Former US President Donald Trump has essentially ruled out the threat of cryptocurrencies being banned if he wins another term in the White House, triggering a jump in Bitcoin prices to an all-time high.
Trump, who warned in 2021 that cryptocurrencies were a “disaster waiting to happen,” appeared in a CNBC interview on Monday to have softened his stance. He acknowledged the popularity of alternative currencies, noting that Bitcoin was even used by many buyers of the special-edition Trump sneakers that he unveiled last month. “You probably have to do some regulation, but many people are embracing it,” the Republican frontrunner said. “More and more, I’m seeing people wanting to pay Bitcoin, and you’re seeing something that’s interesting, so I can live with it one way or the other.” Bitcoin surged above $72,000 for the first time after Trump’s interview. Other cryptocurrencies, including Ethereum, Solana and Dogecoin, also rallied. “It’s an additional form of currency,” Trump said of Bitcoin. “I used to say, ‘I want one currency, I want the dollar, I don’t want people leaving the dollar.’ I feel that way, but I will tell you, it has taken on a life.” The ex-president insisted that he still intends to defend the US dollar’s status as the world’s leading reserve currency. “I would not allow countries to go off the dollar,” Trump said. “When we lose that standard, that will be like losing a revolutionary war. That will be a hit to our country just like losing a war, and we can’t let that happen. Too many countries now are fighting to get off the dollar.” As for cryptocurrencies, he added, “I have seen there has been a lot of use of that, and I’m not sure that I’d want to take it away at this point.” Trump is the presumptive Republican nominee to face incumbent President Joe Biden in this year’s US election. Polls released in the past week by the Wall Street Journal, Fox News, CBS News/YouGov, and the New York Times show that US voters currently favor Trump over Biden by a margin of 2-4 percentage points. Although Trump is no longer contemplating a cryptocurrency crackdown, he has pledged to block the development of a US central bank digital currency (CBDC). He said in January that he would never allow a CBDC, calling it a “dangerous threat to freedom.” A digital dollar would give the federal government “absolute control over your money,” he warned.
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Bitcoin, the world’s highest-valued cryptocurrency, hit a new record on Monday as it surged above $72,000.
The token soared to a fresh all-time high of $72,030, breaking the record set in November 2021 and bringing gains for the year so far to nearly 70%, according to CoinDesk data. In 2021, Bitcoin reached $68,790 as the crypto industry boomed and amateur investors poured savings into digital coins. Analysts attribute the latest surge to cash inflows into US-based spot Bitcoin exchange-traded funds (ETFs), as well as to expectations that the Federal Reserve will soon cut interest rates. “Bitcoin has started the week with a surge, dragging the rest of the cryptocurrency space higher with it,” DailyFX strategist Nick Cawley told Reuters. ETFs allow more retail investors to hold Bitcoin indirectly via funds that trade on exchanges. Institutional investors have shown increasing interest in the biggest cryptocurrency by market value after the US regulator approved crypto ETFs in January. The rally of the volatile cryptocurrency comes after its value plunged below $20,000 in 2022. Nearly $1.4 trillion was wiped off the crypto market in 2022 amid bankruptcies in the sector. According to SkyBridge Capital founder Anthony Scaramucci, who briefly worked as former US President Donald Trump’s communications director, the latest rally in the token is a “really big breakthrough for Bitcoin as a digital asset.” The financier added that it is a “much broader story for digital property in general.” Late last year Standard Chartered Bank predicted that Bitcoin would reach $100,000 by the end of 2024, or even earlier. Cathie Wood, CEO of the investment firm ARK Invest, went even further, forecasting the Bitcoin price would breach $1 million by 2030. Only two nations in the world have approved Bitcoin as legal tender – El Salvador and the Central African Republic. However, CAR later reversed the decision. Bitcoin is recognized as a digital asset in many developed countries such as the US, Canada, the UK and the EU, with Germany, Denmark, Japan, Switzerland and Spain allowing Bitcoin to be used in transactions. Meanwhile a number of countries, including China, Qatar, and Saudi Arabia, have banned Bitcoin. Сhina, once one of the most popular places for Bitcoin mining, prohibited all cryptocurrency transactions in the country in 2021 when it forbade banks and other institutions from providing services such as clearing and exchange, and made mining in the country illegal. The price of Bitcoin, the world’s highest-valued cryptocurrency, surged past the $60,000 mark on Wednesday, according to CoinDesk.
The token rose above $60,600 at 14:55 GMT, its highest level since November 2021, marking a gain of over 6% over the past 24 hours. The digital currency has surged for a fifth consecutive day, supported by inflows into US-based spot Bitcoin exchange-traded funds (ETFs). ETFs allow more retail investors to hold Bitcoin indirectly via funds that trade on exchanges. The launch of ETFs in early January has helped drive the value of Bitcoin up nearly 40% so far. According to Reuters, traders are also investing in Bitcoin ahead of the upcoming halving in April, a process designed to slow the release of the cryptocurrency. The value of all the Bitcoin in circulation has exceeded $2 trillion this month for the first time in two years, according to Reuters, which cited the crypto platform CoinGecko. Bitcoin reached an all-time high of $68,982.20 in November 2021 before dropping to around $29,000 last July due to uncertainty caused by the criminal charges against Binance founder Changpeng Zhao and amid concern about economic woes in China. The European Union has put together a preliminary agreement that includes a €10,000 cap on cash payments to address the challenges posed by money laundering and the financing of terrorism.
The accord, reached through negotiations among member states and the European Parliament this week, seeks to protect citizens and the EU financial system from illicit financial activities. However, the proposed legislation raises privacy concerns and fears of state surveillance and government control over how people spend their money, as well as potential abuse of the new powers. The newly established regulations will impose the cash payment limit on entities engaged in financial services, banking, real estate agencies, asset management firms, casinos, and merchants. Moreover, these entities will be obligated to verify the identity of individuals making cash payments within the range of €3,000 to €10,000. While member countries have the flexibility to set lower limits for cash payments, the interim agreement introduces a heightened focus on monitoring high-net-worth individuals, a provision advocated for by Members of the European Parliament (MEPs). In an expansion of the scope of oversight, the interim agreement now encompasses a significant segment of the cryptocurrency sector. Crypto service providers will be required to authenticate customer identities for transactions equal to or exceeding €1,000. Beginning in 2029, the regulatory framework will be extended to include professional football clubs and agents, which will be categorized as obligated entities. This classification mandates these entities authenticate customer identities, monitor transactions, and promptly report any suspicious money transfers to the financial intelligence services of their respective countries. The agreement empowers member countries to exclude football clubs and agents from their national lists if they are determined not to pose a risk. National financial intelligence services and other competent authorities will gain access to information on ownership, bank accounts, and land and property registries. These authorities will also supervise the transfer of ownership for specific luxury goods, setting thresholds at €250,000 for cars and €7.5 million for yachts and aircraft. The impending implementation of the new legislation has ignited a robust public debate, exposing a diverse range of viewpoints. Heightened apprehensions surrounding potential totalitarian surveillance, especially with exemptions for high-profile individuals, evoke disquieting parallels to Orwell’s ‘1984’ and intensify fears of a dystopian reality. Skepticism has been cast on the effectiveness of these regulations, prompting queries about their ability to genuinely combat money laundering and fostering calls for a more inclusive strategy that addresses the burgeoning cryptocurrency sector. Conversely, some interpret the EU’s cash payment cap as a positive stride toward meeting the needs of the contemporary economy. They acknowledge the evolving financial landscapes and the digitization of cash flows, including the growing influence of central bank digital currencies. However, there are those who condemn these measures as excessive state control. The ongoing discourse reflects a polarized perspective on the EU’s actions, encapsulating concerns about potential abuses of power and the necessity of adapting payment methods to contemporary needs. This debate underscores the intricate dynamics between financial regulations, surveillance, and individual freedoms in the digital age. Cryptocurrencies facilitate illegal activities such as money laundering, according to JPMorgan CEO Jamie Dimon, who has insisted that digital assets should be banned.
Dimon once again attacked the top cryptocurrency this week, calling Bitcoin “worthless” and saying he still isn’t buying into the hype surrounding the crypto. “I've always said that Bitcoin doesn't have value,” the Wall Street heavyweight told Fox Business Network on Tuesday. “The actual use cases are sex trafficking, tax avoidance, money laundering, terrorism financing. It's not just people buying and selling Bitcoin,” he claimed. Dimon and several other industry chiefs, including Bank of America’s Brian Moynihan, have said the crypto market must follow the same anti-money-laundering rules as traditional financial institutions. A series of fake tweets from the US Securities and Exchange Commission’s X account this week about the much-awaited Bitcoin exchange-traded fund (ETF) approval decision sent the price of the crypto soaring above $47,000. It later fell as low as $45,400 after the tweets turned out to be fake. The crypto industry has suffered a slew of scandals recently, starting with the collapse of the FTX crypto exchange in November 2022. This placed the sector under intense scrutiny from US lawmakers and resulted in the conviction of former FTX CEO Sam Bankman-Fried. In November 2023, another major crypto exchange, Binance, was fined $4.3 billion for various violations, ranging from money laundering to bank fraud. The introduction of a Digital Euro, a digital form of the European currency, offers numerous advantages in today's rapidly evolving digital world. Here are some key benefits of a Digital Euro:
While the advantages of a Digital Euro are compelling, it is crucial to address concerns such as data privacy, cybersecurity, and the digital divide to ensure that the benefits are accessible to all and that the system is secure and reliable. The world’s largest cryptocurrency by market capitalization, Bitcoin, has jumped to its highest level since June 2022 this week, according to CoinDesk crypto trading tracker.
The token rose as high as $31,411 per coin on Friday before the gains were pared later in the day. Around 07:30 GMT on Sunday, Bitcoin was trading at $30,814, up about 0.4% over the past 24 hours, data shows. It is up around 20% over the past week, and roughly 87% since the start of the year. It is still more than 50% below its all-time high of almost $69,000 in November 2021. Analysts attribute the surge to the recent spike of interest in crypto from financial giants. Last week, the world’s biggest asset manager, US-based BlackRock, applied to register a Bitcoin spot exchange-traded fund (ETF), which would allow investors to gain exposure to the cryptocurrency without necessarily buying it. Two other financial services majors, Invesco and WisdomTree, also recently refiled applications for similar products. These applications came shortly after the cryptocurrency industry faced a regulatory crackdown in the US. Earlier this month, the US Securities and Exchange Commission (SEC) sued major exchanges Coinbase and Binance on alleged violations of securities laws. Binance, the world’s largest crypto exchange, was accused of operating illegally on US soil, while Coinbase, America’s own major crypto trading platform, faced charges as an unregistered broker. Industry experts, however, believe that a Bitcoin ETF could be seen as a positive development in the crypto sector’s quest for regulatory approval, and the recent surge in Bitcoin price signals the resilience of public interest in crypto. The future of central bank digital currency (CBDC) is highly dependent on the actions and decisions of central banks and governments around the world. As of now, some central banks are actively exploring the possibility of issuing their own digital currency. For example, the People's Bank of China has been working on a digital version of the Chinese yuan for several years, and it's expected to be launched in the near future. Other central banks, such as the European Central Bank and the Bank of Japan, are also conducting research and pilot projects on CBDCs. However, the decision to issue CBDCs is not one that should be taken lightly. There are many technical, legal and regulatory challenges that need to be addressed before launching CBDCs. Furthermore, Central Banks will have to ensure that CBDCs will not lead to financial stability risks and that it will coexist with other forms of money. If CBDCs are successfully implemented, they could have a significant impact on the global economy and financial system. They could provide an alternative to private cryptocurrencies, while also making it easier for people to access and use digital payments. Additionally, they could also help to reduce the risks associated with physical cash and improve financial inclusion.
On the other hand, if not properly implemented, CBDCs could lead to unintended consequences such as financial stability risks, erosion of privacy and freedom and a decline in the use of bank deposits and other financial products. Central bank digital currency (CBDC) is a topic that has been gaining a lot of attention in recent years. As the world becomes increasingly digital, many central banks are exploring the possibility of issuing their own digital currency as a way to modernize their monetary systems and stay relevant in the age of digital payments. There are a number of potential benefits to CBDCs. For one, they could help to reduce the risks associated with physical cash, such as the potential for counterfeiting and money laundering. They could also make it easier for people to access and use digital payments, especially in areas where access to traditional banking services is limited. One of the main arguments in favor of CBDCs is that they could provide an alternative to private cryptocurrencies like Bitcoin, which are decentralized and not backed by a government. CBDCs, on the other hand, would be issued and regulated by central banks, providing a level of oversight and stability that is currently lacking in the world of private cryptocurrencies. However, there are also some potential downsides to CBDCs. One concern is that they could further erode privacy and financial freedom, as central banks would have access to detailed information about how individuals are using the currency. Additionally, the introduction of CBDCs could also have an impact on the traditional banking system, potentially leading to a decline in the use of bank deposits and other financial products. Overall, the idea of central bank digital currency is an interesting one that deserves further exploration. While there are certainly potential benefits, it's important for central banks and policymakers to carefully consider the potential downsides and unintended consequences before moving forward. Ultimately, any decision to issue CBDCs should be made with the goal of promoting financial inclusion, stability, and security for all citizens. The founder and CEO of the ill-fated cryptocurrency exchange FTX, Samuel Bankman-Fried, has been arrested in the Bahamas at the request of the US authorities. He now awaits criminal charges, weeks after his multi-billion-dollar company went bankrupt. The government of the Bahamas issued a statement on Monday night announcing the arrest, noting that the move “followed receipt of formal notification from the United States that it has filed criminal charges against [Bankman-Fried] and is likely to request his extradition.”
The US Justice Department later confirmed that the disgraced CEO was in custody, with US attorney Damian Williams saying the arrest was “based on a sealed indictment filed by the [Southern District of New York].” He added that the indictment would be unsealed sometime on Tuesday. A source familiar with the matter told the New York Times that Bankman-Fried’s charges will include money laundering, wire fraud, wire fraud conspiracy, securities fraud, and securities fraud conspiracy, and noted that he currently is the only FTX executive facing indictment. Prosecutors have reportedly examined whether the crypto exchange broke any laws by transferring money to a separate hedge fund operated and owned by Bankman-Fried before FTX went belly-up in November. Regulators have also looked into how the Bahamas-based exchange ended up with an $8 billion gap on its balance sheet, and whether FTX lent money to the hedge fund, Alameda Research, for risky trades. Bankman-Fried’s arrest comes less than 24 hours ahead of a House Financial Services Committee hearing he planned to attend virtually on Tuesday, where he was meant to testify about FTX’s downfall. California Democrat Maxine Waters, who oversees the committee, said she was “surprised” that he was in custody, and expressed disappointment that lawmakers would not hear his testimony. The FTX founder has denied any suggestions that he defrauded his customers before his company collapsed, instead maintaining that he “screwed up” while managing the large crypto exchange, which was among the world’s largest at its peak. “I made a lot of mistakes. There are things I would give anything to be able to do over again,” he told an audience at an event hosted by the New York Times last month. Investors have withdrawn a record amount of digital coins from global cryptocurrency exchanges amid fears over the safety of their assets following the bankruptcy of major exchange FTX, data from analytics firm Crypto Compare shows. According to the report, 91,363 bitcoin was pulled out of centralized exchanges such as Binance, Kraken, and Coinbase in November. The tokens were worth roughly $1.5 billion based on last month’s average price of around $16,400.
“Bitcoin recorded the largest outflows from exchanges in its history... Since FTX, centralized exchanges have witnessed a string of outflows as market participants look to safeguard their funds,” Crypto Compare said. It is not clear from the report whether the funds are being sold or moved to private wallets. Data also showed that the outflow trend has continued in December, with 4,545 bitcoin withdrawn from centralized exchanges in the first seven days of the month, while the same period last year saw inflows of 3,846 bitcoin. The rush for the exits comes after FTX, a once major brokerage for trading crypto, filed for bankruptcy protection in mid-November. The company’s downfall left as many as 1 million FTX creditors with no access to their assets, dented investor confidence in cryptocurrencies and set off a chain reaction in the crypto market. In late November, another cryptocurrency lender, BlockFi, filed for bankruptcy. According to Bloomberg, over 130 FTX-affiliated entities have collapsed so far. Eric Robertsen, global head of research at Standard Chartered Bank, warned this week that the crypto market crisis will continue well into next year. “While the bitcoin sell-off decelerates, the damage has been done… More and more crypto firms and exchanges find themselves with insufficient liquidity, leading to further bankruptcies and a collapse in investor confidence in digital assets,” he told the Financial Times. The collapse of the FTX exchange threatens to topple more cryptocurrency companies, BlackRock chief executive Larry Fink warned during the New York Times DealBook summit. BlackRock, the world’s biggest asset manager, is among the financial firms affected by the bankruptcy of the Bahamas-based crypto exchange. Fink’s company manages $10 trillion in assets on behalf of clients ranging from huge pension funds to high-net-worth individuals.
“I actually believe most of the companies are not going to be around,” the long-time sceptic of cryptocurrencies stated. Fink also disclosed that his company had invested roughly $24 million in FTX. “Could we have been misled?” he asked. “Until we have more facts, I will not speculate.” According to the businessman, there were “misbehaviours of major consequences” at FTX, but he still sees potential in the technology underlying crypto, despite all the problems. The collapse of the FTX exchange has set off a chain reaction, triggering a crisis of confidence in the cryptocurrency market. This week, leading cryptocurrency lender BlockFi, which was financially entangled with FTX, filed for bankruptcy. Embattled brokerage Genesis is currently trying to avoid the same fate. Major exchange Kraken said on Wednesday it would lay off 1,100 employees despite having “no material exposure” to FTX. According to Bloomberg, more than 130 FTX-affiliated entities have already gone bust. The breaking news throughout the first half of November has been dominated by coverage of the sudden collapse of FTX, one of the world’s biggest cryptocurrency exchanges. The crash has shaken the crypto market, lost institutional investors billions – and individual customers millions – led to official investigations of FTX in several countries, and made some question whether the Bitcoin sphere might crash and burn outright, and perhaps cause wider problems for the financial system.
Some take the view that FTX was a fraud all along, ever since its launch in April 2019. If that’s the case, it has grave implications for the US Democratic Party and Ukrainian government, as the company’s corrupt activity may have been used to fund both, openly and secretly. The Ukraine connection On March 14, FTX launched a new online portal for cryptocurrency donations, Aid for Ukraine, in partnership with Ukraine’s Ministry of Digital Transformation. Through this, crypto traders, both large and small, could donate bitcoin and other cryptocurrencies, which FTX would convert into cash for the Ukrainian Ministry of Defense to spend on weapons and other war-related expenses. Very rapidly, the fund claimed to have amassed “over” $60 million in donations. By April 14, it was reported that just over $45.15 million of that sum had been splurged on digital rifle scopes, thermal imagers, monoculars, rations, armor, helmets, military clothing, tactical backpacks, fuel, communication devices, laptops, drones, medical supplies, and a “worldwide anti-war media campaign.” The same records show a further $10 million was spent over the next three months – leaving around $5 million in the bank, so to speak. An Aid for Ukraine social media post on November 15 said this sum was still held in reserve, and that $60 million remained of the total amount of donations received through the portal to date.This seems very odd, particularly given that Ukraine was reported to have received $100 million in bitcoin donations, and then spent almost all of it, between February 24 and March 11 alone, before Aid for Ukraine’s establishment. Are we to believe that – over the course of seven months, from the time the $60 million figure was first publicized to today – no further funds at all have been donated through Aid for Ukraine? Despite the entire crypto community having been able to do so, and being actively encouraged to do so that whole time? Official investigations into FTX, and its founder and CEO Sam Bankman-Fried, have only just begun. However, it seems clear already that he secretly and illegally moved billions stored in the FTX exchange to its sister company Alameda Research, a quantitative trading firm that he also runs. The gaping black hole Bankman-Fried’s sleight-of-hand created meant that, when customers sought to withdraw their money from the exchange, FTX didn’t have the funds to keep up with demand. It seems he was assisted in this underhand ploy by a “back-door” specially created for him in the company’s accounting, which meant sums could be moved into and out of the exchange off the books, and without auditors or FTX employees noticing. Much of the money taken out of FTX by Bankman-Fried has disappeared completely. The US Securities and Exchange Commission and Commodity Futures Trading Commission are particularly looking at whether these stolen client deposits were used to prop up Alameda in any way, which was reportedly struggling financially. There is, as yet, no sign though that these authorities are probing an obvious lead – Aid for Ukraine. Was money moved from FTX to Alameda, then channelled to Kiev to be spent on Western – mainly US – weapons, and indeed other activities that the government and its backers in Washington, London, and elsewhere in Europe and North America would prefer to be kept hidden? Conversely, money raised beyond the initial $60 million total could’ve been funnelled out of Aid for Ukraine by Bankman-Fried to enrich himself, or secretly spent for very different purposes – such as funding the US Democratic Party’s election campaigns. The Democratic Party connection Bankman-Fried is a very well-connected figure in US politics, especially to the Democratic Party. Over the course of the 2020 presidential election cycle, he contributed $5.2 million to two super PACs supporting Joe Biden’s campaign and was the overall second-largest individual donor to Biden that year. Such extravagant spending appears trivial today. In 2021/22, he provided tens of millions to Democratic causes and candidates, becoming the party’s second-largest donor, behind only “spyless coup” specialist George Soros. Bankman-Fried has boasted of meeting policymakers in Washington “every two or three weeks for the last year.” Over 2022, this has included multiple audiences with senior government officials and top Biden advisers at the White House. These meetings escalated in volume around the time that the Ukraine conflict began. On March 7, exactly one week before Aid for Ukraine was launched, his brother Gabe Bankman-Fried – who directs his political operations – visited the White House along with Jenna Narayanan, a Democratic strategist who once worked for the Democracy Alliance, which has been called the “most powerful liberal donor club” in the US. Bankman-Fried himself then visited the White House on numerous occasions in April and May, concurrent with him donating $865,000 to the Democratic National Committee. In early June, mere days after his last recorded White House meet-and-greet, Bankman-Fried announced he would invest up to $1 billion in further funds between then and 2024 to guarantee Biden – or whoever might take his place – won the next presidential election. These activities have been interpreted by many as an attempt by Bankman-Fried to ingratiate himself with politicians to further his commercial interests. It is certainly true that, at the same time, he and FTX high rankers were attempting to influence US lawmakers on crypto regulation, to make the market more favourable for his company. In this context, the promised $1 billion appears to be a dangled carrot, an implied promise of future financing if Bankman-Fried got his way. Accompanying him on some of these visits was Mark Wetjen, FTX head of policy and regulatory strategy, who previously served as commissioner on the Commodity Futures Trading Commission under President Barack Obama – but only some. Were the other meetings related to Ukraine? If so, the $1 billion pledge may have reflected what Bankman-Fried thought could be secretly skimmed from Aid for Ukraine for Democratic Party purposes. It’s conspicuous that in mid-October, he completely disowned that enormous commitment, saying, “That was a dumb quote. I think my messaging was sloppy and inconsistent in some cases.” In repudiating his $1 billion promise, Bankman-Fried also quietly added that he would stop giving any money at all to political causes. It was just days later that it was announced FTX was subject to investigation in Texas for allegedly selling unregistered securities. Jump to a few weeks later, and the company had filed for bankruptcy. Bankman-Fried clearly said something he shouldn’t have back in June – whether he got carried away by all the positive press and high-level access his political donations were receiving and wrote a proverbial check in public he couldn’t privately cash, or his comments drew unwanted attention to how much money was actually flowing into Aid for Ukraine, we do not currently know. But the truth must out. Failing cryptocurrency exchange FTX has begun moving assets offline, after more than $600 million in tokens was allegedly pilfered from the digital wallets on its platform. After filing for bankruptcy protection from creditors on Friday, FTX “initiated precautionary steps to move all digital assets to cold storage,” said Ryne Miller, general counsel for the firm’s US arm. “Process was expedited this evening to mitigate damage upon observing unauthorized transactions.”
However, considerable damage had already been done. According to an estimate by blockchain research firm Nansen, $662 million flowed out of FTX’s US and international exchanges. The firm’s main wallet, which was used to process withdrawals, was drained of its entire balance of 45.8 million FTT tokens, worth an estimated $97.2 million, Nansen said. A separate review by another analytics firm, Elliptic Connect, pegged the thefts at $473 million. The FTX community administrator on Telegram said the exchange had been hacked. FTX applications are infected with malware, according to the administrator, which also warned followers against loading the exchange’s website. The Bahamas-based FTX and about 130 affiliated companies commenced Chapter 11 bankruptcy proceedings on Friday in Delaware. The firm also announced that Democratic Party donor Sam Bankman-Fried had resigned as CEO. Bankman-Fried, who reportedly ranked behind only billionaire political activist George Soros in 2022 pledges to Democratic Party candidates, saw his entire $16 billion fortune wiped out this week, according to Bloomberg, which called the collapse “one of history’s greatest-ever destructions of wealth.” Miller, the general counsel, said the exchange was “investigating abnormalities with wallet movements related to consolidation of FTX balances across exchanges.” The financial troubles of major cryptocurrency hub FXT threaten to wreak havoc on crypto firms and transform how they’re run, JPMorgan strategists warned on Wednesday. According to a research note cited by Business Insider, the analysts believe this will likely send the price of Bitcoin down 25% to $13,000 a coin. Crypto players are likely facing demands from lenders to put up more collateral, and some may collapse under the pressure, the Wall Street strategists wrote. “It looks likely that a new cascade of margin calls, deleveraging and crypto company/platform failures is starting,” they said. The JPMorgan team pointed out to the close links between FTX and its boss Sam Bankman-Fried’s trading firm Alameda Research, and the wider crypto space. According to the report, Bankman-Fried, who had been heralded as the white knight of crypto, and even compared to Warren Buffett, now appears to be the one in need of rescue. “The number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking within the crypto ecosystem,” the strategists said. They indicated that the whole situation “creates a confidence crisis and reduces the appetite of other crypto companies to come to the rescue.” It could take several weeks for the crypto turmoil to settle down, unless FTX is quickly rescued, the experts suggested. “With the crypto market cap standing at just above $1 trillion before the FTX/Alameda Research collapse, our guess is that the crypto market will find a floor above $500 billion in the current deleveraging phase,” they said. On Wednesday, Bitcoin dropped to its lowest level in nearly two years on news of the potential bankruptcy of Bankman-Fried's company after the world’s largest crypto trading platform Binance abandoned plans to acquire FTX. A deal for major cryptocurrency exchange FTX collapsed on Wednesday as bigger rival Binance said it was pulling out after doing due diligence on the proposed acquisition. Binance signed a non-binding agreement on Tuesday to buy FTX's non-U.S. unit to help cover a "liquidity crunch" at the rival exchange, but the deal was subject to further due diligence.
"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com," Binance said in a statement. A representative for FTX did not immediately respond to a request for comment, but Chief Executive Officer Sam Bankman-Fried told employees in a Slack message viewed by Reuters that Binance had not previously expressed reservations about the deal. The turmoil over FTX has hit crypto prices. Bitcoin, the biggest cryptocurrency by market value, was last down 13% on the day at $16,277. FTX.com is also facing scrutiny from U.S. regulators over its handling of customer funds, as well as its crypto-lending activities. Michael Saylor is down about a billion dollars on his bitcoin (BTC) bet and just stepped down as CEO at MicroStrategy (MSTR), the software company he founded in the 1980s. Being in a tight spot is familiar territory for the 57-year-old Saylor. After the dot-com bubble burst in March 2000, Jim Cramer, the CNBC host, pointed to the collapse of MicroStrategy as a catalyst. The stock had tumbled 62% in a single day after MicroStrategy announced accounting mistakes, erasing $6 billion from Saylor’s wealth and marking a prominent end to the high-flying days of the early Internet. Later that year, the U.S. Securities and Exchange Commission brought, and then settled, accounting charges against MicroStrategy, Saylor and other company executives. Saylor and MicroStrategy then spent two decades mostly under Wall Street’s radar. Not that he was suffering. MicroStrategy kept plugging away, developing software for businesses. Saylor lived in a Miami Beach, Fla., mansion that looks like a Spanish colonial palace. A recent visit by a CoinDesk reporter revealed painted cherubs on the foyer ceiling, gold paneling and crimson-red wall paper in the dining room, a stage beyond the office library stocked with guitars, drums and whatever else a band might need, and a portrait of Saylor styled like an old English sailor – with laser eyes. A yacht was floating out back, where a crew lived full-time so Saylor could travel whenever he wanted.
What brought Saylor back to center stage was bitcoin. His fear of inflation drove him in 2020 to start investing MicroStrategy’s cash in the original cryptocurrency. The company’s cash flows started getting routed to bitcoin. He lined Wall Street bankers’ pockets by selling debt to raise money to buy bitcoin. In the process, he audaciously turned his sleepy software company into a bitcoin vault. In all, MicroStrategy has spent about $4 billion on digital assets. MicroStrategy’s stock became a proxy for holding bitcoin. The stock price moves up and down in lockstep with bitcoin’s movements.He became something like a bitcoin preacher spouting religiously fervent praise. His grandiose predictions included one that bitcoin will eventually be worth $100 trillion, roughly what all stocks in the world are collectively worth now. “After scientifically studying everything on Earth, I’ve concluded bitcoin is the best inflation hedge,” he told CoinDesk during a November interview at the Miami Beach mansion. “We buy bitcoin as fast as we can with whatever money we find lying around.” His advice as bitcoin was near its record high? “If you have bitcoin, don’t sell it. If you don’t have bitcoin, buy it. And if your bitcoin is moving around, wait.” Fast forward to today. MicroStrategy’s stock has lost about two-thirds of its value since peaking last year, dragged down by the current bitcoin bear market. This week, Saylor handed the CEO title to Phong Le, who had been MicroStrategy’s president, and shifted into an executive chairman role, pledging to put all his focus on bitcoin investing. Le now runs the legacy software business. Saylor wasn't immediately available for an interview for this story. So who is Michael Saylor? Born in Lincoln, Neb., into a military family, Saylor grew up around bases. That included Wright-Patterson Air Force Base near Dayton, Ohio. He attended the Massachusetts Institute of Technology on an Air Force scholarship and became an Air Force second lieutenant. He launched MicroStrategy in his early 20s after convincing his employer, DuPont (DD), to give him $100,000 and free office space and computer equipment, Saylor told Charlie Rose during an interview in February 2000. Saylor’s quirkiness was visible back then, offering a glimpse of what was to come with bitcoin. “I think you're going to see over the next decade that people are going to use software to route traffic on every major highway,” he told Rose 22 years ago. “We're going to use it to determine what hospital we go to or what drug we take. We're going to use it to arbitrage out all the spreads in the interest rates in the finance market and get us a better deal from our bank and probably a better trade in the stock market.” But he immediately noted the serious potential downsides of technology, too, about a month before his stock plunged. “If the software crashes, the civilization comes to a grinding halt in the same way that if you shut down air traffic control at a major airport, traffic will come to a grinding halt,” Saylor told Rose, adding, “And that’s what’s exciting about technology.” |
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