Crypto exchange Coinbase is dropping out of Turkey’s crypto market and liquidating its Turkish operation after withdrawing its application with the country’s financial regulator.  

Türkiye Today reported that the country’s Capital Markets Board updated its company liquidation list last week. It noted that Coinbase had withdrawn its three-month-old pre-application and filed for liquidation. 

When asked to comment on the withdrawal, Coinbase told Protos it, “Continually assesses potential markets for expansion,” and that it “remains adaptive to evolving market conditions, regulatory landscapes, and our internal priorities.”

Read more: Coinbase to delist WBTC months after Justin Sun controversy

A total of 14 companies have reportedly filed for liquidation and 77 firms are going through the application process. Some crypto companies that have applied include Binance, Kucoi, and OKX.

Oddly enough, Binance and KuCoin removed the Turkish language options from its website and app last September while also discontinuing marketing to Turkish users. Binance claimed this would allow it to comply with Turkish laws for non-Turkey-based crypto asset service providers.

Starting this December, Coinbase stopped offering yields on USDC in Europe which it claims was due to the European Union’s Markets in Crypto-Assets (MiCA) stablecoin law. 

Many X users weren’t happy with the USDC yield shuttering. The co-founder and CEO of Sablier commented sarcastically, “Very grateful to the EU for protecting me against earning a yield on my USDC holdings on Coinbase.” This prompted a wave of similar comments from users across X.  

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A pharmaceutical firm is suing stablecoin provider Circle and demanding a refund after its CEO “accidentally destroyed” $1 million worth of USDC by sending it to the wrong wallet address. 

CelaCare filed the lawsuit in a Massachusetts district court this week that claims the USDC was “permanently destroyed” after its CEO, Kenneth Yates, entered the wrong Ethereum wallet address. 

The USDC was sent from CelaCare’s Coinbase account to a contract counterparty on July 3, 2024. The lawsuit claims, “When Yates used his computer to copy the destination address from a document sent to him by the counterparty, Yates’s computer erroneously transcribed a B as ‘8’.” This transcription error seems to have arisen as the CelaCare CEO attempted to copy and paste the address from a PDF and failed to verify the results.

As a result, CelaCare claims that Yates sent the crypto to an inaccessible wallet address that has no owner. In order to convince itself that the funds were truly inaccessible, it sent a message to the address which reads, “On July 3, 2024, Celacare Technologies Inc. sent one million USDC to this address erroneously. If you have the private key to this wallet address, please send 1.46 USDC to any address and contact us at charlie@gerstein-harrow.com.” It did not receive a response. CelaCare argues this renders the USDC destroyed. 

Read more: OpenSea hit with Wells notice, says SEC lawsuit will ‘misinterpret law’

It says that Circle should refund the crypto as the firm’s USDC stablecoin is classed as a “financial asset” while Coinbase is classed as a “securities intermediary” under the Uniform Commercial Code (UCC). Because of this distinction, CelaCare claims the UCC legally requires Circle to either reissue the funds, or “honor them.” 

The firm wrote to Circle on August 15 with the drafted lawsuit attached and asked Circle to return the funds. However, on September 6, Circle’s counsel refused CelaCare’s refund request.

Celacare is seeking a trial by jury and wants the court to declare that the USDC was destroyed. It wants to receive $1 million, either in USDC or fiat, or issue Circle the same $1 million value in damages.

Tether, the largest USD-backed stablecoin, offers a token recovery service where it will (at its discretion) burn and re-issue tokens in cases like this for a 10% fee.

Got a tip? Send us an email or ProtonMail. For more informed news, follow us on X, Instagram, Bluesky, and Google News, or subscribe to our YouTube channel. Quotes in bold are our emphasis.

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The blockchain bridge connecting gaming-focused Ronin Network to Ethereum has been paused after losing over $11 million worth of ETH and USDC to MEV bots.

This incident is the third major hack to affect the Ronin Network team after the loss of over $600 million in March 2022, and the theft of $10 million of a co-founder’s personal funds earlier this year.

Read more: Axie co-founder hacked for $10M two years after $625M Ronin attack

According to smart contract auditing firm Beosin, a recent upgrade introduced a bug in the bridge’s cross-chain verification system.

At around 9:30 UTC, 4,000 ETH (worth approximately $9.8 million) were first extracted from the bridge via one bot’s ‘Mmmm MEV’ function, almost $10,000 of which went to block builder beaverbuild, the rest was sent on to another address.

Half an hour later, around $2 million worth of stablecoins were ‘yoinked’ by another bot and were immediately swapped to ETH, before being forwarded onto a holding account.

Assuming that the outflows are due to the bots’ front-running of malicious transactions, rather than malicious in themselves, the Ronin team has attempted to open communication via input data messaging: “Hey, thanks a lot for white hat saving user funds today. Can we chat over Blockscan chat?”

In an announcement made via X (formerly Twitter), one of Ronin Network’s co-founders informed users that the bridge had been paused “while we investigate a report from whitehats about a potential MEV exploit.”

Highlighting the $850 million still held safely within the bridge, the team appears to be trusting that the bot operators plan to return the funds after having front-ran malicious attacks.

A follow-up statement from the Ronin Network’s X account reiterated that negotiations are ongoing, promising that a fix “will undergo intensive audits, before being voted on by the bridge operators for deployment.”

Crypto security firm BlockSec also highlighted the root cause as an ‘upgrade issue.’ A misconfigured upgrade was similarly behind the nine-figure Nomad Bridge hack, which occurred later in 2022.

Read more: Nomad hacker buys the dip, scooping up $40M of ETH two years later

This most recent incident is far from Ronin Network’s first rodeo.

The bridge was drained in March 2022 for over $600 million worth of Ether and USDC, in what is still one of the largest-ever hacks to hit the decentralized finance (DeFi) sector. Despite this, the loss went unnoticed for almost a week before being discovered.

More recently, another co-founder of Axie Infinity, known as Jihoz, also lost $10 million to a hack in February this year when the private keys of two ‘personal accounts’ were compromised.

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Bitcoin maxis have branded Coinbase an ‘enemy of Bitcoin’ and accused it of ‘cultural misappropriation’ after the crypto exchange decided to sell pizza with USDC on Bitcoin Pizza Day.

On May 22, Coinbase set up a pizza truck selling slices for $1 worth of USDC. Coinbase said it was “celebrating how far crypto has come since 2010 in helping to create a cheaper, faster system.”

However, some crypto enthusiasts weren’t impressed by the USDC pricing. Users on X (formerly Twitter) claimed the crypto exchange should be ‘ashamed,’ questioned why the truck wouldn’t accept bitcoin, and said Coinbase is behaving like a ‘bad actor.’

One attendee filmed themselves next to the Coinbase truck claiming, “The Bitcoin pizza guys are trying to beef with Coinbase.” One man can then be seen walking by with a sign that reads “It’s Bitcoin Pizza Day not Shitcoin Pizza Day.” 

Another passerby can be heard saying, “This is a cultural misappropriation of bitcoin.” Additionally, someone claiming to be a core contributor to BTCPay Server was also pictured behind the Coinbase Pizza truck holding the same ‘Shitcoin Pizza Day’ sign.

Read more: UK watchdog protects Papa John’s pizza lovers from free Bitcoin

However, others were skeptical of the protests, with one user noting, “Bro it’s such a good marketing ploy. No one is organically counter-protesting a Coinbase pizza truck.  I’m like 99.9% that this is a publicity stunt.” 

Another joked, “Bro said cultural misappropriation lmao bitcoiners are down SO BAD.”

Bitcoin Pizza Day started in 2010 and marks the first-ever ‘real-world’ bitcoin transaction when Laszlo Hanyecz paid someone 10,000 BTC to order two Papa John’s pizzas. That figure would be worth just under $700 million today.

Papa John’s frequently celebrates Bitcoin Pizza Day but was criticized by the UK’s advertising watchdog in 2021 for trivializing crypto investing.

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Binance recently announced that it was converting its ‘Secure Asset Fund for Users’ (SAFU) fund to the USDC token. This SAFU fund was a pseudo-insurance fund in which Binance stored funds to hopefully reimburse users if something were to go wrong with the platform.

Before the conversion, the fund was held in several coins, including BTC, USDT, BNB and TUSD.

These changes to the fund have brought to mind Binance’s earlier ‘Industry Recovery Fund’ and the lack of updates about the project.

What was the Industry Recovery Fund?

While FTX was collapsing into bankruptcy, financial criminal Changpeng Zhao tweeted that Binance was ‘forming an industry recovery fund to help projects that are otherwise strong, but in a liquidity crisis.’

This fund ended up reaching a total size of $1.1 billion and was initially held in Binance USD (BUSD), a Binance-branded stablecoin. 

Despite Zhao describing it as a ‘fund,’ later communications from Binance clarified that the Industry Recovery Initiative (IRI) “is not an investment fund. Rather, each participant (including Binance) reviews the IRI applications as they come in and makes investment decisions independently of each other, on a deal-by-deal basis.”

According to Binance, the Industry Recovery Fund received support from Animoca Brands, Aptos Labs, Brooker Group, DWF Labs, GSR, Jump Crypto, Kronos, and Polygon Ventures.

What were the investments?

Very few industry projects received investment from this initiative.

Instead, Binance seems to have used this fund to invest in a majority stake in an exchange called GOPAX which had a self-described decentralized finance (DeFi) service that ended due to the failure of crypto lender Genesis.

Despite this investment, the full takeover has been delayed by financial regulators.

Partners claimed to have invested in a total of 13 other projects as part of the initiative but only two were named.

Protos has reached out to Binance to determine if there were other investments, but as of press time, it hasn’t responded. 

Besides those investments, the only other significant activity since the fund’s launch came when it was converted from stablecoins into BNB, bitcoin, and ether — the polar opposite of the recent SAFU fund swap. 

Read more: Binance and CZ plead guilty but SEC lawsuit remains

Where is the Binance Industry Recovery Fund?

Zhao previously disclosed an Ethereum address that was holding the Industry Recovery Fund, which at the time was approximately $1 billion in BUSD. The BUSD was transferred from this wallet to another Binance address, but strangely, the replacement ether never flowed into this address. Binance hasn’t released a new disclosure that shares where the funds related to this initiative are held.

How much is the Binance Industry Recovery Fund worth?

The Industry Recovery Fund should have appreciated in value since these transactions. The BUSD was transferred out on March 13, 2023, and since then:

• Ether has increased in value from about $1,500 to approximately $3,200.
• Bitcoin has increased in value from around $22,000 to roughly $66,000.
• BNB has increased in value from $300 to around $600.

It’s quite possible that the Industry Recovery Fund is now worth $2 billion or even more, prima facie proof that the industry has recovered.

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Circle, the company that issues USDC, announced on February 20 that it would no longer be continuing support for the stablecoin on the TRON blockchain and is pushing for a phased transition away from the Justin Sun-created crypto by February next year.

This gives users exactly one year to transfer any USDC they hold on the TRON blockchain to one of the other blockchains that USDC is issued on. These include Ethereum, Solana, Algorand, and 11 other blockchains.

Circle has already scrubbed TRON as a supported ecosystem on its website.

The sudden move could also be seen as a shot at Tether (USDT), the largest stablecoin by market cap and volume. Tether has, according to its own transparency page, issued more than half of its stablecoins on the TRON blockchain. This equates to $52 billion worth of crypto.

Read more: Circle emphasizes that Justin Sun is not sanctioned… yet

Circle didn’t expand on why it was making the decision to remove TRON from the long list of blockchains that it currently supports, other than that it’s a “result of an enterprise-wide approach that involved the business organization, compliance and other functions across [Circle].”

The suggestion from the blog post is that TRON lacks the transparency and characteristics that Circle needs from a blockchain to utilize it. At worst it implies that Sun’s latest actions around his exchange HTX and algorithmic stablecoins such as USDD have tainted everything that the former diplomat has touched. It’s unclear if further developments for TRON and Sun are coming down the line from US law enforcement or politicians.

Circle and other stablecoin operators took shots at Tether in front of Congress last week. Regardless, it means that an important stablecoin with a large US base has decided against using Sun’s cryptocurrency. Sun responded via a vague X (formerly Twitter) thread stating that he “support[s] each developer’s development decisions.”

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During Coinbase’s Q2 earnings call on Thursday, chief and founder Brian Armstrong stammered a reply to a question about stablecoin USDC, unexpectedly revealing that its market cap had gone up after Binance sold all its holdings.

“USDC market cap is up after Binance pulled out,” Armstrong stuttered out during Coinbase’s earnings call. The unexpected answer seemed to imply that crypto exchange Binance was a holder of Circle and that USDC is safer now that Binance no longer holds the stablecoin.

Coinbase is a member of the consortium that owns USDC. It’s the preferred stablecoin for the exchange’s operations.

However, USDC’s market cap is shrinking fast, dropping from $44.5 billion at the start of this year to just $26 billion at press time. Earlier this year, the Federal Deposit Insurance Agency had to take over Circle’s main banks, namely Signature and Silicon Valley Bank, to prevent a bank run. This controversial move effectively saved USDC.

Coinbase earnings Q2 2023

Coinbase earnings for the second quarter of 2023 show it made $663 million in net revenue, continuing its decline from last year. Q2 2023 revenue from trading volume was less than half of last year’s second quarter — down to $92 billion compared to $217 billion in Q2 last year.

Trading activity on Coinbase is on a steady decline. Traders seem to be increasingly trading bitcoin in the current bear market, with bitcoin trading comprising 40% of the total volume compared to just 31% in Q2 2022. Coinbase still holds up to $3.3 billion in debt, and only reported $485 million worth of crypto assets of its own. It’s currently holding $130 billion in customers’ assets.

Read more: Drug gang used Coinbase to launder crypto from prison

Ever since Coinbase went public on the NASDAQ, Coinbase executives including Brian Armstrong haven’t stopped selling stock. Stock price went public at $342 and sits at $90.75 at press time.Coinbase is currently facing a court battle against the Securities and Exchange Commission (SEC) for selling unregistered securities – an accusation that Coinbase denies. 

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Crypto exchange Coinbase reportedly offered a $3 billion lifeline to Circle as its stablecoin USDC de-pegged as a result of Silicon Valley Bank’s (SVB) collapse, according to a person familiar with the arrangement speaking to Fortune.

Circle was able to withdraw the majority of its funds before SVB and Signature Bank experienced bank-runs earlier this month. However, $3.3 billion remained locked in deposits at SVB. The immediate line of credit by Coinbase would have ensured USD Coin reserves were liquid and returned the stablecoin’s $1 peg, according to the source. 

USDC’s market cap is $39 billion — the $3 billion locked, while a drop in the bucket in comparison, caused traders to lose confidence in the stablecoin. Its price slipped down to $0.88 on March 11 and eventually clawed its way back up to $1 by March 13.

Coinbase had a lot at stake if USDC never re-established its peg. USDC is managed by a consortium called Centre, founded by Circle. Members include Coinbase and Bitcoin mining company Bitmain, an investor in Circle.

• Coinbase partnered with Circle in 2018 to bring the stablecoin to market.
• In 2021, Coinbase chief Brian Armstrong went head-to-head with the Securities and Exchange Commission (SEC) when it threatened to sue regarding its USDC lending product.
• Coinbase scrapped the project soon after.

During the pandemonium, Circle chief Jeremy Allaire disabled USDC minting and redemption through Signature Bank’s SigNet. Coinbase subsequently halted USDC withdrawals on its platform. It cited the need for US dollar transfers from banks as the cause:

“During period of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours. When banks open on Monday, we plan to re-commence conversions,” the exchange tweeted on March 11.

Read more: Coinbase reportedly considers overseas expansion amid US crackdown

Coinbase’s line of credit turned out to be unnecessary. The US government basically bailed out USDC when it announced that all deposits at the two failed banks would be insured. Circle moved its cash to BNY Mellon.

However, Coinbase appears to not be counting on further favors from the US government. Sources told Bloomberg the exchange has reached out to partners to discuss plans to open a trading platform abroad.

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A new scam has appeared that tries to take advantage of the recent unsteadiness of the USDC stablecoin peg, by pretending to be a safe way for users to swap their USDC into Tether. In reality, attackers are draining ether from victims’ wallets.

On Tuesday, someone registered the domain name circle.blog, and began mocking up a convincing website with copies of previous news updates from the actual Circle page. The next day, the scammer posted their own update which announced a new, fictitious product called Circle Swap.

Circle Swap purported to be a partnership between Circle and TronDAO to create a new swap market between USDC and Tether, backed up with liquidity from TronDAO. The blog post linked to the supposed Circle Swap product on another domain, circledefi.center, which was registered on March 12.

The interface for this page is a copy of the Raydium application — but with its disclaimer removed and several of the links made non-functional, including the ‘docs’ page. The source for the application contains a file called ‘config.js’ which begins with the comment: “P***Y DRAINER @ Obfuscate this file with obfuscator.io,” apparently an instruction these users didn’t understand.

This file links to another address at hapewives.claims, which was registered to someone in Charlestown on the island of Nevis. Visiting that site reveals text that states: “Nothing to see pepe.”

Read more: USDC faces SEC enforcement amid stablecoin crackdown

Inside this file is also a wallet address, which Etherscan has already flagged for associations with a phishing scam. Approximately 74 ether have been sent to this address, from 80 unique addresses. 3.5 ether has been deposited in total since the fake blog domain was registered. At least some of the funds which have come out of this wallet have since been swapped through Uniswap and SideShift.

Another address is referenced in the scam, which has also been flagged by Etherscan as a phishing scam. It has received only 2.5 ether.

USDC depeg scam a stark reminder to exercise caution with DeFi

The scam seems to function by getting users to approve the website and then sign transactions which allow the attacker to remove their ether.

This serves as a good reminder that you need to be extraordinarily cautious when interacting with DeFi. Mistakes can be very costly, and often irreversible. Scammers look for opportunities, like a stablecoin depegging, where individuals may be more likely to make a rash decision and be taken in by one of these sites.

Stay vigilant.

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The Federal Deposit Insurance Corporation (FDIC) has taken over two banks at which Circle held billions of dollars worth of backing for its stablecoin, USDC. By making depositors whole at these insolvent banks, the US government has essentially bailed out USDC’s $1 peg.

Early last week, Circle held over $10 billion worth of assets at Signature and Silicon Valley (SVB) banks. Although Circle was able to withdraw the majority of its funds prior to the weekend when both banks went under, it still exceeded $3.3 billion on deposit as they failed.

In other words, on Saturday, at least 8% of the value of USDC’s $39 billion market capitalization was locked within two insolvent banks. By Sunday, the US government had restored that loss.

The price of the so-called stablecoin had slipped into the $0.80s. After a joint statement from the US Treasury, Federal Reserve, and FDIC, traders regained confidence and bid the token’s price back up to $1.

A bailout for DeFi’s most popular denominator

During the crisis, Circle CEO Jeremy Allaire disabled the minting and redemption of USDC through Signature Bank’s SigNet.

Circle controls the administrative keys needed to blacklist particular USDC tokens. The company also controls the issuance and redemption of USDC for USD, which is further constrained by the US banking system.

Allaire initially expressed confidence that Circle would enable USDC redemption and minting with a new bank as soon as possible. In a later tweet, he said Circle selected Cross River Bank for automated, USDC-related settlements.

Thanks to the government’s bailout on Sunday, Allaire was able to subsequently affirm that USDC reserves were 100% collateralized.

Circle is moving most of its Signature Bank cash to BNY Mellon.

Read more: Hedge fund billionaire Ken Griffin says US should have let SVB die

Criticisms of management and fractional reserves

Data Finnovation criticized Circle’s selection of Cross River Bank, saying its managers have a poor track record of treasury management. It posted a series of regulatory filings showing a mix of mortgages, commercial loans, and consumer finance on Cross River Bank’s balance sheet.

In his tweet thread, Allaire briefly acknowledged the risks of keeping money in a fractional reserve bank. He said he supports the Payment Stablecoin Act, which would require stablecoin issuers to keep cash and short-term treasury bills in a Federal Reserve-chartered bank account. Circle said it keeps 77% of its USDC reserves in treasury bills.

A co-host for the YouTube channel Paul Barron Network said Circle sent a notice that it was suspending USDC redemptions in Brazil, India, Indonesia, Latvia, Mexico, and the Philippines. Circle has not officially announced an end to USDC redemptions in these countries.

On Thursday, SVB customers tried to withdraw $42 billion in deposits while, at the smaller Signature Bank, depositors attempted to withdraw 20% of the entire bank’s assets a day later.

In 2018, Signature attracted attention from regulators when it became one of the few banks willing to do business with crypto companies. By early 2022, digital asset companies accounted for 27% of the bank’s deposits and it served customers including Binance, Coinbase, and Circle.

Read more: USDC faces SEC enforcement amid stablecoin crackdown

Feds backstop the $1 peg of USDC

Fortunately for proponents of the USDC, the US Treasury, Federal Reserve, and FDIC bailed out deposits at two banks holding at least 8% of the backing of USDC. 

The government declared SVB and Signature as systemically important. To alleviate contagion to the US financial system, the FDIC guaranteed all deposits at both banks — including deposits above the FDIC’s standard, $250,000 per customer limit for federal deposit insurance.

USDC issuer Circle has subsequently switched its primary bank to BNY Mellon and is moving its automated settlements to Cross River Bank. It temporarily disabled USDC redemptions and minting amid the transition.

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