Is FTX CEO Accelerating the Deep DeFi Rout?

After going through a deep pullback in the past month, most of the DeFi tokens struggle to let go of the losses.

Although the news of Square buying $50,000,000 worth of BTC has sent the market into a tisy, not all coins are moving out of the red. Coins like UNI (+22%), LRC (+13.5%), and KNC (+5%) are recording some gains. DeFi darling YFI has manged to dig itself out of the deep red into the green (+5%).

Much like the price, the total value locked (TVL) in the DeFi Sector has declined by almost 10% to $10.12 billion, as per DeFi Pulse.

Popular DEX Uniswap, however, is an exception to this, whose TVL has jumped 30% in a fortnight.

Keep on Dumping!

As we reported, numerous popular DeFi tokens have lost 80% to 90% of their value since hitting all-time highs during the period of mid-August and the beginning of September.

But still, they continue to go down more and more, which could be seen as an opportunity for the project enthusiasts to buy these tokens at low prices which might have missed them the first time around.

In the past 7 days, more losses have been incurred by the DeFi sector, with YFII leading with almost -46% drop. Other notable losers include SUSHI (-41%), CRV (-37%), YFI (-29%), SWRV (-33%), bzrx (-37%), UNI (-24%), UMA (-25%), LEND (-20%), and SNX (-17%).

As another round of losses hit DeFi tokens, Twitterati points to derivatives exchange FTX CEO Sam Bankman-Fried shorting YFI, CRV, and UNI.

Some market participants speculate that Bankman-Fried might be behind the latest dose of losses, especially for YFI, CRV, and UNI, which he has been dumping on leading spot exchange Binance.

It is worth noting that Bankman-Fried is also the CEO of the quantitative cryptocurrency trading firm Alameda Research.

The Catalyst…

While some aren’t liking it, others said Bankman-Fried is simply shorting a few cryptos, which means he believes the coin will decline in value.

Jason Choi of crypto fund The Spartan Group found it all absurd, stating, “Always find it amusing that the idea of shorting is deemed evil on crypto twitter.”

And if you think Bankman-Fried will short his FTT or SRM, that’s a big fat no, because he ain’t short on his creation, of course, rather he is “long as fuck.”

Trader Moon Overlord also pointed out the obvious nature of the situation, which is “a person apart of a trading firm does a trade.” Back in late August, when FTX acquired the crypto portfolio tracker Blockfolio, the trader said, “FTX didn’t pay for a portfolio tracker they could build in 5 minutes they paid $150M for your data and bag info.”

The market also likened Sam’s behavior with billionaire investor George Soros acting as a catalyst in collapsing the British pound in 1992 by shorting it.

In the process, Soros made an estimated $1 billion profit. While that incident was viewed as “a permanent black mark on the UK as a center of financial prestige,” following the event, “Britain entered a period of growth and prosperity,” noted Sahil Bloom, VP at Altamont Capital Partners.

If not Soros, someone else would have used the opportunity to their advantage, and he “merely accelerated” the process. The same could be seen in the DeFi market, which may finally find its bottom and embark on a new bull run.

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Author: AnTy

YFI Ready to Take Off As The ‘Ultra High Beta’ or About to Get Smoked?

The DeFi market is going through winter right now, as prices of these tokens take a pullback after making all-time highs during August and September.

Since hitting those peaks, some Defi tokens have taken a harsh beating, like CRV, SUSHI, and bZx, which are down over 90%, some like Aave, Maker, and Loopring only went down about 40%. Amidst this, Yearn.Finance’s governance token YFI is somewhere around the middle.

In August, 1 YFI became equal to 1 BTC and then went past Bitcoin’s ATH $20,000 soon after. It was in the mid of September that YFI hit its peak at $43,678, as per CoinGecko.

Making new highs means the digital assets have to get ready for a correction, and that’s exactly what happened as the DeFi sector as a whole went through a winter.

So Much More Affecting YFI

YFI’s losses were exacerbated because of Eminence.Finance, a project by YFI founder Andre Cronje that rug pulled $16 million. Trader and economist Alex Kruger said,

“YFI has been getting Creamed. Recent underperformance relative to other cryptos has been notable. One could argue it is the chart. But it is not. One can find plenty equally poor charts across crypto. This IMO is the marketplace punishing YFI by removing the Cronje premium.”

According to him, although yields matter which has fallen, the blatant negligence around the EMN launch from Yearn and “how poorly the aftermath was handled… many exited/reduced YFI positions because of it.”

At the time of writing, YFI/USD has been trading at just above $18,000.

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Another reason for this poor performance could be the overall drop in activity in the DeFi sector. Jason Choi of crypto fund The Spartan Group said,

“August has been a phenomenal month for DeFi bulls. Now we’re in the hangover phase of the DeFi party.”

Amidst this rout, we are seeing “flight to quality in yield farming,” with Uniswap accounting for 70% of all TVL in yield farms despite its modest returns of 20%-30%. Choi said,

“The shift in sentiment was rapid. Even “degen” farms offering north of 1500% APY are only attracting ~1/10th of the TVL they did just a month ago.”

“drop is risk appetite and collapse in APY is a direct result of -ve price performance of new crop tokens.”

Moreover, with CRV “buckling under continual inflation sell pressure,” it is affecting YFI as well as yCRV APYs on Yearn.Finance accounts for 60% of its activity.

Macro in Focus

While some call for YFI to go down to four digits due to a head and shoulders pattern, trader Josh Rager sees it making new highs as it has found support at a major 0.618 fib level.

Kruger is also still bullish on this DeFi token despite the price of the token crashing 45% in six days as he said,

“The YFI bigger picture bull case remains unchanged. Odds are high this whole ordeal is short term noise.”

The EMN event, however, should remind speculators of YFI’s high ‘founder risk’ as seen in early August when an interview about Cronje “close to quitting DeFi” tanked the price of YFI.

Overall, the trader expects crypto to take off again after the elections and for DeFi to push even further “as the ultra high beta.” Kruger said,

“Macro matters now. So it makes sense to play from the long side. But if crypto crashes, YFI would get smoked, and no fundamental analysis would stop that.”

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Author: AnTy

YFI Founder Andre Cronje ‘Still Building’ the DeFi Project that Got Hacked for $16 Million

Amidst the craze and shift toward non-fungible tokens (NFT), DeFi sweetheart yEarn’s founder Andre Cronje’s latest project saw rug pulled on $16 million.

The project was Eminence Finance (EMN), an unreleased and unfinished gaming multiverse project whose smart contracts were deployed last night but without any announcement.

But nothing remains out of the sight of crypto, especially the DeFi degens, more so when Cronje is involved.

The community soon discovered the project that had zero information available about it except for the two tweets subtweeted by Cronje, who, in his explanation, today, said the project is “at least ~3+ weeks still away.”

The twitter account of eminence.finance already has over 5,900 followers.

As is natural in high-risk DeFi projects, people rushed in with their funds to get in on a new YFI-related project. In a matter of a few hours, $15 million funds were used to mint EMN tokens.

Liquidity soon hit the largest DEX Uniswap, and the EMN-ETH market saw volume rising to millions, still at $11.7 million. Meanwhile, the price of EMN that went to $0.00003739 has crashed to $0.00003052.

And just as is normal in the DeFi world, an attacker exploited the unaudited code and swept away with all the $16 million.

The exploit was a “simple one” – “mint a lot of EMN at the tight curve, burn the EMN for one of the other currencies, sell the currency for EMN.”

The hacker sent $8 million of the stolen funds to Cronje’s deployer account, all of which yEarn treasury will be refunding to the holders after he received “a fair amount of threats.”

Despite the debacle, Cronje hasn’t given up on the project and is still building Eminence Finance.

“I am also going to continue deploying test contracts. I have over ~100 deployed contracts, of which probably >half have vulnerabilities. Please wait for official announcements,” he said today.

Trader and economist Alex Kruger noted that the hack losses are small in comparison to the 20% crash in YFI, following the news, currently trading at $25,275, “where the real damage was inflicted.”

“Price will likely recover fast, markets have short memories for this sort of events. Hopefully there are some lessons in there for everyone involved,” he added.

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Author: AnTy

Despite The Risk, DeFi Continues to Swell Even More; Driving Ether Higher

DeFi tokens are becoming increasingly more accessible through centralized exchanges, such as Coinbase listing YFI this week, which though net positive for the ecosystem, also presents the risks of FOMO, the fear of missing out.

This phenomenon gets exacerbated by the increased retail demand, and when the price reaches beyond expectations, the fear of getting rekt too.

As in some of the DeFi tokens, like Aave, which surged 7,500% YTD, this makes the secondary market trading an “incredibly crowded long-trade,” which, as recently seen, results in “an unaggressive unwind and subsequent avalanche of margin calls.” But despite all this, Denis Vinokourov of Bequant says,

“The prospect of achieving above market average returns is expected to lead to an influx of retail flow and with it, the size of the DeFi ecosystem will begin to swell even more.”

The TV in DeFi is back on the upside, currently at $8.5 billion, not far away from its ATH at $9.5 billion, as per DeFi Pulse.

Pushing the Small Players Out

As we have seen lately, major decentralized exchanges (DEXs) are transacting in greater volume than some of the largest centralized exchanges like Coinbase.

But with this activity comes the ballooning of Ethereum gas costs as the majority of these DEXs are built on Ethereum blockchain. Because of this, the second-largest network is all set to generate $1.5 billion in yearly fees, as per TradeBlock.

The biggest driving force behind this is yield farming, where users participate in the revenue earned by these DEXs. In exchange for providing liquidity on DEXs like Uniswap, they receive reward tokens in the form of yield on their staked capital, which can then be sold in the market or staked across other platforms for more rewards.

And all of this happens on the Ethereum blockchain, which requires gas, which is needed to transact with smart contracts. Because the yield return is highly profitable, it increases the demand for ether, which is required for gas. Besides yield farming, placing an order on DEX needs gas as well.

ETH Daily Gas Used Over Time
Source: TradeBlock

So, this increased demand for yield farming and DeFi token trading resulted in demand for gas costs and Ether to an ATH. Gas fees generated through the Ethereum blockchain also reached a new peak of $17 million per day, averaging around $5 million. This also means DEXs have become expensive, making it not suitable for small scale traders.

Ethereum Holding Strong

One good thing in this direction came from Ethereum, whose much-delayed update is on track for a November 2020 launch, although only time will tell.

The DeFi craze has also brought Ethereum competitors in the limelight. Binance also launched its Binance Smart Chain, which boasts of cheaper transactions.

Monero’s lead developer Riccardo Spagni said this costless switch might actually make “ETH less useful.” He said,

“So “Binance Smart Chain” launched, & it’s basically a drop-in replacement for ETH. You point your wallet at their version of Infura, use their clone of Etherscan, & you keep your ETH address. A bunch of projects are already planning migrations. It has Binance money.”

But according to top DeFi players, Ethereum’s Defi dominance is here to stay, for now at least.

Meanwhile, ETH price is on the rise today, currently at $375. Despite this, ETH whale holders increased their holdings by 84% in the past month to 5.80 million, and the number of whale wallets increased by 1.82 times for one year, signaling their bullishness and confidence in Ether.

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Author: AnTy

Crypto Community Bashes First-Ever STO IPO Advisors for Shilling INX

The first-ever Security Token Offering (STO) held its IPO for 130 million INX tokens on Tuesday following approval from the US Securities and Exchange Commission (SEC). The Ethereum-based token was for sale at a price of $0.9 per token.

The IPO came about a year after the project issued its preliminary prospectus, which could become the largest IPO to date in the crypto industry if it manages to raise its targeted $117 million (originally targeted $130M).

A startup with 14 employees has Israeli consulting firm A-Labs Finance and Advisory as its underwriting for public offering. A-Labs’ owner Doron Cohen is the founding partner of INX.

They were founded in 2017 by Shy Datika, the controlling shareholder (31%) and president of INX and Cohen, who, along with Triple-V, owns a 10% share of the company.

But the real event hasn’t been about the INX being the first STO, but the advisors of the project and in the middle of it is Casa’s Jameson Lopp, who received backlash from the crypto community for shilling a “shitcoin.”

“It enables non-accredited investors to get exposure to crypto exchange cash flows. It’s kind of like BNB except regulatory compliant,” is how Lopp explained the project.

Lopp is actually eligible to purchase 25,000 tokens at $0.01 per piece, which is 98.8% lower than the price it is currently available for the public.

“Don’t conflate permissionless altcoins that try to compete with bitcoin to this, a regulated security token for a specific company,” said Lopp who finds it “interesting because historically the most profitable businesses in the crypto ecosystem are exchanges,” and “this is a very different beast.”

200 million INX tokens have already been minted, out of which 35 million are reserved for the management, employees, early investors, and advisors. Another 35 million have been put into a reserve fund for acquisitions and other operational expenses.

Token holders are entitled to 40% of the adjusted operating cash flow, which is so far negative $4 million and advisors are set to make $225,000.

Bitcoin core developer and founder of Bloq argued that maximalists had made a U-turn as they advertise their Ethereum token sale after calling everything on Ethereum a scam.

Blockstream CSO, Samson Mow, who is also one of the advisors and eligible to buy up to 100k of INX’s at $0.01 per token said he first invested in 2018 and that “the plan is for the INX security token to be issued on Liquid via Liquid Securities, however that will take time and approval from regulators.”

The exchange is estimated to launch in Q1 2021 with listings and the token trading in Q2 of next year.

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Author: AnTy

Polkadot’s DOT Token Transfer Goes Live; Redenomination by 100x Supply Increase In 2 Days

Polkadot announced yesterday that its DOT tokens can now be transferred, after the blockchain hit block no. 1,205,128. This milestone places the Ethereum competitor at a better place, given it’s been a work in progress since 2016. Its Mainnet went live as recent as May 2020 with the latest achievement on DOT tokens transferability set to scale its value proposition even further.

The firm, however, noted that DOT token redenomination would occur in approximately three days, which translates to August 21 at 16:40 UTC. This process is particularly crucial in the rolling out of Polkadot’s complete version since it is the base of its ecosystem tokenomics. Notably, there have been some changes in the value represented by one DOT token hence the redenomination process.

Currently, the smallest DOT unit is ‘10**12’ Plancks, but this will be altered to ‘10**10’ Plancks once the blockchain hits block number 1,248,328. It is quite noteworthy that this development is a result of votes taken by the Polkadot community towards the end of July, where 86% voted to increase the DOT token supply by 100 times.

Following its Mainnet launch, DOT token is already gaining the attention of prominent crypto exchanges, including Kraken, which has gone the extra mile to announce trading and staking support for this digital asset. The exchange announced that it would reward as much as 12% per annum for staking DOT tokens with bi-weekly payments. Other significant players who have also expressed support for DOT tokens are Huobi, OKEx, and Binance.

With such dynamics already favoring DOT tokens, Polkadot was keen to issue a warning that some exchanges might try to express the wrong value of this digital asset between now and the actual redenomination time. The project cautioned that such events are probable given malicious actors might decide to commit fraud in this 2-day window given an upper hand with information,

“Do not be fooled by suspiciously low DOT prices. Though most exchanges will represent DOT accurately, there is a chance that some unscrupulous exchanges may choose to enact the redenomination before the date agreed by the Polkadot community, and thus report the apparent price at approximately 100 times lower than the actual market price.”

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Author: Edwin Munyui

DeFi FOMO is Strong But What’s to Come Once This Craze is Over?

The DeFi space has been picking up heat for some time now as the tokens gained a lot of interest after their prices skyrocketed.

In 2020 so far, some of the DeFi coins like Aave have jumped 3,185%, Kyber Network 898%, Bancor 498%, Loopring 493%, REN 445%, Synthetic 235%, 0x 112%, and Augur 101%.

In the past year, projects like Aave and Kyber Network have also gained 7,000% and 1,000% against BTC.

The market cap of Defi space has been flying, now close to reaching $9 billion. The total value locked in the sector is also hitting new highs, the latest one being $2.62 billion, as per Defi Pulse.

In the past few weeks, especially after Compound’s stellar performance following the listing of its governance tokens just days after launch on Coinbase, which is also backing the project, took the DeFi space by storm.

However, ConsesnSys’s latest report states, “the increased activity caused by the activity around COMP has come from those already inside the ecosystem.”

Also, “although COMP has caused massive waves in the DeFi community and greatly impacted ETH locked and DAU, it has not brought many new users into the ecosystem.”

Many also argue that Defi’s gains are just recycled money, flowing from large-cap cryptos to these latest hot DeFi tokens, and no new money is entering into the sector.

A Long Journey Ahead for DeFi

“Real talk. There’s so much Defi FOMO but few talk about the elephant in the room: scalability,” said crypto analyst Qiao Wang. According to him, “latency and throughput are the biggest hurdles to Defi adoption,” and it will be a long journey for Defi.

“Most people seem to think that we’ll see exponential growth in the next few months/years. More likely than not, I think we’ll see step-function growth. Grow -> hit latency/throughput ceiling -> infra breakthroughs -> grow again,” Wang said.

Recently, DeFi’s biggest lending protocol Compound was integrated with Curve, a crypto custodian that services institutional investors while Aave, which has “become a DeFi VC darling” with the sale of $3M worth of LEND tokens to crypto funds Three Arrows Capital and Framework Ventures. Aave is dominating the long-tail lending market, with its AUM heavily weighted towards mid-cap digital assets.

“Aave is taking the Binance strategy to scaling while Compound seems to be taking the Coinbase strategy,” said Spartan Black, of crypto hedge fund The Spartan Group.

What Once the Craze is Over

It’s not only the price of Defi tokens that has captured people’s interest. The interest rates offered are just as lucrative, some offering higher than 10% yield on some digital assets.

But Ethereum co-founder Vitalik Buterin said, “these interest rates do not reflect on anything that is remotely sustainable. It’s just a temporary promotion that was created by printing a bunch of compound tokens, and you can’t just keep printing compound tokens forever.”

According to him, once this craze is over, DeFi will no longer offer double digits interest rates but eventually come down on par with those offered in the traditional financial system.

While Buterin thinks synthetic assets would improve the space, Litecoin creator Charlie Lee isn’t “too excited” or optimistic about the future of DeFi.

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Author: AnTy

Blockchain Monitor, Elliptic, Adds Support for Zcash (ZEC) and Horizen (ZEN) Privacy Tokens

Elliptic, a blockchain analysis firm, announced the addition of Zcash (ZEC) and Horizen (ZEN) privacy tokens to its tracking platform. The analysis firm, however, supports the ‘unshielded’ transactions from the blockchain only, keeping away from the built-in privacy tokens such as Monero (XMR), Elliptic co-founder and chief scientist Tom Robinson said.

Following the successful support of ZEC and DASH privacy tokens on Chainalysis, Elliptic has become the latest blockchain monitoring firm to dip its feet into the privacy crypto space.

In a statement on the support of ZEC and ZEN, Robinson believes that monitoring these coins will improve the field by providing the regulated financial entities with a trail on the source and destination of crypto assets. This ensures these companies remain KYC/AML compliant through their operations.

The screening tool only focuses on unshielded addresses on the ZEC and ZEN platforms but alerts compliance departments on shielded transactions as a risk management solution. This is quite different from Chainalysis screening, which involves shining a light on both shielded and unshielded transactions on private networks. Robinson said:

“We provide transaction screening tools for exchanges and don’t plan to offer our functionality on something like Monero, where everything is private by default.”

Adoption is the Main key

Regulators and financial authorities fear privacy coins due to their financial crime risks and possible utility for use in purchasing illicit goods and services. This is contrary to research from the Elliptic intelligence analysts, which claims to “have observed minimal adoption of Zcash or ZEN by illicit entities.” In contrast, Bitcoin, the public blockchain, is still the go-to asset for criminals due to its highly liquid state.

Robinson believes that by supporting the screening of ZEC and ZEN, the fear of risks that the two privacy coins possess will be lower than public blockchain such as BTC.

Genesis Exchange Adds Elliptic

The two crypto assets, ZEC and ZEN, have been added to both the Elliptic Navigator – transaction screening pool – and Elliptic Lens – the firm’s wallet screening tool. Digital asset exchange and trading services, Genesis, will be the first to onboard the ZEC and ZEN monitoring features on its platform.

Genesis CEO Michael Moro said:

“Elliptic’s addition of these new assets enables us to further grow our business by providing the ability to assess risk on transactions and meet regulators’ expectations.”

So far, the Elliptic screening platform boasts screening over 97% of all the crypto assets in trading volume following the widespread addition of over 85 digital assets in May.

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Author: Lujan Odera

Telegram Fined $18.5M As Court Battle With SEC Closes; Ordered to Pay Back $1.2B for ICO

  • After a long hard fight to launch and distribute the GRAM tokens, Telegram and the U.S. Securities and Exchanges Commission (SEC) agreed to settle.
  • The messaging app will pay the SEC an $18.5 million fine and distribute $1.22 billion back to its investors within the next four years.

According to a court filing on June 24, 2020, the U.S Southern District Court of New York Judge Kevin Castel, ordered Telegram to pay a civil penalty of $18.5 million to the SEC within the next 30 days for violating the securities laws in issuing its GRAM tokens during its public offering.

The court also ordered the disgorgement of the $1.7 billion ICO raised in 2018, asking Telegram to return $1.22 billion (72% of the ICO amount) as agreed in the ICO contract – if the project failed to launch. Telegram already stated that U.S. investors will receive 72% of their investment back with non-U.S. investors having the option to defer their payment for one year and receive 110% of their funds back.

A three-year watch

Telegram will also have a three-year “baby-sitting” period whereby they will need to give the SEC a 45-day notice before the launch or issuance of a similar token to GRAM –

“cryptocurrencies, digital coins, digital tokens, or (and) similar digital asset issued or transferred using distributed ledger technology.”

However, the company is only obliged to give notice to the SEC and does not constitute SEC giving approval or consent on the asset. The statement further reads,

“Nor should this [notice] be construed to require Defendants to provide the Commission with any information beyond the notice contemplated herein.”

A fair ruling?

Lawyer and governing council at Compound Finance, Jake Chervinsky, weighed in on ruling stating it may be the best outcome for Telegram. He tweeted,

“Telegram’s SEC settlement seems fair given the facts & circumstances surrounding the TON project & Grams offering (which were very bad for Telegram).”

The six-month-long court battle finally comes to a close but “sadly ends [this saga] on a confused District Court opinion”, Jake said on the court’s decision to use the Howey Test to prove Telegram’s token is a security. No more GRAMs, but TON blockchain lives on as an open-source network.

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Author: Lujan Odera

Over $67 Million EOS Tokens Transferred From The PlusToken Scam Wallet; Dump Incoming?

  • A new anonymous wallet receives $67 million in EOS tokens from the widely-known PlusToken scam wallet.
  • Could this cause a flip in the bullish markets across the crypto field, especially EOS, in the near term?

In the latter months of 2019, one of the biggest cryptocurrency heists/scams was revealed, whereby approximately $3 billion in investors’ Bitcoin (BTC), Ethereum (ETH) and EOS (EOS) was lost in a Ponzi-like scheme.

Over the past eight months or so, movement of the tokens stolen is on Whale Alert’s radar – an application that tracks significant transactions and scam wallets.

According to a tweet on Whale Alert’s page, a transaction recorded on Tuesday saw over $67 million in EOS tokens (26,316,339 EOS) transferred to an unknown wallet. This leaves the market in limbo over the next few days as a selloff may ensue as the scammers try to sell off these tokens.

The PlusToken Ponzi Ring

PlusToken was founded back in mid-2018 and registered in South Korea as a blockchain firm. Within a year, the firm collected a reported $2.9 billion in BTC, ETH, and EOS tokens from over 3 million customers across the globe.

The deal was to stake your coins in the crypto wallet with a promise to double up your investments in 8 months.

However, on June 27, 2019, users complained about the difficulty of withdrawing their funds, starting the long trace of nearly $3 billion in lost users’ funds.

In July, the government of Pacific island of Vanuatu deported 6 Chinese nationals alleged to be the co-founders of the PlusToken back to China mainland after a tipoff from investigators based in Yangcheng.

At the Expense of Whom?

Since the PlusToken scammers are regularly emptying their wallets and selling off the coins at the expense of the market. In August, BTC dropped from highs of $10,500 back to $9,500 as PlusToken set 5,575 BTC on the move as analysts and tracking organizations such as Chainalysis warned of a more substantial selloff in the coming months.

In December, $105 million worth of Ethereum was moved to an unknown wallet raising questions of a potential selloff. While ETH price only slightly faltered, it cannot be attributed wholly to PlusToken’s wallet movements.

Currently, EOS and the crypto markets remain in the green, with the token trading at $2.56, representing a slight 1.26% growth over the past 24 hours.

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Author: Lujan Odera