US authorities say crypto is here to stay, Huobi is running into trouble, and could quantum computing be a threat to Bitcoin? These stories and more this week in crypto.
IRS: Crypto is Here to Stay
In an interview with The Wall Street Journal, an IRS official said cryptocurrency is here to stay and it’s becoming more legitimate. Special agent Thomas Fattorusso added that the U.S. tax authority must work with crypto companies, not with contention, but as more of a symbiotic relationship.
US Regulators Warn Banks over Crypto Risks
In a joint statement, the US Federal Reserve, FDIC, and the Office of the Comptroller of the Currency have issued a warning to banks over the risks associated with the cryptocurrency market. The watchdogs said they were closely monitoring the crypto activities of banking organizations and are concerned about contagion risk.
Huobi Exchange Runs into Trouble
After announcing the layoff of 20% of its staff, leading crypto exchange, Huobi, has seen an outflow of $60m in funds within just 24 hours. Rumors in the industry were that the layoffs would in fact be closer to 40% of the total staff, and further reports claim that Huobi shut down internal communications while insolvency issues caused concerns for investors.
Coinbase Reaches $100 million Settlement
Crypto exchange Coinbase has reached a $100 million settlement with the New York Department of Financial Services over historical shortcomings in AML and KYC standards. Coinbase will pay a $50 million fine and invest a further $50 million into strengthening internal compliance programs. Shares jumped on the news, spiking over 12%.
Bitcoin Miner to Shut Down Celsius Rigs
Troubled Bitcoin miner Core Scientific will shut down more than 37,000 crypto mining rigs belonging to bankrupt crypto lender Celsius Network, as both firms finally reached an agreement in court. Core Scientific, which hosts rigs for Celsius, filed for Chapter 11 bankruptcy in December and had partially blamed the lender for its financial troubles.
Sam Bankman-Fried Pleads Not Guilty
FTX founder, Sam Bankman-Fried, is set to contest criminal charges in October. The charges range from fraud to conspiracy to commit money laundering. SBF surprised many by pleading not guilty on all charges. The Attorney’s Office in New York has launched a webpage to inform alleged fraud victims about the court case against FTX, which has more than one million creditors.
Silvergate Struggles Following Bank Run
Customers of U.S. bank Silvergate have withdrawn over $8bn of their crypto-linked deposits. Around two-thirds of the bank’s customers have pulled their deposits since October amid fears that lenders were amassing huge losses on bad loans and investments. The bank has already sold $5.2bn in assets to cover its costs.
Researchers Claim to Break RSA Encryption
According to multiple reports, 24 Chinese researchers have succeeded in breaking RSA encryption by using a quantum computer which would have significant consequences for cryptocurrency security. However, many computer scientists and cryptographers outside of China don’t believe that the researchers have made a significant discovery and have denied the veracity of the claims.