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NC congressman ratchets up push for crypto regulation after FTX crash

The swift fall of bankrupt cryptocurrency company FTX has only made U.S. Rep. Patrick McHenry's call for a solid crypto regulatory framework more paramount. McHenry – a Republican from North Carolina's 10th Congressional District, which includes portions of the Charlotte region – was selected as chairman of the House Financial Services Committee in December. He's served on the board since he was first elected to Congress in 2005. After assuming the role as chairman, McHenry hasn't wasted time….....»»

Category: topSource: bizjournalsJan 25th, 2023

NC congressman Patrick McHenry ratchets up call for crypto regulation in wake of FTX collapse

The swift fall of bankrupt cryptocurrency company FTX has only made U.S. Rep. Patrick McHenry's call for a solid crypto regulatory framework more paramount......»»

Category: topSource: bizjournalsJan 26th, 2023

It turns out Taylor Swift has better due diligence than half of Silicon Valley

Taylor Swift did what many successful investors failed to do: Properly suss out a potential deal with Sam Bankman-Fried and FTX. Hiya! Dan DeFrancesco in NYC, but mentally I'm in the premium suites at Jimmy Buffett's Margaritaville in the Bahamas, which was reportedly a favorite of SBF's Alameda staff.Today we've got stories on another fintech getting hit with layoffs, the biggest mistakes you're making with digital transformations, and how one of the most grueling races in the world is trying to soften the experience for the wealthy.But first, nice to meet you, where you been?If this was forwarded to you, sign up here. Download Insider's app here.Taylor Swift in the "Bejeweled" music video.Taylor Swift/YouTube1. Taylor Swift has better due diligence than half of Silicon ValleyIt's SBF.Him.He's the problem. It's him. Just when you thought the FTX debacle couldn't get any weirder, let's add Taylor Swift into the mix. The now-bankrupt crypto exchange was reportedly in talks with the pop star about a potential sponsorship worth upward of $100 million before discussions eventually fell apart this spring. Part of the deal, which was first reported by the Financial Times, was tied to sponsorship of Swift's upcoming tour, her first in four years, and included plans to offer tickets as NFTs.I have so many questions:Could NFTs have actually prevented Ticketmaster's disastrous general sale of the Swift tickets?What was FTX, an exchange that specialized in the trading of complex derivatives, hoping to gain by marketing itself to Taylor Swift fans?What Taylor Swift album does Sam Bankman-Fried most identify with?Perhaps the most pressing question, however, as pointed out by senior finance editor Michelle Abrego, is this: How does Taylor Swift have better due diligence practices than half of Silicon Valley? What does it say about venture investing in general that a pop star with no background in finance could vet a deal better than them?It is worth noting that Swift might have a sharper eye in negotiations than your typical entertainer. Swift famously was in a very public dispute with talent manager Scooter Braun over his purchase of the masters of her back catalog. (Click here to read a fantastic profile on Braun.)Part of me wonders whether this is the biggest indication of SBF wanting to get caught. Swift's fanbase is, to put it mildly, rabid. The so-called Swifties keep a keen eye on any potential slight against their star.If a deal were to go through and malfeasance was uncovered on the part of FTX toward Swift, her fans might have personally extradited SBF from the Bahamas. Also, was Swift trying to warn us about SBF all along?Check out this lyric from "Anti-Hero," the first hit of her latest album, "Midnights."Did you hear my covert narcissism I disguise as altruismLike some kind of congressman? (Tale as old as time)Swift has said the majority of the work done on the album was with Jack Antonoff while both their partners were filming a movie in Panama. Swift and Antonoff's partners — Joe Alwyn and Margaret Qualley, respectively — both starred in "The Stars at Noon," which shot in Panama last December.And what else occurred in December, you may ask? A certain crypto executive, one who preached his belief in effective altruism, spoke before the House Committee on Financial Services.By that point, Swift was already aware of SBF. According to the FT report, that fall was when FTX first approached Swift about a potential deal.Was she calling out what she perceived to be a fake persona from SBF?Click here to read more about the FTX-Taylor Swift deal that almost was.In other news:Yasmine Lacaillade, founder and managing partner at Sinefine.Drive Capital2. These are all the mistakes you're making during your digital transformations. Sumeet Chabria, a former top Bank of America tech executive who is launching his own consulting firm, detailed why the firm's tech overhauls end up going off the rails. Here are three key errors you should avoid. 3. A real-estate analyst who called the last housing crash is predicting a 20% drop in home prices if things don't turn around. Ivy Zelman, who famously called the housing market's peak before the 2008 crash, has a bearish view on the market as mortgage rates continue to rise and demand drops. Read more about her latest prediction. 4. Plaid is the latest fintech to get hit by layoffs. The startup, which plays a key role behind the scenes connecting financial apps to users' banks, is cutting roughly 20% of its staff. Read CEO Zach Perret's note to staff about the layoffs.  5. Bargain hunting for crypto companies is under way. Galaxy Digital has plans to acquire the self-custody arm of Celsius at a 60% price cut from what the bankrupt crypto lender paid for it a year ago, Bloomberg reports. More on the deal here.6. Carvana's creditors are driving it crazy. The online used-card retailer saw its stock price plummet in the wake of some of its largest debt holders agreeing to work together on credit negotiations with Carvana. Read more here. 7. The job market isn't a complete disaster if you're a tech worker. Indeed mapped out the top 20 companies that have recently posted job listings for tech roles. Check out the entire list, which includes plenty of finance firms.8. Meet 27 of the women who became executives at top VC firms in 2022. We mapped out women who were named investing or general partners for the first time in 2022 (including Yasmine Lacaillade, founder and managing partner at Sinefine, who is pictured above). Here's our list of the new women leading investing strategies at top firms. 9. Ironman is rolling out races specifically catered to wealthy executives. For when you want to push yourself hard, but not that hard. Read more about the races that cost nearly 25 times more than typical entry fees. 10. If you're feeling nostalgic, check out this Blockbuster pop-up bar. We've got plenty of photos from the bar, which is in Los Angeles. Grab a drink and take stroll down memory lane.Keep updated with the latest business news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief. Listen here.Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London.  Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 8th, 2022

Sam Bankman-Fried’s Shadow Loomed Over Congress’ First Crypto Hearing Post-FTX Collapse

“The risks of trading crypto have come into sharp focus in the past few weeks,” one senator said at the hearing. Less than a month after the stunning collapse of the crypto exchange FTX, Congress held its first hearing on Thursday on what Washington should do amid the fallout. Senators called for swift legislative action to safeguard consumers but many disagreements still exist over the shape of those actions. Debates will likely continue for months on how, exactly, crypto should be regulated in the U.S. The hearing was hosted by the Senate Agriculture Committee, and didn’t feature the person at the center of the FTX saga: CEO Sam Bankman-Fried, who is expected to testify at a House hearing later this month. The only person invited to testify on Thursday was Rostin Behnam, the chairman of the Commodity Futures Trading Commission (CFTC), an agency that regulates derivative markets and is among those lawmakers are considering tasking with reining in the freewheeling world of cryptocurrency. Behnam pressed the Senate to give his agency oversight of most crypto markets, calling for “comprehensive market regulation.” [time-brightcove not-tgx=”true”] However, Behnam’s testimony was complicated by his close working relationship with Bankman-Fried over the last year. And the bill that Behnam and other senators advocated for on Thursday was the same one championed by Bankman-Fried himself, raising many eyebrows. Here are the main takeaways from the hearing. Senators are divided over the path to take on crypto Many of the senators who spoke on Thursday emphasized the need for some sort of action following the FTX crash. “The risks of trading crypto have come into sharp focus in the past few weeks,” said Senator Debbie Stabenow, a Michigan Democrat, who co-led the hearing with John Boozman, an Arkansas Republican. “The lack of clear consistent rules has allowed crypto to flourish despite the harmful conflicts of interest, an absence of responsible governance and risk management and a failure to safeguard customer assets.” Many senators voiced support for the Digital Commodities Consumer Protection Act, a bill sponsored by Stabenow and Boozman and aims to give the CTFC greater control over crypto. But another bill from Senators Kirsten Gillibrand, a New York Democrat, and Cynthia Lummis, a Wyoming Republican, the Responsible Financial Innovation Act, is competing for attention. And many other crypto bills are floating around in the House, all of them proposing different levels of involvement by the US government in a financial world that has quickly amassed hundreds of billions of dollars in value. Many members of Congress are still struggling to understand exactly how cryptocurrency works. Some senators on Thursday, including Republican Senators John Thune of South Dakota and Roger Marshall of Kansas, raised the possibility of at least temporarily banning crypto in the US altogether, though it was unclear if they understood how such a ban would work. “Do you ever consider that there should just be a pause in this cryptocurrency digital world until we get our arms around it?” Marshall asked Behnam. “I don’t have the luxury to sit back,” Behnam responded. “No matter what, whether it’s in the US or offshore, these markets are going to exist.” Senator Elizabeth Warren, a Massachusetts Democrat who is often a leading progressive voice on regulations, was not present at Thursday’s hearing, but will likely present formidable opposition to any bill that is remotely friendly to crypto: At a Senate Banking Committee hearing this week, she called FTX “not much more than a handful of magic beans.” The CFTC wants control over crypto At the moment, the CFTC is jockeying for regulatory control over crypto with the Security Exchange Commission (SEC) and other agencies. Thursday’s hearing gave Behnam a chance to make the case for his agency, which is much smaller than the SEC and often perceived as much more crypto-friendly. Behnam refuted this idea on Thursday: “If individuals took a harder look at our record, they would understand we’re the farthest thing from a light-touch regulator,” Behnam said. Behnam sought to distance himself from Bankman-Fried, who has served as the main face of crypto on the Hill. Bankman-Fried said on Wednesday at the New York Times’ DealBook summit that he spent “hundreds, probably thousands of hours” in Washington trying to secure meetings with regulators. Bankman-Fried, along with former FTX Digital Markets CEO Ryan Salame, also contributed tens of thousands of dollars to lawmakers on the Senate Agriculture Committee for their election campaigns this year. Behnam admitted at the hearing to meeting with Bankman-Fried ten times over the last couple years in his office. But he said that the meetings were related to FTX’s “dogged” pursuit of a proposal that would let investors make sophisticated bets with borrowed money directly on FTX instead of through a broker. The proposal was highly controversial, with detractors arguing it could destabilize markets. “We did not have flexibility to put it on the side of the desk or disregard it…knowing the importance of the issue and the very strong feelings on both sides,” Behnam said. Senator Cory Booker, a New Jersey Democrat, also sought to distance Bankman-Fried from the Digital Commodities Consumer Protection Act, which Bankman-Fried publicly supported. In October. Bankman-Fried tweeted in October that the bill would “provide customer protection on centralized crypto exchanges.” “It’s been widely discussed in the media that the Stabenow-Boozman bill is an SBF bill,” Booker, who co-sponsored the bill, said. “Sam Bankman-Fried did give a lot of feedback, as did many others, from industry, academia, from the policy community, and beyond.” Behnam said that the bill would have to be “strengthened” in the wake of the FTX crash, including with regard to conflicts of interest and the financial information cryptocurrency exchanges should be required to disclose. Some are skeptical that Congress will do anything While Behnam and some senators used the hearing to push hard for the Digital Commodities Consumer Protection Act, the bill has received criticism from both crypto supporters and skeptics. Crypto supporters worry it will heavily restrict the sprawling crypto ecosystem known as decentralized finance (DeFi). Miller Whitehouse-Levine, policy director of The DeFi Education Fund, told TIME in a phone interview that “I don’t think this hearing is indicative of momentum behind the DCCPA. If anything, I think it has added much more to think about in the next few months.” Crypto detractors, on the other hand, argue the bill lacks teeth in protecting customers from shady practices and that the CFTC might be the wrong agency to police it. Americans for Financial Reform released a letter in September arguing that the CFTC was too small and ill-equipped to regulate the crypto market. Dennis Kelleher, the president of the advocacy group Better Markets, went a step further, arguing that the CFTC should be investigated over “how much access influence Sam Bankman-Fried bought” at the agency. He points to one strategy FTX took of hiring a slew of former CFTC officials, including Mark Wetjen, Ryne Miller, and Brian Mulherin. After Thursday’s hearing, Kelleher expressed frustration that it had unfolded “as if the FTX blowup didn’t happen.” “When something like this happens, typically you have an overreaction of elected officials of the need to crack down on the industry,” he says. “Instead, this hearing is to push a bill that was endorsed and pushed by FTX.” The hearing was the first in a series of congressional meetings about FTX. The House Financial Services Committee will hold a hearing on its collapse on Dec. 13, and expects Bankman-Fried to testify there. As congress mulls whether to pass legislation, federal agencies including the CFTC, the SEC and the Department of Justice (DOJ) have reportedly launched investigations of FTX......»»

Category: topSource: timeDec 2nd, 2022

The World’s Largest Crypto Exchange Is Buying a Major Competitor. Here’s Why That Matters

Binance, the largest crypto exchange in the world, just bought its fastest-rising competitor, FTX. Here's what that means for the crypto world and beyond Binance, the world’s largest centralized crypto exchange, said on Tuesday that it reached a deal to buy its fastest-rising competitor, FTX. Binance’s co-founder and CEO Changpeng Zhao announced the move on Twitter, and immediately sent shockwaves through a crypto landscape already besieged by turbulence and falling prices. In the hours after, Bitcoin fell by more than 10%. The exact terms of the transaction were not disclosed on Tuesday. (In January, FTX was valued at $32 billion.) But the deal exposes the vulnerability of even crypto’s most iron-clad dealmakers—and could draw the increased scrutiny from regulators across the world. It also delivers a blow to the public image of FTX founder Sam Bankman-Fried, one of crypto’s most well-known figures—who was widely acknowledged as an industry leader working to push crypto toward the mainstream. Critics now argue that under Bankman-Fried’s leadership, FTX mismanaged its rapid growth and hid its financial shortcomings, which necessitated a bailout from one of its closest (and savviest) competitors. [time-brightcove not-tgx=”true”] “It will probably go down in history as one of the greatest corporate raids of all time,” Alex Svanevik, the CEO of the blockchain analytics firm Nansen, tells TIME, noting that the deal greatly increases Zhao’s power and stature. A spokesperson from FTX declined to comment beyond Bankman-Fried’s announcement of the deal on Twitter. Zhao helped set off the turn of events on Sunday by publicly sowing doubt on Twitter about the amount of cash FTX had on hand. Zhao announced that Binance intended to sell off more than $500 million worth of FTX’s native token, FTT, creating a bank run in which crypto investors—jumpy from a year’s worth of financial disasters—rushed to pull their money out. This caused an actual liquidity crisis for FTX, which reacted by temporarily pausing withdrawals. On Tuesday, Bankman-Fried tweeted that Binance was helping FTX to repay all of its users who were trying to withdraw their holdings. He said that all users would eventually be able to withdraw their money at a “1:1” ratio. Notably, Binance’s purchase does not include its FTX.US retail operation, which operates as a separate company. History: FTX challenges Binance Binance has long been the foremost crypto exchange. It facilitates billions of dollars in trading volume every day, and generated revenue of at least $20 billion last year, according to Bloomberg. Users turn to Binance to convert dollars into Bitcoin, Ether, or Dogecoin, and also trade Binance’s more risky financial products, including crypto derivatives, which allow them to make bets on future fluctuations in cryptocurrency prices. In 2019, the rising crypto entrepreneur Sam Bankman-Fried founded the exchange FTX, seeking to onboard a new generation of curious investors into the crypto world. At the height of crypto’s recent bull run, from 2020 to 2021, FTX was one of the fastest-growing platforms of the ecosystem, with its revenue soaring more than 1000%. Bankman-Fried himself became one of crypto’s leading celebrities. He held conferences with Bill Clinton and Tony Blair, poured millions into political campaigns and appeared regularly in Washington for congressional hearings and backroom meetings with lawmakers and regulators. He argued that crypto would democratize finance, graced the cover of FORTUNE magazine, and spent heavily on branding, including buying the naming rights to the Miami Heat’s arena, which is now FTX Arena, for $135 million. In May, Bankman-Fried was named to the 2022 TIME100. And when the crypto world suffered one devastating crash after another, Bankman-Fried played the role of white knight, bailing out struggling businesses with huge loans, in the process building an enviable crypto empire. (His notable deals included taking a 30 percent stake in SkyBridge Capital, the hedge fund founded by Anthony Scaramucci.) FTX unravels But on Nov. 2, the crypto news outlet CoinDesk reported that the balance sheet of FTX’s sister company, Alameda Research, seemed to be built on a shaky foundation. On Nov. 6, Zhao announced on Twitter that Binance would sell off the $2 billion worth it owned in FTT, FTX’s token, due to “recent revelations that have came [sic] to light.” “Liquidating our FTT is just post-exit risk management, learning from LUNA,” Zhao wrote, referring to the failed stablecoin ecosystem whose demise played a huge role in deepening the overall crypto crash this May. Zhao’s comparison of LUNA, a disastrous project, with FTX, one of the industry’s trusted power players, raised many eyebrows, including Bankman-Fried’s. “A competitor is trying to go after us with false rumors,” Bankman-Fried tweeted. “FTX is fine. Assets are fine.” Read More: What Terra’s Crash Means For Crypto and Beyond But Zhao’s actions unnerved many investors, and a growing number of crypto analysts began to support the idea that Alameda Research was secretly insolvent. So over the past two days, hundreds of millions of dollars worth of crypto was pulled out of FTX. Investors’ fears compounded upon themselves, and the overall market sank as well, with Bitcoin dropping 6%. FTX suddenly faced a major cash shortage. On Tuesday morning, the platform stopped processing clients’ requests for withdrawals. Hours later, Zhao announced that Binance would be buying FTX, tweeting: “FTX asked for our help.” He stipulated that the agreement was “nonbinding.” The move came as a major surprise to crypto insiders, especially given Bankman-Fried’s stature in the industry. “If you suggested something like this 48 or even 24 hours ago—I don’t think anyone saw this coming,” Kristin Smith, the executive director of the Blockchain Association, a D.C.-based crypto lobbying group, says. “This is absolutely mind-blowing news for the crypto community, and a day that is going to be looked back upon for years ahead.” “Most people did not expect FTX to end up in this situation, given they were the savior of these other distressed companies,” Svanevik says. “We of course know that Sam Bankman-Fried had been quite active trying to influence regulation in the U.S. It looks a bit embarrassing to end up in this situation so shortly after.” What this means for crypto In the short term, the news sent major shockwaves through crypto, with Bitcoin dropping 10% and Ether dropping more than 17%. It’s possible that the downward spiral could continue, as collapses of crypto platforms or companies have proved to be contagious to the larger ecosystem. Smith predicts that the sale will cause Bankman-Fried to take a backseat in U.S. crypto regulatory negotiations. “I don’t imagine that we’re going to see him walking the halls of Capitol Hill anytime soon,” she says. She also says that FTX’s downfall could lead to increased urgency from legislators to regulate large exchanges. “If there’s one thing the events have shown, it’s that we really do need to have more transparency into how centralized crypto exchanges work,” she says. “We need to get legislation passed.” Zhao’s Binance, on the other hand, is now the undisputed powerhouse of the centralized crypto world. The company’s acquisition of FTX is concerning to many crypto idealists given the importance they place on decentralization. And others in the industry are concerned that the deal will draw antitrust scrutiny in more stringent jurisdictions around the world, including in the E.U. John Lo, managing partner of digital assets at the investment firm Recharge Capital, wrote in an email to TIME that after the sale, crypto “is more centralized than ever.” However, he hopes that the events serve as a wake-up call to the crypto community to re-orient its priorities toward the technology’s core values. “Centralized actors will continue to curb stomp decentralization when presented the opportunity,” he wrote. “However, the ascent of decentralized and autonomous solutions are inevitable.”.....»»

Category: topSource: timeNov 8th, 2022

A New U.S. Crackdown Has Crypto Users Worried About Their Privacy

Tornado Cash’s service has let hackers flourish, regulators say. But privacy experts worry the ban goes too far. The battle between the crypto community and the U.S. government over financial privacy just escalated dramatically, amid government efforts to crack down on criminals. Tornado Cash is a service that helps some cryptocurrency owners protect their anonymity by scrambling information trails on the blockchain. On Monday, the Treasury Department prohibited Americans from using the service, arguing that it has played a central role in the laundering of more than $7 billion. In a statement, the Office of Foreign Assets Control (OFAC), a Treasury Dept. agency, called Tornado Cash “a significant threat to the national security” of the United States, and alleged that it has been used repeatedly by North Korean hackers to launder money from multiple million-dollar thefts. [time-brightcove not-tgx=”true”] But the decision drew vicious backlash from many in the crypto community, who see it as a governmental overstep that runs contrary to their core values of privacy and autonomy. On Twitter, the crypto lawyer Collins Belton called it “arguably the most significant legal action that has occurred in crypto” and warned that it could produce “absolutely gargantuan ripple effects.” The Treasury’s decision could end up significantly altering the way users engage with crypto. It also sets the stage for a slew of fierce legal and rhetorical battles between the crypto industry and the U.S. government. Hiding crime When someone sends cryptocurrency from one account to another, a record of the transaction is etched into the blockchain forever. Investigators or eagle-eyed sleuths can then use this public information to follow money flows and learn about a person or company’s financial activity. The U.S. Department of Justice, for example, traced blockchain records to shut down a global child abuse website and arrest hundreds of offenders. This transparency has given rise to the creation of “mixing” services, which are designed to hide activity on the blockchain. A user can deposit cryptocurrency into a mixer, which uses complex cryptography to obfuscate the money’s trail and then send it to a brand new wallet address. From there, the user can recover the funds and eventually cash them out anonymously. As cryptocurrency has exploded in usage both for legal and illegal activity, mixers have become a “go-to tool for cybercriminals,” according to a recent report from the blockchain analysis firm Chainalysis. The study says that nearly 10% of all funds sent from illicit addresses are sent to mixers, and that the usage of mixers in illicit activity has increased significantly in 2022. “Mixers account for a small share of the overall cryptocurrency ecosystem, but play a significant role in illicit activity,” Andrew Fierman, the head of sanctions strategy at Chainalysis, wrote to TIME in an email. The role of North Korea One of the main drivers of this uptick is the increased activity of North Korean hackers, U.S. officials say. In April, U.S. Treasury officials accused the Lazarus Group, a hacking organization allegedly sponsored by North Korea’s government, of spearheading the $600 million hack of the popular crypto game Axie Infinity’s Ronin network. Those officials accused the North Korean government of using the hack to “generate revenue for its weapons of mass destruction and ballistic missile programs.” And the Ronin attackers used Tornado Cash to launder the money, officials say. They say that after $600 million was drained from the Ronin network into a wallet controlled by the Lazarus group, it was then sent to intermediary wallets, then rinsed via Tornado Cash, $10 million at a time. Tornado Cash developers’ attempts to block the Lazarus wallet from interacting with Tornado Cash were unsuccessful: about 18% of the total amount of Ether flowing through Tornado Cash in recent months—167,400 ETH—came from the Ronin hack, according to the blockchain analytics firm Nansen. Ari Redbord, the head of legal and government affairs at the crypto regulatory startup TRM Labs, says the Ronin hack was a major turning point with regards to crypto regulation. “Ronin really changed the way the U.S. government sees money laundering in the crypto space: they shifted from the idea that hacks were a financial crime to the idea that they were a true national security concern,” he says. Redbord estimates that a billion dollars in North Korean-related laundered funds have gone through Tornado Cash, and that the ten biggest hacks perpetrated by North Korean hackers employed Tornado Cash to launder those funds. So on Monday, the Treasury Department placed Tornado Cash and related smart contract wallet addresses on their Specially Designated Nationals (SDN) list, in the way they would an enemy of the state. Any Americans who interact with those addresses now may face criminal penalties. Crypto backlash But while Tornado Cash is used by criminals, it is also used widely and legally by all types of users. “There are all kinds of reasons people want to build anonymity: I don’t want anyone looking at my credit card statements or Venmo,” Redbord says. This week, Tornado Cash supporters have argued that the service is simply a neutral tool that can be used for good and bad: that it’s akin to virtual private networks (VPNs) or The Onion Router (TOR). “This is a rough equivalent to sanctioning the email protocol in the early days of the internet, with the justification that email is often used to facilitate phishing attacks,” Lia Holland, the campaigns and communications director at the digital rights nonprofit Fight for the Future, wrote in a statement. There are many reasons why someone would want to use Tornado Cash: An employee who gets paid by their company in crypto, for example, may not want their employer to know all of their financial details. An NFT enthusiast who has recently made a lot of money thanks to a savvy investment may not want to become the target of potential harassment or robbery. Tornado Cash may also be useful for those who live under oppressive governments. Vitalik Buterin, the founder of Ethereum, came out in defense of the service this week, writing on Twitter that he himself used Tornado Cash in order to donate to Ukrainian causes without putting the recipient organizations under extra scrutiny. And following the overturning of Roe v. Wade, donors to abortion funds may want to use Tornado Cash to keep their identities hidden. The brewing battles The Treasury’s decision to ban Tornado Cash could prove to be a significant turning point for crypto in several ways. First, it shows how far the U.S. government is willing to go in its attempts to corral crypto as it creeps toward mainstream adoption. Tornado Cash defenders have pointed out that the decision is unprecedented in that sanctions have been placed upon a piece of code as opposed to an entity. (Tornado Cash is not an incorporated organization, but a mechanism controlled by software logic.) This step could mean that other types of decentralized bodies, including other smart contracts or DAOs (decentralized autonomous organizations), might soon be in the crosshairs. Redbord, at TRM Labs, says that the treasury’s decision reveals the U.S. government’s desire to push crypto toward more centralized systems and platforms that are easier to regulate. The trading platform Coinbase, for example, has requirements that tie every crypto wallet to a verifiable human identity. “This action sends a message to crypto exchanges that they need to ensure that they have compliance controls in place to stop cyber criminals from using their platforms,” Redbord says. And some major crypto players have fallen in line. Circle, the issuer of the USD Coin (USDC), the second biggest stablecoin, froze over $75,000 worth of funds linked to Tornado Cash addresses. And Github, a software development platform owned by Microsoft, deleted the accounts of Tornado Cash developers. But crypto enthusiasts resist centralized attempts to control policies or transactions. Bitcoin, after all, was created in the wake of the 2008 financial crash, with early adopters seeking a global and unregulated form of currency resistant to the pressures of Wall Street. Many have flocked to crypto because it allows anonymous financial transactions, hidden from surveillance by authorities. In the last few days, Tornado Cash defenders have launched their own offensive against the decision, in several ways. First, they have drawn attention to a perceived logical flaw in the decision: that anyone who interacts at all with a Tornado Cash contract is doing so illegally. Individual users cannot reject incoming transactions—small amounts of cryptocurrency have been sent to prominent public wallet addresses—including those associated with Jimmy Fallon and Shaquille O’Neal—in a stunt that essentially dares the Treasury to take action upon an entire community. (Redbord, for what it’s worth, says he doubts that individuals were the target of the decision in the first place, or that OFAC will pay much attention to the campaign.) A much bigger battle may be in store: some prominent crypto lawyers have begun floating the idea of challenging the decision on constitutional grounds. “Banning software publication is banning speech,” Peter Van Valkenburgh, the director of research at Coin Center, said onstage at a crypto conference in Las Vegas on Monday. “Even laws that unreasonably chill speech are constitutionally suspect, and can be challenged even before enforcement.” As crypto enthusiasts look for a way forward, they must contend with several tough choices: how much to compromise their values in their quest to reach the mainstream; how to tamp down on illegal activities in systems that were built to be oversight-resistant; and whether to cooperate with governments or oppose them, thereby invoking even more ire and scrutiny. For now, it seems that many in the crypto space are responding forcefully to the Treasury’s decision by taking an ideological stand. “While most people won’t ever use a service like Tornado Cash, the government’s approach represents a dangerous precedent for limiting the right of Americans to use privacy tools for legitimate and lawful reasons,” Miller Whitehouse-Levine, policy director of The DeFi Education Fund, wrote in an email to TIME. “Privacy is not—and cannot become—a crime.”.....»»

Category: topSource: timeAug 10th, 2022

What Can We Learn From LUNA’s Collapse?

Lehman Brothers’ collapse was the largest corporate bankruptcy in US history, having accrued $619 billion in debt. So large were Lehmnan’s liabilities that it presaged the Great Recession of 2008 – 2009, making it necessary for the Federal Reserve to step in. On the same level of fallout is Terra’s collapse for the crypto space. […] Lehman Brothers’ collapse was the largest corporate bankruptcy in US history, having accrued $619 billion in debt. So large were Lehmnan’s liabilities that it presaged the Great Recession of 2008 – 2009, making it necessary for the Federal Reserve to step in. On the same level of fallout is Terra’s collapse for the crypto space. On the heels of Ethereum, at a $41 billion market cap in April, Terra (LUNA) was supposed to usher Finance 2.0 by providing a blockchain counterpart to the VISA payment system. Additionally, one of its main dApps, Anchor Protocol, enticed users with up to 19.5% yields on savings accounts. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Unfortunately, Do Kwon’s Terra foundation relied on an algorithmic stablecoin TerraUSD (UST). Without having a real 1:1 cash backing, UST maintained its peg to the dollar by LUNA overcollateralization. When the bearish market devalued LUNA, Terra went into a death spiral, wiping out $44 billion of wealth from May 5th to May 12th. Just as Lehman Brothers’ collapse brought in the Dodd-Frank Act, lessons from Terra’s collapse will be long-lasting. Dead End for Algorithmic Stablecoins How can decentralized finance (DeFi) be truly decentralized by relying on stablecoins run by corporations? For instance, USD Coin (USDC) is run by Circle and Coinbase. Each USDC stablecoin is backed by one dollar, which is regularly audited by an accredited accounting firm. For this reason, if all USDC were suddenly redeemed, nothing would happen. Meaning, there would be no collapse spiral akin to a bank run. In contrast to these classically backed stablecoins, algorithmic stablecoins are supposed to be self-governed and self-contained within the ecosystem. This way, they achieve decentralization by not relying on cash reserves. Instead, their peg to the dollar is collateralized by the network’s native token. In fact, due to inherent volatility of low market cap cryptocurrencies, algorithmic stablecoins need to be overcollateralized. Yet, their history is full of bank run failures: IRON stablecoin was collateralized by TITAN, native DeFi token for Titan Finance lending protocol. Despite being backed by 75% from USDC and 25% from TITAN, rapid withdrawal (bank run) of TITAN deposits caused its price to collapse. In turn, IRON stablecoin collapsed its peg to the dollar as well. Fantom’s fUSD stablecoin that is 500% overcollateralized with the blockchain’s native FTM token. It has yet to reach the 1:1 peg to the dollar despite Andre Cronje’s best efforts. Basis Cash (BAC) was revealed to be Do Kwon’s first algorithmic stablecoin project. Of course, it too is an abandoned failure just like UST is now. Now that the brutal wipeout of Terra’s UST exposed the vulnerability of algorithmic stablecoins, it is likely that investors will avoid such projects. After all, Do Kwon’s new Terra 2.0 has no stablecoin at all. If anything, due to rampant inflation, we may see the rise of commodity-backed stablecoins, such as gold-backed Pax Gold (PAXG), Tether Gold (XAUT), DigixGlobal (DGX) and others. This also means that full decentralization will have to take a back seat in favor of financial security. The End of Suspiciously High Staking Yields Many people don’t realize that stablecoins often yield the highest APY rates on more centralized platforms such as BlockFi. Even with the national average interest rate for savings accounts at 0.07%, this is nothing compared to stablecoin yields. Staking $1,000 in USDC stablecoin generates drastically higher yields than putting dollars in banks.Image credit: DeFiRate.com The question then is, why would a dollar-backed stablecoin like USDC yield so much but the dollar itself so little? The simple reason is - higher demand than supply. While there are trillions of dollars, there are only billions of tokenized dollars. And their stability, especially when it is vetted, is a prized commodity. So far, big market upheavals have slightly destabilized the largest stablecoin by market cap, Tether (USDT) by $0.05 cents. However, USDT swiftly recovered by expanding its reserves. More importantly, both stablecoin and cryptocurrency yields are market-driven. Their falls and downs depend on market performance. This is another thing that Kwon’s algorithmic UST stablecoin short circuited. Up until the crash, Terra’s Anchor Protocol offered up to 19.5% yield rate for staked UST. The rate was set artificially to rapidly expand growth. The rapid growth indeed happened, as Terra went from less than 1% DeFi market share in March 2021, to over 13% up until this May. However, because it was based on anti-market behavior it deflated even more rapidly. Case in point, Anchor Protocol was artificially boosted by the Luna Foundation Guard (LFG) in February by $450 million. That is how Anchor Protocol managed to pay out the high yield, at least initially. It turns out, not only was nothing decentralized, but Terra artificially kept up appearances to widen its pyramid bottom. In the end, wider bearish market winds eroded the bottom despite the boosts. The lesson? If a single protocol offers double the staking yields than anyone else, something is going on, and it's likely not an ingenious cutting edge innovation but a pyramid scheme. Lack of Accountability Just like Ethereum has its own foundation, so did Terra with its Luna Foundation Guard (LFG). However, it appears that the latter used the veneer of decentralization as a mandate to act in the shadows. LFG had 80k Bitcoin (~$3.5b) at its disposal to defend the UST peg, yet there is little clarity on whether the money was used for this purpose. Dr. Tom Robinson of Elliptic research showcased there is no way to positively determine if BTC was sold or used to defend UST against de-pegging. By the same token, Terra validator leaks revealed disturbing behavior on the part of Terraform Labs’ leadership. Terra’s opacity alone goes against the common fiduciary obligation practices. No matter what the ongoing investigation by South Korean authorities reveals, it is clear that DeFi projects need more transparency and scrutiny. Otherwise, the spirit of decentralization will just be abused as a gimmick. Imposed Fiduciary Duty? To protect from bad actors and experiments that are doomed to fail, a balance has to be reached between responsibility and innovation. In the immediate aftermath of Terra’s meltdown, Treasury Secretary Janet Yellen called for additional federal regulation. Of course, the $40B+ wipeout is peanuts compared to trillions in equities alone, but Yellen still sees a need to preemptively set the rules for digital assets. “I wouldn’t characterize it at this scale as a real threat to financial stability, but they’re growing very rapidly, and they present the same kind of risks that we have known for centuries in connection with bank runs.” Most recently, on Tuesday, Sen. Cynthia Lummis (R-WY) and Sen. Kirsten Gillibrand (D-NY) introduced a comprehensive crypto bill dubbed the Responsible Financial Innovation Act. Not only would it classify digital assets as commodities but it would legally define stablecoins as “indebtedness”. Likewise, stablecoins would be issued by a depository institution that would have to maintain high liquidity to back them up, “not less than 100 percent of the face amount of the liabilities”. This will go a long way in securing investor confidence. However, one has to keep in mind that CBDCs - central bank digital currencies - may render the entire stablecoin issue a moot point. Closing Thoughts Without innovation, we wouldn’t even have conversations about alternative money like Bitcoin, or revolutionary smart contracts that render banking services obsolete. However, by pushing the envelope, we should be careful to not lose the core reason for such innovation to begin with - financial liberation. If it leads in the opposite direction, we are on the wrong road. Moreover, the algorithmic stablecoin story is not over. Amid Terra’s demise, NEAR Protocol launched its USN. However, with all the lessons behind us, investors should treat such projects as risky experiments. Want to stay up to date on the world of digital assets? Subscribe to Tokenist’s newsletter, Five Minute Finance. Receive one email, every Friday, with the week’s most important trends in the converging worlds of traditional and digital finance. Updated on Jun 13, 2022, 12:17 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 13th, 2022

Ethereum Tumbles Below Holders" Average Cost Basis

Ethereum Tumbles Below Holders' Average Cost Basis While bitcoin remains stuck to a $30,000, trading in a $2k range around the "nice, round number" for the past month... ...  In its latest weekly Crypto Compass note, UBS writes that what is most stunning is how bitcoin's biggest challenger, ETH has totally retraced its entire outperformance since late 2020 to the point where it has merely level-pegged with benchmark equities since both then and the start of 2019 for an equivalent unit of risk invested. Worse, after relentlessly dropping for 10 consecutive weeks.. ... the token which forms the backbone for web3, and which Goldman called the "Amazon of information" has just taken out a key long-term long-term support, tumbling 12% on Sunday to 1,500.22, the lowest price since Jan 2020. There are several reasons for Its latest relative softening according to UBS, chief among which is a sharper drop-off in activity that is a casualty of weaker transactional demand for Ethereum-based defi and NFTs. which in turn is a function of Fed tightening which is causing asset prices to tumble uniformly (in stocks, bonds and yes, crypto too) as "crash-correlations" approach 1. Some also point to concerns about a Terra-like implosion due to misplaced fears that a security attack on staked Ethereum could lead to a "fat tail" outcome ahead of the ETH 2 transition later this year due to 4 million ether deposited at Lido Finance, making the exchange a concentrated holder and threatening a centralized attack on the broader ETH network (Lido developer Vasiliy Shapovalov disagrees). Additionally, some slowing in the network as the so-called 'difficulty bomb' begins to bite ahead of the late-summer Merge may also be exerting some drag. Amid this wholesale selloff, bear-market blues, liquidations and outright capitulation have set in among even the most ardent crypto proponents (e.g., here). So much so that some have started to highlight how native technical indicators skew the balance of risks henceforth heavily to the downside. Yet in comparison to prior 'crypto winters,' bitcoin's price has yet to fall below holders' average cost base (23,500), although after today's drop, ether is now below the average cost basis which according to UBS is at 1,750. Furthermore, net unrealized profit/ loss metrics highlight specifically how long-term holders have yet to be tested. One way UBS suggests this could happen is via miners capitulating to sell down holdings of existing coins: indeed, their sales in early May coincided with the last lurch lower to and through 30k. Indeed, miners' businesses remain under significant pressure due to high energy costs and capex commitments, so their stock prices continue to make fresh lows even as the broader market has consolidated or even rebounded somewhat. Meanwhile, as UBS adds, there has been little positive news to offset investor concerns, and the Swiss bank proceeds to list some of these, starting with stablecoin issuers who have been put on notice by UST's collapse, while officials should feel spurred on to clamp down by Do Kown's plans for Terra2, Justin Sun's launch of the effective copycat USDD, and Tether's expansion onto Tezos. Japan's Diet has passed legislation allowing only banks and other licensed financial institutions to issue yen stablecoins as of next year. New York's Department of Finance likewise formalized guidance mandating full backing via short-dated T-bills or equivalent, segregated accounts and monthly audits by independent US CPAs. And a new UK consultation paper just floated procedures for dealing with failed issuers and makes provisions for systemically important designation Amongst the familiar fare of hacks, and outages, two additional items stood out in UBS' review of key events. One was the SEC moving to investigate Binance over its 2017 BNB exchange coin listing. The latter's price fell almost 10% in consequence. But the action matters beyond the fact that it involves the largest exchange by volumes and the industry's third largest non-stablecoin. It signals a fresh effort to enforce securities registration that will be applicable to the vast majority of crypto ventures. This comes atop other probes into the company that were already underway. These involve possible trading abuses by corporate insiders, insufficient segregation of the firm's local US subsidiary and concerns that it has been conducting unregulated broker-dealer activities. There is also the issue of whether founder CZ's ownership stakes in market-makers that are active on the platform constitute conflicts of interest. That said, UBS is quick to caution that none of this is to argue that crypto is sliding into oblivion, quite the contrary - after all Wall Street and Silicon Valley have invested tens of billions in crypto infrastructure and manpower (most did so around the time cryptos peaked),. Yet what it does point to is how the future will look very different. According to UBS' James Malcom, players will have to embrace regulation and collaborate with existing financial service providers; thus Singapore's just-launched Project Guardian, which represents a pilot project for the central bank to explore tokenized bonds and deposits via the establishment of permissioned liquidity pools in collaboration with DBS, JPMorgan and Marketnode. They must also have to compromise even as they seek to disrupt longstanding tradfi practices, per FTX's bold bid to disintermediate derivatives trading by clearing customers' swaps without the involvement of FCMs. The good news is that, as UBS concludes, those who can last beyond the near-term downward pressure and volatility, the longer-term demand-side outlook looks exceedingly healthy when recast in such terms. Accenture's newly released Future of Asian Wealth Management survey revealed that more than half of its 3,200 respondents already hold digital assets, and nearly three quarters plan to do so by year-end. However, two thirds of the 500 financial advisors surveyed have no plans to offer such services due to regulatory uncertainty and unfamiliarity with the space, which would require specialized research capabilities plus substantial investment in training for relationship managers.  Little wonder satisfaction ratings with primary counterparts score rather lowly.  It is also not surprising that many allocators end up relying on potentially less reliable online advice in consequence. UBS' Global Family Office Report 2022 finds, by contrast, most of the bank's clients are 'cryptocurious' rather than 'crypto-committed'— wanting to learn about the space rather than invest. It pegged just a quarter of Asian participants as active in the space, though that rises to more than a third in North America. The vast majority of allocations amount to less than 3% of portfolios and are being made to better understand the technology as much as on the expectation of strong, diversified returns at this point. As for Ethereum's latest tumble, it could certainly fall more amid capitualtory liquidations, now that selling below the average cost basis means cementing losses for retail investors. But when it comes to institutions one can be certain that instead of writing off their investments in the web3 space, most will simply double down, and why not: it is already widely accepted that after the Fed hikes enough to push the economy into recession (or depression) in the next few months, it will then proceed to aggressively cut rates again... ... with the benefit of QE again, and the moment Powell capitulates - which will be some time in late 2022 or early 2023  - is when all the "growth", high-beta assets that have gotten destroyed in the past few months, will erupt to new all time highs in anticipation of the biggest liquidity injection yet, one which is simply mandatory if for no other reason than central banks have to fund and finance the $150 trillion (with a T) spending over the next 30 years (via QE) that is unavoidable if the progressive "climate change" agenda is to pass. And it will - too many politicians and parties have staked their entire existence on it. Finally, none of this accounts for the growing risk that China, and its $54 trillion in bank assets or 150% more than the US... ... will suffer another devaluation, sparking another massive capital exodus using bitcoin and other crypto instruments. Tyler Durden Sat, 06/11/2022 - 13:06.....»»

Category: blogSource: zerohedgeJun 11th, 2022

What Are Algorithmic Stablecoins, And Why Can They Be A Problem?

When most people with some level of knowledge about the crypto markets think about stablecoins, they imagine cryptocurrencies with stable valuations that are pegged to a particular asset or fiat currency like the U.S. dollar. However, algorithmic stablecoins are much more complex. They rely on algorithms and a second cryptocurrency to maintain their peg, making […] When most people with some level of knowledge about the crypto markets think about stablecoins, they imagine cryptocurrencies with stable valuations that are pegged to a particular asset or fiat currency like the U.S. dollar. However, algorithmic stablecoins are much more complex. They rely on algorithms and a second cryptocurrency to maintain their peg, making implosions like what happened to the original Terra coin possible. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Warren Buffett Series in PDF Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Takeaways Like standard stablecoins, algorithmic stablecoins are pegged to another asset like a fiat currency, precious metal or something else. While standard stablecoin operators often maintain a reserve big enough to back some or all of their stablecoins in circulation, algorithmic stablecoins usually don't. Algorithmic stablecoins rely on algorithms and a second cryptocurrency to maintain their pegs. Standard operation involves minting and burning new stablecoins and coins of the supporting cryptocurrency as supply and demand shift with the goal of maintaining the stablecoin's peg. Unfortunately, the crash of the original Terra stablecoin has highlighted some issues with algorithmic stablecoins and could lead to the eradication of all algorithmic stablecoins at some point. Crypto experts now expect regulations to be imposed on stablecoins. If you've been following the world of crypto at all, you've probably heard about the implosion of the so-called stablecoin Terra. The coin was supposed to be pegged to the U.S. dollar, but it broke its peg on May 9 and has remained de-pegged since then. The Terra coin has since been rebranded, but for the sake of this article, we will continue to refer to the now-de-pegged stablecoin previously called Terra by its original name, ignoring the rebranding. (For those who are wondering, the UST coin originally called Terra now trades as USTC under the name TerraClassicUSD.) What are stablecoins? If cryptocurrencies are known for one thing, it's volatility. Due to the highly speculative nature of cryptocurrencies, it's anyone's guess where each coin will go next. Bitcoin's value has been cut in half multiple times, but it generally comes roaring back, sometimes soon but other times eventually. Other cryptocurrencies can be just as volatile as bitcoin. However, stablecoins are an entirely different story. Some enthusiasts might see them as the bridge between fiat currencies and highly volatile cryptocurrencies. What gives stablecoins a stable price is their peg. For example, many stablecoins are pegged to the U.S. dollar, which means their value should always be right around or, ideally, at exactly $1. The first stablecoin was BitUSD, but the first to gain widespread recognition and use was Tether, which is also pegged to the U.S. dollar. While the dollar is a common peg for stablecoins, they can also be pegged to other assets like another fiat currency, precious metals or certain other assets. Stablecoins were created to remove the volatility associated with cryptocurrencies by pegging them to another asset that's far less volatile. Aside from the reduced volatility, stablecoins also offer reduced risk because they are pegged to an uncorrelated asset. However, they also may experience the same level of volatility and risk as the asset they are pegged to. One of the concerns with standard stablecoins has to do with their peg. Reputable stablecoins like Tether are actually backed by the asset they are pegged to, meaning that the developer of Tether holds enough cash and equivalents to convert some or all of the stablecoin's supply into its pegged currency. Tether claims all of its coins are backed 100% by its reserves, although not all stablecoin developers do this. What are algorithmic stablecoins? When someone hears that a particular cryptocurrency is a stablecoin, they typically think of standard stablecoins. However, a new type has emerged, creating some confusion for those who don't follow the crypto market closely. Algorithmic stablecoins are far more complex than standard stablecoins. While they are pegged to a particular asset, they use algorithms to try to hold the peg in place. Most algorithmic stablecoins are undercollateralized, meaning the developers don't have enough of the pegged asset in reserves to back the value of the coins. This is one of the increased risks of algorithmic stablecoins over the standard kind. Another risk is the fact that they usually rely on a second cryptocurrency to enable them to hold their peg. The second cryptocurrency backs the stablecoin, and the algorithm regulates the relationship between the two coins using supply and demand. How do algorithmic stablecoins work? When the supply of the stablecoin is too small compared to the amount of demand, its price moves higher than its peg, which is often the dollar. To push the stablecoin's value back down to $1, the algorithm burns $1 worth of the other coin to create $1 worth of the stablecoin. In the case of Terra, the protocol allowed users to trade $1 worth of the other coin for one of the stablecoins. Users could make money when the stablecoin was minted by selling it for $1.01, earning a profit of one cent. The profits added up when it was done millions of times. On the other hand, where there's too much of the stablecoin compared to demand, the value falls below $1 in the case of Terra and other stablecoins pegged to the dollar. When the supply was too high, the Terra protocol burned one Terra coin and minted $1 worth of Luna by allowing users to buy one Terra coin for 99 cents and then trade it for $1 worth of Luna, once again resulting in a profit of one cent. The protocol allowed Terra coins to be burned and Luna coins to be minted until Terra was again worth $1. As a result, the market could be flooded by Luna coins whenever the Terra coin fell below $1, meaning that the value of Luna could enter freefall whenever Terra's value fell below $1. Terra fell as low as 12 cents at one point, illustrating the fact that it had de-pegged from the dollar. Even after the rebranding of the coin, it hasn't regained its peg. What will happen to stablecoins? Regulators around the world have been discussing the need to regulate cryptocurrencies, but so far, there has been no broad-based effort to do so. However, the implosion of Terra/ Luna has led to widespread calls for regulation on stablecoins. U.S. Treasury Secretary Janet Yellen called on lawmakers to pass legislation about stablecoins. Meanwhile, the U.K. government announced plans to regulate stablecoins earlier this year — before the Terra implosion. At the end of May, the British government unveiled a proposal to amend the existing rules to manage the failures of stablecoins that could pose a "systemic" risk. Many experts in the crypto industry are expecting increased regulation of stablecoins, so it's probably only a matter of time. In late May, Bertrand Perez of the Web3 Foundation, a former director of the Facebook-backed Diem stablecoin, told CNBC that he expects regulators to require that stablecoins be backed by real assets. He also expects stablecoin operators to be subjected to regular audits ensuring they have the proper reserves to back their stablecoins. There are also questions about the future of algorithmic stablecoins. Some crypto experts predict that the Terra implosion will result in the end of them, although standard stablecoins backed by the proper reserves are likely to live on. Updated on Jun 3, 2022, 2:34 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 3rd, 2022

Investors Continue To Wrestle With Inflation Worries As Oil Rises And Bitcoin Takes A Breather

“Investors are continuing to wrestling with worries over inflation as the oil price climbs back up again and supply concerns resurface amid ongoing geo-political tensions. As the era of cheap money has hurtled to an end, lowering liquidity in the markets, trading in the sessions ahead is set to stay volatile. On Wall Street the […] “Investors are continuing to wrestling with worries over inflation as the oil price climbs back up again and supply concerns resurface amid ongoing geo-political tensions. As the era of cheap money has hurtled to an end, lowering liquidity in the markets, trading in the sessions ahead is set to stay volatile. On Wall Street the S&P 500 was just a whisker away from a bear market before rebounding and the growls are continuing at the spectre of stagflation hovering over economies. The FTSE 100 is set to open higher with some measure of calm restored after the head of the US Federal Reserve Jerome Powell said that although taming inflation won’t be easy, the central bank saw paths ahead to make that happen. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Oil Rises Brent crude has edged up and is trading just below $109 dollars a barrel as the prospects loom of a European ban on Russian crude while work on a compromise to cater for Hungary’s demand for an exemption continues. Tensions have been pushed up after Russia slapped sanctions on European subsidiaries of state owned Gazprom. For now though a lid is being kept on the oil price by China’s zero-Covid policy and its city wide whack-a-mole approach of using mass lockdowns to quash infection spikes. With little end in sight to these tough restrictions, which have already caused a severe headache for manufacturers in terms of lost production, jitters are continuing about weaker growth and lower demand in the world’s second largest economy. Chinese stocks have been lifted over speculation that The People’s Bank of China will unleash a fresh round of stimulus to help companies keep borrowing costs lower amid worries about the economy losing steam. Bitcoin Takes A Breather For now the crypto wild west is taking a breather after reeling from the crash brought on by the collapse of a so called ‘stablecoin’, which demonstrated that it was anything but what it said on the tin. TerraUSD was designed to trade one on one against the dollar-but instead of being backed by the fiat currency – the reserve was made up of a mish-mash of other volatile coins. The clamour for regulation of stablecoins has become louder after losses mounted up but Bitcoin and Ether have regained some ground, with Bitcoin edging back up above $30,000. Some traders may see the sharp fall this month as an opportunity to buy the dip at a time but, given the hugely volatile nature of the coins, the crypto house of cards could tumble further. This latest plunge in the wheel of fortune demonstrates that speculating in cryptocurrencies is extremely high risk and are not suitable for investors who don’t have money they can afford to lose.’’ Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown About Hargreaves Lansdown Over1.7 million clients trust us with £132.2 billion (as at 30 April 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month. Updated on May 13, 2022, 1:28 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 13th, 2022

Crypto market cap has plunged 28% over the last week to $1.2 trillion, the lowest since July, amid broad meltdown

"It has been a rough period for crypto given the lost confidence with stablecoins and expectation for a much harsher regulatory environment." Jack Taylor/Getty Images Cryptocurrencies slumped further Thursday and have lost more than $500 billion in market capitalization since last week. The total crypto market cap is down 28% from a week ago at $1.2 trillion amid a broader meltdown. The latest dive puts the market cap at the lowest point for since July 2021. Cryptocurrencies continued to drop Thursday, extending a meltdown that has seen the total market capitalization for tokens falling 28% over the last week to $1.2 trillion, the lowest since July.That means more than $500 billion in market value has vanished in the past week, with the last 24 hours alone seeing a $200 billion loss. Digital assets continue to struggle to unlink from traditional risk assets that are falling on interest rate hikes and soaring inflation."It has been a rough period for crypto given the lost confidence with stablecoins and expectation for a much harsher regulatory environment," said Edward Moya, senior market analyst at OANDA.Bitcoin, the largest cryptocurrency by market capitalization, fell below $30,000 on Monday and briefly dipped below $26,000 on Thursday. Bitcoin is now settling at a support level around $28,000, down from its all-time high of $69,000 seen in November 2021.Turmoil in stablecoins, some of which are backed by liquid cash while others are algorithmic, added to the crypto crash after Terra lost its dollar peg."Full capitulation of the selloff for risky assets is entering its last stage, so that should suggest that Bitcoin might be subject to one last major plunge before big money decides to buy the dip," Moya said.Other analysts also said the latest crypto slide is another opportunity for "big money" to come back to risk assets to buy the dip. "The markets are in meltdown but this may present an opportunity for institutional players to start building positions and push stablecoin regulation to provide more confidence," said Martha Reyes, head of research at BEQUANT, a digital asset exchange and brokerage.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 12th, 2022

Blain: Buy Gold To Fund Bottom-Fishing

Blain: Buy Gold To Fund Bottom-Fishing Authored by Bill Blain via MorningPorridge.com, “Gold is enough, Beautiful gold, Lovable gold, Spendable gold..….” Gold – can’t eat it, can’t use it, but its everything crypto never was: tangible, exchangeable, a store of value, and a kitty for when things get tough. In uncertain markets…. Don’t forget the yellow stuff. Writing the morning porridge after Burn’s Night, Scotland’s celebration of our acclaimed national poet, Robert Burns, following Whisky and Haggis is never easy… So in order to force my brain back into motion… let’s consider Gold! Trying putting Gold in the context of today’s markets…. So foul and fair a market I have not seen. (Extra points if you know the reference from the Scottish Play – and what happens next!) One hand we have a pandemic of optimism that inflation is broken, central banks are going to pivot and start cutting rates, thus its unbounded joy at the prospect of a minor downturn, recovery, growth and a swift rise in earnings pushing up stocks, while bonds rally into the ease. The China reopening will fuel global recovery. Put your buying boots on! On the other hand are the ongoing portents of sticky inflation, central banks wanting to normalise positive interest rates around 2% inflation and 4% rates to promote functional capitalism (the end of the era of cheap money), and the shake-out in Zombie, over-levered companies and speculative hype that’s driven financial asset price inflation and now blocks growth and productivity gains. Stabilising the global economy will see rates and inflation higher for longer. Then layer on the real-world challenges of War In Ukraine, Geopolitical threats, Energy Security, the consumer Cost of Living Crisis and Income Inequality, climate change, plus a host of immediate challenges emerging to the political order in the West; from failing services across health, housing, education to increased populist threats from Left and Right. Pick yer poison and lay yer bets accordingly. Markets work by reading the uncertain runes of unclear futures. There are threats out there – but outcomes probably fall into the middle. My classic mantra is: “Things are never as bad as you fear, but never as good as you hope.” I see markets as multi-dimensional and complex: a little bit of inflation here will have consequences way over there. Be aware of the complexity. Many market participants tend to make the mistake of thinking price moves are determined by the linear cause and effect of events – this morning I read on Bloomberg: “High Equity Yields act as a better hedge against higher inflation than fixed income.” That is linearly true, but higher interest rates have consequential lateral effects; reducing consumption thus putting corporate earnings under stress and long-term less sustainable. Nothing in markets is ever simple…. Think laterally. Which finally leads us to Gold and its place in uncertain markets. According to the chart I was looking at, Gold prices peaked in 1980 at $2500 on an inflation adjusted basis. On a price basis the current price of Gild ($1945) is pretty close to the $1971 price seen during the depth of Covid. My colleague Ashley Boolell, Shard’s head of commodities, reckons gold is going to a new record level this year, fuelled by a number of factors – not least being the ongoing market uncertainty. Each time we get another unexpected market number, or a corporate shock, it chips way confidence. In uncertain markets Gold is seen as the safe-haven investment – especially when there is the threat of the technical US default on the back of the debt-ceiling being blocked by the Alt-Right of the Republican Party. Gold pays no interest. There is no return. It has no real use. Gold’s value is its scarcity. It is formed in supernovas and neutron stars in Galaxies far, far away. All the gold on earth came arrived as space rubble and dust, absorbed as the planet coalesced in the clouds of material around the forming sun. All the gold that’s ever been mined would only just cover a football pitch to the depth of 1 meter. (205,238 tonnes over the entirety of human history according to the World Gold Council.) Aside from some very limited industrial catalyst applications, its not very useful, but because it does not react or tarnish – it’s been worshipped as a thing of value for millennia. I was once told the prime driver of gold prices is the Monsoon. In wet years Indian farmers get rich on improved crop yields – meaning they buy their daughters more gold bangles for their wedding dowry. It’s a lovely thought – but apparently an exaggeration. Unlike cryptocurrencies – which tried to push their way into finance as exchangeable stores of value despite their intangibility – gold’s tangibility as a store of value has made it the globally accepted token of wealth since year dot. Over the years it has morphed into a commodity in its own right – traded electronically and held as an investment because of its recognised store of value. In times of uncertainty gold tends to rise. In times of market uncertainty it’s a very useful asset to hold. The trick to a market sell off is not being short equities when the stock crash comes, but being liquid enough to start buying after the crash or market correction. Analyse any great market tumble and its inevitably followed by a buying window – that delicious moment when the rest of the market is still panicked and fearful, but stock yields look cheap and bonds are selling for pennies because of weakness. That’s the moment to buy – but what with if your liquid bonds are in free-fall and offered only, and stocks are still in free-fall. That’s when the liquidity of Gold is a marvellous thing. Going into market uncertainty with a nice little stash of gold to finance bottom fishing of distressed cheap assets is a marvellous thing! Funny moment yesterday when I was chatting to Ashley about Gold y’day. Aside from being our commodities guru, he is also a published Science Fiction author. I asked him about the implications of space mining – which will be a very real thing in the next 50-years. What if a mission to the asteroid belt discovers a 10,000 tonne lump of orbiting gold? (I remember something like that from E Doc Smith’s Lensman series). Ashley told me that’s exactly what he’s writing about now! Tyler Durden Thu, 01/26/2023 - 09:35.....»»

Category: personnelSource: nytJan 26th, 2023

Bitcoin has rallied 22% in a week, pushing the crypto to levels not seen since fall of FTX

Bitcoin erased its post-FTX losses, surging past $21,000 on Tuesday. Crypto's total market cap topped $1 trillion as well, its highest since 2022. Bitcoin illustrationGetty Images Bitcoin is up 22% in the past week, trading at $21,236 on Tuesday. The cryptocurrency hasn't touched that level since before FTX's bankruptcy in November. A blockchain exec says that markets could see more volatility if large institutional players sell bitcoin.  Bitcoin has been on multi-day rally following strong Consumer Price Index data, surging 22% in the past week to touch levels not seen since prior to the fall of cryptocurrency exchange FTX in November.The token is ahead 1.96% at $21,236 on Tuesday. Bitcoin is trading at levels not seen since the fallout from the collapse of Sam Bankman-Fried's exchange. The industry's total market capitalization notched $1 trillion again over the weekend amid signs of bottoming.Elsewhere, altcoins are trending upwards as well. Solana spiked 44% in the past month following the release of a solana-based meme token called Bonk Inu. Polygon's token surged 19% in the past week on news of an upcoming software upgrade.Markets still have a long road to recovery amid a lengthy crypto bear market. Decades-high inflation, along with a slew of bankruptcy filings from the industry's biggest players like FTX, Celsius, and Three Arrows Capital last year have continued to hit investor sentiment as well.Despite recent gains, bitcoin is still down 68% since its all-time high in November of 2021. Industry executives, however, seem optimistic that market jitters will subside."I think we'll see less volatility in the Bitcoin price over the next 6 months just because traders are likely scarred by the recent events of the FTX crash," Kadan Stadelmann, Chief Technology Officer of blockchain solutions provider Komodo, told Insider earlier this year.Stadelmann added: "FTX held [zero] BTC, so we shouldn't see any liquidation events directly from that. However, large institutions that had a portion of their funds on FTX might be forced to sell their assets held in other places, which might include BTC."Danny Chong, cofounder of tokenized asset management protocol Tranchess, says that markets could worsen if there is more stringent crypto regulation or macroeconomic conditions become less favorable for investors. "This could be a further blow to the already lowered confidence levels in the industry," Chong told Insider earlier this year. "Coupled with bearish global market conditions like the persistence of high inflation, if such challenges are faced this year within the industry, this could have a negative impact on the crypto market."Last week, CPI data for December signaled that inflation pressures eased again, giving Federal Reserve officials leeway to slowdown interest rate hikes. Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 17th, 2023

What is wash trading, the fraudulent practice that some experts say accounts for 70% of transactions on crypto exchanges?

Wash trading can artificially boost prices, give the illusion of liquidity, and generate interest from other investors, experts tell Insider. (Photo by Jakub Porzycki/NurPhoto via Getty Images) Wash trading accounts for 70% of trades on some crypto exchanges, a study found.  The practice of firms trading with themselves to boost prices artificially may lure inexperienced investors.  Three experts dive into the practice and what it means for the crypto market.  Illicit crypto transactions skyrocketed in 2022 as scammers and hackers made off with billions, but there's another type of fraud lurking in the industry—wash trading, the fraudulent practice some traders and crypto firms can use to pump prices, dupe investors, and make trading appear more liquid. A recent working paper from the National Bureau of Economic Research found that wash trades accounted for up to 70% of all transaction on non-compliant crypto exchanges, suggesting most trades on these platforms are fraudulent. Mark Cuban, an avid cryptocurrency investor, warned his followers that the discovery and regulatory crackdown on wash trades could potentially set up another implosion in the industry.What is wash trading and why is it bad?Wash trading is essentially when a firm or party trades with itself to artificially boost prices, give the illusion of liquidity, and generate interest from other investors, according to Timothy Cradle, the director of regulatory affairs at Blockchain Intelligence. That can lead other investors to buy the token at an artificially high price. It's fraud and a form of market manipulation, he said.But the practice isn't only limited to individual bad actors. Crypto exchanges can also do wash trading to artificially jack up trading volumes, making the exchange appear more productive or more liquid than it actually is. That could potentially lure investors who are looking for a place to park their money, especially if they're comparing exchanges. "There's competition in every industry. That's not an excuse to go out and do wash trading and try to make your exchange look more liquid than it actually is, especially when you're dealing with cryptocurrency," Cradle said.How common is it?Wash trading could be as simple as sending crypto from one wallet to another, but there are more elaborate schemes out there, says Kim Grauer, the director of research as Chainalysis. In her research, wash trades were identified when a trade met certain relationship criteria with other wallets and addresses – suggesting something fraudulent could be taking place.The NBER paper studied 29 crypto exchanges that were classified as regulated or unregulated, with unregulated exchanges being sorted into two tiers based on size. The authors found wash trading was virtually absent on regulated crypto exchanges, but made up an average 77.5% of trading volume on unregulated exchanges. Tier-1 unregulated exchanges had a slightly lower proportion of wash trades at 61.8% of transactions, compared to 86.2% of transactions Tier-2 unregulated exchanges. For Binance, the largest crypto exchange in the world by trading volume and an unregulated Tier-1 exchange in the study, wash trading was estimated to comprise 46.4% of all transactions. "Binance does not engage in or tolerate wash trading, which is a violation of our terms of use, nor has it ever done so," a spokesperson from the exchange told Insider. "Binance has a dedicated Market Surveillance team that is responsible for reviewing surveillance related to potential abusive and/or manipulative behavior including wash trades and trade price manipulation."KuCoin, another top-five crypto exchange according CoinMarketCap, was estimated 52.9% of its transactions consist of wash trades. A spokesperson from the exchange told Insider KuCoin did not engage in wash trading.The paper also found a higher incident of wash trading in the few weeks after the crypto market saw positive returns, or experienced a drop in volatility. "Price increases could draw retail investors' attention and encourage speculation. Therefore, crypto exchanges are incentivized to pump up volumes to vie for better ranking and more clients."There's no way to truly identify a wash trade unless you have access to account data, which is typically only available to the exchanges themselves, according to Martin Leinweber, digital assets product specialist at MarketVector Indexes. The paper's findings, do, however, give an idea of how important regulation is in the industry, he said.How bad is this for the crypto industry?Experts are hesitant to say it could lead to the crash Mark Cuban envisioned, although the risk of another major crypto exchange going down because of fraudulent behavior is certainly possible, Cradle said."I struggle to agree or disagree with it," Cradle said. "I would find it hard to see a complex industry completely go under because of one type of fraud or manipulation.""I don't see a risk of a sudden crash as investors are already migrating to better exchanges," Leinweber added, pointing the exodus of crypto traders towards Tier 1 exchanges, which typically have better external ratings and are more compliant with regulation. Why aren't regulators paying more attention?One problem could be that the legal framework for crypto regulation is currently ambiguous. For instance, many in the industry have claimed that cryptocurrencies are commodities, not securities. But that definition places crypto in a regulatory loophole, since there is no federal oversight over the commodities spot market the way there is for the futures market."We're in this weird situation where both the CFTC and the SEC haven't really settled on what is cryptocurrency, and the question becomes who's actually going to investigate it and why," Cradle said. Others have criticized the CFTC and the SEC's hands-off approach to regulation. SEC chief Gary Gensler has previously said the US has regulatory framework for crypto firms, but many are not compliant, he said, urging exchanges to "come in and talk." Leinweber speculated that regulators may need to have a more comprehensive strategy if they are truly to crack down on wash trading. "To govern these exchanges, you must have a global strategy. Otherwise, regulatory arbitrage would always exist," he said. "I predict there will be increased regulation. But what we really require is intelligent regulation." Read the original article on Business Insider.....»»

Category: smallbizSource: nytJan 16th, 2023

FTX appeared to rent a property just 300 meters from the White House

FTX's US parent company has exited a six-year lease for the property, located opposite the White House and US Treasury. Legal filings show that FTX has backed out of a lease for a property just opposite the White House.Tom Williams/Getty Images FTX has exited a lease for a property it rented just opposite the White House and US Treasury. A court order marked the six-year lease for the "nonresidential" property as "mutually terminated." Sam Bankman-Fried visited the White House four times between April and September. Legal filings show that FTX has backed out of a lease for a property just opposite the White House.The property is located at 655 15th Street, Washington, DC, in a building known as Metropolitan Square.According to a legal filing by FTX's attorneys from Monday, West Realm Shires – the parent company of FTX's US businesses – and Metropolitan Square Associates LLC agreed a lease on August 3, 2022, which was set to expire in August 2028.The legal filing described the property as "nonresidential" but didn't give further information, such as its square footage or intended use.The building is located directly opposite the US Treasury and just a few minutes walk from the White House. As the crow flies the building is around 300 meters from the seat of the president.Google Maps lists part of the property as a WeWork and the office-space company has an inactive Facebook page for the address, though 655 15th Street doesn't feature on WeWork's website. Crypto outlet Decrypt first reported on the news.The filing was included as part of FTX's bankruptcy proceedings. The crypto exchange and dozens of affiliated companies, including hedge fund Alameda Research, filed for bankruptcy on November 14. Cofounder Sam Bankman-Fried stepped down as CEO and has since been charged with eight criminal counts, including wire fraud. Former Alameda CEO Caroline Ellison and former FTX CTO Gary Wang have also been charged, with both pleading guilty."The Debtors, in exercise of their business judgment, have determined that they do not have a continuing need for the Premises and that the Lease adds no value to the Debtors' estates," representatives for FTX Trading wrote in a proposed order on Monday, which was granted by US bankruptcy judge John T. Dorsey on Tuesday.The order said that the lease "shall be deemed rejected and mutually terminated as of December 21, 2022." A legal filing from December 21 shows that FTX Trading proposed an order for West Realm Shires to also reject leases it held in Miami, San Francisco, Chicago, and Singapore.Under the order, Metropolitan Square Associates is entitled to retain the security deposit of $31,981. The order says that FTX must collect its business and financial records from the site and return third-party items to their proper owners. Beyond that, if FTX doesn't collect its other personal property, Metropolitan Square Associates is allowed to retain or dispose of it.Attorneys for FTX Trading and Metropolitan Square Associates did not immediately respond to Insider's request for comment on when the lease first started and what the property was used for. WeWork did not immediately respond to Insider's request for comment on whether it still has any connection to the property.Sam Bankman-Fried visited the White House four times between April and SeptemberDuring his time leading FTX, Bankman-Fried tried to push through changes to crypto regulation. He gave away millions of dollars in political contributions and planned to host a huge Christmas party for politicos, Insider previously reported.Guarding Against Pandemics, a lobbying group set up by Bankman-Fried, bought a roughly $3 million townhouse in Capitol Hill, Puck reported. In November, the group used the property to host a cocktail party for Republican operatives and lobbyists on one night and a similar event for Democrats the next, the publication reported.Bankman-Fried himself visited the White House four times between April and September, visitor logs show, including visits two days in a row in May."The meetings focused on pandemic prevention related to Sam Bankman-Fried's Foundation and general information on the cryptocurrency industry and crypto exchanges," White House Press Secretary Karine Jean-Pierre told reporters last week. Steve Ricchetti, who serves as Counselor to President Joe Biden, and Bruce Reed, Biden's deputy chief of staff, attended the meetings, Jean-Pierre said.Read the original article on Business Insider.....»»

Category: dealsSource: nytJan 11th, 2023

Here"s the latest timeline of the FTX saga from Sam Bankman-Fried"s shady balance sheet and a battle with Binance to pleading not guilty to fraud

Everything to know from the first domino that toppled the crypto empire all the way to the disgraced founder's latest court appearance. om Williams/CQ-Roll Call Inc via Getty Images Sam Bankman-Fried's downfall began with a November 2 CoinDesk report on the balance sheet of his hedge fund, Alameda Research.  He then battled with Binance, watched two of his co-conspirators plead guilty, and then pled not guilty himself on January 3.  Here's the latest timeline of FTX's collapse and ongoing fallout. In short order, crypto exchange FTX went from a $32 billion valuation to bankruptcy and its founder went from a praised wunderkind to a disgraced figure accused of massive fraud. Sam Bankman-Fried could face up to 115 years in prison if convicted of all the charges against him. Since FTX collapsed in November, numerous reports have emerged on shady financing practices, like having customers send funds to a fake electronics retailer, and on how billions of dollars in client funds were used to prop up Bankman-Fried's hedge fund, Alameda Research.Such dealings became the subject of federal probes even before the FTX crash, while authorities and debtors search for billions in missing customer funds.With the case set to drag on for months, if not years, here's how the saga has unfolded so far.The FTX timelineNovember 2: CoinDesk reports Alameda held $14.6 billion of assets, much of it in the form of the FTT token that FTX issued.November 6: Binance CEO Changpeng "CZ" Zhao took to Twitter to announce the sale of $530 million in FTT, triggering roughly $6 billion in FTX withdrawals in just 72 hours.November 7: Bankman-Fried wrote in a now-deleted tweet: "A competitor is trying to go after us with false rumors. FTX is fine. Assets are fine. FTX has enough to cover all client holdings. We don't invest client assets (even in treasuries). We have been processing all withdrawals, and will continue to be."November 8: Binance tentatively agrees to buy FTX amid "significant" liquidity issues, and some users reported difficulties pulling funds from FTX.November 9: Binance backs out of the takeover deal after corporate due diligence revealed issues CZ said were beyond helping.November 11: FTX files for chapter 11 bankruptcy and Bankman-Fried steps down as CEO, replaced by John Ray III. FTX officials confirm rumors of a hack on Telegram as outflows exceed $600 million.November 12: Bahamas police bring in Bankman-Fried for questioning, and the authorities there open a criminal investigation.November 15: In a bankruptcy filing, FTX says it could have over 1 million creditors. One week earlier, the company estimated the number of creditors at about 100,000.November 16: Bankman-Fried has a direct-message exchange with a Vox journalist, where the ostensibly pro-regulation figure says regulators make everything worse.November 17: New CEO John Ray III slams FTX and leadership in court filing: "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here." The filing also noted that Bankman-Fried took a personal loan of $1 billion from Alameda Research, and other execs received massive loans too.November 18: Bahamas regulators confirm they are holding some of FTX's assets.November 22: In a bankruptcy hearing, a lawyer for FTX said a substantial amount of assets belonging to the crypto exchange were either missing or stolen. November 28: BlockFi, a crypto lender that FTX helped bail out last summer, files for bankruptcy and launches a lawsuit to get Bankman-Fried to hand over Robinhood shares. December 12: US authorities announce plans to charge Bankman-Fried after the Bahamian authorities arrested him.December 13: A lawsuit filed by the Commodity Futures Trading Commission states that FTX execs hid $8 billion in liabilities in a customer account that Bankman-Fried referred to as "our Korean friend's account."December 19: Caroline Ellison, former CEO of Alameda Research, and FTX cofounder Gary Wang both plead guilty to fraud. Ellison tells a judge that FTX execs secretly borrowed billions from Alameda Research.December 22: After being extradited to the US, Bankman-Fried is released on $250 million bail with plans to stay at his parents' home in Palo Alto, California.December 27: Court documents reveal that Bankman-Fried borrowed hundreds of millions of dollars from Alameda to fund purchases of Robinhood stock, which Alameda used as collateral for a loan, CoinDesk reported.January 3: Bankman-Fried pleads not guilty in the Justice Department's criminal case. His lawyers ask a judge to keep secret the identities of two people who helped secure his $250 million bail package. His trial is due to begin in October.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 4th, 2023

Crypto contagion isn"t over and the lack of transparency means the industry is an "insider"s game," EY blockchain chief says

Users often don't have the ability to fully evaluate crypto firms for themselves, even when businesses are transparent, EY's blockchain chief warned. Bitcoin rocket crash flying down graphicGetty Images FTX's collapse shows that crypto contagion isn't over and the industry has transparency issues, according to EY's blockchain chief Paul Brody. Brody noted that transparency claims made by crypto firms were often "difficult to test," which makes the industry an "insider's game." Policymakers have urged the SEC to tighten regulation on crypto firms, criticizing the current hands-off approach. FTX's collapse shows that crypto contagion isn't over, and the lack of transparency in the industry means crypto is an "insider's game," according to EY's head of blockchain Paul Brody."We're definitely not done with the contagion," Brody said in an interview with CNBC on Tuesday. "People said, crypto is going to be better because it's going to be transparent and there's no politically motivated central bank in this ecosystem. It's turned out to be quite the opposite. Crypto is extremely non-transparent."That's been exposed with the collapse of prominent crypto firms this year, with companies like Terra Luna and Sam Bankman-Fried's FTX declaring bankruptcy, setting off a domino effect of other collapses in the industry.FTX's bankruptcy, in particular, revealed chaotic record-keeping within the crypto exchange and extravagant purchases using company funds, rattling the trust of its former users.But the problem is deeper than just bad actors in the industry, Brody said. Users often don't have the ability to fully evaluate crypto firms for themselves, even when businesses are transparent with their algorithm. He noted that his own team finds transparency claims among crypto firms "difficult to test and follow through.""In some cases, that's absolutely by design," he said. "You follow all the rules, but the rules are complicated, and so therefore it's an insider's game."Brody predicted customers would start to look to firms in the space that they could trust and were inspected by regulators, adding to a chorus of market commentators who have urged government agencies to tighten the screws on crypto firms. Lawmakers have been critical of the SEC's current approach, which asks crypto firms to "come in and talk" to be regulated.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 20th, 2022

Crypto contagion isn"t over and the lack of transparency means the industry is an "insider"s game," EY strategist says

Users often don't have the ability to fully evaluate crypto firms for themselves, even when businesses are transparent, one EY strategist warned. Bitcoin rocket crash flying down graphicGetty Images FTX's collapse shows that crypto contagion isn't over and the industry has transparency issues, according to EY strategist Paul Brody. Brody noted that transparency claims made by crypto firms were often "difficult to test," which makes the industry an "insider's game." Policymakers have urged the SEC to tighten regulation on crypto firms, criticizing the current hands-off approach. FTX's collapse shows that crypto contagion isn't over, and the lack of transparency in the industry means crypto is an "insider's game," according to EY strategist Paul Brody."We're definitely not done with the contagion," Brody said in an interview with CNBC on Tuesday. "People said, crypto is going to be better because it's going to be transparent and there's no politically motivated central bank in this ecosystem. It's turned out to be quite the opposite. Crypto is extremely non-transparent."That's been exposed with the collapse of prominent crypto firms this year, with companies like Terra Luna and Sam Bankman-Fried's FTX declaring bankruptcy, setting off a domino effect of other collapses in the industry.FTX's bankruptcy, in particular, revealed chaotic record-keeping within the crypto exchange and extravagant purchases using company funds, rattling the trust of its former users.But the problem is deeper than just bad actors in the industry, Brody said. Users often don't have the ability to fully evaluate crypto firms for themselves, even when businesses are transparent with their algorithm. He noted that his own team finds transparency claims among crypto firms "difficult to test and follow through.""In some cases, that's absolutely by design," he said. "You follow all the rules, but the rules are complicated, and so therefore it's an insider's game."Brody predicted customers would start to look to firms in the space that they could trust and were inspected by regulators, adding to a chorus of market commentators who have urged government agencies to tighten the screws on crypto firms. Lawmakers have been critical of the SEC's current approach, which asks crypto firms to "come in and talk" to be regulated.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 20th, 2022

Futures Tumble Ahead Of $4 Trillion Quad Witch, 2nd Biggest Ever OpEx

Futures Tumble Ahead Of $4 Trillion Quad Witch, 2nd Biggest Ever OpEx A miserable week for global stocks - which wrongfooted traders as risk first soared after a weaker than expected CPI only to tumble more than 7% just two days later - was set to end with even more selling on Friday after hawkish signals from the Fed and the ECB sparked worries about higher-for-longer interest rates leading to a possible recession: the latest economic data signaled a slowdown in US growth; data from France showed that it faces a greater recession risk, with its PMI falling to its lowest level in two years. Similarly UK companies are steeling themselves for an economic contraction, with both the manufacturing and service sectors experiencing a slump in the fourth quarter. Economists now see a 60% probability of recession in the US and an 80% chance in Europe. Equity analysts have cut 12-month earnings estimates for the regions to the lowest levels since March and July, respectively. Not helping matters is today's massive, $4 trillion quad-witching option expiration, which as we previewed yesterday threatens to become a liquidity-draining vortex just as CTAs are forced to dump stocks. potentially leading to outsized price moves. With the S&P 500 stuck for weeks within 100 points of peak gamma at the 4,000 strike, the sheer volume provides a positioning reset that could turbocharge market moves. Given the backdrop of hawkish central banks and slowing growth, worries are mounting the expiration will act as an air pocket. Finally, bitcoin plunged back under $17K following news that accounting firm Mazars has paused work for all crypto clients globally, according to Binance, which was a customer of the auditing firm. Between all that, it is perhaps surprising that S&P futures are down only 1% while contracts on the Nasdaq 100 dropped 0.62% by 6:56 a.m. in New York. The overnight selloff accelerated when Europe opened as European peripheral bonds blew out amid fears that the ECB's aggressive tightening and QT will crash the European bond market. The dollar fluctuated and Treasuries dropped across the curve. Oil trimmed a weekly gain, sliding more than 2% amid renewed fears that the Fed is pushing the US into a crash-landing. The S&P 500 index, already on track for its biggest annual slump since 2008, erased another $1.1 trillion in market capitalization in the past two days after both the Fed and the ECB took a more hawkish tone than expected about how much further rates will need to rise to tame inflation. The MSCI ACWI Index, the global equities gauge, headed for a 1.4% retreat this week. “The worrying aspect for markets is the rate hike finishing lines are still unknown, and we have the two most dominant central banks in the world climbing the mountain into very restrictive territory,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “Hiking interest rates into a dimming macro environment will undoubtedly trigger a recession. The question is just how profound.” Ann-Katrin Petersen, senior investment strategist at BlackRock Investment Institute, said on Bloomberg Television that central banks were starting to acknowledge they will have to crush growth and will likely engineer recessions to tame inflation. Among notable moves in US premarket trading, Adobe shares are up 3.7% in premarket trading, after the software company reported adjusted fourth-quarter earnings that beat expectations. Analysts said the report speaks to positive demand for creative design software despite economic uncertainties. Guardant Health shares sank after following disappointing results from a study of its blood test for detecting colorectal cancer in average-risk adults. Here are some other notable premarket movers: Amazon (AMZN US) falls 1.3% in premarket trading as JPMorgan cut its price target on the stock to $130 from $145 primarily due to AWS revenue deceleration and margin compression amid challenging macro conditions. . Meta Platforms (META US) rises 1.7% in premarket trading as JPMorgan raised the recommendation on the stock to overweight from neutral, citing increased cost discipline and a more favorable revenue outlook. Lanvin (LANV US) shares surge 56% in US premarket trading, following a volatile New York trading debut for the luxury group that saw its stock bounce between a gain of as much as 130% and declines of more than 50%. Stocks exposed to cryptocurencies drop in US premarket trading, as the price of Bitcoin fell below the $17,000 level after the Binance exchange said French auditor Mazars Group had paused work for all crypto clients globally. Hut 8 Mining (HUT CN) -4.6%, Block (SQ US) -2.1%. "Recessionary fears raced back to the top of the agenda and any thoughts of a Santa rally have all but evaporated, with previous hopes of peak inflation and interest rates being soundly rejected,” said Richard Hunter, head of markets at Interactive Investor. “Comments from the ECB in particular that ‘we are not slowing down, we are in for the long game’ were in direct contrast to what markets had been pricing in over recent weeks.” The slump this week also kept the S&P 500 from overcoming a technical downtrend in place since the start of the year, which has put an end to the past three bear-market rallies. The index didn’t convincingly break above its 200-day moving average, and is now close to testing its 50-day moving average, two other closely watched technical thresholds. Europe’s equity benchmark fell for a third day, to a five-week low. European real-estate stocks were the biggest declinerss in Friday trading, with the subindex for the rate-sensitive sector the biggest laggard on the Stoxx 600, after the ECB on Thursday hit a more hawkish tone than expected alongside its latest rate decision. Stoxx 600 Real Estate sector declines 2.2% with the wider Stoxx 600 -1%. Telecoms and retailers also underperformed as all sectors fell barring autos, which are supported by recent data that showed auto sales in Europe rose for a fourth straight month. Here are some of the biggest European movers: Games Workshop shares jump as much as 15%, the most since September 2020, after the maker of the Warhammer series of games said it has reached an agreement in principle for Amazon to develop the company’s intellectual property into film and television productions. TeamViewer shares jump as much as 11% to touch their highest level in six months, after the remote- software provider said that it would eventually end its sponsorship partnership with Manchester United Hollywood Bowl rises as much as 6.8% to its highest level since June 8 after the bowling chain reported a strong set of FY22 results Suedzucker rises as much as 5.9%, adding to yesterday’s 3.3% gains, as Warburg says the German sugar producer’s latest financial update is a “blow-out guidance” for the coming fiscal year. OVS shares rise as much as 5.3% in Milan after 9-month results, with Banca Akros upgrading to buy from neutral, noting that the 4Q sales performance is “much higher of our expectation.” Rank falls as much as 9.1%, most in two months, after a trading update from the gambling firm. Wood shares fall as much as 8% as Barclays cuts the energy services firm to equal-weight National Express falls as much as 6.5% after being cut to hold from buy at Liberum, with the broker highlighting that growing headwinds point to a “deleveraging challenge,” according to note. Aalberts shares drop as much as 5.1% after the Dutch piping firm announced Wim Pelsma has notified its supervisory board that he wishes to step down as chief executive officer in the second half of 2023 Tele2 shares drop as much as 4.7% after Redburn analyst Steve Malcolm cut the recommendation to sell from neutral, citing a potential 2023 guidance cut. Asian equities fell Friday, extending the week’s decline, as hawkish views from global central banks offset the boost from easing delisting risk for Chinese stocks in the US. The MSCI Asia Pacific Index dropped as much as 0.9%, led by technology stocks. Shares in Japan and Taiwan were among the worst performers in the region; it posted the first weekly decline since October.  Chinese shares eked out small gains after US officials said they got sufficient access to audit documents on companies in China and Hong Kong, removing the acute threat of delisting faced by those firms. Still, caution remained as the US government added dozens of Chinese tech companies to its blacklist. A risk-off mood extended into Friday’s trading after the Fed’s hawkish tone from its latest rate decision was echoed by the European Central Bank, squashing hopes for a pivot in monetary policies next year. “As premature pivot bets collide with overly-exuberant China re-opening bets,” expectations will need to be “tempered for a bumpy path out of Zero-Covid amid winter/Lunar New Year travel and lingering confidence deficit,” said Vishnu Varathan, head of economics & strategy at Mizuho Bank. The Asian stock benchmark has fallen 1.8% this week, set to snap a six-week gaining streak as traders took profit following a recent rally, and as China’s surging Covid cases and the Fed’s tightening weighed on sentiment. Japanese stocks declined for a second day, leading losses in the region, as investors assess the possibility of further tightening by global central banks and weak US retail sales data.  The Topix Index fell 1.2% to close at 1,950.21, while the Nikkei declined 1.9% to 27,527.12. The MSCI Asia Pacific Index dropped 0.7%. Toyota Motor Corp. contributed the most to the Topix Index decline, decreasing 1.9%. Out of 2,163 stocks in the index, 343 rose and 1,737 fell, while 83 were unchanged. “Both the U.S. and Europe were down significantly yesterday, and Japanese stocks are also dragged by this,” said Ryuta Otsuka, a strategist at Toyo Securities Co In FX, the greenback traded mixed versus its Group-of-10 peers; the yen was the best performer. The euro swung between modest gains and losses against the US dollar. The euro’s volatility skew steepened with the currency failing to tackle spot offers around $1.0750 after the hawkish ECB decision and as profit-taking took over. The pound climbed and UK bonds fell, in line with bunds. Australian dollar reversed an intraday gain after iron ore fell on news that China would be centralizing purchases of the commodity. Kiwi rose as data showed non-resident bond holdings hit a four-year high. In rates, Treasury yields added up to 4bps led by the long end. In rates, treasury futures drifted lower over Asia and early European session, following wider losses seen across core European rates after several ECB policy members reinforced the bank’s hawkish stance. US session light, with focus including manufacturing data and Fed’s Daly talking on inflation. US yields were cheaper by up to 5bp across long-end of the curve, with 2s10s and 5s30s spread steeper by 3bp and 1bp on the day; 10-year yields near cheapest levels of the session at around 3.49% with bunds, gilts lagging by additional 6bp and 7bp in the sector. The German curve added 10-12 bps while Italian yields rose by 15-23bps after money markets bet the ECB will lift the deposit rate as high as 3.36% after a barrage of hawkish comments from ECB policy makers. In commodities, crude benchmarks posted losses in excess of 2.0%; though, WTI still has around USD 4.0/bbl of downside required to bring it back to the WTD low of USD 70.25/bbl which printed on Monday. French President Macron said EU energy policy is likely to be finalized during the meeting on Monday, while it was separately reported that the Czech PM said EU leaders agreed the gas price cap deal must be done by Monday at the energy ministers' meeting, according to Reuters. Spot gold and silver are experiencing some marked divergence with the yellow metal essentially unchanged, while silver has slipped by around 2% to the mid-USD 22/oz region. Looking to the day ahead now, and data releases include the global flash PMIs for December. Central bank speakers include the Fed’s Daly, and the ECB’s Rehn, Holzmann and Centeno. Finally, earnings releases include Accenture. Market Snapshot S&P 500 futures down 1.1% to 3,854.25 STOXX Europe 600 down 0.8% to 426.66 MXAP down 0.7% to 156.22 MXAPJ down 0.6% to 508.56 Nikkei down 1.9% to 27,527.12 Topix down 1.2% to 1,950.21 Hang Seng Index up 0.4% to 19,450.67 Shanghai Composite little changed at 3,167.86 Sensex down 0.8% to 61,333.94 Australia S&P/ASX 200 down 0.8% to 7,148.68 Kospi little changed at 2,360.02 German 10Y yield little changed at 2.20% Euro little changed at $1.0625 Brent Futures down 1.9% to $79.66/bbl Brent Futures down 1.8% to $79.72/bbl Gold spot down 0.0% to $1,776.18 U.S. Dollar Index little changed at 104.59 Top Overnight News from Bloomberg An estimated $4 trillion of options is expected to expire Friday in a monthly event that tends to add turbulence to the trading day. This time, with the S&P 500 stuck for weeks within 100 points of 4,000, the sheer volume provides a positioning reset that could turbocharge market moves The Fed’s quarterly projections showed officials now expect so-called core inflation — which excludes food and energy — to end this year around 4.8%, up from the 4.5% figure they forecast in September. Yet that number looks much too high to Wall Street economists The ECB is likely to raise interest rates by 50 basis points at its meetings in both February and March, Governing Council member Olli Rehn said The ECB will likely accelerate the pace at which it offloads government debt accumulated during past crises from July next year as part of its fight against soaring inflation, Governing Council member Francois Villeroy de Galhau said Markets have understood the hawkish message sent by ECB rate setters, Governing Council member Robert Holzmann tells reporters in Vienna ECB Governing Council member Madis Muller said interest rates will likely rise above levels anticipated by markets as the economic slowdown isn’t enough to curb inflation as needed Euro-zone composite PMI rose to 48.8 in December, from 47.8 in the prior month and versus an estimate 47.9 Three senior Italian politicians criticized the ECB’s increase in borrowing costs, pointing to rising tensions between Giorgia Meloni’s government and Frankfurt officials UK Composite PMI was little changed at 49 in December, compared to last month’s reading of 48.2 and expectations for a drop to 48 Britain is enduring the highest number of strikes since Margaret Thatcher was prime minister, according to estimates by a group of economists UK retail sales unexpectedly fell in November. The volume of goods sold in shops and online fell 0.4%, the Office for National Statistics said Friday. Sales excluding auto fuel fell 0.3%. Economists expected a 0.3% gain on both measures China’s abrupt ending of its Covid Zero restrictions have forced economists to make sharp revisions to their growth projections for this year and next. UBS Group AG and Australia & New Zealand Banking Group Ltd. were the latest to adjust forecasts on Friday, cutting estimates for this year to 2.7% as Covid infections spread rapidly. Predictions for next year were raised sharply to close to 5% or higher, on the expectation that consumer and business activity will recover as Covid infections subside A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were pressured on spillover selling from global counterparts following the slew of central bank rate hikes and with markets also unnerved by a flurry of dismal US data releases. ASX 200 was lower with sentiment not helped by a deterioration in the latest Australian flash PMI data releases. Nikkei 225 underperformed after the ruling LDP tax panel agreed and provided details on the tax hike plan to boost the defence budget and with index-heavyweight Fast Retailing hit by the announcement of a 3-for-1 stock split. Hang Seng and Shanghai Comp lacked firm direction amid mixed headlines with some encouragement from reports related to US audits in which Chinese companies averted a delisting after the US was given full inspection access, while there was also a constructive tone in discussions between US Treasury Secretary Yellen and China's Ambassador to the US in which they agreed to step up coordination on trade and policies. Top Asian News China National Health Commission issued a plan to step up COVID control and prevention in rural areas where it will strengthen reserves of essential drugs and COVID home test kits. China will also accelerate COVID vaccination of the rural population, especially among the elderly and said that people returning to their hometowns in rural areas should monitor their health and reduce contact with the elderly at home, according to Reuters. China's NDRC said the economy is facing more complex and grim external environments but added that the long-term positive trend hasn't changed and it approved CNY 1.5tln of major projects as of end-November. NDRC said China's economic growth is expected to continue picking up following the implementation of new COVID rules and that they will focus on stabilising growth, employment and prices, as well as speed up infrastructure project construction and expand effective investment, according to Reuters. China's securities regulator said it welcomes the US PCAOB decision on auditing and will continue supervision work on auditing in the future, while it will create a more stable regulatory environment with the US, according to Reuters. China's ambassador to the US met with US Treasury Secretary Yellen to discuss their views on global macroeconomic and financial developments, while it was reported that they agreed to step up coordination on trade and policies. Japan's government is to implement defence tax hikes in stages over multiple years to secure more than JPY 1tln by fiscal 2027, while it is to adopt a new corporate surtax of 4.0%-4.5% and will introduce a surtax of 1% on incomes for the time being. Furthermore, it is to raise the tobacco tax in stages by JPY 3 a piece and said it will implement defence taxation at an appropriate time from 2024 onwards, according to a draft by the ruling LDP cited by Reuters. European bourses remains on a downward trajectory as the post-ECB slump continues, Euro Stoxx 50 -1.0%. Sectors were initially mixed but are now all underwater with Real Estate lagging giving the detrimental rate environment. Stateside, US futures are pressured in-line with the above price action and ahead of a handful of Fed speakers, ES -1.1%. Top European News UK Companies Brace for Recession as Manufacturing Slumps UK Dec. Flash Services PMI 50; Est 48.5 Most Banks See More ECB Rate Hikes With Potentially Higher Peak Russian Missile Barrage Knocks Out Power to Ukrainian Cities UK Civil Aviation Regulator Raises Concerns With Wizz Air Bunzl Sinks as Barclays Cuts to Underweight, RS Group Upgraded FX USD has whipsawed within a 104.20-73 range, well within yesterday's bands, though an overall underlying bid has emerged, with the DXY climbing to incremental new peaks on multiple occasions. Though, this action is capped by marked JPY upside given its traditional haven allure and post-data; USD/JPY down to 136.83 at worst. GBP impaired further post-BoE dissent on the USD's move and as the EUR proves comparably more resilient given the hawkish ECB; Cable to 1.2120 and EUR/USD holding above 1.06. Elsewhere, G10 peers are generally downbeat given the above narrative, though CAD has proven relatively resilient to the crude action. PBoC set USD/CNY mid-point at 6.9791 vs exp. 6.9844 (prev. 6.9343) Fixed Income EGBs continue to slide. With Bunds lower by over 150 ticks and the associated 10yr yield above 2.2% post-ECB. Gilts are pressured in-turn, though to a slightly lesser extent given the BoE's dovish dissenters. USTs are in the red, but with magnitudes much more contained and the curve steepening ahead of Fed speak and the region's PMIs. Commodities Currently, the crude benchmarks are posting losses in excess of 2.0%; though, WTI still has around USD 4.0/bbl of downside required to bring it back to the WTD low of USD 70.25/bbl which printed on Monday. Qatar Energy sells February Al-Shaheen crude at USD 1.30-1.50/bbl above Dubai quotes, according to sources. French President Macron said EU energy policy is likely to be finalised during the meeting on Monday, while it was separately reported that the Czech PM said EU leaders agreed the gas price cap deal must be done by Monday at the energy ministers' meeting, according to Reuters. ICE warned it may pull the gas market from the EU over the Brussels price cap, according to FT. Currently, Dutch TTF Jan’23 is lower by around 8% on the session, though seemingly found a floor around EUR 120/MWh. Panama's government ordered the suspension of operations at First Quantum Minerals' copper project. Spot gold and silver are experiencing some marked divergence with the yellow metal essentially unchanged, while silver has slipped by around 2% to the mid-USD 22/oz region Central Banks ECB's Villeroy says must not speculate on the number of interest rate rises, too early to talk about the terminal rate. ECB's Muller says rates are likely to increase by more than the market expects. Cannot rely on an economic slowdown to tame inflation. ECB's Rehn says rates need to rise significantly. Interest rates will still have to rise significantly to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target. ECB's Holzmann says inflation still poses a challenge, does not want to say where the terminal rate is, the hawkish statement is equivalent to a 75bp hike. Bundesbank: German recession now expected in 2023, downturn not seen severe. Click here for more detail. Geopolitics North Korean Leader Kim Jong Un guided a successful test of a 'high-thrust solid-fuel motor' at the satellite launching ground and the test was said to have provided a guarantee for the development of another new strategic weapon system, while Kim hopes the new-type strategic weapon would be made in the shortest span of time, according to KCNA. HKEX (388 HK) welcomed Asia's first crypto assets ETFs after the listing of CSOP Bitcoin Futures ETF & CSOP Ether Futures ETF, according to Reuters. FTX is reportedly seeking permission to sell off LedgerX, Ember and its branches in Japan and Europe before they lose value and have their licences revoked, according to Cointelegraph. Kraken says "We are investigating reports from clients having difficulty connecting to the site and API as well as via mobile apps.". Binance reports that Mazars is to pause work for crypto clients, via Bloomberg. US Event Calendar 09:45: Dec. S&P Global US Composite PMI, est. 46.9, prior 46.4 09:45: Dec. S&P Global US Services PMI, est. 46.5, prior 46.2 09:45: Dec. S&P Global US Manufacturing PM, est. 47.8, prior 47.7 DB's Jim Reid concludes the overnight wrap At this age in life I generally have an idea of what I like and new experiences are rarer, for mostly good reasons. However, tomorrow I’ll attend my first ever artistic swimming (synchronised swimming in old parlance) Christmas performance. Maisie is the youngest in it but has taken to the sport very well in spite of her hip issues. I never thought in a million years I'd go to such an event but here goes. Talking of year end performances, it would have been completely out of character for 2022 to go out with a whimper and with the last major act of the year, the ECB ensured that we didn’t. Following the hawkish message from the Fed, yesterday saw the ECB join in with a clear signal for markets to price in more aggressive rate hikes. Indeed, there could be no doubt about their message as they 1) pointed to further rate hikes ahead, 2) outlined their plans for quantitative tightening, and 3) upgraded their inflation forecasts significantly. Meanwhile, Bloomberg even reported afterwards that over a third of the Governing Council wanted a larger 75bps hike. That led to some massive market moves coming on the heels of the Fed, with yields on 2yr German debt (+22.1bps) seeing their largest daily increase since September 2008 if you use the generic 2yr series on Bloomberg and to the highest since that point too. And with the Fed and the ECB now pledging to take rates further into restrictive territory in 2023, risk assets took another major hit, with the S&P 500 (-2.49%) and the STOXX 600 (-2.85%) both seeing sizeable losses. The first punch from the Fed didn’t really land on markets but the second punch from the ECB did. In terms of the details, the main headline was much as expected as they unveiled a 50bps rate hike, thus taking the deposit rate up to a post-GFC high of 2%. However, just about every other detail leant in a hawkish direction. First, there was the comment at the top of the ECB’s statement that rates would “still have to rise significantly”, even after the 250bps worth of hikes we’ve already had. Second, President Lagarde then followed that up in her press conference, saying that “we should expect to raise interest rates at a 50 basis-point pace for a period of time”, which dampened investor hopes that the ECB might downshift again to 25bps at the next meeting. And third, the staff inflation forecasts were much more hawkish than in September, with the 2023 projection upgraded to +6.3% (vs. +5.5% in September), 2024 at +3.4% (vs. +2.3% in September), and 2025 still above target as well at +2.3%. Alongside those hawkish details, the ECB also outlined plans to begin quantitative tightening from March. They said that their Asset Purchase Programme portfolio would start declining by €15bn per month from March until the end of Q2 2023, and that afterwards the pace “will be determined over time.” The statement said we should get “the detailed parameters” for QT at the next meeting in February, and that by the end of 2023, they’d also review the “operational framework for steering short-term interest rates, which will provide information regarding the endpoint of the balance sheet normalisation process.” Given the comments from Lagarde about further 50bp hikes ahead, investors moved to price in a more aggressive path of ECB rate hikes over the months ahead. For instance, if you look at overnight index swaps, the rate hike priced in for the next meeting in February moved up from +40.1bps the previous day to +58.1bps now, so fully pricing in another 50bp move. Our own European economists now think the terminal rate will be 3.25% rather than the 3% expected before the meeting. This was always the direction they saw the risks moving with Mark Wall now expecting hikes of 50bps in February, 50bps in March and 25bps in May. There is risk of another 50bps in May but Mark thinks the ECB growth forecast is too strong for H2 2023 and into 2024, and that an earlier start to QT and a rapid rate means he thinks they’ll step down at that point. See Mark’s team’s excellent review of a very important ECB meeting here. Against the backdrop of mounting expectations of further ECB hikes, sovereign bonds saw a massive selloff across the Eurozone yesterday. For instance, yields on 10yr bunds (+14.0bps), OATs (+15.9bps) and BTPs (+28.9bps) all rose significantly after the policy decision was announced. Furthermore, there was a significant widening in peripheral spreads, with the gap between Italian and German 10yr yields moving back above 200bps for the first time in a month. In the meantime, the moves at the front-end of the curve were even more pronounced, with yields on 2yr German debt hitting 2.44% intraday, before closing at 2.39%, a post-2008 high. With the two major DM central banks having taken a very hawkish stance over the last 48 hours, risk assets struggled yesterday as investors grappled with the prospect of further rate hikes into 2023. The S&P 500 (-2.49%) had its worst day in over a month, and Europe’s STOXX 600 (-2.85%) put in its worst day since May. Those losses were seen across the board, with just 32 companies in the S&P 500 moving higher on the day. We will see if now the big event risk days are out the way, whether the market just calms down massively into Xmas and we pick up the battle again next year. Whilst the focus was understandably on the ECB yesterday, the Bank of England also announced their latest policy decision, where they confirmed that the Bank Rate would rise 50bps as expected, taking it up to a post-2008 high of 3.5%. Six of the nine members on the committee were in favour of the hike, but one preferred a larger 75bps move, and two others wanted no change at all. Looking forward, they echoed the other central banks in pointing to further hikes ahead, with a majority saying that if the economy evolved in line with their November projections, then “further increases in the Bank Rate might be required for a sustainable return of inflation to target.” Market pricing for the upcoming meetings saw little change following the decision, but gilts outperformed significantly, with 10yr yields down -6.9bps on the day. Elsewhere in markets, yesterday brought a mixed bag of US data releases for investors to react to. On the plus side, the weekly initial jobless claims unexpectedly fell to 211k (vs. 232k expected) over the week ending December 10, and that’s one of the most timely indicators we get. However, the decline in November retail sales of -0.6% (vs. -0.2% expected) was faster than anticipated, whilst industrial production also contracted by -0.2% (vs. unch expected). Some of the surveys for December didn’t look too good either, with the Empire State manufacturing survey down to -11.2 (vs. -1.0 expected), and the Philadelphia Fed’s business outlook came in at -13.8 (vs. -10.0 expected). One asset that didn’t follow the pattern elsewhere yesterday was Treasuries. In spite of the hawkish tone from Fed Chair Powell on Wednesday, they strongly outperformed their counterparts in Europe, with the 10yr yield down -3.1bps to 3.45%. So this was a strong day for the DB house view of bunds underperforming Treasuries. The 10yr UST move was driven by a -2.6bps decline in the 10yr inflation breakeven to 2.17%, which is just above its recent closing low in late-September of 2.1545%. If it breaches that point, then it would be at its lowest since February 2021, and demonstrates that for the time being, investors still have confidence that central bankers aren’t going to let longer-term inflation get out of control. Nevertheless, there’s still something of a divergence between the Fed’s dots from Wednesday and market pricing, with the Fed pointing to end-2023 rates at 5.1%, whereas futures are still only at 4.40%. Something will eventually have to give. Meanwhile, in Asia this morning, yields on 10yr USTs (+3.64 bps) slightly pulled back, trading at 3.48% as we go to print. Asian stock markets are trading in negative territory for a second consecutive day on concerns that the hawkish stance of global central banks will push the economy into a recession. Across the region, the Nikkei (-1.74%) is leading losses with the Shanghai Composite (-0.25%), the CSI (-0.33%) and the KOSPI (-0.26%) all moving lower. Elsewhere, the Hang Seng (+0.09%) is fractionally higher in early trading. Outside of Asia, stock futures tied to the S&P 500 (-0.06%) and the NASDAQ 100 (-0.03%) are trading just below flat. We had mixed data from Japan as manufacturing activity contracted at the fastest pace in more than two years in December with the au Jibun Bank flash manufacturing PMI falling further to 48.8 from a level of 49.0 in the previous month amid soft demand. At the same time, the au Jibun Bank flash services PMI rose to a seasonally adjusted 51.7 in December, from November’s final reading of 50.3 as the sector activity expanded on tourism reopening. To the day ahead now, and data releases include the global flash PMIs for December. Central bank speakers include the Fed’s Daly, and the ECB’s Rehn, Holzmann and Centeno. Finally, earnings releases include Accenture. Tyler Durden Fri, 12/16/2022 - 08:06.....»»

Category: blogSource: zerohedgeDec 16th, 2022

Sam Bankman-Fried"s story keeps getting wilder and weirder as details emerge from his past and more people speak out.

Insider's Phil Rosen breaks down the latest updates in the tumultuous Sam Bankman-Fried and FTX saga. Anddddd it's Friday! Phil Rosen here, writing to you just before boarding my flight from New York to Los Angeles. I've been keeping close tabs on FTX and its disgraced founder, Sam Bankman-Fried. The more details that emerge, the more I feel like this is going to make a great Michael Lewis book (and movie) one day.Today, I'm breaking down the latest on the tee-shirt-and-shorts wearing video-gamer and former billionaire. And tomorrow: Keep an eye out for another special weekend Q & A edition of Opening Bell, featuring one of the foremost energy experts in the business. If this was forwarded to you, sign up here. Download Insider's app here.WASHINGTON, DC - DECEMBER 08: CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill December 8, 2021 in Washington, DC. The committee held a hearing on "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States."Alex Wong/Getty Images1. Bankman-Fried was meant to testify before Congress this week, but for obvious reasons (he was arrested, in case you missed that somehow), the show had to go on without him. A deep roster of crypto voices sounded off in this week's testimony in Washington DC, as the Senate Banking Committee asked to hear more about the debacle. We heard from Kevin O'Leary again, who said the market simply needs more (any?) regulation in order to thrive and move on from this fiasco. O'Leary has avoided laying any blame at SBF's feet, and also testified he believes rival exchange Binance intentionally put FTX out of business. It'd be impressive if you guessed who showed up next — none other than early 2000s heartthrob-turned-crypto critic, Ben McKenzie. The star of "The O.C." has been among the loudest skeptics, and he had a lot to say about the industry, none of it good. Among the highlights from his testimony include his assertion that the crypto market is "the largest Ponzi scheme in history." Meanwhile, Congressman Ritchie Torres called Bankman-Fried a "pathological liar" during an interview with CoinDesk. He likened FTX to a college fraternity, with haphazard, reckless bookkeeping. That aligns with the characterization by new FTX CEO, John Ray III: "I've just never seen an utter lack of record keeping." Recall that Ray had been brought in to clean up bankrupt energy firm Enron in the early 2000s. He knows a thing or two about accounting scandals. In his testimony to the House Financial Services Committee on Tuesday, Ray said it could take months to secure all the company's assets, and that his team has secured over $1 billion so far.According to Ray, under Bankman-Fried's leadership the global conglomerate used QuickBooks to do its accounting. However, one of the most intriguing anecdotes from this week, as Insider's Morgan Chittum writes, was something from Bankman-Fried's past, long before the fraud allegations. Long before Bankman-Fried was in the crosshairs of regulators, he attended Crystal Springs Uplands, a top Silicon Valley prep school, and his senior class prank reportedly included making $100 bills with his face on them. The kicker? The bills were called "Bankmans," Puck reported earlier this week.His old school had a $56,620 annual tuition, its website shows, and there Bankman-Fried had a reputation as one of the top math students, and also led the "Puzzle Hunt Club," which Puck described as a "particularly nerdy group at an already nerdy high school."After a month of FTX and Bankman-Fried drama, what are your thoughts?  Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.In other news:Federal Reserve Chairman Jerome Powell speaks at a news conference following a Federal Open Market Committee meeting, Wednesday, Nov. 2, 2022, in Washington. (AP Photo/Patrick Semansky)Patrick Semansky/AP Photo2. US stock futures sink early Friday, setting up for another day of big losses as investors face the reality that Fed hikes will push up borrowing costs. Here are the latest market moves.3. Earnings on deck: Accenture, Darden Restaurants, and more, all reporting.4. Goldman Sachs, JPMorgan, Credit Suisse and eight other top Wall Street giants have given their predictions for stocks and the economy in 2023. Bank of America, for one, is calling for a recession next year, but maintains an upbeat outlook for the S&P 500. See all of the boldest takes and economic outlooks here.5. The Fed's inflation forecast was wrong, according to RBC. The bank's chief economist said Jerome Powell's economic projection for 2023 was hard to justify. And since some Fed officials already see a recession in the cards, Powell shouldn't try to water down risks of a downturn.6. Elon Musk's Tesla stock sales are throwing gas on a burning fire. That's what Wedbush's Dan Ives said, and he thinks shares of the EV-maker are oversold. In his view, the billionaire is using "Tesla as his own ATM machine to keep funding the red ink at Twitter." At the same time, Tesla's third largest individual shareholder called for a new CEO. 7. A top FTX exec blew the whistle on Sam Bankman-Fried's moves just two days before the crypto exchange collapsed. A filing showed that FTX Bahamas' co-CEO, Ryan Salame, told local authorities that customer funds were being used to cover losses at Alameda. Get the full details here.8. The "ultimate buy-and-hold" investment fund is beating 96% of its competitors this year with the same stocks it's held since 1935. The Voya Corporate Leaders Trust Fund is outperforming peers with a risk-averse, Great Depression-driven strategy. Here's how it's still pulling in returns.9. This retired football player turned-trader said it took him four years to nail down a profitable process. Ellis Hobbs started trading stocks from his phone in 2016, and believes that trading guidelines aren't meant to make you earn money, but to prevent you from huge losses. Here are his four top strategies.Markets Insider10. Morgan Stanley's Mike Wilson said the stock market could fall further in 2023. Investors have yet to fully price in a growth slowdown with inflation set to throttle corporate profits, in the bank's view. Wilson warned that the S&P 500 could drop to 3,000 in the first half of the year.Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@insider.comEdited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: smallbizSource: nytDec 16th, 2022

Sam Bankman-Fried"s FTX had the corporate governance of a college fraternity, congressman says

FTX staff reportedly used Slack for filing company expense reports. "It would be laughable were it not so serious," a congressman said. The collapse of FTX exchange.NurPhoto / Getty Images A congressman likened collapsed exchange FTX's corporate governance to a college fraternity. Staff used messaging app Slack to file company expenses, according to FTX's new CEO.  "It would be laughable were it not so serious," congressman Ritchie Torres said. FTX was once a $32 billion crypto empire, attracting top backers like Sequoia Capital and BlackRock. It was the third-largest cryptocurrency exchange, founded by Sam Bankman-Fried, the self-proclaimed effective altruist who said he was on a mission to lobby for better crypto regulation.In reality, the company was more like a college fraternity, congressman Ritchie Torres says, with haphazard and reckless bookkeeping practices. FTX staff used messaging app Slack for filing employee expense reports."FTX had the corporate governance of a fraternity," Torres, a member of the House Financial Services Committee, told Coindesk TV on Wednesday. "It would be laughable were it not so serious."The now-bankrupt exchange used QuickBooks, an accounting software generally used by smaller businesses, not multi-billion dollar companies. FTX insiders were reportedly using a secret group chat called "Wire Fraud" as well, according to the Financial Review. (Bankman-Fried tweeted that he is "quite sure it's just false" in response to the story's claims.)FTX's new CEO John Ray, who oversaw Enron's restructuring process, echoed similar sentiments to Torres in his testimony to the House Financial Services Committee on Tuesday."[I've] never seen an utter lack of record keeping," Ray added. "Absolutely no internal controls whatsoever."FTX filed for bankruptcy protection last month amid a severe liquidity crunch. Bankman-Fried was arrested in the Bahamas on Monday night on charges including conspiracy to commit money laundering, violating campaign finance laws, and wire fraud. In written remarks ahead of the Tuesday committee, Ray blamed the company's downfall on Bankman-Fried and his inner circle, referring to them as "a very small group of grossly inexperienced and unsophisticated individuals."Fraternity chapters, however, aren't managing billions of dollars or in the crosshairs of regulators. The US Securities and Exchange Commission is accusing Bankman-Fried of defrauding investors in a years-long scheme. "We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto," SEC Chair Gary Gensler said in a statement on Tuesday.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 15th, 2022