🍿 Breaking: Binance and CZ Sued by the CFTC

Reading time 4m15s

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CZ and Binance Sued by CTFC
Coinbase Creating a Stablecoin?
Bitcoin Is Getting ZKProofs!
Gucci Collab with Yuga Labs
Polygon zkEVM Launches Beta Mainnet

Is Binance Finished, or Is this Lawsuit No Big Deal?

Binance and its CEO, CZ, have been officially sued by the United States Commodity Futures Trading Commission (CFTC) for trading and derivatives violations.

🚨 Breaking News 🚨
#Binance is sued by US CFTC for allowing users to... trade on its exchange. 🤣
The US will have to do better than that to break Binance monopoly.
This feels personal.
Those 196 Congress Members are probably salty @cz_binance rekt their #FTX sugar daddy.
— Duo Nine ⚡ discord.gg/ycc (@DU09BTC)
Mar 28, 2023

The exchange has actually been under investigation since 2021, and this suit is the result of that investigation — the CFTC believes that Binance has failed to fulfill regulatory duties by not registering with the regulator for derivatives.

1/23
Oh boy
Case is up and it's bad.
This is the CFTC attempting to strike *fatal* blow to Binance, and at first read through... I think they actually have really strong chances here of succeeding in toppling the Binance empire.
— Adam Cochran (adamscochran.eth) (@adamscochran)
Mar 27, 2023

To go deeper into the explanation, the CFTC is alleging that Binance has provided trading services to lots of US customers, despite having a policy banning use by users in the US. Here’s the wording directly from the suit:

“All the while, Binance, Zhao, and Lim, the platform’s former Chief Compliance Officer (“CCO”), have each known that Binance’s solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law.”

Accountant: "In March 2023, why did you swap BUSD to USDC then to USDT then withdrew it to Binance then to Coinbase then to your bank account back to Kraken back to Binance and then to Bybit?"
Me: "Just trying not to get rugged."
— Tree of Alpha (@Tree_of_Alpha)
Mar 27, 2023

Some believe that this case has serious implications for the exchange (and for other crypto exchanges), but time will tell whether this ends in a fine for CZ and nothing more, or much larger consequences like the removal of services or shutting down the exchange.

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Coinbase in Talks About a “Flatcoin” for its New Layer 2?

Speaking of big exchanges, Coinbase has put out a call to builders to start using their new Layer 2, Base — including something called “flatcoins.”

Are you a builder passionate about making the onchain economy grow, but looking for where to start?
We just published a Request for Builders: four areas we’d love to see builders explore on Base (with funding from the Base Ecosystem Fund) 🧵
— Base (@BuildOnBase)
Mar 24, 2023

Flatcoins are inflation-pegged stablecoins that negate economic uncertainty caused by the legacy financial system, which is especially important in light of current market conditions.

Coinbase wants developers on its Base network to look into developing an inflation-pegged “flatcoin" amid recent banking turmoil. cointelegraph.com/news/coinbase-…
— Cointelegraph (@Cointelegraph)
Mar 27, 2023

Here’s what Base had to say about it:

“[We] are particularly interested in ‘flatcoins’ — stablecoins that track the rate of inflation, enabling users to have stability in purchasing power while also having resiliency from the economic uncertainty caused by the legacy financial system.”

Coinbase is making a Request for Builders on their L2 and one of the products they want to incubate is a non-fiat pegged stable 👀
— ℳiLLiΞ🔑🔮⏳ (@0xmillie_eth)
Mar 26, 2023

These stablecoins wouldn’t be pegged to the sheer value of a national currency — they would be pegged to the actual price of living, which is what inflation tracks (albeit imperfectly).

This is the best explanation for why a CPI denominated "flatcoin" RAI may be preferable to USD denominated RAI
if USD inflates quickly (CPI spikes), USD-RAI holders would lose value quickly
CPI-RAI holders would be OK in the short term, but the rates would spike negative
— ameen.eth (@ameensol)
Mar 27, 2023

Flatcoins aren’t the only thing that they want builders to develop on their chain. Base is also interested in seeing an on-chain reputation system, an on-chain limit order book (LOB) exchange, and safety tools for the DeFi ecosystem.

We wish them the best of luck in building the future of blockchain, and we salute Base and projects like it that are choosing to build in the face of regulatory uncertainty.

Who holds the most Coinbase ($BASE) stock in the world?

A. AH Capital Management LLC B. ARK Investment Management LLC C. Nikko Asset Management Co., Ltd. B. The Vanguard Group, Inc.

Scroll down to the bottom to see if you're right!

Other Top Stories Today 📢

Bitcoin to Get its Own Zero-Knowledge Proofs

Swiss nonprofit ZeroSync Association is creating a way for the Bitcoin network to use zkProof technology without having to download the whole blockchain itself or use a third party. The tool could totally change the way that Bitcoin transactions are validating, enabling transaction processing to be done off-chain and freeing up the network to run smoother and faster than before.

Gucci Creating New Phygital Project with Yuga Labs?

The company behind the Bored Apes Yacht Club (BAYC) NFT collection has announced a collaboration with luxury designer Gucci. It’s unclear what their new digital project will be, but this is what Gucci had to say about it on Twitter: “Continuing to explore the Metaverse, the House comes together with Yuga Labs," tweeted Gucci. "Stay tuned as a new narrative takes shape, blurring the boundaries between the physical and digital." Apparently, it’s a multi-year partnership, and this announcement marks the beginning of chapter 1.

Polygon’s zkEVM Beta Launches Mainnet

Described as the “holy grail of Ethereum scaling,” Polygon’s zero-knowledge Ethereum Virtual Machine (zkEVM) is stepping up to its mainnet beta stage. The network promises lower transaction costs, increased throughput, and massive scalability through transaction batching. “Imagine you computed a whole business transaction somewhere else off-chain on layer 2, but on Ethereum, you submitted a very succinct proof, and Ethereum 200% knows that you computed it correctly,” Sandeep Nailwal, Polygon’s co-founder, said. “That’s why it’s a game changer. The community knows that Optimistic Rollups are like crutches before Ethereum figured out ZK. And now that ZK is there, it kind of makes Optimistic Rollups obsolete. This is the end game basically.”

❓ Trivia Answer

Answer: A.

Although you might think ARK and Cathie Woods hold the most Coinbase stock from all the headlines they make, AH Capital Management LLC holds the most at over 14M shares (7.84% total).

Web3 Resource of the Day

Polygon zkEVM Launch with Mihailo Bjelic and Jordi Baylina | Podcast from Bankless

Just in time for Polygon’s zkEVM launch, Bankless comes to the rescue with a new podcast, featuring Mihailo Bjelic (Polygon Co-founder) and Jordi Baylina (Technical Lead for the zkEVM). In this episode, Bankless covers everything from what Polygon zkEVM is to how it works, how it stacks up against Proof-of-Stake (PoS) chains, and how this new chain from Polygon stands to revolutionize the way we transact in blockchain.

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