US DoJ investigating 2022 TerraUSD collapse
US Justice Department authorities are now investigating the $60bn TerraUSD collapse in 2022, questioning former team members and ramping up pressure on project founder Do Kwon.
The investigation comes a month after the SEC sued Kwon and Terra parent company Terraform Labs for fraud.
Kwon has been on the run since South Korean prosecutors issued a warrant calling for his arrest in September of 2022, and the fallout from TerraUSD’s collapse has been widely credited as a key catalyst for the 2022 downturn in the crypto markets.
NOW READ: Meet the professor ‘obsessed’ with tracking crypto fugitive Do Kwon across the blockchain
Biden pledges to make SVB and Signature depositors whole
President Joe Biden declared the US banking system safe on Monday. He made the speech as the dust settled after three crypto-friendly banks collapsed last week – Silvergate, Signature and Silicon Valley Bank.
While market still reel from the banking meltdown, Biden told customers of Silicon Valley Bank and Signature Bank that they could “rest assured” that the government would see their deposits honoured.
‘All customers who had deposits with these banks can rest assured that they’ll be protected and will have access to their money as of today’
“All customers who had deposits with these banks can rest assured that they’ll be protected and will have access to their money as of today,” he said.
Biden statement followed his call over the weekend to “strengthen oversight and regulation of larger banks.”
Biden’s latest assurances added to the stream of regulatory actions over the past few days to try and stem further bank runs.
In a joint statement made Sunday by the US Department of the Treasury, the Federal Reserve, and the FDIC, the agencies plan to honour all deposits in both Silicon Valley Bank and Signature Bank. New York’s Signature was closed Sunday by its “state chartering authority.”
NOW READ: Bank meltdown crushes crypto regulation hopes: ‘Crypto in the US is dead’
The bottom line is this: Americans can rest assured that our banking system is safe, and your deposits are safe. pic.twitter.com/hM36ZmZ22x— Joe Biden (@JoeBiden) March 13, 2023
Signature Bank board member claims regulators want to send message “crypto is toxic”
Signature Bank board member Barney Frank has accused regulators who closed Signature Bank over the weekend of shuttering the bank to send a message “that crypto is toxic.”
The meltdown of Silvergate Bank earlier last week contributed to a deposit run on Signature on Friday.
Frank, a former US Representative and key architect of the Dodd-Frank regulatory law and member of the Signature board, said the bank had stabilised things on Sunday, but that regulators closed the bank anyway.
On Monday, he accused the regulators of shuttering the bank to send a message.
‘I believe the regulators, especially the New York state regulators, wanted to send the message that crypto is toxic’
“[I] believe the regulators, especially the New York state regulators, wanted to send the message that crypto is toxic,” said Frank.
New York Department of Financial Services Superintendent Adrienne Harris denied the implication that the move was an attack on the crypto sector, citing the bank’s “broad depositor base.”
Frank went on to praise the Biden administration’s quick response to the crisis, while emphasising Signature’s strict crypto management policies.
FDIC takes another crack at selling Silicon Valley Bank
The Federal Deposit Insurance Corporation is planning another auction for insolvent Silicon Valley Bank after failing to find a buyer in a Sunday auction.
On Monday, the FDIC told Senate Republicans that the crash of the crypto-friendly bank was a threat to the whole financial system.
By declaring it a systemic threat, regulators have more flexibility to cover all depositors at the failed bank. It also means the FDIC can offer would-be buyers deal-sweeteners such as loss-sharing agreements.
The UK branch has had more luck after HSBC said it will acquire Silicon Valley Bank UK on Monday, following frenetic negotiations involving the UK government and the Bank of England over the weekend.
Silicon Valley Bank collapsed on Friday, a day after the bank announced a $2 billion emergency raise which in turn triggered a fatal $42 billion bank run.
Bank of England statement on Silicon Valley Bank UK 👇 pic.twitter.com/62snFTF2Wj— Bank of England Press Office (@BoE_PressOffice) March 10, 2023
Euler Finance hacked for $197m in biggest DeFi heist of 2023 so far
DeFi lending protocol Euler Finance suffered $197 million in losses due to a flash-loan attack Monday, security firms report.
A flash-loan attack takes advantage of high-speed borrowing techniques, in which an exploiter can make off with borrowed funds without posting collateral.
The identity of the exploiter remains unclear. Euler has taken steps to notify law enforcement in the US and UK. The attack is the largest attack event of 2023 so far, which has seen 17 hacks to date.
2/ The hack is made possible due to the flawed logic its donation and liquidation. Specifically, the donateToReserves needs to ensure the donator is still over-collateralized. And liquidation needs to ensure the *correct* conversion rate from borrow to collateral asset. pic.twitter.com/dsHUP1orRP— PeckShield Inc. (@peckshield) March 13, 2023
Binance using $1bn BUSD to buy crypto-native assets
Binance CEO Changpeng Zhao tweeted Sunday that all $1 billion in funds remaining in the company’s Industry Recovery Initiative will be converted to crypto assets including bitcoin, Binance coin, and ether.
The purchase will be made with Binance’s fledgling BUSD stablecoin, which was ordered to cease minting by US authorities in February – though it still has an $8.42 billion market capitalisation.
Zhao’s move comes amid tumult in the markets, with Binance facing regulatory pressure and the crypto space under threat due to the ongoing US tech banking crisis.
Clever move. He is both signaling a loss of trust in banking and buying the good will of the people with a pump in their favorite crypto. https://t.co/FcF15dWAVG— Autism Capital 🧩 (@AutismCapital) March 13, 2023
More web3 news from around the web…
Three Arrows Capital co-founder Kyle Davies: No pending lawsuits or regulatory action – CoinDesk
Massive vulnerabilities revealed at Dogecoin, Litecoin, and Zcash, with developers warning of additional risks – Fortune
Binance to suspend GBP transactions as payments partner moves away – The Block