Several stories developed over the last seven days that could have reverberations into next week. Let’s take a look at some of the key themes to keep an eye on.

Restarts

Not one but two collapsed crypto institutions revealed plans to come back from the dead this past week.

First up were the founders of failed crypto hedge fund 3AC, Su Zhu and Kyle Davies, pitching to raise $25 million for a new crypto exchange dubbed “GTX” because “G comes after F,” according to the opening line of a leaked pitch deck.

The pair is partnering with Mark Lamb and Sudhu Arumugum, who founded the crypto exchange Coinflex that’s currently going through a restructuring. Following an inevitable mocking of the GTX name on Crypto Twitter, Coinflex said the GTX name wouldn’t be used, but it would provide a further update once a possible round or partnership materializes. 

FTX also raised a few eyebrows, with new CEO John Ray saying the collapsed crypto exchange could be restarted. Many users criticized the idea anyone would ever trust depositing funds onto the platform again. Still, Ray was adamant, telling the Wall Street Journal, "If there is a path forward on that, then we will not only explore that, we’ll do it," sending the essentially worthless FTX-related FTT token up 30% following the comments.

Genesis is also looking to pull the proverbial rabbit out of the hat, moving “quickly and efficiently” to exit the bankruptcy process after its crypto lending business filed for Chapter 11 bankruptcy protection owing more than $3.6 billion to its top creditors. First-day proceedings for Genesis’s bankruptcy case will take place on Monday.

Enforcement action

After a report from Cornerstone Research outlined a 50% increase in U.S. Securities and Exchange Commission crypto enforcement actions in 2022, the regulator is showing no signs of slowing down. 

The SEC’s recent charge against crypto exchange Gemini and crypto lender Genesis over their lending products came just days before the latter’s Chapter 11 bankruptcy protection filing. In doing so, it fired a warning shot to the industry on yield-bearing accounts — something we could see more of given the number of similar services still active across the crypto space. Indeed, news of Nexo’s $45 million settlement with the regulator followed shortly after, having failed to register the offer and sale of its retail crypto asset lending product.

The SEC isn’t afraid of tackling the decentralized side of crypto either, demonstrated by the charges it brought against Avraham Eisenberg on Friday after the securities regulator said Eisenberg stole $116 million from the DeFi platform Mango Markets.

And the SEC isn’t alone, with the U.S. Department of Justice’s announcement of an announcement leading to speculation Binance may be on the receiving end of some enforcement action. In the end, “B” was for Bitzlato, with the little-known Hong Kong-registered exchange accused of transmitting $700 million in illicit finds. Crypto Twitter ridiculed the DOJ given a perceived lack of intervention against more high-profile cases like FTX and Celsius.

However, others suggested the Bitzlato action could merely be a stepping stone, with the DOJ quietly working on larger crypto enforcement cases.

Hot topics

Optimism outpacing Arbitrum was one of the key narratives picked up on by the crypto community last week, with transaction counts between the Layer 2 rivals diverging dramatically. However, following the end of Optimism Quests (educational tasks and quizzes to earn commemorative NFTs) on Jan. 17, that divergence is retracing. Optimism also still lags behind Arbitrum by the total value of assets on the protocol, holding $636.6 million compared to the $1.1 billion on Arbitrum.

Unlike Arbitrum, Optimism has already released its native OP token, up more than 150% in January, with some of Optimism's ecosystem tokens up over 200% year-to-date. Since launching its V2 derivatives platform on Optimism, Synthetix has also benefited from the ecosystem, with its daily users doubling as the Layer 2 overtook Ethereum as Synthetix’s main hub.

Layer 2s are just one area of interest with investors looking for high-beta exposure to the Ethereum ecosystem. Tokens underlying liquid staking derivative (LSD) protocols such as Lido (LDO) and Rocket Pool (RPL) also performed well following a week where they were integrated into the web3 wallet MetaMask. Stablecoin issuer Frax is another project that continues to benefit since launching its own liquid staking derivative. Its FXS governance token is one of the best-performing assets since the FTX-fueled market collapse. Alongside the OP token, LDO, RPL and FRX are among the biggest gainers from the top 100 crypto assets this year.

That particular narrative will likely continue as we get closer to Ethereum’s proposed Shanghai upgrade in March — aiming to deliver the unstaking feature that has been missing from the blockchain since its transition to a proof-of-stake system that culminated in The Merge.

Finally, chatter around bridged BTC on Avalanche also picked up following attractive DeFi yields for the token that saw it surpass the BTC held on Bitcoin’s Lightning Network. It’ll be interesting to see how that trend among the other hot topics continues into the coming week.