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Top Headlines for 25 March, 2022

Russia To Accept BTC for Energy Exports

On 24 March 2022, the chairman of Russia’s State Duma Committee on Energy, Pavel Zavalny, announced that the country is ready to accept payment in Bitcoin for its energy exports.

Bitcoin will allow the Eastern European nation to evade the trade sanctions imposed by world governments in retaliation for the invasion of Ukraine initiated on 24 February 2022.

Under the new payment scheme Western countries will be required to pay for Russian oil imports with rubles or gold, while allies of Moscow such as China and Turkey would be allowed to use rubles, their native currencies or BTC. Chairman Zavalny did not make it clear if the Russian administration would accept Bitcoin from the sanctioning countries or only from its allies.

The Washington Post reported that the ruble had lost nearly half of its buying power against the dollar soon after the country invaded Ukraine. However, the Russian currency has slowly recovered, and was only down down 30% from its pre-war position as of 25 March 2022. Energy exports combined with trade sanction have made the ruble stronger.

Russia reportedly exports 10% of the world’s oil. While the U.S. and the U.K. are already transitioning to other suppliers, many other countries still rely on Russian energy. An estimated 40% of European gas reserves come from the former
Soviet Union.

In his 24 March 2022 investor letter BlackRock CEO Larry Fink wrote that the Russia-Ukraine conflict will force world governments to reevaluate their currency dependencies and seek reliable digital alternatives. Bitcoin and cryptocurrency, in general, have received much flak from global leaders suspecting that Russia will use them to evade sanctions. However, Chainalysis founder Jonathan Levin said, “We have not seen any evidence that Russia or Putin are systematically using cryptocurrencies to evade sanctions. Nevertheless, if we want censorship-resistant money, there is a good chance evil regimes will use it as well. We can’t have it both ways”.

Portsmouth, U.S. Enables Crypto Payments

Portsmouth, New Hampshire has become the latest city to allow its residents to pay their bills using cryptocurrencies.

Mayor Deaglan McEachern originally proposed the idea to city officials, who felt that the initiative would provide citizens with more payment options. McEachern said, “There’s a wave of new things that will affect us in the future that uses technologies like crypto. I want to make sure Portsmouth is not waiting around to see how this will affect us in the future because it’s already affecting us”.

Citizens of Portsmouth cannot directly send crypto to the city but will need to use a vendor like Paypal. Those who already have some cryptocurrency in their Paypal account will be able to settle their bills with those funds. The new payment method will have no impact on Portsmouth’s financial practices as the cryptocurrency is immediately converted into U.S dollars by Paypal before before being sent to the city. Paypal began providing crypto services back in 2020, making it one of the biggest adoption stories of that year.

Other cities are also gearing towards including crypto as a payment option for state services. At the recently held ETH Denver conference, Colorado Governor Jared Polis announced that he intends to make Colorado the first cryptocurrency state in the United States.

Robinhood To Release Debit Cards

U.S.-based trading platform Robinhood is launching a new debit card service that will allow users to earn crypto rewards upon usage.

The new “Cash Card” will give debit card users benefits that are traditionally reserved for credit card users. The new card will not have any subscription fees, monthly fees, overdraft fees, or hidden fees attached to it.

As of March 2022, the trading platform supports only seven crypto assets: Bitcoin, Ethereum, Dogecoin, Litecoin, Bitcoin Cash, Bitcoin SV, and Ethereum Classic. However, the new offering is geared towards helping the younger generation invest.

Robinhood’s Product Officer Aparna Chennapragada said, “We’re growing with a new generation of debit-first customers for whom investing still feels out of reach. Spending is a fact of life, and we want to help this generation turn everyday spending into opportunities that will help build good habits for the future.”

Luna to Buy $2.5B in BTC

On 24 March 2022, the founder of the Terra blockchain, Do Kwan, announced that he had allocated $2.5 billion for buying BTC to stabilize the dollar-pegged stablecoin UST, which had a market capitalization of $16 billion.

Do Kwon had already begun accumulating BTC through a Jump trading entity. He had reportedly been buying $125 million worth of BTC daily and planned to continue making purchases until 5 April 2022. Kwon had accumulated nearly $500 million worth of Bitcoin within four days at the end of April 2022, making a total of 18,423 BTC worth $800 million, with 5,934 more Bitcoin added in the previous two days.

Kwon’s purchases appeared to be the first occurence of a blockchain making direct buys without the involvement of traditional finance infrastructure. Previously, corporations that bought large amounts of Bitcoin used banking fiat for their transactions, making the process somewhat obscure. But Kwon’s blockchain bus make the project’s intention a lot more transparent.

U.S. DoJ Arrests Scammers for NFT Rug Pull

On 25 March 2022, the United States Department of Justice (DOJ) charged a pair of 20-year-olds, Ethan Nguyen and Andre Llacuna, with conspiracy to commit wire fraud and money laundering with the Frosties NFT project.

The duo reportedly ran away with $1.1 million worth of ETH after selling 8,888 Ethereum NFTs to their community. Frosties conducted its mint in January 2022, after which the scammers quickly closed down all communications channels and disappeared. This rug pull is a landmark case for the NFT industry; it signals that influencers who defraud their community members are not safe from law enforcement.

Rug pulls are cons where scammers mislead investors and run away with the invested capital. These projects often appear in every bull market when naive investors seem willing to throw their money at any project promising lofty returns. Between 2017 and 2018 many of these projects were launched via Initial Coin Offerings (ICOs), where scammers were able to raise millions of dollars with a fake token setup and a website.

The fraudsters have now switched to the next big craze in the crypto world, NFTs. The scheme often follows a narrative like the following: first, a single developer or team creates a project that includes a website and accompanying social media channels; next, they promote their scams through influencers. After a community forms around the project, the team announces a mint. During this process, community members send their crypto funds to a smart contract set up by scammers. The smart contract quickly liquidates the assets, and the project and social media channels disappear, leaving the community empty handed.