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The recovery in cryptocurrency prices should not overshadow FTX’s lessons

Published

8 months ago

20 May, 2024

AltcoinUpdates Staff

The recovery in cryptocurrency prices should not overshadow FTX's lessons

Bullish sentiment should not overshadow the lessons to be learned from FTX

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As cryptocurrency markets continue to be in the midst of a bull market, combined with the most institutional adoption to date, there are multiple reasons for investors and advocates to be optimistic. One of the most surprising headlines, which is at least a partial result of the recovery in prices, new innovations and increased adoption, was the recently released news regarding the bankruptcy of FTX. Even as Bankman-Fried sits in prison, at the beginning of his long sentence, and the regulatory landscape (and regulators) struggle to overcome the failures and embarrassment caused by this collapse and associated crimes, a positive story has emerged. In May 2024 it was announced that the bankruptcy estate handling the reorganization and eventual liquidation of FTX was able to recover sufficient funds to repay investors in full, with some estimates going as high as 140% recovery..

Setting aside some comments that this absolves Bankman-Fried and his former colleagues of criminal activity – of which Bankman-Fried was found guilty in court and for which some former colleagues are still awaiting sentencing – there are several important lessons that all stakeholders in the crypto space should be aware moving forward. The fact remains that criminal charges have been brought against these individuals and that, while sentences can always be reduced in the future, these charges and crimes exist.

Rising prices lift all boats

Any investor who has studied the history of markets for any asset has heard from Warren Buffet a version of the phrase that savvy investors only reveal themselves during bear markets; this is also the case with FTX. Positive headlines about the bankruptcy estate’s ability to repay investors tend to overshadow an important point; these ratios and redemption parameters are based on cryptocurrency prices as of November 2022. The 2024 bull market significantly increased the price of all cryptoassets, including those held on FTX’s balance sheet, leading to much higher levels of available assets. If you add up the cash recoveries possible through the repossession and sale of real estate, the picture of the repayment process becomes clearer.

The fact that FTX, on paper, has the ability to make investors whole 18 months after filing for bankruptcy should not obscure the fact that this is an incomplete presentation of the facts. Illiquidity is fine and portfolio managers face this risk/return tradeoff daily, but this is no excuse for fund commingling, wire fraud and other financial crimes committed at FTX.

Repayment plans expose the need for faster settlement

For an asset class that can and do move as quickly as cryptoassets, updates on FTX’s bankruptcy recovery are another example of the need for more timely legal processing. It is encouraging and worth noting that established failure practices have apparently worked as intended during this process, but this is no reason to stop looking for improvements. In contrast to the United States, customers of FTX Japan they managed to regain access to the funds long before the US bankruptcy case heralded this recent news. Questions that have been raised regarding FTX’s bankruptcy and eventual liquidation include, but are not limited to, issues related to cryptocurrency re-hypothecation, private key management, succession planning for key personnel of cryptocurrency exchanges and exactly how much disclosure and transparency should be required from the cryptocurrency broker. retailers.

Given the rapid acceleration of cryptoassets and blockchain-based applications, it is inevitable that legal and financial complications will arise. While it remains true that all cryptoassets, including bitcoin, are financial instruments, it should be evident that the rapid development of institutional products coupled with interest from individual investors indicates that at least some cryptocurrency-specific frameworks and rules are needed.

Regulatory guardrails are needed

In May 2024, in a rare display of bipartisan agreement, the United States Congress (both houses) voted to repeal the controversial SAT 121 the one issued by the SEC. In addition to these votes serving as another rebuke to President Gensler and his campaign to regulate all cryptoassets as stocks, this illustrates a fact that cryptocurrency advocates and investors have known for years; clear and concise regulatory frameworks are needed. Bitcoin ETFs have attracted tens of billions in inflows since their inception, and TradFi institutions continue to develop and deploy blockchain and crypto-native assets, but the regulatory environment in the United States remains murky.

Protecting investors, as well as maintaining liquid and transparent markets, should be a key priority of both US regulators and policymakers, but this should not stand in the way of much-needed innovation. Especially since stablecoins, and the implications of tokenized transactions, appear to be attracting the attention and investment of TradFi institutions, politicians would be wise to have productive conversations on these topics instead of scoring political points.

FTX continues to cast a long shadow over the crypto space, but it also offers cryptocurrency advocates, investors and policymakers the opportunity to learn – and implement – important lessons.

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Related Topics:Bankman-fried cryptocurrency FTX Gensler

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AltcoinUpdates Staff

We are the editorial team of Altcoin Updates, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on Altcoin Updates, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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How Ether Spot ETF Approval Could Impact Crypto Prices: CNBC Crypto World

Published

7 months ago

3 July, 2024

AltcoinUpdates Staff

How Ether Spot ETF Approval Could Impact Crypto Prices: CNBC Crypto World

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CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and gives viewers a glimpse of what’s to come with high-profile interviews, explainers and unique stories from the ever-changing cryptocurrency industry. On today’s show, Ledn Chief Investment Officer John Glover weighs in on what’s driving cryptocurrency prices right now and how the potential approval of spot ether ETFs could impact markets.

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News

Miners’ ‘Capitulation’ Signals Bitcoin Price May Have Bottomed Out: CryptoQuant

Published

7 months ago

3 July, 2024

AltcoinUpdates Staff

Miners' 'Capitulation' Signals Bitcoin Price May Have Bottomed Out: CryptoQuant

According to CryptoQuant, blockchain data shows signs that the Bitcoin mining industry is “capitulating,” a likely precursor to Bitcoin hitting a local price bottom before reaching new highs.

CryptoQuant analyzed metrics for miners, who are responsible for securing the Bitcoin network in exchange for newly minted BTC. As outlined in the market intelligence platform’s Wednesday report, multiple signs of capitulation have emerged over the past month, during which Bitcoin’s price has fallen 13% from $68,791 to $59,603.

One such sign includes a significant drop in Bitcoin’s hash rate, the total computing power that backs Bitcoin. After hitting a record high of 623 exashashes per second (EH/s) on April 27, the hash rate has fallen 7.7% to 576 EH/s, its lowest level in four months.

“Historically, extreme hash rate drawdowns have been associated with price bottoms,” CryptoQuant wrote. In particular, the 7.7% drawdown is reminiscent of an equivalent hash rate drawdown in December 2022, when Bitcoin’s price bottomed at $16,000 before rallying over 300% over the next 15 months.

This latest hash rate drop follows Bitcoin’s fourth cyclical “halving” event in April, which cut the number of coins paid out to miners in half. According to CryptoQuant’s Miner Profit/Loss Sustainability Indicator, this has left miners “mostly extremely underpaid” since April 20, forcing many to shut down mining machines that have now become unprofitable.

CrypotoQuant said that miners faced a 63% drop in daily revenue after the halving, when both Bitcoin block rewards and transaction fee revenues were much higher.

During this time, Bitcoin miners were seen moving coins from their on-chain wallets at a faster rate than usual, indicating that they may be selling their BTC reserves“Daily miner outflows reached their highest volume since May 21,” the company wrote.

Among the sales of Bitcoin miners, whales and national governmentsBitcoin’s price drop in June also hurt Bitcoin’s “hash price,” a metric of Bitcoin Miner Profitability per unit of computing power.

“Average mining revenue per hash (hash price) continues to hover near all-time lows,” CryptoQuant wrote. “Hashprice stands at $0.049 per EH/s, just above the all-time low hashprice of $0.045 reached on May 1st.”

By Ryan-Ozawa.

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News

US Congressman French Hill Doubles Down on Trump’s Pro-Crypto Stance

Published

7 months ago

3 July, 2024

AltcoinUpdates Staff

US Congressman French Hill Doubles Down on Trump's Pro-Crypto Stance

US lawmaker French Hill has noted that Donald Trump will take a more pro-crypto approach than the current administration. The run-up to the presidential election has seen cryptocurrencies become an issue with lawmakers making huge statements ahead of the polls. Donald Trump has also been reaching out to the industry, making a pro-crypto case.

French Hill Backs Trump’s Pro-Crypto Stance

Republican Congressman French Hill has explained the type of cryptocurrency regulatory framework he believes Donald Trump could adopt in the country. In a recent interview with CNBC, French Hill said that the recently passed FIT21 bill is the type of regulatory framework the Trump administration will adopt in the sector.

#FIT21 passed the House with 71 Democratic votes, it’s exactly the kind of digital asset regulatory framework former President Trump would support if re-elected.

See more on @SquawkCNBC🔽 photo.twitter.com/ceTmU4LApU

— French Hill (@RepFrenchHill) July 3, 2024

THE FIT21 Bill It is intended to protect investors and consumers in the market by establishing clear rules and powers for the various regulators in the sector. According to Hill, Trump will adopt it because it directs the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on the specific regulatory framework needed in the market.

“… for people who are innovating and starting a crypto token, a related business, custody of those assets, how to ensure consumer protection, so I think that framework is the right approach and that’s what I’m going to recommend to the President to pass, which is that we have not passed it between now and the end of this Congress.”

He also called Trump an innovative and pro-growth president in financial matters.

Cryptocurrency is going mainstream

This election cycle saw the cryptocurrency industry taking a place in mainstream issues following broader adoption across demographics. From candidates moving toward enthusiasts to recent pro-Congress legislation, cryptocurrencies have become a rallying point for officials. The U.S. regulatory landscape has been criticized for stifling growth due to frequent SEC LawsuitsThis has led executives to push for pro-cryptocurrency laws and raise money for pro-industry candidates.

David Pokima

David is a financial news contributor with 4 years of experience in Blockchain and cryptocurrency. He is interested in learning about emerging technologies and has an eye for breaking news. Keeping up to date with trends, David has written in several niches including regulation, partnerships, cryptocurrency, stocks, NFTs, etc. Away from the financial markets, David enjoys cycling and horseback riding.

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US Court Orders Sam Ikkurty to Pay $84 Million for Cryptocurrency Ponzi Scheme

Published

7 months ago

3 July, 2024

AltcoinUpdates Staff

U.S. Court orders Sam Ikkurty to pay $84M for crypto Ponzi scheme

A federal court has ordered Jafia LLC and its owner, Sam Ikkurty, to pay nearly $84 million to cryptocurrency investors after ruling that the company was operating a Ponzi scheme.

The ruling, issued by Judge Mary Rowland in the U.S. District Court for the Northern District of Illinois, follows a lawsuit filed by the Commodity Futures Trading Commission (CFTC) in 2022 after the fund collapsed.

Judge Rowland found that Ikkurty, based in Portland, Oregon, did numerous false claims on his company’s hedge funds.

These included misleading statements about his trading experience and the promise of high and stable profits. Instead, Ikkurty used funds from new investors to pay off previous investors, a hallmark of a Ponzi scheme.

The Ponzi Scheme

The court found that Ikkurty misappropriated investment funds for personal use without the knowledge of the investors. These funds were used for personal use and were reported as Fraudulent Investmentscausing significant financial losses to customers.

This non-transparent operation violated Transparency Commission regulations, which led to the imposition of a hefty fine to compensate defrauded investors and restore some public confidence in the financial system.

Judge Rowland emphasized that fraudulent activity such as this violates the law and undermines the integrity of modern financial markets. The $84 million award seeks to address the financial harm inflicted on investors and reinforce the importance of legal compliance in cryptocurrency trading.

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