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Caroline Ellison testifies in Sam Bankman-Fried trial, reveals more on FTX-Binance war; SEC reportedly has no plans to appeal on Grayscale Bitcoin ETF case.

Top Stories This Week

Caroline Ellison wanted to step down but feared a bank run on FTX

Caroline Ellison, former CEO of Alameda Research, testified for over 10 hours this week at Sam Bankman-Frieds trial, offering deeper details on the events that anticipated the FTX debacle in November 2022. From Ellison’s testimony, jurors learned that she planned to leave Alameda months before its collapse, but feared a bank run on FTX amidst the crypto market downturn. The week also featured a recording presented as evidence in the case showing the exact moment Ellison told employees about Alameda’s use of FTX customer deposits. Among the key moments of Bankman-Fried’s trial were revelations of fabricated balance sheets in order to deceive crypto lenders, as well as BlockFi CEO Zac Princes testimony. Check out this week’s highlights from Cointelegraph’s team on the ground.

Sam Bankman-Fried blamed Binance for balance sheet leak to media: Court evidence

Months before the collapse of crypto exchange FTX, former CEO Sam Bankman-Fried was freaking out about buying shares in Snapchat, raising capital from Saudi royalty and getting regulators to crack down on rival crypto exchange Binance, according to evidence presented in court this week as a part of the ongoing criminal trial. Bankman-Fried believed Binance leaked an Alameda balance sheet to the media in 2022. According to a document from Nov. 6, 2022, Bankman-Fried wrote that Binance had been engaging in a PR campaign against us. It continued, saying that Binance leaked a balance sheet; blogged about it; fed it to Coindesk; then announced very publicly that they were selling $500m of FTT in response to it while telling customers to be wary of FTX.

SEC reportedly wont appeal court decision on Grayscale Bitcoin ETF

The United States Securities and Exchange Commission reportedly has no plans to appeal the recent court decision that favored Grayscale Investments. The ruling requires the SEC to review the firms spot Bitcoin exchange-traded fund (ETF) application. The SECs supposed decision not to appeal doesnt necessarily mean Grayscales application is set to be approved. If the reports are true, the SEC will need to follow the courts August order and review Grayscales application to change its Grayscale Bitcoin Trust into a spot Bitcoin ETF.

Terraform Labs contends Citadel Securities had a hand in its stablecoin collapse

Terraform Labs has again pointed the finger at market maker Citadel Securities for its role in an alleged concerted, intentional effort to cause the depeg of its TerraUSD stablecoin in 2022. On Oct. 10, Terraform Labs filed a motion in the United States to compel Citadel Securities to produce documents relating to its trading activity in May 2022, when TerraUSD Classic depegged. In its motion, Terraform argued that the documents are crucial for its defense in the lawsuit filed by the U.S. Securities and Exchange Commission in February, which alleged Terraform Labs and its founder, Do Kwon, had a hand in orchestrating a multi-billion dollar crypto asset securities fraud. Citadel Securities has, however, previously denied trading the TerraUSD stablecoin in May 2022.

Mastercard announces successful wrapped CBDC trial results

Mastercard has completed a trial involving wrapping central bank digital currencies (CBDCs) on different blockchains, similar to wrapped Bitcoin and wrapped Ether. The trial was conducted with the Reserve Bank of Australia and the countrys Digital Finance Cooperative Research Centre CBDC. Mastercard said the solution allowed a CBDC owner to purchase a nonfungible token (NFT) listed on Ethereum. The process locked the required amount of a pilot CBDC on the RBAs pilot CBDC platform and minted an equivalent amount of wrapped pilot CBDC tokens on Ethereum, the payment processor wrote.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $26,892, Ether (ETH) at $1,551 and XRP at $0.48. The total market cap is at $1.05 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Loom Network (LOOM) at 86.71%, Trust Wallet Token (TWT) at 16.72% and Tether Gold (XAUt) at 5.16%. 

The top three altcoin losers of the week are Mantle (MNT) at -17.27%, Rocket Pool (RPL) at -14.39% and Avalanche (AVAX) at -13.39%.

For more info on crypto prices, make sure to read Cointelegraphs market analysis.

Most Memorable Quotations

Thats our homework, actually. To really educate people about the benefit of using blockchain.

Grace Sabandar, co-founder of the Indonesia Blockchain and Metaverse Center

Crypto-assets markets, including DeFi, do not represent meaningful risks to financial stability at this point.

European Securities and Markets Authority

I was worrying about customer withdrawals from FTX, this getting out, people to be hurt. […] I didnt feel good. If people found out [about Alameda using FTX funds], they would all try to withdraw from FTX.

Caroline Ellison, former CEO of Alameda Research

Its alarming and should be a wakeup call for lawmakers and regulators that digital wallets connected to Hamas received millions of dollars in cryptocurrencies.

Elizabeth Warren, U.S. senator

Bitcoin and Ethereum may seem like opposites, but they can co-exist and complement each other.

Willem Schro, CEO of Botanix Labs

People who believe SBFraud is a good guy who made mistakes, and FTX grew too fast and it all got away from him, should NEVER be in charge of other peoples money.”

John Deaton, attorney and crypto advocate

Prediction of the Week 

Ethereum losing streak vs. Bitcoin hits 15 months Can ETH price reverse course?

The price of Ethereum’s native token, Ether, is trading around a 15-month low versus Bitcoin, and the lowest since Ethereum switched to proof-of-stake. The ETH/BTC pair dropped to as low as 0.056 BTC earlier this week. In doing so, the pair broke below its 200-week exponential moving average (200-week EMA; the blue wave) near 0.058 BTC, raising downside risks further into 2023.

The 200-week EMA has historically served as a reliable support level for ETH/BTC bulls.

ETH/BTC stares at similar selloff risks in 2023 after losing its 200-week EMA as support. In this case, the next downside target looks to be around its 0.5 Fibonacci line near 0.051 BTC in 2023, down about 9.5% from current price levels.

Conversely, ETH price may rebound toward its 50-week EMA (the red wave) near 0.065 BTC if it reclaims the 200-week EMA as support.

FUD of the Week 

Mistake or money laundering? User pays $1.6 million for CrypToadz NFT

One of the CrypToadz NFTs, whose average price doesnt exceed $1,000, was bought for an astonishing 1,055 wrapped Ether, an equivalent of $1.6 million. The CrypToadz collection was launched during the NFT boom of 2021 and surpassed a trading volume of $38 million worth of Ether during its first 10 days on the market. The price paid by the anonymous user for the NFT raised questions among the community. Two weeks ago, this item was acquired for 0.95 ETH (around $1,600), only to be sold for a price a thousand times higher.

USDR stablecoin depegs to $0.53, but team vows to provide solutions

Real estate-backed stablecoin USDR lost its peg to the United States dollar after a rush of redemptions caused a draining of liquid assets such as Dai from its treasury. USDR, backed by a mixture of cryptocurrencies and real estate holdings, is issued by the Tangible protocol, a decentralized finance project that seeks to tokenize housing and other real-world assets. During the crisis, a trader reportedly exchanged 131,350 USDR for 0 USD Coin, resulting in a complete loss on investment.

HTX claws back $8M in stolen funds, issues 250 ETH bounty to hacker

Huobi Globals crypto exchange HTX has confirmed the return of the funds stolen by a hacker in late September and issued a 250 Ether bounty after resolving the issue. One of HTXs hot wallets was drained of 5,000 ETH on Sept. 25, worth roughly $8 million at the time. Shortly after the hack occurred, the firm contacted the hacker and claimed to know their identity. HTX ultimately offered to pay a 5% bounty worth around $400,000 and not to take any legal action if they returned 95% of the funds before a deadline of Oct. 2.

Beyond crypto: Zero-knowledge proofs show potential from voting to finance

An emerging cryptographic technology may provide help with two gaping 21st-century needs: Privacy and truth.

Eleanor Terrett on impersonators and a better crypto industry

Fox Business producer Eleanor Terrett’s following exploded after she began providing commentary on the SEC v. Ripple lawsuit.

SBFs alleged Chinese bribe, Binance clarifies account freeze: Asia Express

SBF allegedly bribes Chinese officials with $150 million to unfreeze accounts, Binance justifies blocking Hamas users, meanwhile, Huobi hacker returns all $8M in stolen assets.

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The coins staked worth $122 million and represent a small fraction of FTX's holdings of Solana.

FTX estate seems to be bullish on Solana’s native token SOL (SOL), as it staked over 5.5 million in SOL coins on Oct. 13. According to on-chain data, an FTX-identified wallet sent the coins to Figment, a staking validator firm for institutional investors. 

The transaction was detected by blockchain tracker Whale Alert and later identified as an FTX estate address by pseudonymous on-chain researcher Ashpool. The coins staked worth $122 million and represent a small fraction of FTX's holdings of SOL.

Staking involves locking up a specific amount of coins for a set period of time. Staking holders receive SOL coins rewards for securing the network with their stakes.

FTX was an early investor in Solana and receives every month a significant volume of SOL unlocked according to the established vesting schedule. FTX estate has the option of liquidating these holdings at any time. The FTX estate is overseen by a bankruptcy trustee. Its primary role involves the recovery of assets to the exchange’s creditors.

FTX estate is staking 5.5M SOLhttps://t.co/ajRgBHFNt9 https://t.co/UGorSGMtwC

— ashpool (@solanobahn) October 14, 2023

In September, a U.S. court approved the sale of $1.3 billion in SOL from FTX, causing concerns among holders about a slump in prices. To avoid adding burdens on the crypto market, the bankruptcy court demanded the sale occur through an investment adviser in weekly batches. The decision drove SOL's price to a two-month low of $17.34 on Sept. 11.

FTX holds $3.4 billion in Digital Assets A, which is the top 10 assets the company holds, including Solana, Bitcoin (BTC), Ether (ETH), Aptos (APT) and other cryptocurrencies. According to court filings from September, over $7 billion has been recovered since the exchange filed for bankruptcy protection last November.

Sam Bankman-Fried, co-founder of FTX, is on trial at a district court in Manhattan accused of fraud and conspiracy to commit fraud. If found guilty, he could serve up to 115 years in prison.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

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