WEEKEND CRYPTO RECAP: FTX HACKER, U.S. SHUTDOWN, CFTC CHARGES, & SU ZHU’S ARREST

Over the weekend, the cryptocurrency world witnessed several noteworthy events and developments. Here’s a recap of the key stories:

FTX Hacker Resurfaces with $38M Transfer

The crypto hacker accused of orchestrating a massive theft from the bankrupt cryptocurrency exchange FTX made a significant move over the weekend. The hacker, using the wallet address 0x3e957E…, transferred 22,500 Ether (ETH) valued at approximately $38 million in the span of two days. This activity marked the first substantial movement of funds in 10 months. On September 30th, $8.6 million worth of Ether was moved to a new address, followed by another transfer of $17 million across five addresses on the same day.

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A subsequent transfer on October 1st saw the hacker move an additional 7,500 ETH, equivalent to $12.6 million, bringing the total ETH transferred over the weekend to $38 million.

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This comes just days before the scheduled fraud trial of former FTX CEO Sam Bankman-Fried on October 3rd and the potential launch of the United States’ first Ethereum futures ETFs.

U.S. Government Narrowly Avoids Shutdown

The United States narrowly dodged a feared government shutdown on October 1st, thanks to a last-minute agreement reached by the Senate and House of Representatives. President Joe Biden signed a 45-day bill moments before the deadline. This extension provides additional time for both chambers to finalize funding legislation.

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The potential government shutdown had raised concerns, with agencies like the United States Securities and Exchange Commission (SEC) warning that it would lead to staff furloughs and hinder market oversight.

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Bloomberg analyst James Seyffart suggested that the looming shutdown had accelerated the approval process for Ethereum futures exchange-traded funds (ETFs), potentially paving the way for their launch as early as today October 2nd.

CFTC Charges in Cryptobravos Scam

The United States Commodity Futures Trading Commission (CFTC) has brought charges against four individuals and a company involved in the operation of the fraudulent cryptocurrency platform Cryptobravos. The scheme, which operated from January 2017 to October 2021, lured customers into depositing Bitcoin and other funds with promises of generating risk-free returns. However, the CFTC’s complaint, filed on September 29th, revealed that the defendants did not engage in actual trading of Bitcoin (BTC) or other digital assets nor did they deliver the promised returns to customers. Instead, Cryptobravos accepted customer funds without returning them and encouraged customers to withdraw funds from retirement accounts or take out loans for additional deposits. The CFTC alleges that most customers never had their funds returned. The complaint charges the defendants in Israel, Italy, Germany, and Ukraine, along with the Seychelles-based company Expected Value Plus Ltd, with fraudulent solicitation and misappropriation of tens of millions of dollars from hundreds of individuals. The CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.

Open Exchange Token Declines Following Su Zhu’s Arrest

The Open Exchange token (OX) experienced a sharp decline, plummeting nearly 50% after news broke that one of its creators, Su Zhu, co-founder of Three Arrows Capital, had been arrested by Singaporean authorities while attempting to leave the country. The token’s value dropped by 58.5% from $0.024 to $0.01 within a three-hour window on September 29th. It has since rebounded to approximately $0.011 at the time of writing, according to CoinGecko. Su Zhu’s arrest followed a court-issued committal order in late September, sentencing him to four months in prison for failing to comply with a court order. Open Exchange, launched on April 4, 2023, is a cryptocurrency exchange and marketplace designed to assist investors who lost funds during recent crypto project collapses. Leslie Lamb currently serves as the CEO of Open Exchange. Su Zhu and Kyle Davies played pivotal roles in the platform’s launch in April. The token (OX) has now experienced an 84.4% decline from its all-time high price of $0.081 on August 9th.

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Other Notable Developments

• The U.S. Department of Justice confirmed its intention to summon former FTX clients, investors, and staff as witnesses in the upcoming trial involving former FTX CEO Sam Bankman-Fried, following a letter of motion in limine submitted on September 30th.
• Ethereum co-founder Vitalik Buterin expressed concerns about decentralized autonomous organizations potentially monopolizing the selection of node operators in liquidity staking pools. He highlighted the potential risks posed by malicious actors in such scenarios.

These significant developments over the weekend continue to shape the ever-evolving landscape of the cryptocurrency and blockchain industry. Stay tuned for more updates as the crypto world remains dynamic and full of surprises.

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