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The space is panicking over Multichain 😱

Learn about this weeks hot Web3 drama

GM, frens! Ambire here without our weekly newsletter. Today we’re going to talk about Multichain, Hong Kong getting ready for crypto, Ledger delaying its controversial key recovery feature, Hotbit shutting down its CEX and a bit of extra stuff. Let’s get down to it!

The space is panicking over Multichain

Multichain, a platform that connects crypto and NFTs across different blockchains has been facing a series of issues. The protocol has been down 25% after it was reported that the team behind Multichain has been arrested in China.

The platform relies on bridges to move assets and tokens across different blockchains. These bridges have been disrupted due to “force majeure” and no one is sure when the service will be up again.

In addition to this, users have also been reporting an abnormal delay in the arrival of their funds, which contributed to the increase in panic.

Following this, several crypto entities began to pull liquidity from Multichain. On-chain data suggests that a wallet address linked to Fantom Foundation withdrew $2.4 million worth of the protocol’s native token MULTI on decentralized exchange SushiSwap. The HashKey Group moved $250,000 worth of MULTI to Gate.io while Tron founder Justin Sun withdrew $470,000 of the USDD stablecoin from Multichain. Stargate Finance and Synapse have also temporarily stopped access to Fantom as a precautionary measure.

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Hong Kong is getting ready for crypto

May 23rd marked a significant milestone in the regulation of crypto in Hong Kong. On that day, China Central Television (CCTV) aired a segment on the adoption of cryptocurrencies in Hong Kong and reported that the Securities and Futures Commission (SFC) had completed its preparations for 'virtual asset trading' platforms.

Zhonghui Cai, an official from the SFC of Hong Kong, noted that while there are challenges in regulating virtual asset providers - such as cyber security, the safety of clients' assets and potential manipulation - the authorities are working to mitigate these risks and ensure that investors can participate in the market safely.

CZ, CEO of Binance, praised the move and highlighted its significance for the crypto space. CZ said it's a "big deal" and that "coverages like these led to bull runs”.

Indeed, Hong Kong crypto boom is one of the most important developments for the crypto space this year and it could lead to further mainstream adoption of crypto and further crypto market growth. Or at least we can hope so.

Hong Kong will green light retail trading of crypto in the second half of the year, as previously announced by Keith Choy, interim head of intermediaries at the Securities and Futures Commission.

Choy also noted that the exchanges themselves would determine which cryptocurrencies to offer, but these assets must have a reputable backing. The SFC also announced that it would accept applications from exchanges to offer such services from June 1.

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Ledger delays key recovery feature after backlash

After a big backlash from the crypto community, Ledger has decided to delay the release of its key recovery feature.

Citing safety as the priority, Ledger CEO Pascal Gauthier wrote in a letter to users that the company will not introduce the feature until they can release the code for it.

Gauthier also wrote in his letter that the company has learned a hard lesson, and is now accelerating its open-sourcing roadmap. Core components of the operating system and services like Ledger Recover will be available soon, he said.

Before that, Ledger did not publish its code, but instead trusted a team of selected security researchers to test its products.

The company is now in the process of gathering feedback from the community and working on implementing all necessary improvements to its code. But the damage has already been done, and the community is now more wary of Ledger's practices.

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Hotbit shuts down its CEX

Hotbit, a crypto CEX that had served millions of users, has announced the end of its centralized exchange operations due to deteriorating operating conditions and changes in the crypto landscape.

In order to facilitate a smooth transition for its users, the platform has given them until 04:00 UTC on June 21 to withdraw their assets from the platform.

Hotbit says that this shift is a response to the increased regulatory oversight of centralized firms, particularly after the collapse of FTX. It believes that going forward, the industry will be pivoting more towards decentralized business models that should reduce the risk of single points of failure, which is true if one looks at the recent surge in popularity of DeFi protocols.

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Other notable reads:

A thread on Uniswap “fee switch” debate:

On-chain data suggest there are now more than $220M worth of tokenized securities (ETFs) on the blockchain, a thread by Yash Agarwal:

Vitalik’s recent blog post explained by Bankless:

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The fun page: our weekly meme collection

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That's all for now, frens.

We'll see you next week. And remember, the market conditions are temporary, but our commitment to building a better DeFi is here to stay. Thanks for joining us and we look forward to seeing you back next week. Cheers!

Yours, The 🔥 Team

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