Weekly Updates

Caddi Weekly Update - June 16th

Crypto Bot Pulls Off $200M Flash Loan for $3.24 Profit: A High-Risk, Low-Reward Endeavor. SEC Seeks More Time for Crypto Clarity Response to Coinbase Amidst Legal Tensions. Crypto Plunge: Bitcoin Tumbles Below $25k, XRP and ADA Take the Lead in Losses.
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Me If I Was A Bot:

An audacious crypto trading bot executed a series of intricate manoeuvres within the Ethereum blockchain, including a $200 million flash loan, all for a meagre profit of just $3.24​1​. This event, analyzed by blockchain firm Arkham Intelligence, revolved around an arbitrage bot utilizing flash loans, a type of loan that requires no collateral as long as the borrowed funds are repaid within the same Ethereum block​1​.

In this case, the bot borrowed 200 million DAI from the decentralized finance (DeFi) protocol MakerDAO and transferred the funds to the Aave DAI market. Subsequently, it borrowed 1.349 Wrapped Ether (WETH) against these funds, which was then used to purchase Threshold Network (T) tokens on the Curve Finance exchange and sold on the Balancer liquidity protocol​1​.

The bot's total earnings came to 0.019 Ether (ETH), valued around $33 at the trade time. However, after deducting transaction fees and an additional $1 paid to the block builder, the bot was left with a tiny profit of $3.24​1​.

The event sparked diverse reactions, with one community member stating, "profit is profit" and another highlighting the severity of the bear market. Meanwhile, other bots reportedly made significant profits, like one that earned over $1 million targeting memecoin traders​1​.

SEC Just Needs More Time

In response to Coinbase's request for regulatory clarity, the United States Securities and Exchange Commission (SEC) has requested an additional four months to prepare their reply. The SEC's request, made through a letter to the U.S. Court of Appeals for the Third Circuit, comes after the court's order asking the regulator to clarify whether they are denying the rulemaking or if they require more time to respond. The SEC hasn't yet decided on the action to be taken regarding Coinbase's petition, labelling it as having "no merit." Nevertheless, the SEC anticipates making a recommendation on Coinbase's request for rulemaking within the next 120 days​1​.

Reacting to the SEC's response, Paul Grewal, Chief Legal Officer of Coinbase, accused the SEC of repeating the fallacy that they are yet to decide on new regulations. He criticised the SEC for ignoring clear statements from SEC Chair Gary Gensler that the SEC has no intention to issue new rules. Grewal also expressed frustration over the SEC's refusal to commit to a deadline despite the court's explicit order​1​. This comes as the SEC sued Coinbase on the same day for offering unregistered securities and operating an unregistered securities exchange​1​.

BTC Is Back Below $25k

Cryptocurrencies fell on Thursday, with Bitcoin dropping below $25,000 and XRP and Cardano's ada (ADA) experiencing 24-hour declines of up to 7.4%, contributing to a 3.8% loss in total market capitalization​1​. Traders anticipate further declines, suggesting Bitcoin could drop to as low as $23,500 based on price-chart analysis​1​. Alex Kuptsikevich, a senior market analyst at FxPro, noted that Bitcoin has retreated to resistance levels observed from August last year to February this year and highlighted that the 200-day average support level for Bitcoin is $23.6K​1​.

ADA's value has plummeted by more than 20% in the past week due to a U.S. Securities and Exchange Commission (SEC) lawsuit against crypto exchanges Binance and Coinbase​1​, while XRP wiped out all gains from a surge earlier this week in response to the release of the "Hinman emails" from a Ripple Labs filing​1​. Meanwhile, Ether (ETH) posted a 6.4% 24-hour drop, with ether-tracked futures seeing the highest liquidations among major cryptos​1​. The overall market sentiment was further dampened by bearish sentiment and abnormal tether (USDT) stablecoin sales on DeFi protocol Curve Finance​1​.

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