The crypto scene was abuzz with activity last week, with several noteworthy developments unfolding. One such trend was the dominance of NFTs. Meanwhile, Hong Kong has begun positioning itself as a leading global cryptocurrency hub. Sam Bankman-Fried found himself facing new charges amid the seemingly incessant FTX saga.
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Blur’s emergence triggers NFT dominance
Last week, Blur, a burgeoning Ethereum-based NFT marketplace, took over the scene, bringing a proliferation of NFT trades in the crypto space. The marketplace had been dominating the NFT trade volume for the past month. However, this feat went largely unnoticed until last week, when the extent of its dominance became particularly evident.
Blur implemented various strategies, including zero-fee trades, customer loyalty incentives, and airdrops, to attract a significant influx of customers to its platform. As a result, the NFT marketplace surpassed Uniswap and Seaport. It emerged as the leading gas consumer on the Ethereum blockchain. This was attributed to a substantial surge in NFT trading volume on the platform.
On Feb. 18, Blur’s trading volumes rose six-fold higher than OpenSea, the leading NFT marketplace. This surge in trading activity was primarily driven by two airdrops orchestrated by Blur, which were designed to motivate loyal customers to list their NFTs on the platform.
Owing to Blur’s growing prominence, the NFT scene dominated the crypto space last week. A spike in NFT trades led to a massive surge in social activity. This dominance became more apparent as OpenSea struggled to recover lost market share. OpenSea announced zero-fee trading on Feb. 18 to attract customers who had earlier moved to Blur.
Coinbase’s “Base, Introduced” contributes to NFT dominance
As Blur and OpenSea fought to maintain prominence, American exchange Coinbase introduced an initiative that contributed to the increasing dominance of NFTs in the crypto space. Last Thursday, Coinbase unveiled Base, a new layer-2 network on the Ethereum blockchain developed in partnership with Optimism.
To commemorate the launch, the exchange unveiled an NFT collection dubbed “Base, Introduced.” Coinbase partnered with Zora, an NFT minting platform, to allow users with a wallet to mint one free open-edition NFT per wallet.
Given that the “Base, Introduced” NFT collection was free of charge, many users rushed to mint them before the deadline set by Coinbase. At present, over 265,794 NFTs have been minted. The smart contracts associated with Coinbase’s NFT and Blur drove Ethereum’s total fees to $46m, a new yearly high.
NFT dumps, the emergence of Litecoin Ordinals
Amid the buzz surrounding Blur and Coinbase’s NFTs, Litecoin Ordinals were launched. Reports from last Monday revealed that an anonymous GitHub user had forked the original bitcoin Ordinals protocol to introduce support for the litecoin blockchain. The development marked the birth of litecoin Ordinals.
Since the debut of the first-ever NFT, Kevin McCoy’s Quantum collectible, in 2014, the growth of NFTs has emerged as a major catalyst for the widespread adoption of cryptocurrencies worldwide. In an interview last week, Anndy Lian, the president of Paris-based studio NFT Factory, emphasized the critical role played by digital collectibles in this trend. As NFTs continue to dominate the market, they significantly influence the overall crypto industry.
Despite the widespread prevalence of NFTs, the previous week also experienced significant sell-offs of digital collectibles. On Wednesday, reports surfaced that a prominent collector had liquidated numerous Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) NFTs on the Blur marketplace.
The collection included 71 BAYCs, 11 MAYCs, and 7 Azuki collectibles, and the address involved was linked to Mando, the creator of Rektguy. Mando acknowledged that the sell-off was an attempt to capitalize on the growing liquidity of NFTs and rake in profits.
A few days later, another prominent collector, Machi Big Brother, sold a staggering 1,010 NFTs for 11,680 ETH. This sell-off, over 48 hours, has been recorded as the most extensive NFT dump ever witnessed. On Friday, Andrew Thurman, a technician at Nansen, drew attention to the distribution campaign.
Thurman explained that Machi’s campaign was designed to leverage the ongoing Blur airdrop, which rewards trade activity on the NFT marketplace. Following the significant sell-off, Machi subsequently re-purchased 991 NFTs.
Hong Kong gears up to welcome crypto
Meanwhile, Hong Kong’s efforts to become a prominent crypto hub in the global scene were further underscored last week. As reported two weeks back, the administrative region revealed its plans to legalize cryptocurrency trading for its citizens. The past week saw a continuation of these efforts, with Hong Kong taking steps to establish itself as a leader in the crypto space.
On Monday, reports revealed that the Hong Kong Securities and Futures Commission (SFC) was mulling the idea of permitting crypto investments for retail investors. The SFC has released a consultation paper on the matter. Interested parties have until Mar. 31 to submit their comments and feedback. This move signals Hong Kong’s commitment to exploring the potential of cryptocurrencies and expanding the scope of crypto investments in the region.
The SFC emphasized the significance of implementing measures to protect consumers, including the requirement for proper licensing of exchanges before they are permitted to serve Hong Kong residents. Consequently, all exchanges are expected to acquire a license before Jun. 1.
Shortly after these reports, speculations that Beijing might support Hong Kong’s crypto ambition surfaced. According to circulating reports from Feb. 21, authorities from mainland China often visit the autonomous administrative region to monitor the developments in crypto regulations there.
Moreover, as the regulatory landscape in Hong Kong continues to shift to a more favorable territory, several crypto businesses have begun showing an interest in penetrating the local industry there. Last Monday, Justin Sun disclosed that Huobi is looking to procure an operating license in Hong Kong and establish a subsidiary within the region to serve institutional investors.
Sun also revealed that the exchange wants to move its headquarters from Singapore to Hong Kong. This move is part of Huobi’s strategy to expand its business and take advantage of the shifting regulatory environment for crypto in Hong Kong.
In addition, Gate.io also revealed plans to secure a license of operation in Hong Kong amid reports of the Hong Kong government’s $6.4 million proposed investment in Web3.
The U.S.continue to crackdown on crypto
While Hong Kong looked to transition to a more friendly environment for cryptocurrencies, the United States’ aggressive crackdown on the industry spilled into last week. On Feb. 22, New York Attorney General Letitia James slapped global crypto exchange CoinEx with a lawsuit for operating within the state without prior registration.
According to AG James, CoinEx provided services for assets regarded as commodities and securities under state law without registering with the relevant authorities. James claimed that CoinEx was subpoenaed on Dec. 22 but declined to respond.
In another instance of U.S.-based regulation, an American federal judge declared that the NBA Top Shot NFTs are securities and should have been registered with the U.S. SEC. This ruling opposes the view that NFTs are digital collectibles not subject to securities regulations.
The issue of misclassifying crypto assets as securities by U.S. regulators, particularly the SEC, has been a recurring concern in the crypto community. This matter has been highlighted by several high-profile cases, including the ongoing litigation between the SEC and Ripple and the case involving the SEC and LBRY.
The Chamber of Digital Commerce, a crypto trade group, has been pushing back against the labeling of crypto assets as securities by U.S. regulators. In a case involving insider trading charges against a former Coinbase employee, Ishan Wahi, the trade association filed an amicus brief arguing that the assets in question were mislabeled as securities.
Moreover, Circle co-founder and CEO Jeremy Allaire expressed his opinion that the SEC is not the most suitable regulatory body to oversee stablecoins, as they are not particularly securities under the purview of the Commission. Recall that the SEC issued a Wells notice to Paxos two weeks back, disclosing intentions to sue the financial institution due to the issuance of the BUSD stablecoin.
Bankman-Fried faces new charges
Meanwhile, updates on the FTX bankruptcy case were minimal last week. However, they shed some good insight into the situation surrounding the bankrupt crypto empire.
On Monday, the unsecured creditors’ committee of Voyager Digital requested a remote court testimony from former FTX CEO Sam Bankman-Fried, as well as a group of high-profile executives from FTX and Alameda Research, which is scheduled to take place on Feb. 23. The testimony is related to FTX’s attempt to bail out Voyager Digital during its bankruptcy struggles in July last year.
Two days later, Bankman-Fried’s lawyers opposed the subpoena from Voyager’s creditors, arguing that the subpoena was “procedurally deficient” as it was not delivered directly to Bankman-Fried but instead to his mother. The lawyers also cited undue pressure on Bankman-Fried, who needed more time to provide the required documents.
However, on Feb. 23, new charges were leveled on Bankman-Fried regarding his numerous political donations. The recent charges allege that the political contributions, totaling tens of millions of dollars, were illegal. Recall that the new management of FTX had requested on Feb. 5 that these donations be refunded.