. 

The firm’s President & COO, Aydin Kilic, expressed his satisfaction with the successful deployment of the commercial version of the HIVE BuzzMiner, powered by the Intel Blockscale ASIC. He highlighted the high quality and robustness of the machine, and what sets the HIVE BuzzMiner apart is its dynamic range of operation.

Kilic added in the statement:

We are able to operate our machines from 110 TH/s to 130 TH/s, allowing us to optimize the profitability of our fleet by varying the power consumption and machine efficiency. Accordingly, our initial build of 5,800 HIVE BuzzMiners, can produce between 638 PH/s to 754 PH/s.

In addition, the company noted that it has successfully deployed over 1,500 machines globally, meeting expected performance targets. Their earlier projections of over 1 Exahash were based on the total allocation of Blockscale chips from Intel to produce 13,000 HIVE BuzzMiners.

Related Reading |  Recent Bitcoin Price Rally Is Due to Market Manipulation, Says Ex-SEC Member  

Bitcoin ASIC Miners Prices Per Terahash Hit All Time Low Of 80%

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In what is being perceived as another indicator of a deepening crypto bear market, Bitcoin ASIC miners, devices designed solely for mining Bitcoin, are currently selling at bottom-of-the-barrel prices last seen in 2020 and 2021.

The most effective ASIC miners, those that produce at least one terahash for every 38 joules of energy, have seen their prices drop 86.82% from a peak of $119.25 per terahash on May 7, 2021 down to $15.71 as of December 27, according to latest data from Hashrate Index.

The Antminer S19 from Bitmain and the Whatsminer M30s from MicroBTC are examples of miners in this category.

The same is true for mid-range computers, whose average price has dropped significantly 89.36% from its peak price of $96.24 on May 7, 2021, to currently average $10.23.

The least effective machines, on the other hand, are now priced at $4.72, a 91% decrease from their peak of $52.85. These devices demand more than 68 Joules per terahash. It was last priced similarly on or about November 5, 2020.

Source

Large Bitcoin mining firms that have battled to remain profitable throughout the bear market are mostly to blame for the price decline. To keep afloat, many of these firms have either filed for Chapter 11 bankruptcy, taken on debt, or sold their BTC holdings and equipment.

Core Scientific, Marathon Digital, Riot Blockchain, Bitfarms, and Argo Blockchain are a few of the companies that have completed that.

However, some eager purchasers have responded to the sharp price decline. Numerous Russian-based mining operations, like BitRiver, are among them. With some modern hardware, they can mine 1 BTC in the energy-rich country for approximately $0.07 per kilowatt-hour, taking advantage of the relatively low electricity costs in the country.

Bitcoin’s 2024 Halving Cycle To Be Different

Although it’s difficult to predict which price direction ASIC miners will take next, Nico Smid of Digital Mining Solutions noted in a tweet on December 21 that ASIC miner prices bottomed at Bitcoin’s most recent halving cycle on May 11, 2020 and quickly moved up afterward — something that could play out in Bitcoin’s upcoming halving cycle, which is anticipated to occur on April 20, 2024.

FTX: Under Fire Aussie Regulatory Head Makes Explosive Claims

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FTX collapsed a month back, but a new revelation has uncovered a troubling fact. The SBF-led exchange had allegedly obtained an AFS Licence by exploiting a regulatory loophole bypassing the regular process.

Joseph Longo, the chairman of the Australian Securities and Investments Commission [ASIC] revealed at a joint committee.

According to Longo, FTX was reportedly able to circumvent the regular checks and secure an AFSL when it took over IFS Markets in Dec. 2021. The exchange later began operating in Mar. 2022.

This loophole left ASIC without a tooth to inspect corporations the same way it does with the new licensees, the chairman alleged.

FTX “bought [its AFSL] off an existing license-holder. Under current statutory arrangements, it is a normal thing to do,” Longo continued: “we were notified about that position, but it is very easy to trade someone else’s license.”

The ASIC’s chair also added he had specifically requested the former government led by Scott Morrison to close this regulatory gap, but got no response whatsoever.

Longo has lately come under fire from a parliamentary committee on why FTX held a financial services license.

The government has rejected his suggestion that the regulator lacked the power to intervene on the financial services license of the failed crypto exchange.

FTX: Rift Between Government and Regulator

Assistant Treasurer Stephen Jones said the Australian Securities and Investments Commission already had sufficient powers to suspend, cancel, or modify an AFS Licence.

Taking note of the FTX blowout, the government has pledged to bring custodial legislation next year, after a Senate committee chaired by Liberal Andrew Bragg said local custody rules would be an important protection for crypto investors.

Mr. Longo, on the other hand, has reiterated his warnings that crypto was “inherently speculative, volatile and highly risky” and said investors should be “prepared to lose all your money”.

At the time of writing this post, FTX has not responded to the top exec’s claims.

Meanwhile, the UK Treasury is reportedly giving the finishing touches to a framework for the regulation of the digital asset industry following the FTX saga.

The Financial Times reported that the nation’s financial regulators are finalizing its crypto regulation. This would cover restrictions on foreign entities doing business in the UK, methods for handling commercial failures, and rules on product advertising.

Here’s How Cryptocurrency Miners In Russia Are Capitalizing On The Bear Market

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The continuing cryptocurrency mining problem doesn’t seem to be bothering Russian cryptocurrency miners, since local demand for mining equipment is said to have increased in Q4 2022.

According to local news outlet Kommersant, several Russian suppliers of crypto mining hardware have experienced a sharp increase in demand for application-specific integrated circuit (ASIC) chips made specifically for mining.

Local dealer Chilkoot claimed that their ASIC sales in November and October were greater than all of its sales for the third quarter. The distributor reportedly sold 65% more hardware in the last nine months than in 2021.

Chilkoot development manager Artem Eremin said,

“We are working with legal entities, and we see that they began to buy 30% more equipment in one transaction than at the beginning of the year.”

The demand for crypto mining services has reportedly grown by 150% over the last 10 months at BitRiver, Russia’s largest data center facility.

Source

Russia is reportedly experiencing a surge in demand for cryptocurrency mining equipment at a time when the mining sector is struggling; in late November, total Bitcoin mining revenue fell to two-year lows. Due to the significant losses brought on by the current bear market in cryptocurrencies, several mining companies, like Argo Blockchain and Core Scientific, have even questioned if they would be able to continue operations.

Russian Miners Stockpiling Cryptocurrency ASICs

Russian miners are likely stockpiling more crypto ASICs as a result of the country’s cheap energy and lower prices for mining equipment.

Despite a sharp decline in the price of bitcoin this year, 51ASIC co-founder Mikhail Brezhnev allegedly stated that mining Bitcoin in Russia can still be viable. The executive claims that mining 1 BTC with the most up-to-date equipment may produce about $11,000 at an electricity cost of $0,07 per 1 kilowatt-hour. According to data from CoinGecko, Bitcoin is currently trading at $16,975, down around 70% over the previous year.

According to Vladislav Antonov, a financial analyst for BitRiver, the current market environment has been advantageous for the Russian industrial cryptocurrency mining business. He pointed out that a decline in purchasing prices, which have gotten as near as feasible to the cost of manufacture, stimulated demand for ASIC equipment in the wholesale market. According to reports, the expert suggested that was the ideal place to start investing.

A mining entry during a bear market, in Antonov’s estimation, may be able to produce “substantial profit of tens of percent” over the course of three years.

Intel Corp rolls out energy-efficient new Bitcoin mining chips

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One of the largest chip-making firms Intel Corp on 11 February 2022 unveiled a new chip for blockchain applications as part of its plan to harness the fiercely competitive mining industry.

The chip is scheduled to be shipped later this year and the first customers include Block Inc, the Jack Dorsey-led firm that recently changed its name from Square Inc, and Argo Blockchain [ARGO].

In accordance with the blog post, Senior Vice President and General Manager of Intel’s Accelerated Computing Systems and Graphics Group Raja M. Koduri said Intel will contribute to blockchain technology with a “roadmap of energy-efficient accelerators.”

According to the firm, its chip is an energy-efficient “accelerator” designed to speed up tasks in blockchain that require huge amounts of computing power and in turn consume a lot of energy. One of the chip designers is Nvidia Corp, whose graphics cards are being used widely for mining activities, also has a separate chip meant for Ethereum mining.

The latest initiative is to further Intel’s plan to expand its footprint in the space, it has also formed a new segment called Custom Compute Group within its Accelerated Computing Systems and Graphics business unit.

The news follows after the world’s largest semiconductor manufacturing firm has outlined its ambition to create a specialized crypto-mining chip at the International Solid-State Circuits Conference (ISSCC) in February, according to the conference’s agenda.

Intel reveals plans to create energy-efficient ASIC

Two weeks ago, the chip-making giant announced building an “ultra-low-voltage energy-efficient” chip at an upcoming ISSCC conference slated to be held on February 23, 2022. The move signaled Intel’s entry into the bitcoin mining chip-making industry.

Not only that, but this also brings the company into direct competition with the giants like Bitmain and MicroBT in the market for bitcoin mining ASICs, or application-specific integrated circuits, for the first time.

That being said, Crypto mining has in the past has caused demand and prices to shoot up for graphics processing units, including Intel’s, causing resentment among the gamer community. Unlike its competitor Nvidia, Intel has said it doesn’t plan to add ether mining limits on its graphics cards.

Crypto rush forces Australia’s securities commission to warn users about unlicensed digital asset entities

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As cryptocurrencies and their related markets make their way up, regulators across the world have warned users of managing their capital in the nascent field. This has been mainly due to the large number of fraudulent activities in the industry mostly fueled by ignorance and cheap phishing tricks. To combat this rising issue, the Australian Securities and Investments Commission [ASIC] has taken the onus to inform its citizens about the do’s and dont’s of crypto trading.

One of the first markers provided by the ASIC was to be on the lookout for cryptocurrency exchanges that do not comply with AML regulations or don’t possess an AFS license. In the latest ASIC report, it was stated:

“An entity is required to be licensed by ASIC if they provide financial services (such as advising or dealing) in relation to financial products offered in Australia. Financial products include derivatives such as options, futures, leveraged tokens, and binary options. The sale of binary options to retail clients was recently banned in Australia under an order that will remain in force for 18 months.”

The ASIC has had to take such a step because of cascading number of cases related to capital fraud. Over the past couple of years, several Australians experienced massive losses be in the form of futures, options, or leveraged tokens. Bringing these entities under the national mandate is expected to streamline the processes and make them much more transparent.

Users have also been urged to cross-check their references and exchanges before investing their hard-earned funds. The first step is to check if the exchange or crypto trading body holds an AFSL or Anti-Money Laundering [AML] system. The Commission further added that users need to be more vigilant when checking for licensing on crypto entities.

500,000 ASIC Equipment Goes Online as Bitcoin Hash Rate Reaches New Record High

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A hive of activity in 2019 has surrounded Bitcoin, and this has translated into a price rise for the leading crypto asset on the markets. Bitcoin mining power reached a new record high as miners come online to participate in the booming trade of the cryptocurrency.

New powerful machines come online

The last three months have seen several powerful mining machines come online on the Bitcoin network. It is estimated that about 600,000 powerful machines have come online during this period, and this has led to an increase in Bitcoin’s hash rate.

According to BTC.com, the two weeks average hash rate for Bitcoin reached 85 exa hashes per second, as of Friday the 13th at 19:00 UCT. Mining difficulty also reached a new record of nearly 12 trillion. This is a 60% increase in both figures since the 14th of June, 2019.

Mining difficulty refers to the measure of how difficult it is to create a block to form a block of transactions. Bitcoin mining difficulty shifts after every 2,016 blocks, which is an average of every two weeks. The aim is to ensure that the time it takes to create a block remains around 10 minutes.

The hash power carried by Bitcoin mining machines fluctuates as miners compete to complete transactions on blockchains, but the time it takes to create a block needs to remain as constant as possible around the 10-minute mark.

ASIC machines come online, possible billion-dollar business

Over the past three months, several new kinds of application-specific integrated circuit (ASIC) mining machines came online. These machines have an average hashing rate of 55 tera hashes per second (TH/s), and this has considerably increased the total mining power dedicated to Bitcoin. A rough calculation reveals that there might be about half a million new mining machines that have joined the Bitcoin network over the last three months.

Most of the machines used in Bitcoin mining come from companies such as InnoSilicon, Bitmain, MicroBT, and Cannan. These significant manufacturers of Bitcoin mining equipment sell their products at between $1,500 and $2,500 per unit. If half a million of these were added to the Bitcoin network, it means these leading manufacturers have made over $1 billion in revenue over the last three months.

The rising price, rising demand, rising need for mining power

The increase in the need for more mining power on Bitcoin’s network comes after a surge in the crypto asset’s price over the year. The price rise has attracted more traders to the cryptocurrency, and this has influenced a spike in hash rate and mining difficulty. The increase in hash rate led to a growing demand for Bitcoin mining equipment.

China carries the world’s highest mining power, and most of the mining farms are situated in the country’s southwestern regions. Miners in these areas make use of cheap hydroelectric power, and high rainfall over the summer has made this electrical power even less expensive. Miners in the country estimate that their hash rate could break the 70 EH/s mark in the summer.

There is also raising demand for equipment from mining farms in Russia’s Eastern Siberia region. These farms are making use of the Brastsk hydropower plant which was constructed during the Cold War era. These mining farms in Russia are said to carry about 10% of the total mining power on the Bitcoin network.

Most of the major mining equipment manufacturers have sold out on their stock, and their customers are placing pre-orders for more equipment three months in advance. Bitcoin’s hash rate, mining difficulty, and the price will likely continue to rise as a result.

Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

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