Did Binance do an FTX? 🤔

Stani of Aave & Lens | Argus $10M Raise

Marco Manoppo & Karon Pangestu
June 09, 2023

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Good Morning,

While the EU finalizes MiCA regulation and Hong Kong integrated its virtual asset index policy, the SEC is marching towards its final battle against crypto in the US.

The enemy: Binance and Coinbase — stock up on your popcorn for the watch party.

In Today's Email:

What Matters: Did Binance do an FTX? 🤔
Founders-Investors Highlight: Stani, Founder of Aave and Lens 🌱
Deal Flows: Argus Labs $10M Seed Round 🎮

Narratives: Assess how EVM-comptabile protocols will be integrating crvUSD.

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WHAT MATTERS

Did Binance Do an FTX?

CryptoSlate

State of play: SEC claimed that Binance and Binance US redirected $12B in customer assets to investment funds controlled by owner Changpeng ‘CZ’ Zhao.

SEC submitted the allegations as supporting evidence to support their request to freeze Binance US assets.

In short, the SEC alleged that Binance commingled customers’ funds.
$11B from Binance customer assets was funneled through another entity called Key Vision Development Limited.
SEC claimed over $12B of the $22B that CZ’s Merit Peak received between 2019-2021 came from Binance and Binance US customer assets.
$21.6B out of that $22B went to a foreign affiliate of the firm Paxos, the NY-based trust company that issued the BUSD stablecoin.
Paxos claimed that it has ended its relationship with Binance since February 2023.

Why it matters: This case shares a lot of resemblance with the Alameda-FTX case. While there’s no proof of such a level of incompetence/fraud yet. We should all be on alert.

For builders and investors: Nothing much — stay cautious as the market will become extremely uncertain in the near term.

Market makers are pulling their liquidity, and if Binance is indeed proven of doing something fraudulent, it will cause even bigger damage than FTX.
Related parties transactions have been the number one reason crypto firms imploded in the past year. Make sure you and your portcos are not engaging in such behavior without proper disclosures.

BUILDER-INVESTOR HIGHLIGHT

Stani Kulechov, Founder of Aave and Lens Protocol

Photo: getbamboo.io

Stani Kulechov is the Founder of Aave and Lens Protocol. Aave is a DeFi lending protocol, while Lens is a social graph that can be used to build decentralized social media.

Stani first founded Aave, which grew to become the top 3 largest DeFI protocol with more than $5 billion in TVL.
Aave has raised a total of $49M since November 2017.
Lens Protocol just raised $15M to build the decentralized social web.

Previous backgrounds: Stani explored how Ethereum could impact the traditional financial system while he studied law at the University of Helsinki.

In 2017, he released ETHLend, the precursor of Aave.

The big idea: Lens will enable the development of web3 social protocols — meaning that users of social media built using Lens’ technology will have full ownership of their data.

Imagine if you can take all of your Twitter metadata and move it over to Instagram.

Take a peek at our new referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

INSIGHTS

crvUSD $150M Debt Ceiling

Twitter

Curve, the largest AMM optimized to stable swaps has raised its own stablecoin (crvUSD) debt ceiling from $10M to $150M.

This upgrade effectively launches crvUSD at scale.
As scrutiny towards centralized stablecoin increases, crvUSD might have a role to play.
Currently, only around $15M of the debt ceiling has been utilized.

DEAL FLOWS

Argus Labs $10M Seed Round

@ArgusLabs_

Deal flows remain strong this week 🏄 — we saw $400M+ in deals.

$10M for the future of crypto gaming. Argus’ mission is to become the trailblazers in the Internet of games. It recently launched “World Engine”, a blockchain-based SDK for developers to build interconnected game worlds.

World Engine is an open-source, connected layer 2 of sharded blockchains that will serve as the backbone for the Internet of Games.
Haun Ventures led the seed round with participation from Alchemy, Anargram, Dispersion Capital, and Robot Ventures.
Argus Labs founder Scott Sunarto is the creator of Dark Forest, a decentralized game on Ethereum.

Deal flows in the past week:

Argus, $10M Pre-Seed Round
Fusionist, $6.6M Seed Round
Lens Protocol, $15M Seed Round
Meanwhile, $19M Seed Round
Taiko, $22M Seed Round
Informal Systems, $5.3M Unknown Round
HyperPlay, $12M Unknown Round
Kakarot, Undisclosed $ Pre-Seed Round
COMBO, $80M Ecosystem Fund
Volcano Energy, $250M Investment from Tether

QUICK BITES

Binance US suspends USD deposits, bank partners will be cut off.
Binance US to pause OTC portal and delist trading pairs.
Binance trail reveals $70B flowing through Silvergate and Signature banks.
Coinbase will not delist assets.
Paradigm wants the SEC to withdraw its proposed definition of exchanges.
Elizabeth Warren seeks new DOJ inquiry Into Binance.
SEC Gensler offered to serve as Binance Advisor in 2019.
Former CFTC Head joins Circle as Chief Legal Officer.
Curve Founder sued by three VC firms: ParaFi, Framework, and 1kx.
BitGo to acquire rival custodian Prime Trust.
Arbitrum experienced a brief delay in network operation.

MEME & NOTEWORTHY READS

Paradigm’s read on the SEC’s proposed redefinition of exchange.
Kain Warwick’s read on Synthetix, what comes next.
DL News’ read on VC trio suing Curve’s founder.

New VC thought leadership just dropped: be Nutella
— VCs Congratulating Themselves 👏👏👏 (@VCBrags)
1:19 PM • Jun 8, 2023

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.