Crypto Spotlight - Robin Hood accused of unlawful sale of securities, TUSD market cap hits $1 bn, Ethereum marches toward Shanghai upgrade

Last week was a mixed bag for the crypto world. According to a CoinShare Weekly Report, digital investment products had minor outflows of US$2m. Blockchain equities saw outflows totalling US$7.2m, predominantly from growth-focused companies, which are vulnerable to expectations on interest rates. The largest inflows, however, were into short-investment products.

Bitcoin saw outflows for the third consecutive week totalling $12m, while short-bitcoin products saw inflows of US$10m, indicating nervousness amongst US investors. Ethereum remained relatively insulated from the negative sentiment as it moves closer to its Shanghai Upgrade

However, Liquidity conditions in both Bitcoin and Ether markets continue to exacerbate. Data shows the liquidity in Bitcoin-USDT trading pairs has dropped to its lowest level since May 2022.

Traders are concerned about the thinning liquidity leading to abrupt price swings in the crypto market. The market depth started declining in mid-November after the collapse of Alameda Research and FTX, leading to the loss of billions of dollars in liquidity for small and large-cap tokens.

Amidst it all, the war on crypto rages on in the US. Another huge trading platform was targeted by the US security and exchange commission (SEC) this week. With that said, here is today’s crypto news.

1 - Robinhood Markets has disclosed in its latest 10-K filing that it received a subpoena from the SEC in November, shortly after the FTX crypto exchange filed for bankruptcy protection. The subpoena centred around the unlawful sale of securities and requested information regarding crypto listings, custody of crypto, and platform operations. The company also received similar requests from the California Attorney General's office regarding its trading platform, customer disclosures, custody of customer assets, and coin listings.

Robinhood warned that if any cryptocurrencies are deemed securities by the SEC or a court, they could face regulatory penalties, customer liabilities, and judicial or administrative sanctions. Ultimately, this could force Robinhood to stop trading those cryptos. Robinhood's shares were down by 0.5% in after-hours trading on Monday after the filing.


2 - Binance has been relying more on the TrueUSD (TUSD) stablecoin following a regulatory crackdown on Binance USD stablecoin. As a result, TUSD's circulating supply surpassed $1.1 billion, making it the fifth-largest stablecoin by market capitalization.

Previously, the exchange ditched TUSD among the platform's trading pairs to consolidate trading liquidity and boost BUSD. Binance minted around $130 million worth of TUSD in the past seven days, and its growing presence on Binance represents a significant reversal. Why? The regulatory attention to BUSD sparked a major reshuffling in the $135 billion stablecoin market, leading to the emergence of TUSD as a solid alternative for the industries leading exchange.

3 - The Shanghai-Capella upgrade, which will allow users to withdraw staked Ethereum, just passed tests on the Sepolia testnet. The upgrade is slated for deployment on Ethereum's mainnet in March, marking a significant milestone in the protocol’s transition to a proof-of-stake consensus algorithm.

Testnets like Sepolia help developers launch apps and upgrades, fixing any potential issues before deployment on the mainnet. The price of Ethereum has remained largely unaffected by these developments.


4 - Voyager Digital transferred $121 million of crypto to exchanges in February and received $150 million in USDC stablecoins, likely from cryptocurrency sales. The firm sold at least $54 million worth of crypto to exchanges Coinbase and Binance.US last week.

This recent maneuver by Voyager may signal selling pressure for its largest holdings, notably ETH and SHIB. Voyager halted trading and filed for bankruptcy in July. During the court proceedings, Voyager agreed to sell itself to Binance.US. However, concerns from federal and state regulators regarding the deal have been mounting. One such concern is the SEC investigating Voyager's VGX token for potentially being an unregistered securities offering.