Binance deposits overtake withdrawals, and the SEC creates crypto FAQs on governance

Nearly 11 billion left Binance in 46 hours, but now deposits are outpacing withdrawals, meaning that the worst of it is probably over. We're going to talk about that and a lot more happening in crypto news right now on the Daily Wolf. Let's go.

What is up everybody? Welcome to the Daily Wolf on Yahoo Finance. I am your host, Scott Melker, also known as the Wolf of All Streets. Now, obviously today is election day, but we're going to spend the next few days unpacking that. It's not something worth discussing midday today and we already told you sort of what the lobbying situation was and the lay of the land yesterday.

What we will talk about is continuing the updates on what is happening with the world's largest hack on the world's largest exchange. Here is the headline right now. Binance net outflows reach 5.3 billion after record hack, CEO says recovery underway. So it's 5.3 billion net.

But there were 11 billion that left the exchange. That means that, you know, a bunch has come back in as well. and right now the bigger story may be the fact that deposits are outpacing withdrawals. Once again, like I said in the intro, that might mean that the worst of this is over. So the exact number was 10.97 billion in withdrawals over 46 hours. That was reported by Binance.

5.7 billion in deposits during that window, the cumulative net outflow remained approximately 5.28 billion. Binance completed verification Monday for its October 31st reserve snapshot, covering 10 tokens, and says covered balances were backed at a minimum of one for one at that snapshot. They're planning another snapshot for tomorrow, Wednesday, which will cover the additional tokens.

Binance says approximately 95% of effective assets have been replenished, which is wild because everything that was taken to some degree, not everything, but a lot of it had to actually be bought back. So they went on the OTC markets and bought back a bunch of esoteric all quotes and somehow even that couldn't pump the prices.

A whole bunch of buying demand from Binance to replenish supplies and we still are not seeing things go up. Now, interestingly, their Safu fund, which we've talked about before, is now at a level below what they have disclosed as ideal or allowed. They have not made an announcement yet as to how they're going to replenish that, but we can anticipate that coming soon. Now there's a second little aside to this story that I want to show you.

North Korea denies role in 6.4 billion Binance attack after FBI points to trader trader. It wasn't us. Who, me? Kim Jong, no, not me. North Korea had nothing to do with it, guys. We should trust their word. They're honest, honest people.

Honest people. So they're saying they didn't do it while literally everybody in the world can see exactly the wallets that did it that are attributed to past hacks from North Korea. They definitely did it, right? I mean, come on. Come on. Uh, speaking of hacks by the way, as an aside, I don't know if you saw this, but uh, refrigerators were hacked in supermarkets across Europe. It's crazy story.

Like, uh, they had this happened in France recently and apparently a bunch of other countries didn't update and now all the food is spoiled because the temperatures went up to 50, which led everyone in crypto to make cold storage jokes. Get it? Crypto, hack of cold storage. We're funny people. We're funny people. Okay, moving on, we're going to obviously see what happens with Binance into the future, um, but it seems like the bleeding might likely be over assuming that, uh, everything is now A-OK.

Uh, place where the bleeding is not over. I can't go a day without telling you about Black Rock I bit outflows. ETF outflows, uh, fund Black Rock here recorded 398.6 million uh net and 405 of that was from my bit. So interestingly there were slight inflows into fidelity which made the number uh a little bit better. So 405.3 million

in net outflows from Black Rock. That was its biggest day, I believe since June. No surprise here, right? Monday because the market's not open on the weekend, ETF flows react to what happened on Friday and we know that Friday was an absolute blood bath in markets. so of course we saw outflows on Monday. Very exciting stuff.

I tell you. You know what else is really not exciting? The next story. Nearly 70% of OKI Xice's original stock picks subject to tokenization of US stocks. The update today, Tesla, boo. You guys own Bitcoin. What are you doing? Amazon, Bezos, why? So the two richest men in the world. The headline should be two richest men in the world opted out of tokenization. Tesla, Amazon and SpaceX join tokenized stock objections, also

Netflix, so we can ban them now, because they're their shows suck. And Lam Research and SoFi, which is a Neo bank. There's some good shows on Netflix, I'm sorry. Sorry, I said that about you. Most of the shows suck. Uh, so now we're basically at 70% of the ones that OKX is additional had initially said they wanted to tokenize, completely opting out. So right now, this is not going as intended, but there will still be plenty of tokenized stocks and plenty of ways to tokenize into the future.

We don't even have a launch date yet, by the way, for OKX Ice. It will definitely happen. I believe it'll be wildly successful. I just believe that right now, the Nasdaq sees this as competition and is encouraging in the Soprano's manner, is encouraging the companies that are listed on Nasdaq not to participate. Pretty lame, for being honest. Pretty lame.

Uh, things that are less lame. Coinbase says New Jersey users can resume staking as regulator rescinds 2023 cease and desist order. So in June of 2023, Jersey, the Great state of, the Garden state, if you will, also the Sopranos. Uh, they had an order against Coinbase's staking service, which was finally just rescinded on October 30th, the day before Halloween.

So it withdraws the season desist order and its $5 million penalty. That's good. The regulator acted without prejudice. The regulator did not issue a ruling on the merits. The order preserves New Jersey's ability to bring future enforcement action. Brian Armstrong said New Jersey customers would regain staking access very soon. Now, listen, it's just New Jersey and it's just staking access for Coinbase customers, but this is actually

quite meaningful. And and the reason that it is quite meaningful is because we are slowly seeing a rollback not only at the federal level, but also at the state level of damaging actions from the previous administration. Right? So this is a cleanup of the contentious government that was anti-crypto across both the country and individual states, and I'm here for it because obviously, obviously,

we should be able to earn staking revenue on decentralized networks in crypto. Now the next story does go to the federal government level and it is from the SEC, our favorite regulator. I never thought I'd say that. SEC adds three crypto FAQ entries on governance and token status. So to break down what's happening here. The SEC generally treats a token as a commodity rather than a security only if no central party controls its network.

We all remember during the Gensler era where if you were potentially deemed a security as a crypto token, it was basically a death warrant. Nobody wanted to be a security because that meant you were going to be under the thumb of one Gary Gensler at the SEC and nobody wanted it. Well now, getting more clarity as to what will identify a token or a network as a security and what will identify one as a commodity. So here's what they said. They said, broad token holder governance generally does not create a central controlling group when participants are unaffiliated and have no separate agreement to act together.

So if a bunch of people are part of a decentralized network and vote in a dow or something, that will still be a commodity not a security. Same analysis can apply when that governance governance operates through a foundation, which is interesting. Staff also identifies unilateral powers over access, validators and protocol rules as examples of control and they distinguish a network's functionality from its decentralization. These are now FAQs are staff guidance, they are not a new SEC rule.

But it's interesting how deeply the SEC is now thinking about this, right? We talked about with Hester Purce, the years where she was a minority at the SEC and was proposing very reasonable ideas like safe harbor, a, you know, four-year path to decentralization to prove that you were not a security and that you could be a commodity or decentralized network. And we've seen a lot of that now come into rule making with both the innovation exemption and of course with Reg crypto.

So these are just continuations, deeper thinking, more sensible additions to the policies that we saw before. So really interesting. I think very, very, very, very good news here from the SEC and from the federal government. I I have to say like as a total aside, we do have midterms today and you know, by tomorrow or the end of the week or in three years when we're done uh counting the fake votes from the Russian machines

or whatever accusation there will be to make sure that we have no idea what happens in the elections anytime soon. Um, we're probably going to have a very mixed bag, right? The prediction markets were over 70% that we're going to get Democrats in both the House and Senate. I think a lot of people believe definitely the House, maybe not the Senate. Either way, we're going to have gridlock and that means that the only path forward for crypto is probably

through the regulators. So, we will see how difficult the Democrats potentially make life for Paul Atkins and Michael Selig over at the CFTC. Uh and if it's even difficult for them to make rules moving forward. I think the general sentiment right now is that we have roughly, you know, two years to ride the regulatory uh tailwinds right now before things could get ugly again. So, all of these moves from the federal government, from our regulators, really, really, really important.

Now, if I told you that the next story was about another major exchange hack this week, would you believe me? I I I would I there it is. Brazil's Mercado Bitcoin halts withdrawals after 40 million drained across 10 chain. The Brazilian exchange that nobody outside of Brazil have ever heard of. Doesn't say that.

Pause deposits and withdrawals after wallets on at least 10 chains were emptied days after the 6.3 billion Binance hack. What the hell is going on right now? Now, I tried to dig into this. There's actually not much clarity at the moment about how this happened, but Binance was not seemingly an AI-related hack. North Korea actually has has used uh social engineering and other tactics that are unrelated uh generally to AI.

No indication yet that this is AI related either, which is just crazy that the security is so poor at this point on these exchanges that they can be hacked for millions and millions and millions of dollars. Now, I don't know how much in total assets Mercado had, but I have to amount I have to imagine that on a smaller exchange in Brazil, 38 million to 40 million is a hell of a lot of money.

Now, the company says approximately 11 million has been blocked with industry partners. Chain analysis says it helped coordinate freezes with law enforcement and stable coin issuers. Dude, like these stable coin issuers are working overtime right now on a job that they didn't expect to freeze funds from hacks nearly every single day. I mean, crypto's busiest department this week is incident response.

Like every single chain is getting a call from exchanges all over the world on a daily basis asking to freeze funds. It's a complete mess out there and honestly, it kind of puts a question mark around the decentralization of crypto. Obviously, I'm very happy that they're helping people get their money back. I'm happy that these assets are being frozen, but remember there's a reason Bitcoin is different from everything else and there's a reason Bitcoin itself has never been hacked.

Yes, exchanges can be hacked, yes custody can be hacked, but Bitcoin itself has never been hacked and it's more important than ever for people to understand that difference. I've been getting the test from my friends as crypto over. What do you mean is crypto over? Well, apparently it can never be hacked. I got that text from a friend who owns Bitcoin, right? It's very hard for people to understand the difference, but Bitcoin has never been hacked.

But if I told you that I had to how not to invest about another hack, would you believe me? Did it? How not to invest? How not to invest? I mean, how not to invest at this point is like don't do anything in crypto on any service. It's terrible. So here's the story. Solana DApp store breached fake SKR claim app sparks seed phrase theft fears.

So Solana mobile has its own App Store. This is not like the App Store on Apple. It's like the App Store on Apple, but it's not the App Store on Apple. and they disclosed a malicious SKR claim app. So basically an app showed up in the store. It told people that they were going to get free money through a air drop and ask them to enter their seed phrase to get the air drop.

This is a tactic as old as time, not necessarily doing it through an App Store, but convincing people that they're going to get an airdrop simply by giving access to the wallet so that the air dropper can drop the air into the dropper air or the air drops into, right? So what's the moral of the story here, people? Literally never give any app, any person, anyone your seed phrases, your seed phrase for any reason.

Come on. How long have we been here? If you're using a Solana phone, I would imagine that you are crypto native enough to understand not to put in your seed phrase, but we're going to see how many people actually fell for it. Tomorrow it's going to be all politics, baby. Get excited. Can't wait to see what happens. I'm just kidding. I don't care. I'll see you guys tomorrow. Bye. Peace.