Kalam Crypto #52: SBF Arrested, USDT vs. USDC & Global BTC Payments on Lightning

“Don't trust, verify” - Crypto ethos

Ahlan wa sahlan, and welcome to the one-year anniversary special edition of CoinMENA's weekly newsletter, Kalam Crypto. We want to thank all our crypto-curious readers for their continued support and interest in learning more about this ever-evolving industry and forming a wonderful community with us. This week, SBF gets arrested, global payments via the Bitcoin Lightning Network, USDT vs. USDC Rivalry, and fears over GBTC’s BTC holdings. All that and more, so let's dive into this week's letter, and talk crypto:

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🚨Breaking News: Former CEO and founder of FTX Sam Bankman Fried (SBF) has been arrested in the Bahamas and charged with wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering. The arrest occurred when he was supposed to testify in a congressional hearing. We will cover this news more in-depth in next week’s newsletter when more details of the arrest are released.

Signal Beyond the Noise 🔊

In this section, we go beyond the main headlines and focus on the practical developments in the world of crypto: 

Global payments through the Bitcoin Lightning Network: During the Afro Bitcoin Conference held in Ghana last week, the CEO of Strike Jack Mallers announced the new “send globally” feature, enabling instant, low-cost payments between the United States, Nigeria, Kenya, and Ghana. The transfers will occur on the Bitcoin network’s layer 2 “Lightning Network.” Crucially, the feature does not require the sender or the receiver to have any exposure to bitcoin. For example, to send money from the U.S. to Nigeria, the user in the U.S. sends dollars, and the dollars are converted instantly to Bitcoin, sent at the speed of light on the Lightning Network. When they reach the receiver, they are converted to local currency (Naira). This is a great example of how cross-border fiat remittances can be done using the Bitcoin network in a cheaper, faster, and more innovative way than the legacy financial system. 

Global News 🌍

This week’s headlines are brought to you in partnership with CoinTelegraph MENA.

Stablecoin Rivalry: U.S. exchange Coinbase made waves this week by incentivizing their customers to switch from USDT to the “trusted and reputable” USDC by waiving swap fees. In the wake of FTX, many investors are moving towards more stable digital assets, and as a result, the total volume of stablecoins is now at an all-time high, led by USDT and USDC. A Coinbase spokesperson mentioned that the move is about increased transparency and clearer proof of reserves demonstrated by USDC issuer Circle compared to USDT. A Tether spokesperson characterized Coinbase’s offer as ”a sad and desperate attempt from a company that is clearly suffering,” Note: Coinbase is a co-founder of USDC.

Circle scraps SPAC plans Circle, the issuer of USDC and publicly traded special purpose acquisition company (SPAC) Concord Acquisition Corp mutually ended their proposed business combination after the deal "timed out." The news was not a huge surprise as the timing right now is less than ideal for any company to go public in the wake of FTX, especially a crypto company. Circle’s financials show the firm is on solid footing, netting $43m in net income and $274m in revenue in the last quarter alone. 

Proof of reserves concern: As the fallout from FTX continues, many investors are demanding more transparent proof of reserves. The latest concern seems to be around the Grayscale Bitcoin Trust (GBTC), the largest institutional BTC holder. The fear is because they are owned by Digital Currency Group (DCG), who also own Genesis, the crypto lending platform that is expected to file for chapter 11 bankruptcy. Grayscale claims to own more than 640,000 Bitcoins that are being held by Coinbase Custody Trust Company, LLC, a wholly-owned subsidiary of the exchange Coinbase. The disclosure was not enough to dissuade investor fears as the GBTC discount to NAV continues to widen, reaching 50%. To understand more about how investing in GBTC is different from investing in BTC, please check out our blog of the week below.

Blog of the Week 📝

Learn how investing in the Grayscale Bitcoin Trust (GBTC) differs from investing in Bitcoin here.

CoinMENA News 🗞

📅Lunch & Learn Event: How to safely store your digital assets: Post the collapse of FTX, it is more important than ever to know how to safely store your digital assets. If you are in Dubai, join us on December 15th at 12:30 PM for a Lunch & Learn session by CoinMENA x BitGo, where we will present both institutional and retail solutions to keep your digital assets safe. RSVP on the event page here.

🎉Win ETH, 0 Fee Offers & CoinMENA Merch: We are doing a HUGE End of the Year Giveaway! 1 ETH for 2 users: To qualify, trade (buy/sell) for $500 or more. Zero Trading Fees + Zero Money Withdrawal Fees for life (2 users): Trade for $250 or more to qualify, and CoinMENA Merch (10 users): Trade for $50 or more to qualify. Trade and qualify before 31/12/2022. 

Tweet of the week 🐥

Quiz Corner ✅ 

Last week’s question: What is a node?

Answer: A computer on blockchain

This week’s question: What is the term used for when a blockchain splits?

1. Fork

2. Bridge

3. Sidechain

4. Division

See the answer in next week’s newsletter.