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Coinbase introduces KYC rules for its Netherland users to comply with local legislation

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Coinbase introduces KYC rules for its Netherland users to comply with local legislation

Coinbase introduces KYC rules for its Netherland users to comply with local legislation Abdulrasaq Ariwoola 路 3 hours ago 2 min read

The rule will require users to provide information of recipients when making transfers to wallets off Coinbase.

2 min read

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Updated: June 24, 2022 at 7:04 am

Cover art/illustration via CryptoSlate

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Coinbase announced its Netherlands users would have to comply with KYC rules when making transfers to wallets off Coinbase. It stated that the rule would bring its operations in compliance with local regulations.

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The country鈥檚 1977 Sanctions Act requires financial service providers to verify the identities of transacting parties on its platform. The mandatory requirement is, therefore, to ensure AML/CFT in financial transactions.

As a result, users making transfers to wallets off Coinbase will have to provide information about the transaction. This includes the recipient鈥檚 full name, the purpose of transfer, and the recipient鈥檚 residential address.

It, however, stated that the latest introduction would not affect the usual transactional experience on the platform.

Meanwhile, Coinbase has made similar announcements to abide by local regulations in other countries. In March, the company announced that it would start tracking off-platform transactions executed by users in Canada, Singapore, and Japan.

Rising crypto restrictions

Regulators in the Netherlands have recently called for increased regulation of the space, with some asking for a total ban.

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Pieter Hasekamp, director of the Dutch Bureau for Economic Analysis, made a call for a total ban stating that the country must curb the crypto hype. He claimed that the use of cryptocurrency constitutes security concerns, fraud risks, and scams.

Likewise, Paul-Willem van Gerwen, head of Capital Markets and Transparency Supervision at the Dutch Authority for Financial Markets (AFM), ruled digital assets as unsuitable for payments or investments.

He expressed similar concerns about crypto markets鈥 transparency and susceptibility to manipulation and other criminal activity.

However, pending the implementation of the EU law, Markets in Crypto Assets Regulation (MiCA), the AFM doesn鈥檛 have powers over the crypto markets.

Europe is increasing its regulatory pace.

The Markets in Crypto Assets Regulation (MiCA) proposed in 2020 is the EU鈥檚 response to the need for an encompassing regulation for digital assets. The increased market volatility has heightened calls for a regulatory framework for digital assets.

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The tripartite of the European Commission, the European Parliament, and the 27 member states constitute the bodies negotiating the MiCA. According to a report by Bloomberg, the negotiators recently met in June and are expected to meet again by聽 June 30 to get the rule ready in time for France鈥檚 six-month rotation in the presidency.

The European Commissioner Mairead McGuiness has also called for hastened negotiation and compromise on the rules. She stated that the TerraUST crash and Russia鈥檚 alleged use of聽crypto assets to evade sanctions have made the rules more urgent.

Likewise, Verena Ross, the head of the European Securities and Markets Authority, made a similar call in May. She appealed for the quick completion of the crypto rules, which she said she was waiting for 鈥渨ith great impatience.鈥

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Analysis

Nansen report reveals Terra caused the stETH depeg and crippled Celsius, 3AC

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Nansen report reveals Terra caused the stETH depeg and crippled Celsius, 3AC

Nansen report reveals Terra caused the stETH depeg and crippled Celsius, 3AC Liam ‘Akiba’ Wright 路 8 hours ago 3 min read

with insights from Nansen

A new report by Nansen walks through the events that led to 3AC and Celsius exiting their stETH positions amid the collapse of Terra and the unwrapping of 600K bETH.

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3 min read

Updated: June 29, 2022 at 9:06 pm

Cover art/illustration via CryptoSlate

The source of the current market volatility and liquidity issues with companies such as Celsius and Three Arrows Capital could be directly linked to staked Ethereum (ETH) on Lido, according to a June 29 report by analysis firm Nansen on the impact of the stETH/ETH depeg on the crypto industry.

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Infinite money glitch

When Ethereum is staked into ETH 2.0 via Lido investors, receive an ERC-20 token named stETH. This token is tradeable, and one stETH is redeemable for 1 ETH after Ethereum moves to proof of stake and is merged with the beacon chain.

However, investors can also post stETH as collateral on sites such as Aave to borrow ETH. This borrowed ETH can also be staked on Lido to receive more stETH. This yield loop multiplies the ETH staking rewards but puts the investor at risk should 1 stETH not equal 1 ETH. Lido promoted this strategy via a Twitter post in March.

2) Leveraged ETH staking

stETH on Aave allows you to leverage your ETH staking to maximise staking returns.

1. Supply your stETH as collateral.

2. Borrow ETH against the stETH.

3. Restake borrowed ETH for more stETH.

Repeat this process as much as your risk profile allows.

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鈥 Lido (@LidoFinance) March 1, 2022

How Ethereum brought down Celsius and 3AC

Nansen highlighted that during the UST depeg crisis, bETH depositors (a wrapped bridged version of stETH on Terra) moved their tokens back to the Ethereum mainnet amid fears of the network鈥檚 stability. The report stated that 615,980 bETH was bridged back to Ethereum during this time and was unwrapped back to stETH.聽

It is this stETH that Nansen claimed was then sold back to Ethereum that started the selling pressure on the stETH/ETh peg, according to data available on its platform. An increase of 567k stETH was added to the stETH/ETH pool of Curve, creating an imbalance and forcing Lido to take measures to attempt to restore the peg.

A large net outflow ensued as investors became worried by the situation and Nansen said that Three Arrows Capital was one of the largest recipients of stETH from Curve. The Three Arrows outflow reportedly totaled 9724 stETH and 486 WETH.

As the price of Ethereum and the broader crypto market, in general, began to fall, Nansen stated

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鈥渁ddresses we flagged as Celsius and Three Arrows Capital were the biggest withdrawers, removing almost $800m worth of liquidity combined (236k stETH and 145k ETH, respectively) on 12 May.鈥

It continued to comment that 鈥渢hese transactions were most impactful to the initial deviation from the ETH price.鈥 The below transactions are the top wallets that transfer stETH between June 1 and 12.聽

Source: Nansen

From the above wallets, Nansen analyzed the individual transactions to reveal that Amber Group, Celsius, Three Arrows Capital, and several whale wallets all moved serious amounts of stETH during this time. Amber Group and Celsius moved stETH to FTX in a possible OTC trade as stETH liquidity on FTX were too shallow to sell the tokens without incurring colossal slippage. Nansen also revealed that Celsius took out large stablecoin loans from Compound to 鈥減ossibly meet redemptions.鈥

After Celsius paused withdrawals, 108.9 ETH and 9,000 WBTC were sent to FTX, originating from one of its leading wallets. This wallet is 鈥渟till the top 1 lender/borrower for ETH (incl. WETH and stETH) and WBTC collateral across both Aave and Compound with a combined collateral value of almost $1 billion,鈥 according to Nansen.

Three Arrows Capital 鈥渨ithdrew a sizable amount of 29,054 stETH from BlockFi鈥 on June 7 and deposited it between Lido and Aave. Another 3AC wallet borrowed 7,000 ETH from Aave using part of the funds removed from BlockFi as collateral and sent to FTX. Over the following week, several more transactions were made by 3AC with funds deposited between FTX and Deribit. Deribit is one of the largest options and derivatives trading platforms in crypto; depositing funds to this exchange is likely to either pay down margin or open up new derivative contracts.

Nansen revealed that on June 13, 3AC began to sell off its assets by 鈥unwrapping its wstETH for stETH and sold it for wETH via Cow Swap鈥 for a total of 49,021 stETH. 3AC sold tens of thousands of stETH for ETH and stablecoins over the following days, thus, exiting its stETH positions.

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Conclusion

The report concluded that Celsius had a liquidity issue, and its need to sell and transfer stETH led to a domino effect. 3AC was a 鈥渧ictim of the contagion鈥 and not the initial cause of the stETH/ETH depeg. Nansen stated that 3AC is 鈥渕ost likely reducing its risks and accepting its losses.鈥 In contrast, Celsius reduced its risk, and 鈥渢heir health ratio is still decent in the context of things, as long as there isn鈥檛 a sudden downward swing of >30% in prices of their collateral.鈥

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Exchanges

CoinFLEX CEO claims investor 鈥淏itcoin Jesus鈥 personally owes the exchange $47M USDC

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CoinFLEX CEO claims investor 鈥淏itcoin Jesus鈥 personally owes the exchange $47M USDC

CoinFLEX CEO claims 鈥淏itcoin Jesus鈥 defaulted on debt 鈥 owes $47M USDC Liam ‘Akiba’ Wright 路 17 hours ago 1 min read

CoinFLEX CEO Mark Lamb said the exchange has filed a notice of default to Roger Ver, an investor and shareholder in the company. Roger Ver has denied the allegations

1 min read

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Updated: June 29, 2022 at 9:38 am

Cover art/illustration via CryptoSlate

Mark Lamb, CEO of CoinFLEX, tweeted June 28 that Roger 鈥淏itcoin Jesus鈥 Ver owes the exchange $28 million USDC and has been issued a notice of default.

Roger Ver owes CoinFLEX $47 Million USDC. We have a written contract with him obligating him to personally guarantee any negative equity on his CoinFLEX account and top up margin regularly. He has been in default of this agreement and we have served a notice of default.

鈥 Mark Lamb 馃挭 (@MarkDavidLamb) June 28, 2022

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Roger Ver immediately responded via Twitter, stating that he owed CoinFLEX nothing and, in fact, the exchange owed him money.

Recently some rumors have been

spreading that I have defaulted on a

debt to a counter-party. These rumors

are false. Not only do I not have a debt

to this counter-party, but this counter-

party owes me a substantial sum of

money, and I am currently seeking the

return of my funds.

鈥 Roger Ver (@rogerkver) June 28, 2022

Lamb added further commentary to his initial thread stating.

鈥淐oinFLEX also categorically denies that we have any debts owing to him. His statement is blatantly false. It is unfortunate that Roger Ver needs to resort to such tactics in order to deflect from his liabilities and responsibilities.鈥

The debt allegedly comes from a margin trading account held in Ver鈥檚 personal name. The account has been said to be in 鈥渘egative equity,鈥 Ver has failed to top it up to a level required by a written contract. Prior to the default notice, Lamb states that Ver has had a track record of 鈥渢opping up鈥 his margin account. Efforts to resolve the situation via calls have allegedly resulted in the account remaining in default.

CoinFLEX paused withdrawals amid market turmoil recently. The move was overturned through the release of a new token named rvUSD. In a comment regarding CoinFLEX鈥檚 internal liquidity issues, FatManTerra commented.

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Let me get this straight鈥 CoinFLEX tried selling debt tokens to people without revealing the debtor’s name, while knowing the debtor in question is refusing to pay up? Looks like the crypto space is speedrunning the 2008 CDO/CDS scenario, except with way more scamming.

鈥 FatMan (@FatManTerra) June 28, 2022

This is a developing story, and further information may be added to this article.

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Coinbase

Goldman Sachs says Coinbase may need to sack more workers; downgrades its stock rating to sell

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Goldman Sachs says Coinbase may need to sack more workers; downgrades its stock rating to sell

Goldman Sachs says Coinbase may need to sack more workers; downgrades its stock rating to sell Oluwapelumi Adejumo 路 5 hours ago 2 min read

Goldman Sachs predicts that Coinbase revenue could decline by 61% because of the current market conditions that have affected retail traders.

2 min read

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Updated: June 27, 2022 at 9:34 pm

Cover art/illustration via CryptoSlate

Leading investment bank Goldman Sachs has downgraded Coinbase鈥檚 stock rating to sell from neutral and reduced its price target from $70 to $45 in its latest note, CNBC reported June 27.

The downgrade was caused by the bear market, leading to crypto-assets value plummeting to new lows. Coinbase stock saw a 5.7% drop to $59.40 in premarket trading after the report.

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Coinbase鈥檚 revenue is dependent on the transaction fees it charges its retail users.

But with the trading activity of this group declining massively due to rising inflation and the crypto market downturn, Goldman Sachs predicts that the exchange revenue could be cut by as much as 61%.

This would be a heavy blow for Coinbase as it reported heavy losses in the second quarter of 2022.

Coinbase may need to sack more workers

The Brian Armstrong-led exchange has been trying to cut costs and recently laid off 18% of its workforce, citing declining revenue and current market conditions.

Meanwhile, its effort to diversify its revenue has not been entirely successful. Its recently launched non-fungible token marketplace has seen little sales since its launch.

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According to Goldman Sachs, Coinbase will need to reduce its expenditure to stem the resulting cash burn. It added that the company would have to decide between diluting its shareholders or reducing employee compensation to stay afloat.

Other crypto stocks are at risk too

Coinbase stock is not the only crypto-related stock currently facing headwinds. According to Bloomberg, most publicly traded crypto-related companies have seen massive declines in their stock value.

Almost all publicly traded crypto-exposed companies, like Microstrategy, Silvergate, Marathon Digital, Coinbase, and Riot Blockchain, have lost over half of their value this year.

But Wall Street analysts remain optimistic about the future of these companies. About 20 analysts still recommend Coinbase stocks as a buy despite its recent poor performance.

According to an analyst at BTIG, Mark Palmer, who has a price target of $290 for Coinbase,

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While we are not at all dismissive of the impact of the current crypto market downturn, we also believe any notion that Coinbase would be unable to survive this latest challenge is misguided in light of the facts on the ground.

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