Today in crypto, an Ethereum developer became the first defense witness to testify in Roman Storm's trial after prosecutors rested their case. In Hong Kong, regulators announced new fines and potential prison time for unlicensed stablecoins targeting retail investors. Meanwhile, Ether slipped slightly as staking exit requests surged to an 18-month high.
ETH core developer testifies in Roman Storm defense as gov’t rests case
Prosecutors in the criminal trial of Tornado Cash co-founder and developer Roman Storm rested their case on Thursday, opening the door for defense counsel to call an Ethereum core developer as its first witness.
According to reporting by Inner City Press on Thursday from the US District Court for the Southern District of New York, Ethereum core developer Preston Van Loon testified in Storm’s defense case, which is expected to last about a week. The developer reportedly described Tornado Cash as a “privacy tool for Ethereum” and said he had used the mixing service four times to send a combined 43 Ether (ETH) in 2019 or 2020, citing safety concerns.
“If [hackers] know the scope of my assets I can become a target,” said Van Loon, according to reporting from the courtroom.
Prosecutors’ cross-examination of Van Loon was largely confined to questions about any personal connections to Storm and whether he used a “normal crypto platform like Coinbase.” Storm’s lawyers reportedly said on Wednesday that they planned to call “two or three doctors” to testify, and possibly someone from Chainalysis.
Van Loon’s testimony marked the ninth day of Storm’s criminal trial, in which he faces charges of money laundering, conspiracy to operate an unlicensed money transmitter, and conspiracy to violate US sanctions related to his role at Tornado Cash.
Hong Kong to criminalize unlicensed stablecoin promotions from Aug. 1
Hong Kong will start enforcing its Stablecoin Ordinance on Aug. 1, making it illegal to offer or promote unlicensed fiat-referenced stablecoins (FRS) to retail investors.
The new law introduces criminal penalties of up to a level five fine of 50,000 Hong Kong dollars (about $6,300) and a maximum sentence of six months imprisonment.
The Hong Kong Monetary Authority (HKMA), the special administrative region’s central bank, issued a public warning on Wednesday, urging investors to steer clear of unlicensed offerings to avoid inadvertently breaking the law.
HKMA Chief Executive Eddie Yue said in the warning that the upcoming regulation aims to bring credibility and stability to the budding stablecoin sector while safeguarding investors from fraud and excessive speculation.
Yue said a market frenzy fueled by hype surrounding stablecoin announcements led to unjustified stock prices and trading volume spikes. “It seems necessary to further rein in the euphoria,” Yue wrote in the Wednesday announcement.
Ether stumbles as validator exit queue hits 18-month high
Ether (ETH) dipped 7% from its year-to-date high on Wednesday as the queue for validators and investors to unstake the asset hit an 18-month high.
ValidatorQueue shows 644,330 ETH worth around $2.34 billion is lined up to leave the blockchain with an 11-day wait.
Unstaking typically means validators are looking to free up the asset for sale, but that isn’t always the case and staking service Everstake explained the backlog was likely validators exiting to “restake, optimize or rotate operators, not leaving Ethereum.”
It said investors and holders also may want to lock in profits, “because it’s natural to assume that some stakers are preparing to sell, which could create short-term sell pressure and potentially lead to a price correction.”
There is also 390,000 ETH worth around $1.2 billion waiting to enter into staking, bringing the net amount being unstaked to around 255,000 ETH.