 When I was younger, my main goal was to catch them all. Pikachu, Squirtle, Bulbasaur, they were my everyday companions. Now, as I've matured, I've turned to a more serious hobby, catching every cryptocurrency out there instead. I'm Molly Jane and this is our Hottler's Digest, Pokemon Edition, and let's try to catch them all. Let's take a look at the latest market updates. Crypto Exchange Binance experienced a major security breach this week, which resulted in the theft of 7,000 Bitcoin. The amount, corresponding roughly to $41 million, was stolen from a number of hot wallets which contain approximately 2% of Binance's total Bitcoin holding. They used both external and internal methods to trap a lot of fish and get a lot of user accounts. And it's probably the most advanced and the hackers are very patient, so they don't move as soon as they have one account. They wait for when they have a very large number of accounts and they wait until they get very high network accounts. Following the incident, Binance suspended all the withdrawal and deposit operations and encouraged all users to reset their credentials. The hack impacted the price of Binance Coin, which dropped almost 10% in the days following the hack. Tron CEO Justin Sun offered to personally deposit the tether equivalent of 7,000 Bitcoin in order to compensate Binance's loss and offer which CZ politely turned down. Binance claims to be able to fully refund customers using its SAFU and emergency insurance fund. CZ claimed he was considering the possibility to roll back the hack transaction on the Bitcoin blockchain as a way to return the stolen funds. This option, called a reorganization, would imply incentivizing Bitcoin miners to form a 51% consensus and generate enough hash power to reorganize the blockchain's transactions. CZ discarded this option shortly after, but still the fact that he considered it in the first place sparked a wave of disbelief and criticism in the community. As such, a move would completely discredit Bitcoin as a decentralized immutable network. Among the critics of the idea were Vitalik Buterin and Mike Novogratz, who argued the Bitcoin's network is too mature to be altered. We talked to Bitcoin educator and developer Jimmy Song about the hack. Jimmy, how surprised were you when one of the most reputable exchanges in the space got hacked? It's the same story over and over again. I've been seeing this since like 2012, 2011, something like that. Ever since I got into this space, it's always been, hey, be really careful putting your coins on an exchange because most people don't realize how vulnerable a lot of these services are. More recently, a lot of these exchanges are flush with money, so they're able to cover out of their own funds. But it's only a matter of time until one of them goes bankrupt as a result. Many praise CZ for the way he handled the crisis. What do you think about CZ's reaction to the hack? He did the right thing in disclosing it, and that's a very good thing. I think too many exchanges just sweep it under the rug and hope that they can make it up later. But by making it public, he's taking the hit now. But long term, it's good in the sense that people will trust them a little more to come clean whenever bad things happen. CZ mentioned the possibility of reorganizing the Bitcoin blockchain. Is a reorganization possible? And if yes, is it the right thing to do in your opinion? I mean, it's definitely possible. And reorgs have been done before, and for different reasons. It could be as simple as two miners found the block at the same time. It's not always the case that reorgs are terrible if there's a bargain, and there's social consensus around it. It might actually make sense to do it. But there are all sorts of game theoretical reasons why you wouldn't want to do that. Especially in this case, where you have the thief with 7,000 Bitcoins, even if CZ is willing to spend 7,000 Bitcoins, the hacker will be able to get away with some amount of Bitcoins by incentivizing miners themselves. What the thief can do is they can basically give the miners some of their theft coins in the form of fees and say, okay, well, if you keep mining on the other chain, you're going to get more fees. Why would they go and try to take your money back if they're giving up their own reward? So you have to compensate them. It doesn't really matter what the block reward is, but you're always going to have to spend more than the thief in order to catch or basically roll back the thief's transaction. That's how it's designed. It's designed to be very, very expensive in order to roll back. And how do you think this incident will reflect on Binance's business in the media or even the long term? We've seen a bunch of these hacks in the past few years. The pattern that I've seen is that the customers don't really care that much. The things that are important, it seems to the customer, are liquidity, ability to trade and things like that, and maybe leverage. Personally, think security should be much higher, but that's not what the market seems to be saying. There's a lot of people still on Biff and X and Bitsom and some of these other exchanges that have been hacked in the past. Yeah, I'd hate to say it, but it doesn't seem to have affected things any and I imagine Binance will keep chugging along. After a year of rumors and more rumors, Mara Zuckerberg's New Year's resolution to study blockchain and crypto might be bearing some fruit. Facebook is now hiring PayPal staff ahead of its mysterious crypto launch near the end of this year. MIT professor Christian Catilini is also reportedly working on the development of Facebook's coin. About 20% of the team's 50 members come from PayPal. No sign as of yet of their most famous son's involvement, Elon Musk. Although knowing him, he is more likely to be working on Musk's coin, the native currency of a galaxy far, far away. Back down to dystopian earth, Facebook's crypto will probably be a stable coin called FB coin that will allow you to buy friends or something. According to reports, the social media giant is seeking investments of $1 billion and is also in talks with Visa and Mastercard. They also acquire the Libra trademark for the token, which will be pegged to the US dollar and have a range of applications. Sources from Facebook itself have done that thing where you lock your mouth with an invisible key declining to comment. Is Facebook coin a good idea? Won't it just make the world's most powerful nerd villain even more powerful? Just this week, one of Facebook's founders, Chris Hughes, called for the platform to be broken up, saying that while he still believes Zuckerberg to be a good person, he has amassed too much power for one man. Barclay's Goldman Sachs and JPMorgan Chase have all planned crypto trading desks, but only one Wall Street Titan has got this close. In the coming weeks, Fidelity Investments might be introducing its very own crypto trading desk. Earlier this year, the asset management firm launched a crypto custody service. But now, they will apparently buy and sell crypto for their institutional clients. The clients will be able to trade Bitcoin at first, but other digital assets are likely to follow. Both Robinhood and eTrade actually got into the crypto game before them, but they go after retail. Fidelity is the largest manager of a retirement fund and is likely to attract an institutional client base. Although it is just institutional for now, this is a sign that institutional players are no longer shy about getting into the crypto space. This is something that was anticipated for 2018, but was never actually materialized, largely because of volatility and regulatory uncertainty. However, now that unsophisticated speculators are gone, more serious investors are interested in the space. According to a recent study, Fidelity found that out of 441 institutional investors, 47% think digital assets are worth investing in. The bullish attitude gleaned from the survey comes at a time when the industry is still plagued by fuddy stories like Quadriga, Bitfinex, and the Binance hack. But this kind of stuff apparently doesn't deter institutional investors. Take Mike Novigratz, who, despite losing $272 million in 2018, is still a believer. This week, he predicted that Bitcoin would shoot past $20K by 2021. Billionaire investor and increasingly out-of-touch grouch Charlie Munger made a discovery this week. He found out what Bitcoin investors do during their happy hour events. They gather around to celebrate the life of Judas Iscariot. That's right, the famous biblical trader. Charlie made sure to use his full name, just in case you got it mixed up with the other famous Judas's out there. Previously, he referred to crypto traders as turd traders, which at least made sense. But this latest comment makes no sense. Do the investors have a shrine or a capital at the events? Is the event mobile? If Judas represents Bitcoin, then is Christ the Dollar and the Romans the Federal Reserve? And Charlie, you're only 95. Get some more contemporary traders, like Benedict Arnold or something. And now, Pikachu Molly, I choose you. It is now official, Bitfinex will conduct an IEO in an attempt to raise $1 billion. The exchange will use the raise funds in a bid to compensate an $850 million gap in its funds. The funds raised will also be used for working capital and general business purposes. According to a recently released white paper, the sale will be private and will only be accessible from outside the United States. Investors can participate in the sale after going through the exchange's KYC procedures. Holders of the new token, called Leo, will be given discounts and rebates while trading on Bitfinex. The Leo will be pegged to the USDT, the controversial stablecoin issued by Tether at Bitfinex's affiliated company. According to Dong Zhao, a prominent Chinese trader and Bitfinex shareholder, the exchange already secured $1 billion in hard and soft commitments from investors for the IEO. The announcement of the IEO came amidst a lawsuit with the state of New York opened against Bitfinex and Tether. According to authorities, Tether secretly gave Bitfinex a loan to cover up an $850 million loss, thus compromising the fiat reserves, which should supposedly back the Tether stablecoin. Bitfinex claims the funds are not lost, rather they were ceased by various authorities, adding that it was working for retrieving the money. According to an injunction filed by the attorney general, a $900 million credit line from Tether to Bitfinex should be frozen as long as the investigation is ongoing. On the other hand, Bitfinex's lawyers claim the injunction is unjustified and likely to harm the startup's customers and the market as a whole. We reached out to Aaron Crown, attorney at Fintech Focus from Crown Law, and asked him to comment on the legal aspects of the Bitfinex case. So Aaron, despite these accusations, Bitfinex claimed to have acted in a transparent way towards its customers. What do you think? Did Bitfinex actually commit fraud in this case? I think they're having an issue with the legitimacy of the loan, the line of capital, or sorry, the line of credit from Tether to Bitfinex. So essentially, this looks like a bailout of Bitfinex from Tether. And the legitimate question here is, should a stablecoin trust fund be bailing out an exchange? That's not something that anyone would approach a stablecoin and think, oh, this is great. I want to own a share in the stablecoin, and I'm going to participate in this if it runs around bailing out exchanges. So that would have to be judicially hashed out in a situation like this and basically be down to the court to determine whether this was fraudulent. And besides that, whether it's a legitimate use of Tether's funds. Bitfinex's lawyers questioned the legitimacy of the attorney general's injunction, as there's no evidence that Tether qualifies as a security or a commodity under the Martin Act. What do you think about that, though? Is that really a solid argument in their favor? They don't want to be under the jurisdiction of securities law, right? That just gives more compliance points. They would have to follow, or they would have had to follow more disclosures, more restrictions, plus more enforcement rights, including multiple damages, different sorts of damages that would be opened up if they were considered to be a security. So that's something, by default, if you're doing something like a stablecoin or any sort of asset on deposit, you don't want to be a security, you want to be under a different narrower set of laws. So that's something that anyone would argue in that situation. And do you think that this upcoming IEO is going to have any consequences on the legal dispute? I don't know if it has much of a direct tie-in to the legal dispute. I suppose it could be piled on as sort of a claim of the nature why are you guys trying to raise funds when you're misrepresenting something else if it's deemed that they are misrepresenting something else. So it's certainly a situation where probably my advice would be don't try to raise capital while you're fighting out a capital deficit in court. So it's not a great thing to be doing, I think, but it doesn't necessarily have a direct bearing.