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Virgil Griffith’s motion to dismiss the charges against him claiming that he violated U.S. sanctions law in North Korea was denied Wednesday by a judge in the Southern District of New York (SDNY).

U.S. Judge Kevin Castel denied the motion, leaving it up to a jury to decide whether Griffith is guilty of helping North Koreans circumvent U.S. economic sanctions using cryptocurrency. SDNY prosecutors allege that Griffith violated the International Emergency Economic Powers Act by giving a speech in April  at the Pyongyang Blockchain and Cryptocurrency Conference on how to use cryptocurrency to get around U.S. sanctions. 

Griffith’s team has argued that first amendment rights protected him and that he did not render North Korea “services” since he received no compensation for the speech.

Related: Ethereum Developer Virgil Griffith Will Likely Face Trial Next September

“The failure to allege that Griffith was paid a fee by the DPRK does not render the indictment defective,” Castel wrote. “The indictment alleges an object of the conspiracy was ‘to provide services to the DPRK.’ This is sufficient and encompasses the provision of useful labor or human effort whether or not compensation was contemplated.”

The U.S. State Department banned all U.S. citizens from traveling to North Korea without express permission in 2017. According to today’s ruling, Griffith’s request was initially rejected by the State Department, but later granted by the DRPK UN mission in Manhattan after he sent copies of his CV, passport, and explained his desire to attend the conference.

In today’s ruling, the judge also denied Griffith’s demand for a bill of particulars. In December 2020, Griffith’s attorneys filed documents arguing that he didn’t know what exactly he had been accused of saying or doing. 

“Griffith contends that he is in the dark as to the services he is accused of providing to the DPRK,” Castel wrote. “But Griffith’s briefing to this Court makes it plain that through discovery he has learned much of the government’s evidence. He does not seek the bill of particulars simply as a means to learn facts, but to limit proof at trial. As already stated, a bill of particulars is not a discovery tool to limit the government’s evidence.”

Related: Virgil Griffith Still Doesn’t Know What Exact Crimes He Is Accused of, Attorneys Say

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India’s cryptocurrency investors were caught off-guard and left confused after news broke Friday that the country’s Parliament will be considering a government-backed bill that would ban “private” cryptocurrencies. Given the ruling party controls both houses of Parliament, the bill’s chances of becoming law are good.

The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 would prohibit cryptocurrencies in India and provide a framework for creating an official digital currency to be issued by the Reserve Bank of India (RBI). The RBI had previously prohibited crypto trading for almost two years before that ban was overturned by the Supreme Court in March 2020.

Industry watchers said the government’s definition of “private” could imply that any digital currency that is not sovereign could be seen as a “private” currency, including bitcoin. It’s unclear which cryptocurrencies would be affected as the bill it allows for certain unspecified exceptions to promote the underlying technology of cryptocurrency and its uses

Related: All Over the World, Small Investors Jump Into the GameStop Frenzy

“This is (the) time to be nervous,” an official at a large cryptocurrency exchange said to the Economic Times of India on the condition of anonymity.

The move is bound to make potential and current crypto investors outside the country nervous as well. When naming potential obstacles to the growth of bitcoin as a store of value, that governments will try to ban it should it become too successful almost always makes the list.

This past week, while appearing more warmly disposed toward bitcoin than he had in the past, Ray Dalio, the founder and co-chairman of Bridgewater Associates, the world’s largest hedge fund, listed government prohibition of bitcoin as one of his remaining concerns regarding the cryptocurrency. That one of the world’s biggest economies seems poised to do just that is only going to feed that narrative.

News of the likely ban may have been a contributing factor in the fallback in the price of bitcoin Friday after it had risen in response to Elon Musk’s Twitter-bio shoutout.

Nischal Shetty, CEO of Mumbai-based cryptocurrency exchange WazirX criticized the announcement via Twitter, explaining “there is no such thing as a private cryptocurrency” and the bill is aimed at helping the RBI create its own central bank digital currency (CBDC) by banning so-called private cryptocurrencies with some exceptions.

“A country as large as India should at least work on understanding the underlying terminologies before presenting technology-related bills in Parliament – seems like a hurried move,” said Shetty.

Related: India Would Ban Private Cryptocurrencies Under Proposed Legislation

Adding that just because a bill is presented does not mean it will be cleared and warned, “wrong or hasty regulations will set us [India] back by a decade. Right regulations will catapult India to the forefront of this technology.”

If the bill becomes law, India would become the only major Asian economy to ban private cryptocurrencies rather than regulating them like corporate stocks.

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Visa CEO Al Kelly said the payments giant is in a position to make cryptocurrencies more “safe, useful and applicable” and may add them to the company’s payments network.

Speaking on the company’s fiscal first-quarter 2021 earnings call, Kelly described cryptocurrencies like bitcoin as “digital gold” which are “not used as a form of payment in a significant way at this point.” 

“Our strategy here is to work with wallets and exchanges to enable users to purchase these currencies using their Visa credentials or to cash out onto our Visa credential to make a fiat purchase at any of the 70 million merchants where Visa is accepted globally,” Kelly said. 

The payments executive also said stablecoins could be used for “global commerce” and that “digital currencies running on public blockchains as additional networks just like RTP or ACH networks.” 

Related: US Federal Reserve Looking to Hire a Manager to Research Stablecoins and CBDCs

Kelly added:

“Today, 35 of the leading digital currency platforms and wallets have already chosen to issue Visa, including coin-based Crypto.com, BlockFi, Fold and BitPanda. These wallet relationships represent the potential for more than 50 million Visa credentials. The next leading network has a fraction of that. And it goes without saying, to the extent a specific digital currency becomes a recognized means of exchange, there’s no reason why we cannot add it to our network, which already supports over 160 currencies today.”

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Canadian investment firm Ninepoint Partners completed the C$230 million (US$180 million) initial public offering of its cryptocurrency fund which is now fully invested.

• Ninepoint Partners bitcoin fund started trading on Wednesday was over 99% invested on its first day of trading.
• The bitcoin fund is available in both U.S. dollars and Canadian dollars and is listed on the Toronto Stock Exchange under the symbols “BITC.U” and “BITC.UN.”
• According to Ninepoint, the fund will have the lowest management fee structure for a listed bitcoin vehicle in Canada.
• The bitcoin held by the fund is valued based on the “MVIS CryptoCompare Institutional Bitcoin Index” managed by MV Index Solutions GmbH which is a wholly-owned subsidiary of Van Eck.

Read more: Former Canadian Prime Minister Lists Bitcoin as Possible Future Reserve Currency

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The world is watching U.S. markets with great interest, and more than a little FOMO, as Reddit investors continue to test their might against Wall Street.

It all started when retail investors on the Reddit community wallstreetbets began pumping the price of U.S. video game retailer GameStop’s (GME) stock to counter Wall Street hedge funds that were “shorting” or betting against it. What the Reddit group did, and the reaction of the mainstream as the stock skyrocketed, reminded many of crypto trading. 

Meanwhile, the world watches, with some seeing what happened with GameStop as a more global story of ordinary investors taking on the power of big institutions. 

Related: The GameStop Stop Is Not a Technology Problem

“We are very much interested in what is happening in the U.S. for many reasons. For some of us, it is the feeling that we can now also play in the market and we are also seeing how the markets actually get manipulated to serve only the rich. This isn’t a movie. … We saw this happen,” Bernard Parah, founder and chief executive officer of Nigerian crypto trading startup Bitnob, told CoinDesk via an email. 

According to Parah, Nigerian investors were buying GME using a number of apps including Bamboo and Trove, which allow U.S. equity trading.

In India, small retail investors were quick to jump in on the action, with GameStop becoming one of the top five traded stocks on Stockal, a platform used by Indian investors to trade U.S. equities, according to Bloomberg. 

Retail investors in China also wanted in, with some users excitedly sharing their gains on social media. There are about 177 million retail investors in China. 

Related: After GME, Dogecoin and Bitcoin, Chinese Traders Are Betting What Will Pump Next

Read More: After GME, Dogecoin and Bitcoin, Chinese Traders Are Betting What Will Pump Next

After the U.S. retail trading platform Robinhood limited users from buying certain trending stocks including GME, European investors who still had access continued to trade: wallstreetbets alleged that they helped keep the GME price up despite the trading restrictions. 

“GME makes you feel the power of the people around the world. … After the Europeans, Asian people are joining the fight to support the movement. It makes your blood boil just by watching it,” one Chinese user wrote on popular social media app Weibo.

Meanwhile, the Reddit investors’ strategy to counter shorted stocks went global, according to Bloomberg journalist Tracy Alloway: Bloomberg reported earlier this week that heavily shorted stocks were rallying in Australia and Japan. Nikkei Asia reported the same trend was seen in Hong Kong and Malaysia. 

Crypto Spillover

The turmoil didn’t stop there. Soon, Reddit investors were pumping other shorted or meme stocks including dogecoin (DOGE), a cryptocurrency that was created as a joke. DOGE started rallying after a Twitter user calling himself the chairman of wallstreetbets (though who is not affiliated with the subreddit) asked followers about the cryptocurrency.  

Responding to the hype, Nigerian social payments app Bundle Africa listed dogecoin on Friday. An hour later, it was the second-most bought asset on Bundle that day. 

“We are definitely feeling the spillover in crypto as people move to buy DOGE as a reaction to what’s been happening in the U.S.,” Yele Bademosi, chief executive officer of Bundle, told CoinDesk via Twitter. 

Read More: GameStop Investing Craze ‘Proof of Concept’ for Bitcoin Success, Says Scaramucci

Colombian investors were getting curious about dogecoin, Alejandro Beltrán, country manager of crypto exchange Buda.com told CoinDesk. Buda.com does not list Dogecoin, and it has no current plans to do so, Beltrán added.  

Some users in Japan watched the dogecoin price run with skepticism, with one user comparing it to a local meme-based cryptocurrency called monacoin. 

“It is a remarkable activity in the market this week, and one which is yet to be determined as healthy or otherwise,” Jon Squires, chief executive officer of crypto exchange Currency.com, told CoinDesk.  

According to Squires, on Thursday, the platform had 10 times the typical number of new clients.

In Nigeria, Parah says there has been a lot of activity in the various investor communities.

 “Even on Whatsapp statuses, you have people asking things like, “What is a short squeeze?” or “What does it mean to short?”… It’s been crazy watching this happen in real time,” Parah said. 

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Stani Kulechov used to think angel investing would distract him from leading his company, Aave, one of the top money markets in decentralized finance (DeFi).

Attention on Aave proved to be well spent: This time last year, Aave only had a few million dollars worth of crypto in it; since then it has risen to become the second largest DeFi project on Ethereum, with over $3 billion in crypto committed to its smart contracts.

Nevertheless, over the last year, Kulechov also invested in something like three-dozen projects. Clearly, his stance on angel investing has changed.

Related: Market Wrap: Bitcoin Bumps to $38.6K While DeFi Exchanges Hit $50B

“I think everyone should do angel investing in the space, especially if you gained,” Kulechov told CoinDesk in an interview.

Kulechov justifies devoting part of his time to angel investing because he has come to see it as a defensive move for his company. It’s like the internet: Once enough people have started using and relying on a tech stack, it becomes very nearly impossible to yank it back out of their hands.

“When the ecosystem is big enough, I believe it is very difficult at that point to fight against the technology,” Kulechov said.

The best the banking system could hope to do, he believes, is decide to build its own version of DeFi, but, “that will not work when you have so many projects in the ecosystem and the ecosystem is growing all the time,” Kulechov said.

Dark forest

Related: Algorand Teams Up With Crypto Custodian Curv for ‘Trusted DeFi’

The term “ecosystem” gets thrown around a lot but Kulechov contends it is uniquely apt in DeFi.

In an ecosystem, things are living off each other but also supporting each other. Species evolve in a specific context and everything is relative. Kulechov sees the same thing happening on Ethereum.

“An ecosystem means you are sharing things together. You are sharing, you are consuming and you are supplying, and you are doing all of these three things together,” he said.

Take Yearn Finance for example. It takes advantage of composability by building other smart contracts into its smart contracts. In exchange, it also pumps a lot of additional liquidity into those protocols by way of its own various interfaces. It also consumes the yield that comes from the backers it supplies. It’s a virtuous cycle.

“We have smart contracts and we have composability,” Kulechov said, “but also we have an element of human composability.”

Kulechov backs a lot of teams but not everyone. The question he’s trying to answer when making picks is: How creative is this team? He said he likes to ask them what they are looking to build next and then maybe after that as well. He needs to see a fertile mind that’s always ready to innovate, because that’s the only way to keep adding value.

Picks

CoinDesk sees Kulechov’s name on press releases about new startups all the time. For example, we’ve reported his backing of Lido, Maple, Slingshot, Swivel and PoolTogether.

Aave itself raised a fresh $25 million last October, ahead of releasing its new version in December. 

But when asked to name some investments that are on his mind, he named three specific ones he’s made in small, new teams that haven’t gotten a ton of attention yet.

Pods Finance. A derivatives product that’s designed to work without oracles.

Kulechov said he liked Pods because it was a team of very young people from Brazil who were traveling around to hackathons to build out early versions of their product.

Certora. A smart-contract security consultancy that specializes in formal verification.

“It’s kind of a traditional business model,” Kulechov said. Certora stands out in the crypto space because it’s a bunch of security researchers who simply provide a service in exchange for payment, without a token or DAO in sight.

Shell Protocol. An upstart automated market maker (AMM) for stablecoins aiming to enable money for the internet.

“What for me was interesting was the whole story of how they moved to Hawaii,” Kulechov said. The team has a “Hawaii House” on the beach listed as a perk for new hires. New employees aren’t required to live there but encouraged to at least come and hang out a while.

Kulechov said he’s been pleased to see some decentralized exchange (DEX) aggregators routing orders through this relatively small protocol, which has a big mission to reinvent money. That said, “They don’t make any noise,” Kulechov said.

Principles

Kulechov contends he doesn’t have strict investing principles, but obviously he likes to see people embrace DeFi values: transparency, open source and the like.

One point he does like to stress, though, is he prefers to make investments in the tokens generated by his own project, Aave. So rather than sending a team a bunch of USDC, he’d rather send them aUSDC, because then they already have some yield built in.

Treasury management is obviously important for any team, but: “If you take interest-bearing tokens it’s actually managed,” Kulechov said.

The point there is to keep projects sustainable on the micro level. Investing does the same for DeFi on the macro level.

“I spend my whole day in DeFi,” Kulechov said, noting that most of his hours are focused on Aave. The remainder, though, often goes to angel investing. “I think everyone should do this,” he said.

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The U.S. Federal Reserve is looking for a manager of digital innovations who will assess the pros and cons of stablecoins and central bank digital currencies.

• In a LinkedIn job posting, the Fed said that the prime candidate would be looking into the impact of digital innovations on its “operation and oversight of financial services, and the supervisory and regulatory framework of emerging payments platforms, activities and institutions.”
• The job posting follows comments earlier in January by Fed Chairman Jerome Powell at a Princeton University event where he said that the Fed would focus on “better regulatory answers” for global stablecoins.
• At the end of last year, then-President Trump’s Working Group on Financial Markets released a report that said stablecoins should meet the same regulatory standards as other aspects of the financial system.
• At the Princeton event, Powell also said that Fed wasn’t concerned with being first in the CBDC race. The chairman added that the dollar’s status as the world reserve currency already gave it a “first-mover advantage.” 

Read more: Jerome Powell on CBDCs: ‘We Don’t Feel a Need to Be First’

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Analysts believe Elon Musk’s shout-out to crypto pushed bitcoin’s price upwards at a time when decentralized exchanges are experiencing record amounts of trading volume on the Ethereum network. Excessive fees could damp that, however. 

• Bitcoin (BTC) trading around $34,616 as of 21:00 UTC (4 p.m. ET). Climbing 5.9% over the previous 24 hours.
• Bitcoin’s 24-hour range: $31,984-$38,566 (CoinDesk 20)
• BTC well above the 10-hour and 50-hour moving averages on the hourly chart, a bullish signal for market technicians.

Bitcoin’s price jumped massively Friday. In the span of an hour, starting at 9:00 UTC (4 a.m. ET), the world’s oldest cryptocurrency gained 11%, going from $33,377 to $37,113 according to CoinDesk 20 data. Over the next five hours, bitcoin hit a 24-hour high of $38,566 before increased sell orders started to take over the market, with the price per 1 BTC at $34,616 as of press time.  

Read More: Kraken, Coinbase Suffer Outages Amid Market Volatility

Related: Aave’s Founder Angel Invests to Grow DeFi’s Head Start on the Banks

Analysts point to the legendary social media habits of serial entrepreneur Elon Musk as a catalyst for bitcoin’s Friday price pop. “Elon’s ‘bitcoin’ logo added to his Twitter feed kicked us off on the aggressive move higher,” said Chris Thomas, head of digital assets for Swissquote Bank. “His comments triggered huge buy stop losses on Binance and likely the other Asian exchanges as leveraged traders had to close their short positions.”

Read More: Musk-Prompted Bitcoin Price Surge Causes Liquidation of $387M in Shorts

Indeed, total liquidations across the entire crypto market over the past 24 hours was the highest in three months, at over $850 million on the short side, according to aggregator Bybt. Liquidations are the crypto equivalent of a margin call: When a leverage trader’s position moves against price, it is bought or sold automatically to begin to wipe out any potential liability.

“The red pullback is absolutely natural given how much we have moved,” Swissquote’s Thomas added. “We’ll likely find a new base – perhaps with $35,000 support – and trade sideways to slightly higher, assuming no more news.”

Related: Are You Running a Bitcoin Node?

Some good news for brokerages: Crypto spot volumes perked up Friday, to $8.7 billion as of press time, the second-highest level over the past month, according to the eight USD/BTC exchanges the CoinDesk 20 tracks.

Prior to the Musk motions, the crypto market had been in the doldrums. “Investors were focused on other big events like earnings and the [Federal Reserve],” noted David Russell, vice president of market intelligence for trading platform TradeStation. “They would have come back to crypto regardless because of the institutional adoption trend, but Musk lit a fire under their feet.”

Funding rates for long leverage are jumping to a level not seen since bitcoin’s record high Jan. 8, when the price hit $41,962, according to CoinDesk 20 data. It’s a sign traders are emboldened by the short liquidations to fuel up some long trades right now.

It will be interesting to see how bitcoin performs over the weekend because crypto never sleeps. Major equities indexes on Friday are awash in red. Could traders jump on cryptocurrency markets to find weekend opportunities?

• Asia’s Nikkei 225 index ended the day falling 1.9% as investors looked to rebalance portfolios amid market volatility at the end of the month.
• In Europe the FTSE 100 closed in the red 1.8% as concerns about speculative trading and coronavirus vaccine supply issues led to market selling.
• In the United States, the S&P 500 slipped 1.6% with traders taking profits as concerns mount a speculative bubble may leave some investors in perilous positions.

“This has been a tremendous week for retail trading across multiple asset classes,” noted James Putra, head of product strategy at Tradestation. “Since most other asset classes are closed later today, we are excited to see if the 24/7 crypto markets benefit from the retail trading enthusiasm.”

DEX volumes hit $50 billion in January monthly volume

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Friday trading around $1,348 and climbing 0.81% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Monthly decentralized exchange, or DEX, volumes for major projects in the Ethereum ecosystem have eclipsed $50 billion, according to data aggregator Dune Analytics. 

In first place is long-standing bellwether Uniswap, with $23.3 billion for January so far, almost half of the total volume. Uniswap is followed by $10 billion by its smart contract fork rival SushipSwap and then $5.8 billion for stablecoin-focused exchange Curve. “I trade a lot on DEXs. They have deeper liquidity and less slippage than traditional exchanges,” noted Michael Gord, chief executive of trading firm Global Digital Assets.

However, Peter Chan, head trader at quantitative firm OneBit Quant, cautioned that centralized exchanges (CEX) still rule despite the record volumes on DEXs. “This is remarkable and I am happy for the development of DeFi,” Chan told CoinDesk, referring to decentralized finance. “But it’s still a long way to go compared to volumes on a CEX.”

According to CoinGecko, volume the past 24 hours on centralized exchange Binance was $34 billion as of press time. 

Chan noted that DEX fees can also be staggering. “Gas price is still going to be a major problem for DEXs. Especially for small trades, gas fees could take up to 20%-30% of the trade.”

Other markets

Digital assets on the CoinDesk 20 are mixed Friday, mostly higher. Notable winners as of 21:00 UTC (4:00 p.m. ET):

• xrp (XRP) + 7.7%
• stellar (XLM) + 7.4%
• litecoin (LTC) + 3%

In addition, meme-focused cryptocurrency dogecoin (DOGE), which is not currently part of the CoinDesk 20, has seen a price appreciation of over 120% over the past 24 hours, mostly because of high activity on social media. 

Read More: Dogecoin Becomes Most Mentioned Crypto on Twitter Ever as Price Soars

Notable losers:

• 0x (ZRX) – 7.4%
• kyber network (KNC) – 3.2%
• cosmos (ATOM) – 3.2%

Commodities:

• Oil was up 0.20%. Price per barrel of West Texas Intermediate crude: $52.18.
• Gold was flat, in the green 0.09% and at $1,843 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield climbed Friday to 1.077 and in the green 2.8%.

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“Are you running the numbers?”

This is what Bitcoin Core developer Andrew Chow is trying to find out in a new survey. 

Sponsored by a grant from MIT’s Digital Currency Initiative, Chow crafted the survey “to get answers from people who are not current users” about why they don’t run a Bitcoin Core full node, the wallet software which simultaneously keeps a record of Bitcoin’s transaction history and connects users to other peers in the network.

Related: Market Wrap: Bitcoin Bumps to $38.6K While DeFi Exchanges Hit $50B

Bitcoin full nodes are like servers so, if you’re not running your own to broadcast transactions to the wider network, then you’re relying on someone else’s.

Moreover, a full node offers users complete control over what encoded rules they want to follow, as well as the ability to independently verify a variety of network data. The popular Bitcoin memes “One node, one vote” and “Run the numbers” demonstrate that these principles of self-verifiability and freedom of choice are core principles for Bitcoin’s most fervent followers.

In short, running a full node is the ultimate exercise in financial self-determination in the Bitcoin realm.

So that’s why Chow launched the survey, which runs until March 2, to give developers an “idea of the biggest barriers facing people who might want to run a node but currently do not.” The inspiration came from a conversation with fellow developers about the removal of a little-known wallet feature for Bitcoin Core.

Related: Beyond Coinbase: 8 Other Ways to Buy Bitcoin

“Several months ago, a few other Bitcoin Core developers and I were discussing the removal of a feature called zapwallettxes. The main question that we had was whether anyone actually used it. This basically led to the general sentiment of wishing to know how users actually use Bitcoin Core,” he told CoinDesk in a direct message.

Bitcoin Core usage survey

The survey’s first questions establish the basics: where are you from, how’d you find the survey, do you run a Bitcoin Core full node?

If the respondent replies that they do run a node, the survey follows up by asking if they use the Bitcoin Core wallet and if they ever have in the past. If you do run a node, the survey will continue to grill you over the specifics of your use: how often you update, what other software/hardware you use, why you run a node, etc.

If you don’t run a node, the survey asks you what wallet you use if you own bitcoin and what barriers have kept you from running a node, be they technical complexity or otherwise.

How many Bitcoin nodes are there?

Measuring the total number of active nodes on the Bitcoin network is tricky, because some nodes may choose to be open to connect to any other node (a “listening node”), while others may choose to keep their connections closed and private (a “non-listening node”)

Still, one of the more accurate metrics comes from prolific Bitcoin developer Luke Dash Jr., whose data estimates there are roughly 83,000 Bitcoin Core nodes currently active (and just over 1,100 or so of Bitcoin’s other few software versions).

This is long shy of the 200,000 Bitcoin nodes that were running back at the peak of 2017’s market cycle, according to the same data, but still more than the 40,000 or so that were operating in the aftermath of March 2020’s historic sell-off.

Better-than-expected response

So far, the survey has 600 recorded responses, which is more than Chow and his peers projected for the early stages of the survey, which will run for roughly five more weeks.

Chow said he plans to publish the data he collects once it’s fully analyzed, adding that “there are no plans to act on the results.” Bitcoin’s development is distributed, after all, so coordinating around specific changes for the diversity of users in the survey isn’t practical.

“Instead [the answers] will help us when there is a question about how users behave. There could be direct changes as a result of the survey, but that depends on the results. The survey is being conducted as more of an overarching ‘what are our users doing?’ rather than trying to figure out some specific feature or detail that we should be doing.”

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Crypto trading platform Voyager has gone off-line several times since Thursday due to “immense ongoing volume,” after its official Twitter account sent out multiple tweets encouraging users to buy and trade dogecoin (DOGE) on its app.

“We’re still working to stabilize our scalability, and performing system upgrades,” according to a tweet from Voyager. “We just wanted to keep you updated as we work to get the system back online. We apologize for the inconvenience.”

At press time, Voyager’s support team sent out at least four emails to its users addressing the service disruptions since the platform’s first tweet on Thursday about dogecoin. In that first tweet the trading platform asked users to tell their friends about Voyager with a link to guidance of how to buy and trade the skyrocketing cryptocurrency.

Related: Market Wrap: Bitcoin Bumps to $38.6K While DeFi Exchanges Hit $50B

Angry users appear to have taken their dissatisfaction to Twitter, too. As one user wrote: “Voyager is the reason I missed out on [DOGE] at 25% this morning. I was digging it until my deposit was continually denied. The thousands I’ve missed out on brings much shame.”

A spokesperson representing Voyager told CoinDesk that Voyager’s platform experienced “an unprecedented amount of volume and traffic” after retail traders from Reddit and Robinhood began migrating into cryptocurrencies. The “rapid” growth in trading activity on Voyager generated 150% more accounts in just 24 hours, the spokesperson added.

“While we had internally scaled our system ten times to handle the influx, what we saw after was of an order of magnitude higher, and ultimately required our system to go offline for further scaling,” according to the email response from Voyager’s spokesperson. The platform recognized significant spikes of trading volumes in dogecoin, its own voyager token, as well as bitcoin.

In a Thursday email from Voyager’s support team reviewed by CoinDesk, Voyager claimed the service disruption was due to “an unexpected event from a system upgrade.” Another email sent on Friday noted “immense ongoing volume” from both “new accounts and trading.”

Related: In Retrospect, It Was Inevitable: Elon Musk Pumps Bitcoin to Space

“All funds are safe,” according to Friday’s email. “While we experience these volume increases, the Voyager app may periodically undergo maintenance periods to ensure systems are able to operate efficiently during this surge in demand.”

UPDATE (Jan. 30, 2021, 02:11 UTC): the article was updated with responses from a spokesperson representing Voyager.

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• After GME, Dogecoin and Bitcoin, Chinese Traders Are Betting What Will Pump Next

Rallies in GameStock (NYSE: GME) shares as well as dogecoin (DOGE) and bitcoin (BTC) are piquing the betting interest of traders in China as much as they are in the United States.

On Weibo, the popular social media platform in China, the highly active crypto community is speculating on which cryptocurrency will be next to get a major pump after dogecoin and bitcoin jumped in recent days.

“Were it not that Ripple was struggling with its lawsuit, the next token being pumped by the retailers in the U.S. could have been XRP,” according to one Weibo account holder with nearly 40,000 followers. “Many newcomers to crypto only look at prices and names, and they do not care how many times this particular token has taken away people’s money or whether it is highly centralized.”

Related: All Over the World, Small Investors Jump Into the GameStop Frenzy

“It might be a good time to look into tokens that’re associated with XRP the most,” the post then continued, which was followed by several responses asking whether Stellar lumens (XLM) would be the next token to pump. Prices for XLM were trading at $0.304 at press time, up 13.96% in the past 24 hours and outperforming bitcoin, according to the CoinDesk 20.

Read More: Stellar’s XLM Token Rallies to 2-Year High on XRP Woes, OCC Ruling, Ukraine

It’s not just on Weibo. Chinese internet users have been surfing on English-based social media platforms including Telegram chat groups and Reddit, where the most recent bout of trading frenzy started originally. A tweet by Tron’s Justin Sun, which said he’d buy $1 million worth of GameStop stock to show his support to the Reddit community, was briefly pinned on the reddit group, r/wallstreetbets, the epicenter of the GME drama.

“Justin Sun (Asian billionaire) has our back and is joining in,” the group’s post says. After the post went out, prices for the tron (TRX) cryptocurrency rose as high as $0.0446, up 52.2% from its 24-hour low at $0.0293, according to Messari.

Related: Market Wrap: Bitcoin Bumps to $38.6K While DeFi Exchanges Hit $50B

The post also led to what appeared to be an accidental rally in shares of Tanzanian Gold Corporation, which has the ticker symbol TRX. That stock doubled in price in earlier Friday and is still up 26% on the day as of press time, according to Yahoo Finance.

“Every stock investor is thinking of how to buy cryptocurrencies,” Yang Liu, a Colorado-based Chinese crypto retail trader, told CoinDesk. “Every crypto investor is thinking of how to buy stocks.”

Yang saw the early movement on Reddit and bought shares of GME last week, right before GME’s prices skyrocketed. He told CoinDesk many friends and family in China have been asking him over the past two days which tokens they should buy.

“In China, the fear of missing out (FOMO) has surpassed the fear of losing money,” Yang said, adding that many Chinese have been trading American stocks since the start of the lockdown in 2020 using platforms such as FutuBull, and Forex.com.

Data from a December report by the China Securities Depository and Clearing Corporation shows there are more than 177 million individual stock investors in China. Unlike the market in the U.S., the stock market in China is dominated by retail investors. The Chinese stock market is also highly regulated, with short-selling very rare and stock exchanges forcing the suspension of trading for the day should the CSI 300 Index rise or fall by 7% or more from its previous close.

The battle between retail traders and financial elites is also nothing new to hundreds of millions of traders in China. They often half-jokingly describe themselves as “leeks,” a common vegetable in China, “being harvested” when they think their money has been “stolen” by the much bigger market players in the traditional stock market.

“Sending support to retailers in the U.S,” one Weibo user commented under a post by Chinese state media The Paper about trading platform Robinhood stopping buy orders on GameStop.

Read More: Retail Traders Sue Robinhood Over Meme Stock Restrictions

That said, it is hard to gauge whether China’s participation in the GME surge is much more than FOMO. Some say that while retail traders are jumping into certain stocks or cryptocurrencies, it may be more about taking advantage of an opportunity rather than a shift in ideology.

“It doesn’t matter whether it’s the GameStop drama or the dogecoin pump. From what we see, the retail investors in China are not deeply or actively engagement in the real ‘revolution’ behind [the trading frenzy],'” Flex Yang, founder and chief executive of Hong Kong-based crypto lender Babel Finance, told CoinDesk.

Related Stories

• The GameStop Stop Is Not a Technology Problem
• Are You Running a Bitcoin Node?

Three stories

1. Elon Musk changed his Twitter bio to #bitcoin and the crypto jumped 20%, to highs last seen on Jan. 19. The two events are not definitely connected. However, just 15 minutes after Musk made the change, bitcoin climbed 15.7% to $37,050. It’s still ticking up.

Of course, with any rally, celebrity-driven or not, the question comes to stability. Blockchain analytics firm CryptoQuant’s “Exchange Whale Ratio” found that exchange inflows among major bitcoin holders is at an eight-month high, signaling a possible price drop.

• However, “Elon’s tweet overrides all other bearish signals,” Ki-Young Ju, CEO of blockchain analytics firm CryptoQuant, tweeted. In a follow-up tweet, Musk appears to nod to bitcoin, saying “In retrospect, it was inevitable,” a quote later imbedded into the cryptocurrency’s blockchain by mining pool F2Pool.
• The sharp rise to a 10-day high of $38,020 sparked $387 million worth of bitcoin short liquidations on major exchanges including Binance, Bitfinex, BitMEX, ByBit, Deribit, FTX, HuobiDM and OKEx.

Musk has frequently shown support for crypto broadly. Industry publication Protos found nearly every time he mentions a cryptocurrency, it rallies.

• DOGE was the most talked about cryptocurrency on Twitter, including a cryptic picture of a dog in a sweater posing on the cover of a magazine, which Musk posted in the midst of a market rally. (The symbol of dogecoin is a Shiba Inu while the featured dog in Musk’s tweet appears to be an Italian Greyhound.)
• Dogecoin climbed 800% Thursday to a record high of about $0.082 per coin. At one point, the meme coin entered the top 10 cryptocurrencies by market cap.

Related: Market Wrap: Bitcoin Bumps to $38.6K While DeFi Exchanges Hit $50B

2. In another story about meme-driven market mayhem, Robinhood has limited cryptocurrency buying due to “extraordinary market conditions.” Traders can “still use settled funds to buy crypto,” a spokesperson said.

• This is the second day in a row that Robinhood trading functionality hit up against the limits of memetic demand. Yesterday, a near-revolution formed after the popular trading app placed limits on stocks favored by the Reddit day-trading community WallStreetBets.
• In what is shaping up to be the biggest trade of the century, a loosely organized group of retail traders attempted to put the squeeze on short-selling hedge funds. It started with GameStop, but spread to other company stocks with less than ideal prospects, like Kodak and AMC. And the mobbed moved markets, even raising questions of whether it was “manipulation.”

Just as the “degenerate traders,” a term often used sympathetically in Discord cesspools and on Reddit, the “man” looked to put its foot down. Lines of communication were cut (sorta) and Robinhood and Webull, the very disruptors that – per their own adverts – were democratizing finance, limited trading in a move that benefited short sellers.

• Both the U.S. House Financial Services Committee and the Senate Banking Committee announced there would be hearings on short-selling and online trading platforms. Traders filed lawsuits.
• The moment has drawn comparisons to Occupy Wall Street, an anarchic protest movement that brought economic inequality to light.

Amid swirling rumors of collusion and political grandstanding, Robinhood said yesterday the pause on trading has been misunderstood. CEO Vlad Tenev said the company wasn’t “directed by a market maker or any other market participant, to pause stocks that had seen triple-digit returns, but made the decision based on a “technical and operational” considerations.

• Turns out, the financial system’s physical and digital plumbing has capacity limits. Of course there have been calls to decentralize. Cryptocurrency company FTX has already listed a WallStreetBets (WSB) index, which will be mirrored on Blockfolio, capitalizing on the whole mess.

3. Coinbase is about 3.5 times the size of Robinhood, which is definitely notable and also a lame way to segue into news that the massive exchange intends to go public through a direct listing.

• Yesterday, the firm confirmed rumors of an IPO through direct listing. Though the official documentation filed with the U.S. Securities and Exchange Commission is not yet available. The firm’s announcement Thursday included no details on when the stock would be listed or under which ticker.
• In semi-related news, MicroStrategy (MSTR) CEO Michael Saylor said the firm will “explore various approaches” to continue buying bitcoin. The company holds 70,784 BTC, and has previously used Coinbase as a means to buy.

At stake

Related: Voyager Reports Multiple ‘Service Disruptions’ After Encouraging Users to Trade Dogecoin

Decentralization blooms?
The retail-driven rally across several “meme stocks” has become a narrative opportunity for calls to “decentralize.” Painting with broad strokes, crypto influencers have viewed the week’s events as the power of the masses rising up against centralized gatekeepers and legacy institutions.

Connecting the dots to the crypto industry, noted technologist Balaji Srinivasan said, “Crypto and WallStreetBets have the same spirit: a vision of truly free markets where everyone plays by the same rules.” A disparate group of traders, banned together by social networks like Reddit and Discord, now, conceivably, can have as much influence on markets as Wall Street, Srinivasan argued.

The movement is much bigger than what’s happening with a few stocks. Similar references to decentralization were made after social media giants, including Twitter and Facebook, took the unprecedented step to ban now-former President Donald Trump from their platforms while he was still in office. 

In short, the battle lines are being drawn around private companies – which were once seen as democratizing forces but have trended towards “illiberalism” – versus open-source platforms that anyone can use, indisputably and in perpetuity.

The problem isn’t necessarily about companies curating their platforms, like Robinhood temporarily limiting trading of a few overheated stocks or Twitter removing QAnon conspiracies, which, as we’ve covered before,  is a First Amendment right, but about who gets to make the call. 

The internet was envisioned as an open platform. It still is. But the World Wide Web we have today, the actual system that is so often conflated with the internet itself, is primarily mediated by a few tech giants. These companies – Google, Facebook and other household names – have become the interface people see when they log on. Their dark-house algorithms also surface the majority of content that is consumed online. 

Decentralizing this stack, removing the “walled gardens,” is the work of the crypto movement, which is rapidly advancing towards Web 3.0, envisioned as a user-owned network. Twitter CEO Jack Dorsey is perhaps the highest-profile proponent of creating open protocols for social media.

A project he announced in late 2019, Blue Sky, recently released a report on the current state of the decentralized web. The obvious conclusion: There is much work to be done. One effort not covered in the Blue Sky report is a pretty clear example of this. 

Revolution Populi announced the launch of its testnet today. It’s a blockchain-based solution meant “to decolonize the internet.” Developed by Yale computer science professor David Gelernter, sometimes credited as the creator of the first internet social network, and ex-Goldman Sachs Vice President Rob Rosenthal, Revolution Populi hopes to create an open source foundation where “a thousand social nets can bloom.”

It’s an ambitious goal, and one that faces numerous obstacles. When pitching itself as a “Facebook killer,” its founders told Forbes in 2019 it was eyeing a “billion-dollar” initial coin offering. That offering has yet to materialize, caught up in legal questions, Rosenthal said in an interview with CoinDesk’s Blockchain Bites yesterday. 

Though Rosenthal said the project is “well capitalized” through private funding, there are other concerns. As experimental as experimental gets, the project is using a consensus algorithm, called random Delegated Proof Of Stake, which builds on the standard used in the EOS blockchain. Then there’s the project’s crypto clearinghouse to match trades. 

“The cryptocurrency industry is screaming – screaming – for some measure of backstop against the spiraling crisis of counterparty risk,” Rosenthal said. It’s an infrastructure Rosenthal proposed as a way to monetize the system, though it is still being built. There are a few examples of clearinghouses already being used, like ErisX. 

And as Messari notes, a blockchain already functions like a clearinghouse. “The Ethereum blockchain acts as the decentralized clearinghouse for transactions involving tokens and smart contracts. Ethereum currently settles billions in transactions every day without requiring a corporation like the [Depository Trust and Clearing Corporation] to ensure a transaction is completed.”

That said, crypto is inherently forward-looking and foundational technology across the ecosystem is still being laid out. Just weeks ago, for instance, Revolution Populi integrated with the decentralized app friendly Matic Network. 

In some sense, what matters most in crypto is intention. The core idea being is to empower individuals, to flatten hierarchies and to lay a technological foundation that could never be co-opted by governments or corporations. 

I was curious about Rosenthal’s take on the Robinhood dilemma, given his 19-year career at one of the world’s most powerful investment banks, one that Matt Tiabbi referred to as “a great vampire squid.” If RevPop wants to kill Facebook, what’s next for Goldman?

There will be no bloodshed, the gray-haired former punk rocker said diplomatically. 

“The point is, we’re on the right side of history, which is a populist revolution. It’s a philosophy of decentralization, an idea around people controlling their own lives,” he said. 

Whether it’s an alternative worth considering, I leave to you, dear reader, to decide. 

Quick bites

LAUNCHING STARGATE: Cosmos looks to lead in blockchain interoperability with its coming release. (CoinDesk)

CRYPTO EXCHANGE: Japanese financial giants SBI and SMFG are eyeing 2022 for the launch of a “digital stock exchange.” (CoinDesk)

BITCOIN CORE: Marathon is backing developer Jonas Schnelli’s work, with a year-long $96,000 grant, payable in bitcoin. (CoinDesk)

SPEAKING OUT: “Madison Campbell’s DIY Rape Kit has kicked up a storm, not least because it’s backed by Silicon Valley VCs.” (Decrypt)

BINANCE SURVEY: Crypto buyers 4 times more likely to regret missed opportunity. (Modern Consensus)

THIN DETAILS: “Visa’s Q1 earnings call reveals details about its crypto strategy.” (The Block)

Who won Crypto Twitter? Related Stories

• In Retrospect, It Was Inevitable: Elon Musk Pumps Bitcoin to Space
• Top 5 Dogecoin Pumps Through the Ages

The Indian Parliament will consider a government-introduced bill that would ban private cryptocurrencies in its upcoming budget session. Given the ruling party controls both houses of Parliament, the chances of the bill’s passage are considered good.

According to the Lok Sabha Bulletin published Friday, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, seeks to prohibit all cryptocurrencies in India and provide a framework for creating an official digital currency to be issued by the Reserve Bank of India (RBI).

While the bill is anti-private cryptocurrencies, it will allow certain exceptions to promote the underlying technology of cryptocurrency and its uses, the bulletin said. The India Parliament has three annual sessions: Budget session, which runs from January to March, Monsoon session and Winter session.

Related: All Over the World, Small Investors Jump Into the GameStop Frenzy

If the bill is approved, India would become the only major Asian economy to ban private cryptocurrencies rather than regulating them like corporate stocks.

The RBI, via a circular issued on April 6, 2018, had banned regulated entities from dealing in cryptocurrencies and providing services for facilitating any person or entity in dealing with or settling those. The central bank’s banking ban was overruled by the Supreme Court in March 2020, bringing cheer to exchanges providing services to India-based clients.

Sumit Gupta, CEO of the Mumbai-based CoinDCX exchange, struck a hopeful note regarding the proposed legislation. “Since the government is considering introducing the bill during this session of Parliament, we are sure the government will definitely listen to all the stakeholders before taking any decision,” Gupta told CoinDesk. “We are talking to other stakeholders and will definitely initiate deeper dialogue with the government and showcase how we can actually create a healthy ecosystem in unison.”

Related Stories

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The U.S. Securities and Exchange Commission (SEC) is ignoring that the XRP cryptocurrency has utility, fintech startup Ripple alleged in its response to a securities complaint filed by the regulatory agency.

In a Friday filing, Ripple Labs pushed back against the SEC’s allegations, which claim the San Francisco-based firm violated U.S. securities laws for over seven years by selling $1.3 billion worth of XRP tokens.

“The functionality and liquidity of XRP are wholly incompatible with securities regulation. To require XRP’s registration as a security is to impair its main utility,” the response said. 

Related: Market Wrap: Bitcoin Bumps to $38.6K While DeFi Exchanges Hit $50B

In a 93-page filing, Ripple responded to each of the SEC’s paragraphs. In its affirmative defenses, Ripple stated that XRP is not a security or investment contract, and the firm’s sales or distributions of XRP are likewise not investment contracts.

Ripple rebuttal

The SEC sued Ripple in December 2020, alleging the company, CEO Brad Garlinghouse and Chairman Chris Larsen sold over $1 billion in XRP, promoted the token and paid third parties to support the cryptocurrency.

Parts of Ripple’s response seem to focus on what XRP actually does, in the company’s view, saying the SEC complaint ignored that XRP is open source and claiming that its price has correlated with the price of bitcoin and ether.

“The Complaint mischaracterizes advice that Ripple received in 2012, from which a reasonable reader actually would have concluded that Ripple Credits (a past name for XRP) were not a security,” the filing adds a few paragraphs down.

Related: After GME, Dogecoin and Bitcoin, Chinese Traders Are Betting What Will Pump Next

Ripple is also claiming that the SEC did not provide fair notice that its sales of XRP might be violating the law. 

It pointed to its settlement with the U.S. Department of Justice and the Financial Crimes Enforcement Network in 2015, which registered XRP as a convertible virtual currency and allowed for sales and secondary market transactions.

“Upon information and belief, Plaintiff knew of that 2015 settlement and yet, for years after, Plaintiff provided Defendants with no clear notice that, in Plaintiff’s view, Defendants’ prospective XRP sales as permitted by the agreement would nevertheless constitute a violation of another federal law,” the response said.

Commodity clarity

In addition to filing its response, Ripple filed a Freedom of Information Act request for documents from the SEC on how it determined that bitcoin and ether, the top two cryptocurrencies by market capitalization, are not securities. 

“To date, they have offered no guidance for that determination, hindering responsible players like Ripple from being able to innovate in the U.S. to bring faster, cheaper and more transparent global payments to consumers who need them the most. As we have said for many years, we’re simply asking for the rules to be clearly stated and applied consistently,” a spokesperson said in an emailed statement.

XRP is up nearly 10% over the past 24 hours, joining a broader spike across the crypto market that saw dogecoin jump over 700% on Thursday.

Read the document:

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BlockFi, a major hub for crypto lending, appears to be increasing its courting of institutional bitcoin bets through a new bitcoin trust product.

The trust, revealed in Friday regulatory filings, could put BlockFi in direct competition with Grayscale for bitcoin-friendly Wall Street investors’ attention and dollars. Grayscale’s own bitcoin trust is one of the single-largest bitcoin investment vehicles on the market. CoinDesk parent company Digital Currency Group also owns Grayscale.

The “BlockFi Bitcoin Trust” has yet to raise any money from investors, according to its U.S. Securities and Exchange Commission filing. Key factors about the fund’s structure were not available at press time. However, the fund’s status as a Rule 506(c) exempt offering gives BlockFi room to market the trust publicly.

Related: ‘Pomp’ Launches Crypto Jobs Board With Gemini, Coinbase and BlockFi

Representatives for BlockFi did not immediately respond to CoinDesk’s questions.

BlockFi is the second firm this week to register a bitcoin trust. Valkyrie, which already has $2.3 million in sales, disclosed its fund on Jan. 26. Osprey is also preparing to go live with a bitcoin trust product positioned to be a direct challenger to GBTC.

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Some of the largest U.S.-based cryptocurrency exchanges are having trouble handing Friday’s market volatility.

• Kraken’s trading is enabled again although “intermittent connectivity issues” remain 17 hours after the company’s entire site was relegated to full “maintenance mode” Thursday morning.
• The company battled a second day of severe connectivity issues after Thursday saw an outage of the exchange’s trading API, though the web interface was still operational.
• Coinbase also suffered “performance degradation,” per its status page. And as the exchanged worked on a fix, reports of the exchange disabling USD buys circulated on Twitter. A Coinbase spokesperson confirmed to CoinDesk that USD buys were down, saying it was related to the outage issues.
• Several hours after the incident occured, Coinbase updated the status page to say “trading is 100% backup [sic],” which was followed by another update shortly thereafter saying “all services are back up” and Coinbse is “continuing to monitor for any future issues.”
• Bitcoin’s price shot up nearly 20% early Friday morning to over $38,000.
• These two exchanges have suffered downtime already this month, with both venues going down after bitcoin traded above $39,000 for the first time in early January, per CoinDesk’s prior reporting.

This is a developing story and will be updated.

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SBI Holdings has reportedly partnered with Sumitomo Mitsui Financial Group (SMFG) to launch a digital stock exchange slated for spring 2022.

• SBI and SMFG are expected to launch the platform in Osaka to compete against the Tokyo Stock Exchange (TSE), according to a Nikkei report Thursday.
• The exchange is expected to be Japan’s first such stock exchange, allowing investors to trade digital securities using blockchain technology.
• In March, the companies will set up an operator called the Osaka Digital Exchange (ODX), with SBI to own 60% and SMFG 40%, per the report.
• SBI and SMFG, which both have brokerage arms, will put in place a governance structure to prevent any conflict of interest.
• The news comes after the TSE was criticized for a major hardware glitch in September caused the worst outage ever for the world’s third-largest equity market.
• The ODX is expected to start trading digital securities in 2023.

See also: Australia’s Central Bank Tells ASX to Push On With Delayed DLT Trading Platform

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• Prime Trust, tZERO Partner on Digital Asset Custody, Trading

Bitcoin (BTC) which seemed uncannily listless for most of this wild week, suddenly found energy after Elon Musk, the electric-vehicle and private-spaceflight entrepreneur who’s also reportedly the world’s richest man, changed his Twitter bio to mention the cryptocurrency. (See screen grab below, in Omkar Godbole’s Bitcoin Watch column.) 

The price of bitcoin, the oldest and largest cryptocurrency, surged 12% to about $37,400, around the highest in two weeks. According to Decrypt, the sudden surge higher caused some $420 million of trader positions to be liquidated – a delicious bit of irony given Musk’s very public aversion to short-sellers, or traders who bet on price declines.  

Ether (ETH), the Ethereum blockchain’s native cryptocurrency, was also higher, pushing back toward a new all-time high price above $1,400.

Related: Market Wrap: Bitcoin Bumps to $38.6K While DeFi Exchanges Hit $50B

Dogecoin (DOGE), a digital token with little utility beyond the meme-iness of its doggie-faced image, has climbed eight-fold in the past two days. (Read more about that here and here and in the Market Moves column, below.)     

In traditional markets, European share indexes slid and U.S. stock futures pointed to a lower open amid lingering concerns about a cash squeeze in China and the volatile retail-trader speculation highlighted by this week’s GameStop saga.

Market Moves

A new narrative is coursing through digital markets that could soon make its way to the crypto industry’s marketing departments: That a lot of individual investors, furious at Wall Street and turned off by stock markets following the GameStop (GME) episode, might find redemption by turning to cryptocurrencies. 

Crypto twitterati including Alex Kruger, Balaji Srinivasan, Erik Vorhees and the Winklevoss twins jumped on the bandwagon Thursday, hammering the message that Wall Street serves its own self-interests before those of customers. And that crypto fixes this. 

Related: Are You Running a Bitcoin Node?

The industry’s opportunistic spirit is already appearing in the form of pitches and new products. Non-U.S.-based cryptocurrency exchange FTX, famous for last year’s TRUMP tokens, rushed to list GameStop’s stock for tokenized futures and spot trading, as reported by CoinDesk’s Sebastian Sinclair. Bermuda-based Bittrex Global listed tokenized GameStop (GME) shares along with other stocks delisted by the retail trading platform Robinhood, including AMC Entertainment.  

Here’s a quick sampling of the commentary:

• Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, told his newsletter subscribers on Thursday: “To many involved in bitcoin and cryptocurrencies, the answer is very clear. Luckily for us, an alternative market has been under construction for the last few years, the decentralized marketplace. It’s a place where transparency is enforced by code and not by men.”
• Paulo Ardoino, CTO of the cryptocurrency exchange Bitfinex and a spokesman for the stablecoin tether: “As advocates for retail investors rail against the current structure and practices of financial markets, it is important to note that much of the work being done in the blockchain space has been inspired by these barriers. Removing obstacles to normal, everyday working people that are building and seeking wealth growing opportunities has always been part of the ethos of crypto.”
• Nicholas Pelecanos, head of trading at NEM, a blockchain company: “The case for cryptocurrencies only grows stronger. I believe we will witness a new wave of investors come over to bitcoin and other major crypto assets as a result of this debacle.” 
• Camila Russo, founder of The Defiant newsletter: “Decentralized finance will win. It’s simply better. Freer.”

One big question, of course, is what it all might mean for cryptocurrency prices. Prices for the digital token dogecoin (DOGE), which is basically just a doggie-faced meme, have shot up in value as rumors swirled that it might be the next to draw the attention of buck-the-system (or even just fun-seeking) retail traders.

As reported by CoinDesk’s Kevin Reynolds and Zack Voell, dogecoin’s price surged eight-fold Thursday. The token now has a market capitalization of about $6 billion for something that is basically an elaborate joke. Dogecoin has overtaken bitcoin, which has a market value of almost $700 billion, to become the most-mentioned cryptocurrency on Twitter. 

(For the DOGE-curious readers out there, the breed typically associated with dogecoin is shina inu, which, according to the American Kennel Club’s website typically only weighs about 20 pounds but is “a well-muscled,” “spirited” and “good-natured.” Pretty cute, too!) 

As discussed by First Mover on Thursday, there are already a lot of similarities between loosely regulated crypto markets, whose international reach has put large portions of the players and activity beyond the scope of usually-coordinated authorities, and the type of anything-goes, let’s-roll spirit that invaded Wall Street this week.     

But it’s the mere existence of an alternative to the traditional financial system that might ultimately prove to be the biggest selling point for the crypto industry, which can also accurately claim to have the newest technology, broadly speaking.     

Mohamed El-Erian, the former Pimco and Harvard money manager who now serves as chief economic adviser for the German financial conglomerate Allianz, wrote this week in a column for Bloomberg Opinion that the GameStop-inspired masses might represent a “new investor force” that “raises several interesting questions for market structure and future financial stability.” 

“The dual possibility of large-scale financial volatility and market dysfunction would pose yet another challenge to an economic recovery,” El-Erian wrote. 

That new investor force might represent the crypto-industry’s new hottest new lead – for motivated customers.  

– Bradley Keoun

Bitcoin Watch

Bitcoin witnessed a sudden double-digit spike to 10-day highs on Friday.

The top cryptocurrency picked up a bid near $32,000 at around 08:30 coordinated universal time (3:30 a.m. in New York) and jumped to $37,050, the highest since Jan. 19, according to CoinDesk 20 data. The 15.7% rise happened in less than 15 minutes and more than reversed the early dip from $34,400 to $32,000.

While the exact reason for the bullish move is hard to define, prices surged after Tesla and SpaceX CEO Elon Musk changed his Twitter bio to mention the cryptocurrency. While the bitcoin community is keen for Musk to come out as a supporter, he seemingly enjoys dropping crypto mentions as something of a tease.

Around the time he changed the bio, Musk also cryptically tweeted: “In retrospect, it was inevitable.” 

Whether bitcoin’s rise will continue isn’t certain. Blockchain analytics firm CryptoQuant’s “Exchange Whale Ratio,” calculated by dividing the top 10 bitcoin inflow transactions in an hour by total exchange inflows, jumped to an eight-month high of 0.88 early Friday, warning of a possible price drop.

However, “Elon’s tweet overrides all other bearish signals,” Ki-Young Ju, CEO of blockchain analytics firm CryptoQuant tweeted. 

– Omkar Godbole

Read More: Bitcoin Surges to $37K After Elon Musk Adds Crypto to Twitter Bio

Token Watch

Algorand (ALGO): Proof-of-stake network Algorand inks partnership with Curv, a digital-custody technology provider, for “trusted DeFi” (CoinDesk)

Dogecoin (DOGE): Meme coin nearly triples, with market capitalization now at record $2.5B, after social-media attention (CoinDesk)  

Cosmos (ATOM): Cosmos set to take lead in blockchain interoperability with February’s Stargate release (CoinDesk) 

Bitcoin (BTC): It’s the demand, stupid. Bitcoin advocates confuse “scarce” with “finite,” Frances Coppola writes in column (CoinDesk Opinion) 

What’s Hot

Coinbase says in Web post it plans to become publicly traded company via a direct listing (CoinDesk) 

Iran tightens grip on crypto miners while looking to them as a potential source of revenue as international sanctions crimp economy (CoinDesk) 

Cathie Wood’s ARK estimates bitcoin could climb to $400K if the cryptocurrency were to replace 10% of the cash on corporate balance sheets: 

Analogs The latest on the economy and traditional finance

Silver surges as GameStop day traders move into other assets (WSJ) 

Retail traders sue Robinhood over restrictions on meme stocks GameStop, AMC Theaters and Blackberry (CoinDesk) 

Robinhood said to draw on bank credit lines amid tumult (Bloomberg) 

Private-equity firm Silver Lake converts $600M of AMC convertible notes into equity after retail-fueled stock-price pump (WSJ)

U.S. Congress plans hearings on GameStop market pumps (CoinDesk) 

American Airlines, Southwest Airlines post record losses for 2020 after coronavirus-related travel downturn (WSJ) 

Emerging-market borrowing boom – $847B in 2020, with another $100B of bonds sold so far in January – sparks concerns over debt loads (WSJ)

European Central Bank’s head of banking supervision worries that lenders in the region might not be setting aside enough money for loan-loss reserves (WSJ)

“Investors have been continuously conditioned to buy the dip, regardless of its cause. FOMO (fear of missing out) and TINA (there is no alternative to risk assets) have turbocharged this behavior,” Allianz Chief Economic Adviser Mohamed el-Erian writes in column (Bloomberg Opinion)  

Although the U.S. economy shrank last year by the most since 1946, consumers have increased their spending on goods faster than before the coronavirus hit, as “resilient wages, buoyant stocks, low interest rates and stimulus gave most households ample spending power” while the pandemic limited payments for services, the U.S. Commerce Department reported Thursday (WSJ) :

Tweet of the Day Related Stories

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Despite chatter circulating Thursday that Robinhood had been compelled to halt trading of stocks being targeted by a Reddit group, the firm’s CEO said it alone had made the decision in order to safeguard the firm.

In a video interview on Thursday with Bloomberg’s Emily Chang, Vlad Tenev said the rumors were “categorically false” and Robinhood wasn’t “directed by a market maker or any other market participant,” but rather the decision was based on a “technical and operational” one.

“Robinhood, as a brokerage, has financial requirements including … deposits that we have to make to various clearinghouses. Some of these requirements fluctuate based on volatility in the markets,” said Tenev.

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In order to “protect the firm” and Robinhood’s customer base, Tenev said his platform disabled purchasing of 13 stocks associated with a Reddit trading group called WallStreetBets (WSB). Tenev added that buy orders for the 13 securities could resume as early as tomorrow.

The current flurry of trader activity has represented an “unprecedented market environment” over the past couple of weeks, according to the CEO. He said Robinhood had not disable selling of the stocks as it would have been “painful” to users of the platform if they weren’t allowed to exit their positions.

Share prices for businesses such as Nokia (NOK), AMC Entertainment (AMC) and GameStop (GME) rose to astronomical highs in recent weeks when WSB sought to “short squeeze” large U.S. institutional hedge funds looking to bet against those companies.

A number of retail traders have since exited their positions amid calls to hold with “diamond hands” – referring to a mindset of maintaining positions in an attempt to drive up stock prices. Despite the calls, AMC, GME and NOK’s share prices have fallen back over the last 24-hours, while lawsuits were filed against Robinhood.

Related: Retail Traders Sue Robinhood Over Meme Stock Restrictions

“Concentrated investing” around these types of stocks was in high demand because of an “intersection” of social media and finance, the CEO said.

“I can kind of understand how Clorox and Lysol were feeling at the beginning of the dynamic when there was so much demand,” said Tenev referring to cleaning products indirectly touted by Donald Trump as a potential medical treatment to combat the rise of COVID-19.

When pressed by Chang over whether Tenev would be willing to visit Washington D.C. to testify about its actions, the CEO said he was open to having a conversation and that the current developments presented an “opportunity” to educate the public regarding how the mechanics of financial settlements in the market work.

“Market volatility which increases the deposit requirements at various clearinghouses that we have to deposit cash into … the more cash we have available to deposit at these clearinghouses the more we can allow customers to buy, especially if these stocks are unrestricted,” Tenev said. “We are interested in removing the restrictions as per our operational requirements and increasing the amount of cash available to fund these deposits that will allow us to better do that to the greatest extent possible.”

See also: Robinhood Pays SEC $65M to Settle Allegations It Misled Customers

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Right now, blockchains communicate via tacked-on solutions (state channels, sidechains, swaps, bridges and so on). With the Stargate update to Cosmos on Feb. 18, the tools for native blockchain interoperability will be live on mainnet. 

“This is a long-awaited release for many Cosmos-based projects out there,” Band Protocol’s Kevin Lu told CoinDesk via email. “For us this will enable seamless and simple integrations with any Cosmos-based decentralized application, relaying oracle data in a highly scalable and tamper-proof manner.”

Iqlusion’s Zaki Manian, who leads much of the development for Cosmos, explained that once Stargate goes live, a governance vote will be required to switch on inter-blockchain communication (IBC), which will take two weeks to finalize.

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So at the earliest, all systems go for IBC would be early March. That said, Tendermint chains need to upgrade to the Cosmos SDK for this to happen. Manian said this is probably one or two weeks of work for most dev teams and they don’t need to wait for Stargate to kick in to start.

If Tendermint-based chains activate Stargate en masse, this has the potential to be a big moment – not just for Cosmos but in the whole history of crypto.

There have been a lot of standalone bridges between blockchains built so far, but Stargate could mark a new era in composability, where we see one big system that lets lots of different chains trade value and build on each other’s strengths. 

Many chains

There are more notable Tendermint-based projects than many may realize.

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A new site called Cosmos-Cap is tracking the market capitalization of projects in the ecosystem, currently valuing all the chains together at just under $13 billion. The native token of Cosmos, ATOM, is currently trading around $8, with a market cap of $1.9 billion on its own. 

Cosmos-Cap shows (among others) the Binance Chain, the stablecoin system Terra, the aforementioned oracle project Band, the privacy blockchain Oasis and the MakerDAO-like collateralized debt platform Kava.

While not on that list, the payments and remittances blockchain Celo has also taken steps to connect with Stargate.

THORChain, which enables assets to be swapped across chains (sort of like Uniswap), told CoinDesk, “THORChain is Stargate-ready, but more work needs to be done to make it IBC-ready, that is in the works currently.” 

Other teams are also busy.

“The current plan for Band Protocol’s Stargate connection is to have testnet by Q1 and mainnet by Q2 for Stargate support,” Lu wrote, enabling the team time to be very confident in its implementation.

Do Kwon, a co-founder of Terraform Labs, which runs the Terra chain, confirmed it would upgrade but not until Stargate has had some time in the wild. “The earliest we would move to upgrade is May,” he wrote in an email.

Spokespeople for Celo and Oasis confirmed the teams are working toward IBC implementation, but without giving a timeline. 

Binance, whose BNB coin represents the most value in the ecosystem, sent CoinDesk the following statement: “We will not be able to join the Stargate timeline to support the IBC. The Binance Chain community will discuss when and how to support this initiative.”

THORChain also emphasized that, like many big upgrades, Stargate will add other benefits for Tendermint-based blockchains, such as faster throughput and implementation of Google’s protocol buffers standard (which should also be good for interoperability).

Close followers of the project may have heard Stargate would launch on Jan. 28, but the date was pushed back. Manian told CoinDesk this decision was driven by a bug that was found and fixed. It was useful anyway because the exchanges still were not ready for the update.

Since 2019, the Cosmos project has been as volatile as cryptocurrency generally.

While in late 2019 CoinDesk noted the financial health of the project thanks to conservative treasury management, by early 2020 it appeared to be falling apart from a personnel standpoint. By the summer, however, it seemed Cosmos had weathered its internal storms.

Going forward, every time a blockchain clicks into IBC it is likely to put pressure on other Tendermint projects to get their upgrades done. With even a few interoperating, composability should start kicking in and FOMO will drive stragglers to get in fast. 

It could get very interesting; while Ethereum tests its beacon chain, Cosmos will have something very similar to a sharded system running on mainnet, tossing value back and forth at will.

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